Exhibit
10.1


 


Execution Copy


 


	
   

  	
   

  	
   

  



 


 


THQ INC.,


 


as
Borrower


 


 




 





 


 


LOAN AND SECURITY AGREEMENT


 


Dated
as of June 30, 2009


 


$35,000,000


 


 




 





 


 


CERTAIN FINANCIAL INSTITUTIONS,


 


as
Lenders


 


and


 


BANK OF AMERICA, N.A.,


 


as
Agent


	
   

  	
   

  	
   

  



 


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
  DEFINITIONS; RULES OF
  CONSTRUCTION

  	
   

  	
  1

  
	
  1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2.

  	
   

  	
  Accounting Terms

  	
   

  	
  23

  
	
  1.3.

  	
   

  	
  Uniform Commercial Code

  	
   

  	
  23

  
	
  1.4.

  	
   

  	
  Certain Matters of
  Construction

  	
   

  	
  23

  
	
  Section 2.

  	
  CREDIT FACILITIES

  	
   

  	
  24

  
	
  2.1.

  	
   

  	
  Revolver Commitment

  	
   

  	
  24

  
	
  2.2.

  	
   

  	
  [RESERVED]

  	
   

  	
  25

  
	
  2.3.

  	
   

  	
  Letter of Credit Facility

  	
   

  	
  25

  
	
  Section 3.

  	
  INTEREST, FEES AND CHARGES

  	
   

  	
  28

  
	
  3.1.

  	
   

  	
  Interest

  	
   

  	
  28

  
	
  3.2.

  	
   

  	
  Fees

  	
   

  	
  29

  
	
  3.3.

  	
   

  	
  Computation of Interest, Fees, Yield Protection

  	
   

  	
  29

  
	
  3.4.

  	
   

  	
  Reimbursement Obligations

  	
   

  	
  29

  
	
  3.5.

  	
   

  	
  Illegality

  	
   

  	
  30

  
	
  3.6.

  	
   

  	
  Inability to Determine Rates

  	
   

  	
  30

  
	
  3.7.

  	
   

  	
  Increased Costs; Capital Adequacy

  	
   

  	
  30

  
	
  3.8.

  	
   

  	
  Mitigation

  	
   

  	
  31

  
	
  3.9.

  	
   

  	
  Funding Losses

  	
   

  	
  31

  
	
  3.10.

  	
   

  	
  Maximum Interest

  	
   

  	
  32

  
	
  Section 4.

  	
  LOAN ADMINISTRATION

  	
   

  	
  32

  
	
  4.1.

  	
   

  	
  Manner of Borrowing and Funding Revolver Loans

  	
   

  	
  32

  
	
  4.2.

  	
   

  	
  Defaulting Lender

  	
   

  	
  33

  
	
  4.3.

  	
   

  	
  Number and Amount of LIBOR Loans; Determination of
  Rate

  	
   

  	
  34

  
	
  4.4.

  	
   

  	
  Borrower Agent

  	
   

  	
  34

  
	
  4.5.

  	
   

  	
  One Obligation

  	
   

  	
  34

  
	
  4.6.

  	
   

  	
  Effect of Termination

  	
   

  	
  34

  
	
  Section 5.

  	
  PAYMENTS

  	
   

  	
  34

  
	
  5.1.

  	
   

  	
  General Payment Provisions

  	
   

  	
  34

  
	
  5.2.

  	
   

  	
  Repayment of Revolver Loans

  	
   

  	
  35

  
	
  5.3.

  	
   

  	
  RESERVED

  	
   

  	
  35

  
	
  5.4.

  	
   

  	
  Payment of Other Obligations

  	
   

  	
  35

  
	
  5.5.

  	
   

  	
  Marshaling; Payments Set Aside

  	
   

  	
  35

  
	
  5.6.

  	
   

  	
  Post-Default Allocation of Payments

  	
   

  	
  35

  
	
  5.7.

  	
   

  	
  Application of Payments

  	
   

  	
  36

  
	
  5.8.

  	
   

  	
  Loan Account; Account Stated

  	
   

  	
  36

  
	
  5.9.

  	
   

  	
  Taxes

  	
   

  	
  36

  
	
  5.10.

  	
   

  	
  Lender Tax Information

  	
   

  	
  37

  
	
  5.11.

  	
   

  	
  Nature and Extent of Each Borrower’s Liability

  	
   

  	
  38

  
	
  Section 6.

  	
  CLOSING DATE, CONDITIONS PRECEDENT

  	
   

  	
  40

  
	
  6.1.

  	
   

  	
  Closing Date

  	
   

  	
  40

  
	
  6.2.

  	
   

  	
  Conditions Subsequent to Closing Date and Additional
  Conditions Precedent to All Credit Extensions

  	
   

  	
  41

  
	
  6.3.

  	
   

  	
  Conditions Precedent to All Credit Extensions

  	
   

  	
  41

  
	
  Section 7.

  	
  COLLATERAL

  	
   

  	
  42

  
	
  7.1.

  	
   

  	
  Grant of Security Interest

  	
   

  	
  42

  
	
  7.2.

  	
   

  	
  Lien on Deposit Accounts; Cash Collateral

  	
   

  	
  42

  
	
  7.3.

  	
   

  	
  [RESERVED]

  	
   

  	
  43

  



 

















 


	
  7.4.

  	
   

  	
  Other Collateral

  	
   

  	
  43

  
	
  7.5.

  	
   

  	
  No Assumption of Liability

  	
   

  	
  43

  
	
  7.6.

  	
   

  	
  Further Assurances

  	
   

  	
  43

  
	
  7.7.

  	
   

  	
  Foreign Subsidiary Stock

  	
   

  	
  43

  
	
  Section 8.

  	
  COLLATERAL ADMINISTRATION

  	
   

  	
  44

  
	
  8.1.

  	
   

  	
  Borrowing Base Certificates

  	
   

  	
  44

  
	
  8.2.

  	
   

  	
  Administration of Accounts

  	
   

  	
  44

  
	
  8.3.

  	
   

  	
  Administration of Inventory

  	
   

  	
  45

  
	
  8.4.

  	
   

  	
  Administration of Equipment

  	
   

  	
  45

  
	
  8.5.

  	
   

  	
  Administration of Deposit Accounts

  	
   

  	
  46

  
	
  8.6.

  	
   

  	
  General Provisions

  	
   

  	
  46

  
	
  8.7.

  	
   

  	
  Power of Attorney

  	
   

  	
  47

  
	
  Section 9.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  47

  
	
  9.1.

  	
   

  	
  General Representations and Warranties

  	
   

  	
  47

  
	
  9.2.

  	
   

  	
  Complete Disclosure

  	
   

  	
  52

  
	
  Section 10.

  	
  COVENANTS AND CONTINUING AGREEMENTS

  	
   

  	
  52

  
	
  10.1.

  	
   

  	
  Affirmative Covenants

  	
   

  	
  52

  
	
  10.2.

  	
   

  	
  Negative Covenants

  	
   

  	
  55

  
	
  10.3.

  	
   

  	
  Financial Covenants

  	
   

  	
  59

  
	
  Section 11.

  	
  EVENTS OF DEFAULT; REMEDIES ON DEFAULT

  	
   

  	
  59

  
	
  11.1.

  	
   

  	
  Events of Default

  	
   

  	
  59

  
	
  11.2.

  	
   

  	
  Remedies upon Default

  	
   

  	
  61

  
	
  11.3.

  	
   

  	
  License

  	
   

  	
  62

  
	
  11.4.

  	
   

  	
  Setoff

  	
   

  	
  62

  
	
  11.5.

  	
   

  	
  Remedies Cumulative; No Waiver

  	
   

  	
  62

  
	
  Section 12.

  	
  AGENT

  	
   

  	
  62

  
	
  12.1.

  	
   

  	
  Appointment, Authority and Duties of Agent

  	
   

  	
  62

  
	
  12.2.

  	
   

  	
  Agreements Regarding Collateral and Field
  Examination Reports

  	
   

  	
  63

  
	
  12.3.

  	
   

  	
  Reliance By Agent

  	
   

  	
  64

  
	
  12.4.

  	
   

  	
  Action Upon Default

  	
   

  	
  64

  
	
  12.5.

  	
   

  	
  Ratable Sharing

  	
   

  	
  64

  
	
  12.6.

  	
   

  	
  Indemnification of Agent Indemnitees

  	
   

  	
  65

  
	
  12.7.

  	
   

  	
  Limitation on Responsibilities of Agent

  	
   

  	
  65

  
	
  12.8.

  	
   

  	
  Successor Agent and Co-Agents

  	
   

  	
  65

  
	
  12.9.

  	
   

  	
  Due Diligence and Non-Reliance

  	
   

  	
  66

  
	
  12.10.

  	
   

  	
  Replacement of Certain Lenders

  	
   

  	
  66

  
	
  12.11.

  	
   

  	
  Remittance of Payments and Collections

  	
   

  	
  66

  
	
  12.12.

  	
   

  	
  Agent in its Individual Capacity

  	
   

  	
  67

  
	
  12.13.

  	
   

  	
  Agent Titles

  	
   

  	
  67

  
	
  12.14.

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  67

  
	
  Section 13.

  	
  BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

  	
   

  	
  67

  
	
  13.1.

  	
   

  	
  Successors and Assigns

  	
   

  	
  67

  
	
  13.2.

  	
   

  	
  Participations

  	
   

  	
  67

  
	
  13.3.

  	
   

  	
  Assignments

  	
   

  	
  68

  
	
  Section 14.

  	
  MISCELLANEOUS

  	
   

  	
  69

  
	
  14.1.

  	
   

  	
  Consents, Amendments and Waivers

  	
   

  	
  69

  
	
  14.2.

  	
   

  	
  Indemnity

  	
   

  	
  69

  
	
  14.3.

  	
   

  	
  Notices and Communications

  	
   

  	
  69

  
	
  14.4.

  	
   

  	
  Performance of Borrowers’ Obligations

  	
   

  	
  70

  
	
  14.5.

  	
   

  	
  Credit Inquiries

  	
   

  	
  70

  
	
  14.6.

  	
   

  	
  Severability

  	
   

  	
  70

  
	
  14.7.

  	
   

  	
  Cumulative Effect; Conflict of Terms

  	
   

  	
  70

  



 


(ii)

















 


	
  14.8.

  	
   

  	
  Counterparts

  	
   

  	
  71

  
	
  14.9.

  	
   

  	
  Entire Agreement

  	
   

  	
  71

  
	
  14.10.

  	
   

  	
  Relationship with Lenders

  	
   

  	
  71

  
	
  14.11.

  	
   

  	
  No Advisory or Fiduciary Responsibility

  	
   

  	
  71

  
	
  14.12.

  	
   

  	
  Confidentiality

  	
   

  	
  71

  
	
  14.13.

  	
   

  	
  [RESERVED]

  	
   

  	
  72

  
	
  14.14.

  	
   

  	
  GOVERNING LAW

  	
   

  	
  72

  
	
  14.15.

  	
   

  	
  Consent to Forum

  	
   

  	
  72

  
	
  14.16.

  	
   

  	
  Waivers by Borrowers

  	
   

  	
  73

  
	
  14.17.

  	
   

  	
  Patriot Act Notice

  	
   

  	
  74

  



 


 


LIST OF EXHIBITS AND SCHEDULES


 


	
  Exhibit A

  	
  Revolver
  Note

  
	
  Exhibit B

  	
  Assignment
  and Acceptance

  
	
  Exhibit C

  	
  Assignment
  Notice

  
	
   

  	
   

  
	
  Schedule
  1.1(a)

  	
  Guarantors

  
	
  Schedule
  1.1(b)

  	
  Commitments
  of Lenders

  
	
  Schedule
  8.3.3

  	
  Consignment
  Sales of Inventory

  
	
  Schedule
  8.5

  	
  Deposit
  Accounts

  
	
  Schedule
  8.4.2

  	
  Certain
  Asset Dispositions

  
	
  Schedule
  8.6.1

  	
  Business
  Locations

  
	
  Schedule
  9.1.4

  	
  Names
  and Capital Structure

  
	
  Schedule
  9.1.7

  	
  Change
  in Condition

  
	
  Schedule
  9.1.11

  	
  Patents,
  Trademarks, Copyrights and Licenses

  
	
  Schedule
  9.1.14

  	
  Environmental
  Matters

  
	
  Schedule
  9.1.15

  	
  Restrictive
  Agreements

  
	
  Schedule
  9.1.16

  	
  Litigation

  
	
  Schedule
  9.1.17

  	
  Defaults

  
	
  Schedule
  9.1.18

  	
  Pension
  Plans

  
	
  Schedule
  9.1.20

  	
  Labor
  Contracts

  
	
  Schedule
  10.2.2

  	
  Existing
  Liens

  
	
  Schedule
  10.2.17

  	
  Existing
  Affiliate Transactions

  



 


(iii)

















 


LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY AGREEMENT is dated as of
June 30, 2009, among THQ INC.,
a Delaware corporation (“THQ” and, together with any other Person that
at any time after the date hereof becomes a Borrower in accordance with the
terms hereof, each individually a “Borrower,” and collectively, “Borrowers”),
the financial institutions party to this Agreement from time to time as lenders
(collectively, “Lenders”), and BANK OF
AMERICA, N.A., a national
banking association, as agent for the Lenders (“Agent”).


 


R E C I T A L S:


 


Borrowers have requested that Lenders provide a
credit facility to Borrowers to finance their mutual and collective business
enterprise.  Lenders are willing to
provide the credit facility on the terms and conditions set forth in this
Agreement.


 


NOW, THEREFORE, for valuable
consideration hereby acknowledged, the parties agree as follows:


 


SECTION 1.        DEFINITIONS;
RULES OF CONSTRUCTION


 


1.1.                            Definitions. 
As used herein, the following terms have the meanings set forth below:


 


Account: as defined in the UCC,
including all rights to payment for goods sold or leased, or for services
rendered.


 


Account Debtor: a Person who is obligated
under an Account, Chattel Paper or General Intangible.


 


Accounts Formula Amount:  85% of the Ascribed Value of
Eligible Accounts.


 


Acquisition: any transaction, or any
series of related transactions, consummated on or after the Closing Date, by
which any Obligor (a) acquires any going business or all or substantially
all of the assets of any Person, whether through purchase of assets, merger or
otherwise or (b) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least a majority
(in number of votes) of the Equity Interests of a Person which has ordinary
voting power for the election of directors or other similar management
personnel of a Person (other than Equity Interests having such power only by
reason of the happening of a contingency) or a majority of the outstanding
Equity Interests of a Person.


 


Affiliate: 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 correlative meanings.


 


Agent Indemnitees: Agent and its officers,
directors, employees, Affiliates, agents and attorneys.


 


Agent Professionals: attorneys, accountants,
appraisers, auditors, business valuation experts, environmental engineers or
consultants, turnaround consultants, and other professionals and experts retained
by Agent.


 


Allocable Amount: as defined in Section 5.11.3.


 
















 


Anti-Terrorism Laws: any laws relating to
terrorism or money laundering, including the Patriot Act.


 


Applicable Law: all laws, rules,
regulations and governmental guidelines applicable to the Person, conduct,
transaction, agreement or matter in question, including all applicable
statutory law, common law and equitable principles, and all provisions of
constitutions, treaties, statutes, rules, regulations, orders and decrees of
Governmental Authorities.


 


Applicable Margin: with respect to any Type of Loan, the margin set forth below, as
determined by the Fixed Charge Coverage Ratio for the last Fiscal Month:


 


	
  Level

  	
   

  	
  Fixed Charge
  Coverage Ratio

  	
   

  	
  LIBOR
  Revolver Loans

  	
   

  	
  Base Rate 

  Revolver Loans

  
	
  I

  	
   

  	
  < 1.25:1.00

  	
   

  	
  4.00%

  	
   

  	
  2.50%

  
	
  II

  	
   

  	
  < 1.50:1.00 but > 1.25:1.00

  	
   

  	
  3.50%

  	
   

  	
  2.00%

  
	
  III

  	
   

  	
  < 2.00:1.00 but > 1.50:1.00

  	
   

  	
  3.00%

  	
   

  	
  1.50%

  
	
  IV

  	
   

  	
  > 2.00:1.00

  	
   

  	
  2.50%

  	
   

  	
  1.00%

  



 


Until July 31, 2009, margins shall be
determined as if Level II were applicable. 
Thereafter, the margins shall be subject to increase or decrease upon
receipt by Agent pursuant to Section 10.1.2
of the financial statements and corresponding Compliance Certificate for the
prior Fiscal Month, which change shall be effective on the first day of the
calendar month following receipt.  If, by
the first day of a month, any financial statements and Compliance Certificate
due in the preceding calendar month have not been received, then, at the option
of Agent or Required Lenders, the margins shall be determined as if Level I
were applicable, from such day until the first day of the calendar month
following actual receipt.


 


Approved Fund: any Person (other than a
natural person) that is engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in its ordinary
course of activities, and is administered or managed by a Lender, an entity
that administers or manages a Lender, or an Affiliate of either.


 


Approved List: PriceWaterhouseCoopers,
Deloitte, Ernst & Young, KPMG, RSM McGladrey, Grant Thornton and BDO
Seidman.


 


Ascribed Value: for an Account, its face
amount, net of any returns, rebates, discounts (calculated on the shortest
terms), credits, allowances or Taxes (including sales, excise or other taxes)
that have been or could be claimed by the Account Debtor or any other Person.


 


Asset Disposition: a sale, lease, license,
consignment, transfer or other disposition of Property of an Obligor, including
a disposition of Property in connection with a sale-leaseback transaction or
synthetic lease.


 


Assignment and Acceptance: an assignment
agreement between a Lender and Eligible Assignee, in the form of Exhibit B.


 


Availability: the Borrowing Base minus
the principal balance of all Revolver Loans.


 


Availability Reserve: the sum (without
duplication of reserves) of (a) the Rent and Charges Reserve; (b) the LC Reserve; (c) the
Bank Product Reserve; (d) the aggregate amount of liabilities secured by
Liens upon Collateral that are senior to Agent’s Liens (but imposition of any
such reserve shall not waive an Event of Default arising therefrom); (e) the
Dilution Reserve; and (f) such additional reserves, in such amounts and
with respect to such matters, as Agent in its Credit Judgment may elect to
impose from time to time.


 


-2-

















 


Bank of America: Bank of America, N.A., a
national banking association, and its successors and assigns.


 


Bank of America Indemnitees: Bank of
America and its officers, directors, employees, Affiliates, agents and
attorneys.


 


Bank Product: any of the following products,
services or facilities extended to any Borrower or Subsidiary by Bank of
America or any of its Affiliates: (a) Cash Management Services; (b) products
under Hedging Agreements; (c) commercial credit card and merchant card
services; and (d) leases and other banking products or
services as may be requested by any Borrower or Subsidiary, other than Letters
of Credit.


 


Bank Product Debt: Debt and other obligations
of an Obligor relating to Bank Products.


 


Bank Product Reserve: the aggregate amount of
reserves established by Agent from time to time in its discretion in respect of
Bank Product Debt.


 


Bankruptcy Code: Title 11 of the United
States Code.


 


Base Rate: for any day, a per annum
rate equal to the greater of (a) the Prime Rate for such day; (b) the
Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day
interest period as determined on such day, plus 1.0%.


 


Base Rate Loan: any Loan that bears
interest based on the Base Rate.


 


Base Rate Revolver Loan: a Revolver
Loan that bears interest based on the Base Rate.


 


Board of Governors: the Board of Governors of
the Federal Reserve System.


 


Borrowed Money: with respect to any
Obligor, without duplication, its (a) Debt that (i) arises from the
lending of money by any Person to such Obligor, (ii) is evidenced by
notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues
interest or is a type upon which interest charges are customarily paid
(excluding trade payables owing in the Ordinary Course of Business), or (iv) was
issued or assumed as full or partial payment for Property; (b) Capital
Leases; (c) reimbursement obligations with respect to letters of credit;
and (d) guaranties of any Debt of the foregoing types owing by another
Person.


 


Borrower Agent: as defined in Section 4.4.


 


Borrowing: a group of Loans of one
Type that are made on the same day or are converted into Loans of one Type on
the same day.


 


Borrowing Base: on any date of
determination, an amount equal to the lesser of (a) the aggregate amount
of Revolver Commitments, minus the LC Reserve; or (b) the sum of the
Accounts Formula Amount, minus the Availability Reserve.


 


Borrowing Base Certificate: a
certificate, in form and substance reasonably satisfactory to Agent, by which
Borrowers certify calculation of the Borrowing Base.


 


Business Day: 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, North Carolina and
California, and if such day relates to a LIBOR Loan, any such day on
which dealings in Dollar deposits are conducted between banks in the London
interbank Eurodollar market.


 


-3-

















 


Capital Expenditures: all liabilities incurred,
expenditures made or payments due (whether or not made) by a Borrower or
Subsidiary for the acquisition of any fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more
than one year, including the principal portion of Capital Leases, but
excluding, to the extent the same shall constitute Capital Expenditures, any
Permitted Acquisitions.


 


Capital Lease: any lease that is required
to be capitalized for financial reporting purposes in accordance with GAAP.


 


Cash Collateral: cash, and any interest or
other income earned thereon, that is delivered to Agent to Cash Collateralize
any Obligations.


 


Cash Collateral Account: a demand
deposit, money market or other account established by Agent at such financial
institution as Agent may select in its discretion, reasonably exercised, which
account shall be subject to Agent’s Liens for the benefit of Secured Parties.


 


Cash Collateralize: the delivery of cash to Agent, as security for
the payment of Obligations, in an amount equal to (a) with respect
to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to
any inchoate, contingent or other Obligations (including Obligations arising
under Bank Products, but excluding inchoate or contingent indemnification
obligations to the extent that claims giving rise thereto cannot reasonably be
identified by any Secured Party based on the then-known facts and
circumstances), Agent’s good faith estimate of the amount due or to become due,
including all fees and other amounts relating to such Obligations.  “Cash Collateralization” has a
correlative meaning.


 


Cash Equivalents: (a) marketable
obligations issued or unconditionally guaranteed by, and backed by the full
faith and credit of, the United States government, maturing within 12 months of
the date of acquisition; (b) certificates of deposit, time deposits and
bankers’ acceptances maturing within 12 months of the date of acquisition, and
overnight bank deposits, in each case which are issued by a commercial bank
organized under the laws of the United States or any state or district thereof,
rated A-1 (or better) by S&P or P-1 (or better) by Moody’s at the time of
acquisition, and (unless issued by a Lender) not subject to offset rights; (c) repurchase
obligations with a term of not more than 30 days for underlying investments of
the types described in clauses (a) and (b) entered into with any bank
meeting the qualifications specified in clause (b); (d) commercial paper
rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing
within nine months of the date of acquisition; and (e) shares of any money
market fund that has substantially all of its assets invested continuously in
the types of investments referred to above, has net assets of at least
$500,000,000 and has the highest rating obtainable from either Moody’s or
S&P.


 


Cash Management Services: any services
provided from time to time by Bank of America or any of its Affiliates to any
Borrower or Subsidiary in connection with operating, collections, payroll,
trust, or other depository or disbursement accounts, including automated
clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled
disbursement, overdraft, depository, information reporting, lockbox and stop
payment services.


 


CERCLA: the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. § 9601 et  seq.).


 


Change in Law: the occurrence, after the
date hereof, of (a) the adoption or taking effect of any law, rule,
regulation or treaty; (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority; or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any
Governmental Authority.


 


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Change of Control: (a) a change in the majority of directors of
THQ, unless approved by the then majority of directors; or (b) any “person”
or “group” (within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) after the Closing Date becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of 35%, of more, of the Equity Interests of THQ
having the right to vote for the election of members of the board of directors
of THQ.


 


Claims: all liabilities,
obligations, losses, damages, penalties, judgments, proceedings, interest,
costs and expenses of any kind (including remedial response costs, reasonable
attorneys’ fees and Extraordinary Expenses) at any time (including after Full
Payment of the Obligations, resignation or replacement of Agent, or replacement
of any Lender) incurred by or asserted against any Indemnitee in any way
relating to (a) any Loans, Letters of Credit, Loan Documents, or the use
thereof or transactions relating thereto, (b) any action taken or omitted
to be taken by any Indemnitee in connection with any Loan Documents, (c) the
existence or perfection of any Liens, or realization upon any Collateral, (d) exercise
of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure
by any Obligor to perform or observe any terms of any Loan Document, in each
case including all costs and expenses relating to any investigation,
litigation, arbitration or other proceeding (including an Insolvency Proceeding
or appellate proceedings), whether or not the applicable Indemnitee is a party
thereto.


 


Closing Date: as defined in Section 6.1.


 


Code: the Internal Revenue Code
of 1986.


 


Collateral: all Property described in Section 7.1, all Property described in
any Security Documents as security for any Obligations, and all other Property
that now or hereafter secures (or is intended to secure) any Obligations.


 


Commitment: for any Lender, the aggregate amount of such
Lender’s Revolver Commitment.  “Commitments”
means the aggregate amount of all Revolver Commitments.


 


Commitment Termination Date: the earliest
to occur of (a) the Revolver Termination Date; (b) the date on which
Borrowers terminate the Revolver Commitments pursuant to Section 2.1.4; or (c) the date on
which the Revolver Commitments are terminated pursuant to Section 11.2.


 


Company: THQ Inc., a Delaware
corporation.


 


Compliance Certificate: a
certificate, in form and substance reasonably satisfactory to Agent, by which
Borrowers certify compliance with Sections
10.2.3 and 10.3, notify of any
amounts that should be included in the Rent and Charges Reserve, and calculate
the applicable Level for the Applicable Margin.


 


Contingent Obligation: any obligation of a Person
arising from a guaranty, indemnity or other assurance of payment or performance
of any Debt, lease, dividend or other obligation (“primary obligations”)
of another obligor (“primary obligor”) in any manner, whether directly
or indirectly, including any obligation of such Person under any (a) guaranty,
endorsement, co-making or sale with recourse of an obligation of a primary
obligor; (b) obligation to make take-or-pay or similar payments regardless
of nonperformance by any other party to an agreement; and (c) arrangement (i) to
purchase any primary obligation or security therefor, (ii) to supply funds
for the purchase or payment of any primary obligation, (iii) to maintain
or assure working capital, equity capital, net worth or solvency of the primary
obligor, (iv) to purchase Property or services for the purpose of assuring
the ability of the primary obligor to perform a primary obligation, or (v) otherwise
to assure or hold harmless the holder of any primary obligation against loss in
respect thereof.  The amount of any
Contingent Obligation shall be deemed to be the stated or determinable amount
of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not 


 


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stated
or determinable, the maximum reasonably anticipated liability with respect
thereto based on the then-known facts and circumstances.


 


Control
Agreement:
a Deposit Account Control Agreements or a Securities Account Control Agreement.


 


Credit Judgment: Agent’s judgment exercised
in good faith based upon its consideration of any factor that: (a) could
reasonably be expected to adversely affect the quality, mix or value of
Collateral (including any Applicable Law that may inhibit collection of an
Account), the enforceability or priority of Agent’s Liens, or the amount that
Agent and Lenders could receive in liquidation of any Collateral; (b) suggests
that any collateral report or financial information delivered by Borrowers is
incomplete, inaccurate or misleading in any material respect, (c) materially
increases the likelihood of an Insolvency Proceeding involving Borrowers; or (d) creates
of could reasonably be expected to result in a Default or Event of
Default.  In exercising such judgment,
Agent may consider any factors that increase the credit risk of lending to
Borrowers in the security of the Collateral.


 


CWA: the Clean Water Act (33
U.S.C. §§ 1251 et  seq.).


 


Debt: as applied to any Person,
without duplication, (a) all items that would be included as liabilities
on a balance sheet in accordance with GAAP, including Capital Leases, but
excluding trade payables (which shall include royalties payable, accrued
expenses and Taxes not yet overdue for payment, but exclude Taxes overdue for
payment ) incurred and being paid in the Ordinary Course of Business; (b) all
Contingent Obligations; (c) all reimbursement obligations in connection
with letters of credit issued for the account of such Person; and (d) in
the case of a Borrower, the Obligations. 
The Debt of a Person shall include any recourse Debt of any partnership
in which such Person is a general partner or joint venturer.


 


Default: an event or condition
that, with the lapse of time or giving of notice, would constitute an Event of
Default.


 


Default Rate: for any Obligation
(including, to the extent permitted by law, interest not paid when due), 2%
plus the interest rate otherwise applicable thereto.


 


Defaulting Lender: any Lender that (a) fails
to make any payment or provide funds to Agent or any Borrower as required
hereunder or fails otherwise to perform its obligations under any Loan
Document, and such failure is not cured within one Business Day, or (b) is
the subject of any Insolvency Proceeding.


 


Deposit
Account Control Agreements: the Deposit Account control agreements to be
executed by each institution maintaining a Deposit Account for a Borrower, in
favor of Agent, for the benefit of Secured Parties, as security for the Obligations.


 


Dilution Percent: whichever is the higher
percent, determined for Borrowers’ most recent trailing twelve Fiscal Month
period and for Borrowers’ most recent trailing three Fiscal Month period, equal
to (a) bad debt write-downs or write-offs, discounts, returns,
promotions, credits, credit memos and other dilutive items with respect to
Accounts, divided  by (b) gross sales.


 


Dilution Reserve: as of any date of
determination, an amount sufficient to reduce the advance rate against Eligible
Accounts by one (1) percentage point for each one (1) percentage
point by which the Dilution Percent is in excess of 5%.


 


Distribution: any declaration or payment
of a distribution, interest or dividend on any Equity Interest (other than
payment-in-kind or any stock split of the common stock of the Company); any
distribution, advance or repayment of Debt to a holder of Equity Interests; or
any purchase, redemption, 


 


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or
other acquisition or retirement for value of any Equity Interest, other than
any stock split of the common stock of the Company.


 


Dollars: lawful money of the United
States.


 


Dominion
Account: a special
account established by Borrowers at Bank of America or another bank acceptable
to Agent, over which Agent has exclusive control for withdrawal purposes during
any Trigger Period.


 


Eligible Account: an Account owing to a
Borrower that arises in the Ordinary Course of Business from the sale of goods or rendition of
services,  is
payable in Dollars and is deemed by Agent, in its Credit Judgment, to be an
Eligible Account.  Without limiting the
foregoing, no Account shall be an Eligible Account if (a) it is unpaid for
more than 60  days after
the original due date, or more than 120  days after the original invoice date; (b) 25% or more
of the Accounts owing by the Account Debtor are not Eligible Accounts under the
foregoing clause; (c) when aggregated with other Accounts owing by the
Account Debtor, it exceeds 10% of the aggregate Eligible Accounts, provided  that,
if the Account Debtor is Wal-Mart Stores, Inc., GameStop Corp., Target
Corporation, Best Buy Co., Inc. or ToysRUs, Inc., or any Affiliate of
the foregoing, such percentage limitation shall be 45%, 35%, 15%, 15% and
15%, respectively, with respect to such Account Debtor and its Affiliates (or,
in any such case, such higher percentage as Agent may establish for the Account
Debtor from time to time); (d) it does not conform with a covenant or
representation herein; (e) it is owing by a creditor or supplier, or is
otherwise subject to a potential offset, counterclaim, dispute, deduction,
discount, recoupment, reserve, defense, chargeback, credit or allowance (but
ineligibility shall be limited to the amount thereof, and other discounts and
allowances granted in the Ordinary Course of Business shall not render the
related Accounts ineligible so long as such discounts and allowances have been
reported to Agent and are included in the calculation of Dilution Percent); (f) an
Insolvency Proceeding has been commenced by or against the Account Debtor
(unless Agent is satisfied in its sole discretion with such Account Debtor’s
ability to pay Accounts post-petition, and elects in its sole discretion to
permit such Accounts to remain eligible hereunder); or the Account Debtor has
failed, has suspended or ceased doing business, is liquidating, dissolving or
winding up its affairs, or is not Solvent; or the Borrower is not able to bring
suit or enforce remedies against the Account Debtor through judicial process; (g) the
Account Debtor is organized or has its principal offices or assets outside the
United States or Canada; (h) it is owing by a Government Authority, unless
the Account Debtor is the United States or any department, agency or
instrumentality thereof and the Account has been assigned to Agent in
compliance with the Assignment of Claims Act; (i) it is not subject to a
duly perfected, first priority Lien in favor of Agent, or is subject to any
other Lien; (j) the goods giving rise to it have not been shipped in the
Ordinary Course of Business, the services giving rise to it have not been
accepted by the Account Debtor, or it otherwise does not represent a final
sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind,
or has been reduced to judgment; (l) its payment has been extended, the
Account Debtor has made a partial payment (unless the unpaid portion is
approved by Agent in its sole discretion to remain eligible hereunder), or it
arises from a sale on a cash-on-delivery basis; (m) it arises from a sale
to an Affiliate, from a sale on a bill-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment, or other repurchase or return
basis, or from a sale to a Person for personal, family or household purposes; (n) it
represents a progress billing or retainage; or (o) it includes a billing
for interest, fees or late charges, but ineligibility shall be limited to the
extent thereof.  In calculating
delinquent portions of Accounts under clauses (a) and (b), credit balances
more than 90 days old will be excluded.


 


Eligible Assignee: a Person that is (a) a
Lender, U.S.-based Affiliate of a Lender or Approved Fund; (b) any other
financial institution approved by Agent and Borrower Agent (which approval by
Borrower Agent shall not be unreasonably withheld or delayed, and shall be
deemed given if no objection is made within two Business Days after notice of
the proposed assignment), that is organized under the laws of the United States
or any state or district thereof, has total assets in excess of $5 billion,
extends asset-based lending facilities in its ordinary course of business and
whose becoming an assignee would 


 


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not
constitute a prohibited transaction under Section 4975 of the Code or any
other Applicable Law; and (c) during any Event of Default, any Person
acceptable to Agent in its discretion.


 


Enforcement
Action: any action to
enforce any Obligations or Loan Documents or to realize upon any Collateral
(whether by judicial action, self-help, notification of Account Debtors,
exercise of setoff or recoupment, or otherwise).


 


Environmental Laws: all Applicable Laws
(including all programs, permits and guidance promulgated by regulatory
agencies), relating to public health (but excluding occupational safety and
health, to the extent regulated by OSHA) or the protection or pollution of the
environment, including CERCLA, RCRA and CWA.


 


Environmental
Notice: a notice
(whether written or oral) from any Governmental Authority or other Person of any
possible noncompliance with, investigation of a possible violation of,
litigation relating to, or potential fine or liability under any Environmental
Law, or with respect to any Environmental Release, environmental pollution or
hazardous materials, including any complaint, summons, citation, order, claim,
demand or request for correction, remediation or otherwise.


 


Environmental Release: a release as defined in
CERCLA or under any other Environmental Law.


 


Equity Interest: the interest of any (a) shareholder
in a corporation; (b) partner in a partnership (whether general, limited,
limited liability or joint venture); (c) member in a limited liability
company; or (d) other Person having any other form of equity security or
ownership interest.


 


ERISA: the Employee Retirement
Income Security Act of 1974.


 


ERISA
Affiliate: any
trade or business (whether or not incorporated) under common control with an
Obligor 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: (a) a
Reportable Event with respect to a Pension Plan; (b) a withdrawal by any
Obligor or 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 any Obligor or 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 Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) any Obligor or ERISA Affiliate
fails to meet any funding obligations with respect to any Pension Plan or
Multiemployer Plan, or requests a minimum funding waiver; (f) 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 (g) 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 any Obligor or ERISA Affiliate.


 


Event of Default: as defined in Section 11.


 


Excess Availability: as of any date of
determination, the amount equal to Availability minus the
aggregate amount, if any, of all trade payables of Borrowers and their
Subsidiaries aged in excess of historical levels with respect thereto and all
book overdrafts of Borrowers and their Subsidiaries in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Credit Judgment.


 


Excluded
Tax: with respect to
Agent, any Lender, Issuing Bank or any other recipient of a payment to be made
by or on account of any Obligation, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the 


 


-8-

















 


jurisdiction
(or any political subdivision thereof) under the laws of which such recipient
is organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located; (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which Borrower Agent is located; (c) any backup
withholding tax required by the Code to be withheld from amounts payable to a
Lender that has failed to comply with Section 5.10;
and (d) in the case of a Foreign Lender, any United States withholding tax
that is (i) required pursuant to laws in force at the time such Lender
becomes a Lender (or designates a new Lending Office) hereunder, or (ii) attributable
to such Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 5.10,
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from Borrowers with respect to such withholding
tax.


 


Existing
ARS Facilities:
(a) the Master Service Agreement, established by Wachovia Securities (as
defined therein), and (b) the Credit Line Agreement, established by UBS
Bank USA, each as in effect on the Closing Date, together with any renewals,
extensions or refinancings thereof, provided  that no such
renewal, extension or refinancing shall increase the maximum permitted
principal amount of Debt available thereunder.


 


Extraordinary Expenses: all
documented out-of-pocket and actual costs, expenses or advances that Agent may
incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any
audit, inspection, repossession, storage, repair, appraisal, insurance,
manufacture, preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (b) any action,
arbitration or other proceeding (whether instituted by or against Agent, any
Lender, any Obligor, any representative of creditors of an Obligor or any other
Person) in any way relating to any Collateral (including the validity,
perfection, priority or avoidability of Agent’s Liens with respect to any
Collateral), Loan Documents, Letters of Credit or Obligations, including any
lender liability or other Claims; (c) the exercise, protection or
enforcement of any rights or remedies of Agent in, or the monitoring of, any
Insolvency Proceeding; (d) settlement or satisfaction of any taxes,
charges or Liens with respect to any Collateral; (e) any Enforcement
Action; (f) negotiation and documentation of any modification, waiver,
workout, restructuring or forbearance with respect to any Loan Documents or
Obligations; and (g) Protective Advances. 
Such costs, expenses and advances include transfer fees, Other Taxes,
storage fees, insurance costs, permit fees, utility reservation and standby
fees, legal fees reasonably incurred, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees,
environmental study fees, wages and salaries paid to employees of any Obligor
or independent contractors in liquidating any Collateral, and travel expenses.


 


Federal Funds Rate: (a) the weighted
average of interest rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers on the
applicable Business Day (or on the preceding Business Day, if the applicable
day is not a Business Day), as published by the Federal Reserve Bank of New
York on the next Business Day; or (b) if no such rate is published on the
next Business Day, the average rate (rounded up, if necessary, to the nearest
1/8 of 1%) charged to Bank of America on the applicable day on such
transactions, as determined by Agent.


 


Fiscal
Month: each period of four or five
weeks,
commencing on the first day of a Fiscal Year.


 


Fiscal
Quarter: each period of three Fiscal
Months.


 


Fiscal
Year: the fiscal year
of Borrower Agent for accounting and tax purposes, ending on the nearest
Saturday to March 31 of each year.


 


Fixed
Charge Coverage Ratio: with respect to any period, the ratio, determined on a consolidated
basis for Borrowers and Subsidiaries, of (a) Modified EBITDA minus
Capital Expenditures (except those 


 


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financed with Borrowed
Money other than Revolver Loans) and cash taxes paid, in each case, for such
period, to (b) Fixed Charges for such period.


 


Fixed
Charges: the sum of
interest expense (other than payment-in-kind and interest expenses that are
fully setoff under the Existing ARS Facilities), principal payments made on
Borrowed Money (other than repayments of the Revolver Loans), and Distributions
(other than any JAKKS Amounts) made.


 


FLSA: the Fair Labor Standards
Act of 1938.


 


Foreign Lender: any Lender that is
organized under the laws of a jurisdiction other than the laws of the United
States, or any state or district thereof.


 


Foreign Plan: any employee benefit plan
or arrangement (a) maintained or contributed to by any Obligor or
Subsidiary that is not subject to the laws of the United States; or (b) mandated
by a government other than the United States for employees of any Obligor or
Subsidiary.


 


Foreign
Subsidiary:
a Subsidiary that is a “controlled foreign corporation” under Section 957
of the Code, such that a guaranty by such Subsidiary of the Obligations or a
Lien on the assets of such Subsidiary to secure the Obligations would result in
material tax liability to Borrowers.


 


Full
Payment: with respect to
any Obligations, (a) the full and indefeasible cash payment thereof,
including any interest, fees and other charges accruing during an Insolvency
Proceeding (whether or not allowed in the proceeding); (b) if such
Obligations are LC Obligations or inchoate or contingent in nature (but excluding
inchoate or contingent indemnification obligations to the extent that claims
giving rise thereto cannot reasonably be identified by any Secured Party based
on the then-known facts and circumstances), Cash Collateralization thereof (or delivery
of a standby letter of credit acceptable to Agent in its discretion, in the
amount of required Cash Collateral); and (c) a release of any
Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before
the payment date.  No Loans shall be deemed to
have been paid in full until all Commitments related to such Loans have expired
or been terminated.


 


GAAP: generally accepted
accounting principles in effect in the United States from time to time.


 


Governmental Approvals: all
authorizations, consents, approvals, licenses and exemptions of, registrations
and filings with, and required reports to, all Governmental Authorities.


 


Governmental Authority: any federal,
state, municipal, foreign or other governmental department, agency, commission,
board, bureau, court, tribunal, instrumentality, political subdivision, or
other entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions for or pertaining to any government or court, in
each case whether associated with the United States, a state, district or
territory thereof, or a foreign entity or government.


 


Guarantor Payment: as defined in Section 5.11.3.


 


Guarantors: each of the Persons listed
on Schedule 1.1(a) and each
other Person who guarantees payment or performance of any Obligations.


 


Guaranty: each guaranty agreement
executed by a Guarantor in favor of Agent.


 


Hedging Agreement: an agreement relating to
any swap, cap, floor, collar, option, forward, cross right or obligation, or
combination thereof or similar transaction, with respect to interest rate, foreign
exchange, currency, commodity, credit or equity risk.


 


Indemnified Taxes: Taxes other than Excluded
Taxes.


 


-10-

















 


Indemnitees: Agent Indemnitees, Lender
Indemnitees, Issuing Bank Indemnitees and Bank of America Indemnitees.


 


Insolvency Proceeding: any case or proceeding
commenced by or against a Person under any state, federal or foreign law for,
or any agreement of such Person to, (a) the entry of an order for relief
under the Bankruptcy Code, or any other insolvency, debtor relief or debt
adjustment law; (b) the appointment of a receiver, trustee, liquidator,
administrator, conservator or other custodian for such Person or any part of
its Property; or (c) an assignment or trust mortgage for the benefit of
creditors.


 


Intellectual Property: all intellectual and
similar Property of a Person, including inventions, designs, patents,
copyrights, trademarks, service marks, trade names, trade secrets, confidential
or proprietary information, customer lists, know-how, software and databases;
all embodiments or fixations thereof and all related documentation,
applications, registrations and franchises; all licenses or other rights to use
any of the foregoing; and all books and records relating to the foregoing.


 


Intellectual Property Claim: any claim or
assertion (whether in writing, by suit or otherwise) that a Borrower’s or
Subsidiary’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other Property violates another Person’s
Intellectual Property.


 


Interest Period: as defined in Section 3.1.3.


 


Interest Rate Contract: any interest rate swap, collar or cap agreement, or other agreement
or arrangement by any Borrower or Subsidiary with Bank of America that is
designed to protect against fluctuations in interest rates.


 


Inventory: as defined in the UCC,
including all goods intended for sale, lease, display or demonstration; all
work in process; and all raw materials, and other materials and supplies of any
kind that are or could be used in connection with the manufacture, printing,
packing, shipping, advertising, sale, lease or furnishing of such goods, or
otherwise used or consumed in a Borrower’s business (but excluding Equipment).


 


Investment: any acquisition of all or
substantially all assets of a Person; any acquisition of record or beneficial
ownership of any Equity Interests of a Person; or any advance or capital
contribution to or other investment in a Person.


 


IRS: the United States Internal
Revenue Service.


 


Issuing Bank: Bank of America or an
Affiliate of Bank of America.


 


Issuing Bank Indemnitees: Issuing Bank
and its officers, directors, employees, Affiliates, agents and attorneys.


 


JAKKS
Amounts: distributions
and payments made to JAKKS Pacific, Inc., pursuant to the THQ / JAKKS
Pacific, LLC operating agreement.


 


LC
Application:
an application by Borrower Agent to Issuing Bank for issuance of a Letter of
Credit, in form and substance satisfactory to Issuing Bank.


 


LC
Conditions:
the following conditions necessary for issuance of a Letter of Credit: (a) each
of the conditions set forth in Section 6; (b) after giving effect to such
issuance, total LC Obligations do not exceed the Letter of Credit Subline, no
Overadvance exists and, if no Revolver Loans are outstanding, the LC
Obligations do not exceed the Borrowing Base (without giving effect to the LC
Reserve for purposes of this calculation); (c) the expiration date of such
Letter of Credit is (i) no more than 365 days from issuance, in the case
of standby Letters of Credit, (ii) no more than 120 days from issuance, in
the case of


 


-11-
















 


documentary Letters of
Credit, and (iii) at least 20 Business Days prior to the Revolver
Termination Date; (d) the Letter of Credit and payments thereunder are
denominated in Dollars; and (e) the purpose and form of the proposed
Letter of Credit is satisfactory to Agent and Issuing Bank in their discretion.


 


LC
Documents:
all documents, instruments and agreements (including LC Requests and LC
Applications) delivered by Borrowers or any other Person to Issuing Bank or
Agent in connection with issuance, amendment or renewal of, or payment under,
any Letter of Credit.


 


LC
Obligations:
the sum (without duplication) of (a) all amounts owing by Borrowers for
any drawings under Letters of Credit; (b) the stated amount of all
outstanding Letters of Credit; and (c) all fees and other amounts owing
with respect to Letters of Credit.


 


LC
Request: a request for
issuance of a Letter of Credit, to be provided by Borrower Agent to Issuing
Bank, in form satisfactory to Agent and Issuing Bank.


 


LC
Reserve: the aggregate of
all LC Obligations, other than (a) those that have been Cash
Collateralized; and (b) if no Default or Event of Default exists, those
constituting charges owing to the Issuing Bank.


 


Lender Indemnitees: Lenders and their
officers, directors, employees, Affiliates, agents and attorneys.


 


Lenders: as defined in the preamble
to this Agreement, including Agent in its capacity as a provider of Swingline
Loans and any other Person who hereafter becomes a “Lender” pursuant to an
Assignment and Acceptance.


 


Lending
Office: the office
designated as such by the applicable Lender at the time it becomes party to
this Agreement or thereafter by notice to Agent and Borrower Agent.


 


Letter
of Credit:
any standby or documentary letter of credit issued by Issuing Bank for
the account of a Borrower, or any indemnity, guarantee, exposure transmittal
memorandum or similar form of credit support issued by Agent or Issuing Bank
for the benefit of a Borrower.


 


Letter of Credit Subline: $15,000,000.


 


LIBOR: for any Interest Period
with respect to a LIBOR Loan, the per annum rate of interest (rounded up, if
necessary, to the nearest 1/8th of 1%), determined by Agent at approximately
11:00 a.m. (London time) two Business Days prior to commencement of such
Interest Period, for a term comparable to such Interest Period, equal to (a) the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source designated by Agent); or (b) if
BBA LIBOR is not available for any reason, the interest rate at which Dollar
deposits in the approximate amount of the LIBOR Loan would be offered by Bank
of America’s London branch to major banks in the London interbank Eurodollar
market.  If the Board of Governors
imposes a Reserve Percentage with respect to LIBOR deposits, then LIBOR shall
be the foregoing rate, divided by 1 minus the Reserve Percentage.


 


LIBOR Loan: each set of LIBOR Revolver
Loans having a common length and commencement of Interest Period.


 


LIBOR Revolver Loan: a Revolver Loan that bears
interest based on LIBOR.


 


License: any license or agreement under which an
Obligor is authorized to use Intellectual Property in connection with any
manufacture, marketing, distribution or disposition of Collateral, any use of
Property or any other conduct of its business.


 


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Licensor: any Person from whom an Obligor obtains the
right to use any Intellectual Property.


 


Lien: any Person’s interest in
Property securing an obligation owed to, or a claim by, such Person, whether
such interest is based on common law, statute or contract, including liens,
security interests, pledges, hypothecations, statutory trusts, reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property.


 


Lien Waiver: an agreement, in form and
substance reasonably satisfactory to Agent, by which (a) for any material
Collateral located on leased premises, the lessor waives or subordinates any
Lien it may have on the Collateral, and agrees to permit Agent to enter upon
the premises and remove the Collateral or to use the premises to store or
dispose of the Collateral; (b) for any Collateral held by a warehouseman,
processor, shipper, customs broker or freight forwarder, such Person waives or
subordinates any Lien it may have on the Collateral, agrees to hold any
Documents in its possession relating to the Collateral as agent for Agent, and
agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person acknowledges
Agent’s Lien, waives or subordinates any Lien it may have on the Collateral,
and agrees to deliver the Collateral to Agent upon request; and (d) for
any Collateral subject to a Licensor’s Intellectual Property rights, the Licensor grants to
Agent the right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect
to the Collateral, including the right to dispose of it with the benefit of the
Intellectual Property, whether or not a default exists under any applicable
License.


 


Line Usage: for any period, the average daily
balance of Revolver Loans and stated amount of Letters of Credit for
such period, as determined by Agent.


 


Liquidity Amount: as of the last day of any
Fiscal Month, the sum of Excess Availability plus the amount of
Qualified Cash.


 


Loan: a Revolver Loan.


 


Loan Account: the loan account
established by each Lender on its books pursuant to Section 5.8.


 


Loan Documents: this Agreement, Other
Agreements and Security Documents.


 


Loan Year: each 12 Fiscal Month
period commencing on the Closing Date and on each anniversary of the Closing
Date.


 


Margin Stock: as defined in Regulation U
of the Board of Governors.


 


Material Adverse Effect: the effect of
any event or circumstance that, taken alone or in conjunction with other events
or circumstances, (a) has or could be reasonably expected to have a
material adverse effect on the business, operations, Properties, prospects or
condition (financial or otherwise) of the Obligors (taken as a whole), on the
value of any material Collateral, on the enforceability of any Loan Documents,
or on the validity or priority of Agent’s Liens on any Collateral; (b) impairs
the ability of the Obligors (taken as a whole) to perform any obligations under
the Loan Documents, including repayment of any Obligations; or (c) otherwise
impairs the ability of Agent or any Lender to enforce or collect any
Obligations or to realize upon any Collateral.


 


Material Contract: any agreement or
arrangement to which a Borrower or Subsidiary is party (other than the Loan
Documents) (a) that is filed or required to be filed as a material
contract under any securities law applicable to such Person, including the
Securities Act of 1933 and the Securities and Exchange Act of 1934; (b) for
which breach, termination, nonperformance or failure to renew could reasonably
be expected to have a Material Adverse Effect; or (c) that relates to
Subordinated Debt, or 


 


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Debt
in an aggregate amount of $5,000,000 or more. 
Each of the Existing ARS Facilities is a Material Contract.


 


Material IP: any Intellectual Property
or License, the unavailability of which (regardless of cause, including by
reason of breach by a third party, or scheduled expiration or termination)
could reasonably be expected to (i) materially impair the value or
merchantability in the Ordinary Course of Business of products representing
Inventory that (x) accounted for not less than 5% of the total net sales
of Borrowers and Subsidiaries on a consolidated basis for the most
recently-completed Fiscal Year in respect of which Borrowers have provided
Agent with financial statements, or (y) is projected to account for more
than 10% of the total net sales of Borrowers and Subsidiaries on a consolidated
basis for the current Fiscal Year (such projections to be utilized for any
prior Fiscal Year in respect of which Borrowers shall not have provided Agent
with financial statements), (ii) have a Material Adverse Effect.


 


Modified
EBITDA: determined on a
consolidated basis for Borrowers and Subsidiaries, net income (loss) (as
defined by GAAP),


 


plus (without duplication and only to the
extent such item is included in net income (loss)):


 


(i)            Interest
expense,


 


(ii)           Income
tax expense,


 


(iii)          Amortization
expense, excluding software amortization expense,


 


(iv)          Depreciation
expense,


 


(v)           Realignment
or restructuring expenses solely to the extent approved by Agent in their sole
discretion,


 


(vi)          Goodwill
impairment expense solely to the extent approved by Agent in their sole
discretion,


 


(vii)         Stock
based compensation expense,


 


(viii)        Decline
in market value arising from securities


 


(ix)          Loss
on sale of securities,


 


(x)           Loss
from minority interests,


 


(xi)          Loss
from discontinued operations,


 


(xii)         Loss
from sale of discontinued operations,


 


(xiii)        Loss
on foreign exchange hedging, and


 


(xiv)        Other amounts
as may be allowed by Agent in their sole discretion from time to time,


 


minus (without duplication and only to the
extent such item is included in net income (loss)):


 


(i)            Interest
income,


 


(ii)           Income
tax benefit,


 


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(iii)          Increase
in market value arising from securities,


 


(iv)          Gain
on sale of securities,


 


(v)           Income
from minority interests,


 


(vi)          Gain
from sale of discontinued operations,


 


(vii)         Gain
on foreign exchange hedging, and


 


(viii)        Reduction
or adjustment in realignment or restructuring expenses.


 


For the purposes of
calculating Modified EBITDA for any period of twelve months (each, a “Reference
Period”), if at any time during such Reference Period (and after the
Closing Date) any Borrower shall have made a Permitted Acquisition, Modified
EBITDA for such Reference Period shall be calculated after giving pro forma
effect thereto in accordance with Regulation S-X promulgated under the Securities and
Exchange Act of 1934 or in such other manner acceptable to Agent as if the Permitted
Acquisition occurred on the first day of such Reference Period.


 


Moody’s: Moody’s Investors Service, Inc.,
and its successors.


 


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


 


Net Proceeds: with respect to an Asset
Disposition, proceeds (including, when received, any deferred or escrowed
payments) received by a Borrower or Subsidiary in cash from such disposition,
net of (a) reasonable and customary costs and expenses actually incurred
in connection therewith, including legal fees and sales commissions; (b) amounts
applied to repayment of Debt secured by a Permitted Lien senior to Agent’s
Liens on Collateral sold; (c) transfer or similar taxes; and (d) reserves
for indemnities, until such reserves are no longer needed.


 


Notes: each Revolver Note or
other promissory note executed by a Borrower to evidence any Obligations.


 


Notice of Borrowing: a Notice of Borrowing to
be provided by Borrower Agent to request a Borrowing of Revolver Loans, in form
reasonably satisfactory to Agent.


 


Notice of Conversion/Continuation: a Notice of
Conversion/Continuation to be provided by Borrower Agent to request a conversion
or continuation of any Loans as LIBOR Loans, in form reasonably satisfactory to
Agent.


 


Obligations: all (a) principal of
and premium, if any, on the Loans, (b) LC Obligations and other
obligations of Obligors with respect to Letters of Credit, (c) interest,
expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations
of Obligors under any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank
Product Debt, and (g) other Debts, obligations and liabilities of any kind
owing by Obligors pursuant to the Loan Documents, whether now existing or
hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.


 


Obligor: each Borrower, Guarantor,
or other Person that is liable for payment of any Obligations or that has
granted a Lien in favor of Agent on its assets to secure any Obligations.


 


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Ordinary Course of Business: the ordinary
course of business of any Borrower or Subsidiary, consistent with past
practices and undertaken in good faith.


 


Organic Documents: with respect to any
Person, its charter, certificate or articles of incorporation, bylaws, articles
of organization, limited liability agreement, operating agreement, members
agreement, shareholders agreement, partnership agreement, certificate of
partnership, certificate of formation, voting trust agreement, or similar
agreement or instrument governing the formation or operation of such Person.


 


OSHA: the Occupational Safety
and Hazard Act of 1970.


 


Other Agreement: each Note; LC Document;
Lien Waiver; Real Estate Related Document; Borrowing Base Certificate,
Compliance Certificate, financial statement or report delivered hereunder; or
other document, instrument or agreement (other than this Agreement or a
Security Document) now or hereafter delivered by an Obligor or other Person to
Agent or a Lender in connection with any transactions relating hereto.


 


Other Taxes: all present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made under any Loan Document
or from the execution, delivery or enforcement of, or otherwise with respect
to, any Loan Document.


 


Overadvance: as defined in Section 2.1.5.


 


Overadvance Loan: a Base Rate Revolver Loan
made when an Overadvance exists or is caused by the funding thereof.


 


Participant: as defined in Section 13.2.


 


Patent
Assignment:
each patent collateral assignment agreement pursuant to which an Obligor
assigns to Agent, for the benefit of Secured Parties, such Obligor’s interests
in its patents, as security for the Obligations.


 


Patriot Act: the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).


 


Payment Item: each check, draft or other
item of payment payable to a Borrower, including those constituting proceeds of
any Collateral.


 


PBGC: the Pension Benefit
Guaranty Corporation.


 


Pension
Plan: 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 any Obligor or ERISA Affiliate or to which
the Obligor or 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 preceding five plan years.


 


Permitted Acquisition: any Acquisition by any
Obligor in a transaction that satisfies each of the following requirements:


 


(a)           such
Acquisition is not a hostile or contested acquisition;


 


(b)           the
business acquired in connection with such Acquisition is (i) located in
the United States or Canada, (ii) organized under United States and
applicable state laws, and (iii) not engaged, directly or indirectly, in
any line of business other than the businesses in which Obligors are engaged on
the Closing Date and any business activities that are substantially similar,
related, or incidental thereto;


 


-16-

















 


(c)           both
before and after giving effect to such Acquisition and the Loans (if any)
requested to be made in connection therewith, each of the representations and
warranties in the Loan Documents is true and correct (except (i) any such
representation or warranty which relates to a specified prior date and (ii) to
the extent Agent has been notified in writing by the Loan Parties that any
representation or warranty is not correct and the Agent and the Required
Lenders have explicitly waived in writing compliance with such representation
or warranty) and no Default exists, will exist, or would result therefrom;


 


(d)           as
soon as available, but not less than thirty days prior to such Acquisition, the
Borrowers have provided Agent (i) notice of such Acquisition and (ii) a
copy of all business and financial information reasonably requested by Agent
including pro forma financial statements, statements of cash flow, and Excess
Availability projections;


 


(e)           if
any Accounts acquired in connection with such Acquisition are proposed to be
included in the determination of the Borrowing Base, Agent shall have conducted
an audit and field examination of such Accounts to its satisfaction;


 


(f)            the
purchase price of such Acquisition does not exceed $2,500,000 and the aggregate
purchase price for all Acquisitions made during any fiscal year of Borrowers
shall not exceed $10,000,000;


 


(g)           if
such Acquisition is an acquisition of the Equity Interests of a Person, the
Acquisition is structured so that the acquired Person shall become a Subsidiary
of Borrowers and a Guarantor;


 


(h)           if
such Acquisition is an acquisition of assets, the Acquisition is structured so
that one or more Borrowers shall acquire such assets;


 


(i)            if
such Acquisition is an acquisition of Equity Interests, such Acquisition will
not result in any violation of Regulation U;


 


(j)            no
Obligor shall, as a result of or in connection with any such Acquisition,
assume or incur any direct or contingent liabilities (whether relating to
environmental, tax, litigation, or other matters) that could have a Material
Adverse Effect;


 


(k)           in
connection with an Acquisition of the Equity Interests of any Person, all Liens
on property of such Person shall be terminated unless Agent in its sole
discretion consents otherwise, and in connection with an Acquisition of the
assets of any Person, all Liens on such assets shall be terminated;


 


(l)            the
Fixed Charge Coverage Ratio shall be less than 1.00 to 1.00 for the most
recently completed Fiscal Quarter; and


 


(m)          Borrowers
shall certify (and provide Agent with a pro forma calculation in form and
substance reasonably satisfactory to Agent) to Agent and Lenders that, after
giving effect to the completion of such Acquisition, the sum of Excess
Availability plus Qualified Cash will not be less than $75,000,000 on a pro
forma basis which includes all consideration given in connection with such
Acquisition, other than Equity Interests of Borrowers delivered to the seller(s) in
such Acquisition, as having been paid in cash at the time of making such
Acquisition.


 


Permitted Asset Disposition: as long as no
Default or Event of Default exists and Net Proceeds are remitted to Agent in
accordance with Section 5.2, an Asset
Disposition that is (a) a sale of Inventory in the Ordinary Course of
Business; (b) a disposition of Equipment that, in the aggregate during any
12 Fiscal Month period, has a fair market or book value (whichever is more) of
$5,000,000 or less; (c) a disposition of Inventory that is obsolete,
unmerchantable or otherwise unsalable in the Ordinary Course of Business; (d) termination
of a lease of real or personal Property that is not necessary for the Ordinary 


 


-17-

















 


Course
of Business, could not reasonably be expected to have a Material Adverse Effect
and does not result from an Obligor’s default; (e) a Permitted IP
Disposition, (f) a Permitted Studio Sale; or (g) approved in writing
by Agent and Required Lenders.


 


Permitted Contingent Obligations: Contingent
Obligations (a) arising from endorsements of Payment Items for collection
or deposit in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted
hereunder; (c) existing on the Closing Date, and any extension or
renewal thereof that does not increase the amount of such Contingent Obligation
when extended or renewed; (d) incurred in the Ordinary Course of Business with
respect to surety, appeal or performance bonds, or other similar obligations; (e) arising
from customary indemnification obligations in favor of purchasers in
connection with dispositions of Equipment permitted hereunder; (f) arising
under the Loan Documents; (g) incurred in the Ordinary Course of Business
with respect to a guarantee of the trade payables of a Subsidiary which is an
Obligor; or (h) in an aggregate amount of $1,000,000 or less at any time.


 


Permitted IP Disposition: a sale,
assignment, transfer, abandonment, termination, relinquishment, non-renewal or
other disposition of any Intellectual Property owned or used in the conduct of
Borrowers’ business, (a) that is “shrink wrap” or similar
widely distributed commercially licensed software or other Intellectual
Property available at a cost of less than $50,000; (b) that is
transferred as part of a Permitted Studio Sale; (c) that is not Material
IP; or (d) approved in writing by Agent and Required Lenders.


 


Permitted Studio Sale: as long as such sales are
consummated on or prior to the date that is 120 days after the Closing Date
(failing which Big Huge Games, Inc. and THQ Wireless, Inc. shall
become Guarantors within ten Business Days of such date): (a) the
disposition of certain Equipment and Intellectual Property related to Borrowers’
Heavy Iron Studios, to Heavy Iron Studios, Inc., a California corporation,
(b) the disposition of substantially all of the assets of Big Huge Games, Inc.;
and (c) the disposition of substantially all of the assets of THQ Wireless, Inc.


 


Permitted Lien: as defined in Section 10.2.2.


 


Permitted Purchase Money Debt: Purchase
Money Debt of Borrowers and Guarantors that is unsecured or secured only by a
Purchase Money Lien, as long as the aggregate amount does not exceed $5,000,000
at any time and its incurrence does not violate Section 10.2.3.


 


Person: any individual,
corporation, limited liability company, partnership, joint venture, joint stock
company, land trust, business trust, unincorporated organization, Governmental
Authority or other entity.


 


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


 


Prime Rate: the rate of interest
announced by Bank of America from time to time as its prime rate.  Such rate is set by Bank of America on
the basis of various factors, including its 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 rate.  Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified in
the public announcement of such change.


 


Pro Rata: with respect to any
Lender, a percentage (carried out to the ninth decimal place) determined (a) while
Revolver Commitments are outstanding, by dividing the amount of such Lender’s
Revolver Commitment by the aggregate amount of all Revolver Commitments; and (b) at
any other time, by dividing the amount of such Lender’s Loans and LC
Obligations by the aggregate amount of all outstanding Loans and LC
Obligations.


 


-18-

















 


Properly Contested: with respect to any
obligation of an Obligor, (a) the obligation is subject to a bona fide
dispute regarding amount or the Obligor’s liability to pay; (b) the
obligation is being properly contested in good faith by appropriate proceedings
promptly instituted and diligently pursued; (c) appropriate reserves have
been established in accordance with GAAP; (d) non-payment could not
reasonably be expected to have a Material Adverse Effect, nor result in
forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed on
assets of the Obligor, unless bonded and stayed to the satisfaction of Agent;
and (f) if the obligation results from entry of a judgment or other order,
such judgment or order is stayed pending appeal or other judicial review.


 


Property: any interest in any kind
of property or asset, whether real, personal or mixed, or tangible or
intangible.


 


Protective Advances: as defined in Section 2.1.6.


 


Purchase Money Debt: (a) Debt (other than
the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt
(other than the Obligations) incurred within 10 days before or after
acquisition of any fixed assets, for the purpose of financing any of the
purchase price thereof; and (c) any renewals, extensions or refinancings
(but not increases) thereof.


 


Purchase Money Lien: a Lien that secures
Purchase Money Debt, encumbering only the fixed assets acquired with such Debt
and constituting a Capital Lease or a purchase money security interest under
the UCC.


 


Qualified Cash: as of any date of
determination, the amount of unrestricted cash and Cash Equivalents of
Borrowers’ and Guarantors’ that is in Deposit Accounts or in Securities
Accounts, or any combination thereof, and which such Deposit Account or
Securities Account is the subject of a Control Agreement and is maintained by a
branch office of the bank or securities intermediary located within the United
States.


 


RCRA: the Resource Conservation
and Recovery Act (42 U.S.C. §§ 6991-6991i).


 


Real Estate: all right, title and
interest (whether as owner, lessor or lessee) in any real Property or any
buildings, structures, parking areas or other improvements thereon.


 


Refinancing Conditions: the following
conditions for Refinancing Debt:  (a) it
is in an aggregate principal amount that does not exceed the principal amount
of the Debt being extended, renewed or refinanced; (b) it has a final
maturity no sooner than, a weighted average life no less than, and an interest
rate no greater than, the Debt being extended, renewed or refinanced; (c) it
is subordinated to the Obligations at least to the same extent as the Debt
being extended, renewed or refinanced; (d) the representations, covenants
and defaults applicable to it are not materially less favorable to Borrowers
than those applicable to the Debt being extended, renewed or refinanced; (e) no
additional Lien is granted to secure it; (f) no additional Person is
obligated on such Debt; and (g) upon giving effect to it, no Default or
Event of Default exists.


 


Refinancing Debt: Borrowed Money that is the
result of an extension, renewal or refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).


 


Reimbursement
Date: as defined in Section 2.3.2.


 


Rent
and Charges Reserve:
the aggregate of (a) all past due rent and other amounts owing by an
Obligor to the landlord or other creditor in respect of the occupation and use
of Company’s chief executive office; and (b) a reserve equal to three
months rent that could be payable to any such Person, unless it has executed a
Lien Waiver.


 


-19-

















 


Report: as defined in Section 12.2.3.


 


Reportable Event: 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.


 


Required Lenders: Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 50% of the aggregate Revolver Commitments; and (b) if
the Revolver Commitments have terminated, Loans in excess of 50% of all
outstanding Loans.


 


Reserve Percentage: the reserve percentage
(expressed as a decimal, rounded up to the nearest 1/8th of 1%) applicable to
member banks under regulations issued from time to time by the Board of
Governors 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”).


 


Restricted Investment: any Investment by a
Borrower or other Obligor, other than (a) Investments in Subsidiaries to
the extent existing on the Closing Date, (b) Cash Equivalents that are
subject to Agent’s Lien and control, pursuant to documentation in form and
substance satisfactory to Agent; (c) Capital Expenditures permitted under Section 10.2.3, loans and advances permitted under Section 10.2.7, or Permitted Acquisitions.


 


Restrictive Agreement: an agreement (other than a
Loan Document) that conditions or restricts the right of any Borrower or other
Obligor to incur or repay Borrowed Money, to grant Liens on any assets, to
declare or make Distributions, to modify, extend or renew any agreement evidencing
Borrowed Money, or to repay any intercompany Debt.


 


Revolver Commitment: for any Lender, its
obligation to make Revolver Loans and to participate in LC Obligations up to
the maximum principal amount shown on Schedule
1.1, or as hereafter determined pursuant to each Assignment and
Acceptance to which it is a party.  “Revolver
Commitments” means the aggregate amount of such commitments of all Lenders.


 


Revolver Loan: a loan made pursuant to Section 2.1, and any Swingline Loan,
Overadvance Loan or Protective Advance.


 


Revolver Note: a promissory note to be
executed by Borrowers in favor of a Lender in the form of Exhibit A, which shall be in the
amount of such Lender’s Revolver Commitment and shall evidence the Revolver
Loans made by such Lender.


 


Revolver Termination Date: June 30, 2012.


 


Royalties: all royalties, fees,
expense reimbursement and other amounts payable by a Borrower under a License.


 


S&P: Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.


 


Secured Parties: Agent, Issuing Bank,
Lenders and providers of Bank Products.


 


Security Documents: the Guaranties, Patent
Assignments, Trademark Security Agreements, Control Agreements,  and all other
documents, instruments and agreements now or hereafter securing (or given with
the intent to secure) any Obligations.


 


-20-

















 


Securities
Account Control Agreements: the Securities Account control agreements to be
executed by each institution maintaining a Securities Account for a Borrower,
in favor of Agent, for the benefit of Secured Parties, as security for the
Obligations.


 


Senior Officer: the chairman of the board,
president, chief executive officer or chief financial officer of a Borrower or,
if the context requires, an Obligor.


 


Settlement Report: a report delivered by
Agent to Lenders summarizing the Revolver Loans and participations in LC
Obligations outstanding as of a given settlement date, allocated to Lenders on
a Pro Rata basis in accordance with their Revolver Commitments.


 


Solvent: as to any Person, such
Person (a) owns Property whose fair salable value is greater than the
amount required to pay all of its debts (including contingent, subordinated,
unmatured and unliquidated liabilities); (b) owns Property whose present
fair salable value (as defined below) is greater than the probable total
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of such Person as they become absolute and matured; (c) is
able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32)
of the Bankruptcy Code; and (f) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either present or future creditors of such
Person or any of its Affiliates.  “Fair
salable value” means the amount that could be obtained for assets within a
reasonable time, either through collection or through sale under ordinary
selling conditions by a capable and diligent seller to an interested buyer who
is willing (but under no compulsion) to purchase.


 


Subordinated Debt: Debt incurred by a
Borrower that is expressly subordinate and junior in right of payment to Full
Payment of all Obligations, and is on terms (including maturity, interest,
fees, repayment, covenants and subordination) satisfactory to Agent in its sole
discretion.


 


Subsidiary: any entity at least 51% of
whose voting securities or Equity Interests is owned by a Borrower or any
combination of Borrowers (including indirect ownership by a Borrower through
other entities in which the Borrower directly or indirectly owns 51% of the
voting securities or Equity Interests).


 


Subject Month: any Fiscal Month in which
the Liquidity Amount is less than the Target Liquidity Amount as of the last
day of such Fiscal Month


 


Swingline Loan: any Borrowing of Base Rate
Revolver Loans funded with Agent’s funds, until such Borrowing is settled among
Lenders or repaid by Borrowers.


 


Target Liquidity Amount: as of the
last day of each Fiscal Month, the Liquidity Amount immediately below the
corresponding month in the following table:


 


-21-
















 


	
  April

  	
  May

  	
  June

  	
  July

  	
  August

  	
  September

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $60,000,000

  	
  $60,000,000

  	
  $60,000,000

  	
  $40,000,000

  	
  $40,000,000

  	
  $40,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  October

  	
  November

  	
  December

  	
  January

  	
  February

  	
  March

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $30,000,000

  	
  $30,000,000

  	
  $60,000,000

  	
  $100,000,000

  	
  $100,000,000

  	
  $100,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Taxes: all present or
future taxes, levies, imposts, duties, deductions, withholdings (including
backup withholding), assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.


 


THQ Stock Plans: (i) the THQ Inc. Amended and Restated
1997 Stock Option Plan, (ii) the THQ Inc. Third Amended and Restated
Nonexecutive Employee Stock Option Plan, (iii) the THQ Inc. 2006 Long-Term
Incentive Plan, as amended and restated and (iv) the THQ Inc. Amended and
Restated Employee Stock Purchase Plan.


 


Trademark
Security Agreement:
each trademark security agreement pursuant to which an Obligor grants to Agent,
for the benefit of Secured Parties, a Lien on such Obligor’s interests in
trademarks, as security for the Obligations.


 


Transferee: any actual or potential
Eligible Assignee, Participant or other Person acquiring an interest in any
Obligations.


 


Trigger Period: a period commencing on the
day that an Event of Default occurs, and continuing until, during the preceding
three consecutive Fiscal Months, no Event of Default has existed; provided that each Trigger Period shall be a period of not
less than six Fiscal Months, and the period of three consecutive Fiscal Months
referred to above may not end prior to the expiration of such six Fiscal Month
period.


 


Type: any type of a Loan (i.e.,
Base Rate Loan or LIBOR Loan) that has the same interest option and, in the
case of LIBOR Loans, the same Interest Period.


 


UCC: the Uniform Commercial
Code as in effect in the State of California or, when the laws of any other
jurisdiction govern the perfection or enforcement of any Lien, the Uniform
Commercial Code of such jurisdiction.


 


Unfunded Pension Liability: 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.


 


-22-

















 


Unused Line Margin: the percentage set forth below, as determined by the Line Usage for
the prior month:


 




	
  Line Usage

  	
   

  	
  Unused Line

  Margin

  
	
   

  	
   

  	
   

  
	
  Greater than $20,000,000

  	
   

  	
  0.25%

  
	
   

  	
   

  	
   

  
	
  Less than or equal to $20,000,000, but greater than $10,000,000

  	
   

  	
  0.50%

  
	
   

  	
   

  	
   

  
	
  Less than or equal to $10,000,000

  	
   

  	
  0.75%

  






 


provided  that;
if Borrowers have made arrangements for Agent or an Affiliate of Agent to
provide Bank Products pursuant to which Agent or an Affiliate of Agent shall
manage cash or Cash Equivalents of the Borrowers or Subsidiaries, and during
any month the average daily balance of cash and Cash Equivalents so managed
exceeds $20,000,000 (or its equivalent in Euros or Sterling), then the
following table shall apply for such month:


 




	
  Line Usage

  	
   

  	
  Unused Line 

  Margin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Greater than $10,000,000

  	
   

  	
  0.25%

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Less
  than or equal to $10,000,000

  	
   

  	
  0.375%

  






 


The Unused Line Margin shall be subject to increase
or decrease based upon the Line Usage for the prior month, as determined by
Agent.


 


Upstream Payment: a Distribution by a
Subsidiary of a Borrower to such Borrower.


 


1.2.                            Accounting Terms.  Under the Loan Documents (except as otherwise
specified herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared,
in accordance with GAAP applied on a basis consistent with the most recent
audited financial statements of Borrowers delivered to Agent before the Closing
Date and using the same inventory valuation method as used in such financial
statements, except for any change required or permitted by GAAP if Borrowers’
certified public accountants concur in such change, the change is disclosed to
Agent, and Section 10.3 is
amended in a manner satisfactory to Required Lenders to take into account the
effects of the change.


 


1.3.                            Uniform Commercial Code.  As used herein, the following terms are
defined in accordance with the UCC in effect in the State of California from
time to time:  “Chattel Paper,” “Commercial
Tort Claim,” “Deposit Account,” “Document,” “Equipment,” “General Intangibles,”
“Goods,” “Instrument,” “Investment Property,” “Letter-of-Credit Right,” “Securities
Account” and “Supporting Obligation.”


 


1.4.                            Certain Matters of Construction.  The terms “herein,” “hereof,” “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. 
Any pronoun used shall be deemed to cover all genders.  In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,”
and “to” and “until” each mean “to but excluding.”  The terms “including” and “include” shall
mean “including, without limitation” and, for purposes of each Loan Document,
the parties agree that the rule of ejusdem
generis shall not be applicable to limit any provision.  Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan
Document.  All references to (a) laws
or statutes 


 


-23-

















 


include all related rules,
regulations, interpretations, amendments and successor provisions; (b) any
document, instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section mean, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context
otherwise requires, exhibits and schedules attached hereto, which are hereby
incorporated by reference; (e) any Person include successors and assigns; (f) time
of day mean time of day at Agent’s notice address under Section 14.3.1;
or (g) unless otherwise specified herein, discretion of Agent, Issuing
Bank or any Lender mean the sole and absolute discretion of such Person.  Unless otherwise specified herein, all times
referred to herein shall be Pacific time. 
All calculations of Ascribed Value, fundings of Loans, issuances of
Letters of Credit and payments of Obligations shall be in Dollars and, unless
the context otherwise requires, all determinations (including calculations of
Borrowing Base and financial covenants) made from time to time under the Loan
Documents shall be made in light of the circumstances existing at such
time.  Borrowing Base calculations shall
be consistent with historical methods of valuation and calculation, and
otherwise satisfactory to Agent (and not necessarily calculated in accordance
with GAAP).  Borrowers shall have the
burden of establishing any alleged negligence, misconduct or lack of good faith
by Agent, Issuing Bank or any Lender under any Loan Documents.  No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision.  Whenever
the phrase “to the best of Borrowers’ knowledge” or words of similar import are
used in any Loan Documents, it means actual knowledge of a Senior Officer,
or knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates.


 


SECTION 2.         CREDIT FACILITIES


 


2.1.                            Revolver
Commitment.


 


2.1.1.                     Revolver Loans.  Each Lender agrees, severally on a Pro Rata
basis up to its Revolver Commitment, on the terms set forth herein, to make
Revolver Loans to Borrowers from time to time through the Commitment
Termination Date.  The Revolver Loans may
be repaid and reborrowed as provided herein. 
In no event shall Lenders have any obligation to honor a request for a
Revolver Loan if the unpaid balance of Revolver Loans outstanding at such time
(including the requested Loan) would exceed the Borrowing Base.


 


2.1.2.                     Revolver Notes.  The Revolver Loans made by each Lender and
interest accruing thereon shall be evidenced by the records of Agent and such
Lender.  At the request of any Lender,
Borrowers shall deliver a Revolver Note to such Lender.


 


2.1.3.                     Use of Proceeds.  The proceeds of Revolver Loans shall be used
by Borrowers solely (a) to satisfy existing Debt; (b) to pay fees and
transaction expenses associated with the closing of this credit facility; (c) to
pay Obligations in accordance with this Agreement; and (d) for working
capital and other lawful corporate purposes of Borrowers.


 


2.1.4.                     Voluntary
Reduction or Termination of Revolver Commitments.


 


(a)                                  The Revolver Commitments shall terminate on the Revolver Termination
Date, unless sooner terminated in accordance with this Agreement.  Upon at least 30 days’ prior
written notice to Agent at any time, Borrowers may, at their option, terminate
the Revolver Commitments and this credit facility.  Any notice of termination given by Borrowers
shall be irrevocable.  On the termination
date, Borrowers shall make Full Payment of all Obligations.


 


(b)                                 Borrowers may permanently reduce the Revolver Commitments, on
a Pro Rata basis for each Lender, upon at least 30 days’ prior written notice
to Agent delivered
at any time after the 


 


-24-

















 


First Loan Year, which notice
shall specify the amount of the reduction and shall be irrevocable once given.  Each reduction shall be in a
minimum amount of $5,000,000,
or an increment of $5,000,000 in
excess thereof, provided that in
no event less shall the aggregate Commitments be reduced under this clause (b) to
an amount less than $25,000,000.


 


2.1.5.                     Overadvances.  If the aggregate Revolver Loans exceed the
Borrowing Base (“Overadvance”) or the aggregate Revolver Commitments at
any time, the excess amount shall be payable by Borrowers on demand by Agent, but all such Revolver
Loans shall nevertheless constitute Obligations secured by the Collateral and
entitled to all benefits of the Loan Documents. 
Unless its authority has been revoked in writing by Required Lenders,
Agent may require Lenders to honor requests for Overadvance Loans and to forbear
from requiring Borrowers to cure an Overadvance, (a) when no other Event
of Default is known to Agent, as long as (i) the Overadvance does not
continue for more than 30 consecutive days (and no Overadvance may exist for at
least five consecutive days thereafter before further Overadvance Loans are
required), and (ii) the Overadvance is not known by Agent to exceed $1,000,000; and (b) regardless
of whether an Event of Default exists, if Agent discovers an Overadvance not
previously known by it to exist, as long as from the date of such discovery the
Overadvance (i) is not increased by more than $50,000, and (ii) does
not continue for more than 30 consecutive days. 
In no event shall Overadvance Loans be required that would cause the
outstanding Revolver Loans and LC Obligations to exceed the aggregate Revolver
Commitments.  Any funding of an
Overadvance Loan or sufferance of an Overadvance shall not constitute a waiver
by Agent or Lenders of the Event of Default caused thereby.  In no event shall any Borrower or other
Obligor be deemed a beneficiary of this Section nor authorized to enforce
any of its terms.


 


2.1.6.                     Protective
Advances.  Agent shall
be authorized, in its discretion, at any time that any conditions in Section 6 are not satisfied, and
without regard to the aggregate Commitments, to make Base Rate Revolver Loans (“Protective
Advances”) (a) up to an aggregate amount of $1,000,000 outstanding at
any time, if Agent deems such Loans necessary or desirable to preserve or
protect Collateral, or to enhance the collectibility or repayment of
Obligations; or (b) to pay any other amounts chargeable to Obligors under
any Loan Documents, including costs, fees and expenses.  Each Lender shall participate in each
Protective Advance on a Pro Rata basis. 
Required Lenders may at any time revoke Agent’s authority to make
further Protective Advances by written notice to Agent.  Absent such revocation, Agent’s determination
that funding of a Protective Advance is appropriate shall be conclusive.


 


2.1.7.                     Increases in
Revolving Commitments. 
Borrowers may from time to time request Agent and Lenders to increase
the aggregate Revolving Commitments by an amount not exceeding $15,000,000 for
all such increases.  Such increases shall
be subject to the consent of Agent and each Lender, which consent may be withheld
or conditioned in their sole discretion.


 


2.2.                            [RESERVED].


 


2.3.                            Letter
of Credit Facility.


 


2.3.1.                     Issuance of
Letters of Credit.  Issuing
Bank agrees to issue Letters of Credit from time to time until 30 days prior to
the Revolver Termination Date (or until the Commitment Termination Date, if
earlier), on the terms set forth herein, including the following:


 


(a)                                  Each Borrower acknowledges that Issuing Bank’s willingness to issue any
Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC Application
with respect to the requested Letter of Credit, as well as such other
instruments and agreements as Issuing Bank may customarily require for issuance
of a letter of credit of similar type and amount.  Issuing Bank shall have no obligation to issue
any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of
issuance; (ii) each LC Condition is satisfied; and (iii) if a
Defaulting Lender exists, such Lender or Borrowers have entered into
arrangements satisfactory to 


 


-25-

















 


Agent and Issuing Bank to eliminate any
funding risk associated with the Defaulting Lender.  If Issuing Bank receives written notice from
a Lender at least five Business Days before issuance of a Letter of Credit that
any LC Condition has not been satisfied, Issuing Bank shall have no obligation
to issue the requested Letter of Credit (or any other) until such notice is
withdrawn in writing by that Lender or until Required Lenders have waived such
condition in accordance with this Agreement. 
Prior to receipt of any such notice, Issuing Bank shall not be deemed to
have knowledge of any failure of LC Conditions.


 


(b)                                 Letters of Credit may be requested by a Borrower only (i) to
support obligations of such Borrower incurred in the Ordinary Course of
Business, including obligations to make payment under any real property lease
agreement of such Borrower that has a term of one year or less; or (ii) for
other purposes as Agent and Lenders may approve from time to time in
writing.  The renewal or extension of any
Letter of Credit shall be treated as the issuance of a new Letter of Credit,
except that delivery of a new LC Application shall be required at the discretion
of Issuing Bank.


 


(c)                                  Borrowers assume all risks of the acts, omissions or misuses of any
Letter of Credit by the beneficiary.  In
connection with issuance of any Letter of Credit, none of Agent, Issuing Bank
or any Lender shall be responsible for the existence, character, quality,
quantity, condition, packing, value or delivery of any goods purported to be
represented by any Documents; any differences or variation in the character,
quality, quantity, condition, packing, value or delivery of any goods from that
expressed in any Documents; the form, validity, sufficiency, accuracy,
genuineness or legal effect of any Documents or of any endorsements thereon;
the time, place, manner or order in which shipment of goods is made; partial or
incomplete shipment of, or failure to ship, any goods referred to in a Letter
of Credit or Documents; any deviation from instructions, delay, default or
fraud by any shipper or other Person in connection with any goods, shipment or
delivery; any breach of contract between a shipper or vendor and a Borrower;
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or
otherwise; errors in interpretation of technical terms; the misapplication by a
beneficiary of any Letter of Credit or the proceeds thereof; or any
consequences arising from causes beyond the control of Issuing Bank, Agent or
any Lender, including any act or omission of a Governmental Authority.  The rights and remedies of Issuing Bank under
the Loan Documents shall be cumulative. 
Issuing Bank shall be fully subrogated to the rights and remedies of
each beneficiary whose claims against Borrowers are discharged with proceeds of
any Letter of Credit.


 


(d)                                 In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or LC Documents, Issuing Bank shall be
entitled to act, and shall be fully protected in acting, upon any
certification, documentation or communication in whatever form believed by
Issuing Bank, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person.  Issuing
Bank may consult with and employ legal counsel, accountants and other experts to
advise it concerning its obligations, rights and remedies, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by such experts.  Issuing Bank may employ agents and
attorneys-in-fact in connection with any matter relating to Letters of Credit
or LC Documents, and shall not be liable for the negligence or misconduct of
agents and attorneys-in-fact selected with reasonable care.


 


2.3.2.                     Reimbursement;
Participations.


 


(a)                                  If Issuing Bank honors any request for payment under a Letter of
Credit, Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement
Date”), the amount paid by Issuing Bank under such Letter of Credit, together with interest at the
interest rate for Base Rate Revolver Loans from the Reimbursement Date until
payment by Borrowers.  Issuing Bank will
promptly notify Borrower Agent of any such honor of a request for payment.  The obligation of Borrowers to reimburse
Issuing Bank for any payment made under a Letter of Credit shall be absolute,
unconditional, irrevocable, and joint and several, and shall be paid without
regard to any lack of validity or enforceability of any Letter of Credit or the
existence of any claim, setoff, defense or other right that Borrowers may have
at 


 


-26-

















 


any time against the beneficiary.  Whether or not Borrower Agent submits a
Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of
Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing
Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata
share of such Borrowing whether or not the Commitments have terminated, an
Overadvance exists or is created thereby, or the conditions in Section 6 are satisfied.


 


(b)                                 Upon issuance of a Letter of Credit, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Issuing Bank, without
recourse or warranty, an undivided Pro Rata interest and participation in all
LC Obligations relating to the Letter of Credit.  If Issuing Bank makes any payment under a
Letter of Credit and Borrowers do not reimburse such payment on the
Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall
promptly (within one Business Day) and unconditionally pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment.  Upon request by a Lender, Issuing Bank shall
furnish copies of any Letters of Credit and LC Documents in its possession at
such time.


 


(c)                                  The obligation of each Lender to make payments to Agent for the account
of Issuing Bank in connection with Issuing Bank’s payment under a Letter of
Credit shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, setoff, qualification or exception whatsoever, and shall be made
in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or the
existence of any setoff or defense that any Obligor may have with respect to
any Obligations.  Issuing Bank does not
assume any responsibility for any failure or delay in performance or any breach
by any Borrower or other Person of any obligations under any LC Documents.  Issuing Bank does not make to Lenders any
express or implied warranty, representation or guaranty with respect to the
Collateral, LC Documents or any Obligor. 
Issuing Bank shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties contained in, or for the
execution, validity, genuineness, effectiveness or enforceability of any LC
Documents; the validity, genuineness, enforceability, collectibility, value or
sufficiency of any Collateral or the perfection of any Lien therein; or the
assets, liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor.


 


(d)                                 No Issuing Bank Indemnitee shall be liable to any Lender or other
Person for any action taken or omitted to be taken in connection with any LC
Documents except as a result of its actual gross negligence or willful
misconduct.  Issuing Bank shall not have
any liability to any Lender if Issuing Bank refrains from any action under any
Letter of Credit or LC Documents until it receives written instructions from
Required Lenders.


 


2.3.3.                     Cash Collateral.  If any LC Obligations, whether or not then
due or payable, shall for any reason be outstanding at any time (a) that
an Event of Default exists, (b) that Availability is less than zero, (c) after
the Commitment Termination Date, or (d) within 20 Business Days prior to
the Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s
request, Cash Collateralize the stated amount of all outstanding Letters of
Credit and pay to Issuing Bank the amount of all other LC Obligations.  Borrowers
shall, on demand by Issuing Bank or Agent from
time to time, Cash Collateralize the LC Obligations of any Defaulting
Lender.  If Borrowers fail to provide
any Cash Collateral as required hereunder, Lenders may (and shall upon
direction of Agent) advance, as Revolver Loans, the amount of the Cash
Collateral required (whether or not the
Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).


 


-27-

















 


SECTION 3.         INTEREST, FEES AND CHARGES


 


3.1.                            Interest.


 


3.1.1.                     Rates and
Payment of Interest.


 


(a)                                  The Obligations shall bear interest (i) if a Base Rate Loan, at
the Base Rate in effect from time to time, plus the Applicable Margin; (ii) if
a LIBOR Loan, at LIBOR for the applicable Interest Period, plus the
Applicable Margin; and (iii) if any other Obligation (including, to the
extent permitted by law, interest not paid when due), at the Base Rate in
effect from time to time, plus the Applicable Margin for Base Rate Revolver Loans.
 Interest shall accrue from the
date the Loan is advanced or the Obligation is incurred or payable, until paid
by Borrowers.  If a Loan is repaid on the
same day made, one day’s interest shall accrue.


 


(b)                                 During an
Insolvency Proceeding with respect to any Borrower, or during any other Event
of Default if Agent or Required Lenders in their discretion so elect,
Obligations shall bear interest at the Default Rate (whether before or after
any judgment).  Each Borrower
acknowledges that the cost and expense to Agent and Lenders due to an Event of
Default are difficult to ascertain and that the Default Rate is a fair and
reasonable estimate to compensate Agent and Lenders for this.


 


(c)                                  Interest
accrued on the Loans shall be due and payable in arrears, (i) on the first
day of each month; (ii) on any date of prepayment, with respect to the
principal amount of Loans being prepaid; and (iii) on the Commitment
Termination Date.  Interest accrued on
any other Obligations shall be due and payable as provided in the Loan
Documents and, if no payment date is specified, shall be due and payable on demand. 
Notwithstanding the foregoing, interest accrued at the Default Rate
shall be due and payable on demand.


 


3.1.2.                     Application of
LIBOR to Outstanding Loans.


 


(a)                                  Borrowers may
on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans
to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan.  During any Default or Event of
Default, Agent may (and shall at the direction of Required Lenders) declare
that no Loan may be made, converted or continued as a LIBOR Loan.


 


(b)                                 Whenever
Borrowers desire to convert or continue Loans as LIBOR Loans, Borrower Agent  shall give
Agent a Notice of Conversion/Continuation,
no later than 11:00 a.m. at least three Business Days before the requested
conversion or continuation date. 
Promptly after receiving any such notice, Agent shall notify each Lender
thereof.  Each Notice of Conversion/Continuation
shall be irrevocable, and shall specify the amount of Loans to be converted or
continued, the conversion or continuation date (which shall be a Business Day),
and the duration of the Interest Period (which shall be deemed to be 30 days if
not specified).  If, upon the expiration
of any Interest Period in respect of any LIBOR Loans, Borrowers shall have
failed to deliver a Notice of Conversion/Continuation, they shall be deemed to
have elected to convert such Loans into Base Rate Loans.


 


3.1.3.                     Interest
Periods.  In connection with the making,
conversion or continuation of any LIBOR Loans, Borrowers shall select an
interest period (“Interest Period”) to apply, which interest period
shall be 30, 60, or 90 days; provided, however, that:


 


(a)                                  the Interest
Period shall commence on the date the Loan is made or continued as, or
converted into, a LIBOR Loan, and shall expire on the numerically corresponding
day in the calendar month at its end;


 


(b)                                 if any Interest
Period commences on a day for which there is no corresponding day in the
calendar month at its end or if such corresponding day falls after the last
Business Day of such 


 


-28-

















 


month, then the Interest Period shall expire on the last Business Day of
such month; and if any Interest Period would expire on a day that is not a
Business Day, the period shall expire on the next Business Day; and


 


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


 


3.1.4.                     Interest Rate
Not Ascertainable.  If Agent
shall determine that on any date for determining LIBOR, due to any circumstance
affecting the London interbank market, adequate and fair means do not exist for
ascertaining such rate on the basis provided herein, then Agent shall
immediately notify Borrowers of such determination.  Until Agent notifies Borrowers that such
circumstance no longer exists, the obligation of Lenders to make LIBOR Loans
shall be suspended, and no further Loans may be converted into or continued as
LIBOR Loans.


 


3.2.                            Fees.


 


3.2.1.                     Unused Line Fee.  Borrowers shall pay to Agent, for the Pro
Rata benefit of Lenders, a fee equal to the Unused Line Margin per annum times
the amount by which the Revolver Commitments exceed the average daily
balance of Revolver Loans and stated amount of Letters of Credit during
any
month.  Such fee shall be payable
in arrears, on the first day of each month and on the Commitment Termination
Date.  If no Loans are outstanding and no
Event of Default shall have occurred and be continuing on the day such fee is
payable, such fee shall be invoiced to Borrowers and payable within five
business days of the date of such invoice. 
In all other cases, such fee shall be payable on demand and
may be charged to the facility and if so charged shall be deemed to be a Base
Rate Revolver Loan.


 


3.2.2.                     LC Facility
Fees.  Borrowers shall pay (a) to
Agent, for the Pro Rata benefit of Lenders, a fee equal to the Applicable
Margin in effect for LIBOR Revolver Loans times the average daily stated amount
of Letters of Credit, which fee shall be payable monthly in arrears, on the
first day of each month; (b) to Agent, for its own account, a fronting fee
equal to 0.125% per annum on the stated amount of each Letter of Credit, which
fee shall be payable monthly in arrears, on the first day of each month; and (c) to
Issuing Bank, for its own account, all customary charges associated with the
issuance, amending, negotiating, payment, processing, transfer and
administration of Letters of Credit, which charges shall be paid as and when
incurred.  During an Event of Default,
the fee payable under clause (a) shall be increased by 2% per annum.  If no Loans are outstanding and no Event of
Default shall have occurred and be continuing on the day such fees are payable,
such fees shall be invoiced to Borrowers and payable within five business days
of the date of such invoice.  In all
other cases, such fees shall be payable on demand and
may be charged to the facility and if so charged shall be deemed to be a Base
Rate Revolver Loan.


 


3.3.                            Computation of Interest, Fees, Yield Protection.  All interest, as well as fees
and other charges calculated on a per annum basis, shall be computed for the
actual days elapsed, based on a year of 360 days.  Each determination by Agent of any interest,
fees or interest rate hereunder shall be final, conclusive and
binding for all purposes, absent manifest error.  All fees shall be fully earned when due and
shall not be subject to rebate, refund or proration.  All fees payable under Section 3.2 are compensation for
services and are not, and shall not be deemed to be, interest or any other
charge for the use, forbearance or detention of money.  A certificate as to amounts
payable by Borrowers under Section 3.4,
3.6, 3.7,  3.9 or 5.9, submitted to Borrower Agent by Agent
or the affected Lender, as applicable, shall be final, conclusive and binding
for all purposes, absent manifest error, and Borrowers shall pay such
amounts to the appropriate party within 10 days following receipt of the
certificate.


 


3.4.                            Reimbursement
Obligations.  Borrowers shall reimburse Agent for all
Extraordinary Expenses.  Borrowers shall
also reimburse Agent for all legal, accounting and consulting fees reasonably
incurred, and any appraisal and other fees, costs and expenses incurred by it
in connection with (a) 


 


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negotiation and preparation
of any Loan Documents, including any amendment or other modification thereof; (b) administration
of and actions relating to any Collateral, Loan Documents and transactions
contemplated thereby, including any actions taken to perfect or maintain
priority of Agent’s Liens on any Collateral, to maintain any insurance required
hereunder or to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection,
audit or appraisal with respect to any Obligor or Collateral, whether prepared
by Agent’s personnel or a third party. 
All legal, accounting and consulting fees shall be charged to Borrowers
by Agent’s professionals at their full hourly rates, regardless of any reduced
or alternative fee billing arrangements that Agent, any Lender or any of their
Affiliates may have with such professionals with respect to this or any other
transaction.  If,
for any reason (including inaccurate reporting on financial statements or a
Compliance Certificate), it is determined that a higher Applicable Margin or
Unused Line Margin should have applied to a period than was actually applied,
then the proper margin shall be applied retroactively and Borrowers shall
immediately pay to Agent, for the Pro Rata benefit of Lenders, an amount equal
to the difference between the amount of interest and fees that would have
accrued using the proper margin and the amount actually paid.  If no Loans are outstanding and no Event of
Default shall have occurred and be continuing on the day the amounts under this
Section are demanded, such amounts shall be invoiced to Borrowers and
payable within five business days of the date of such invoice.  In all other cases, such amounts shall be
payable on demand and may be charged to the
facility and if so charged shall be deemed to be a Base Rate Revolver Loan.


 


3.5.                            Illegality.  If any Lender determines that any Applicable
Law has made it unlawful, or that any Governmental Authority has asserted that
it is unlawful, for any Lender or its applicable Lending Office to make,
maintain or fund LIBOR Loans, or to determine or charge interest rates based
upon LIBOR, or any Governmental Authority has imposed material restrictions on
the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to Agent, any obligation of such Lender to make or continue LIBOR Loans or to
convert Base Rate Loans to LIBOR Loans shall be suspended until such Lender
notifies Agent that the circumstances giving rise to such determination no
longer exist.  Upon delivery of such
notice, Borrowers shall prepay or, if applicable, convert all LIBOR Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to
such day, or immediately, if such Lender may not lawfully continue to maintain
such LIBOR Loans.  Upon any such prepayment
or conversion, Borrowers shall also pay accrued interest on the amount so
prepaid or converted.


 


3.6.                            Inability to Determine Rates.  If Required Lenders notify Agent for any
reason in connection with a request for a Borrowing of, or conversion
to or continuation of, a LIBOR Loan that (a) Dollar
deposits are not being offered to banks in the London interbank Eurodollar
market for the applicable amount and Interest Period of such Loan, (b) adequate
and reasonable means do not exist for determining LIBOR for the requested
Interest Period, or (c) LIBOR for the requested Interest Period does not
adequately and fairly reflect the cost to such Lenders of funding such Loan,
then Agent will promptly so notify Borrower Agent and each Lender.  Thereafter, the obligation of Lenders to make
or maintain LIBOR Loans shall be suspended until Agent (upon instruction by
Required Lenders) revokes such notice. 
Upon receipt of such notice, Borrower Agent may revoke any pending request
for a Borrowing of, conversion to or continuation of a LIBOR Loan or, failing
that, will be deemed to have submitted a request for a Base Rate Loan.


 


3.7.                            Increased Costs; Capital Adequacy.


 


3.7.1.                     Change in Law.  If any Change in Law shall:


 


(a)                                  impose, modify or deem
applicable any reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets of, deposits with or for the account of, or
credit extended or participated in by, any Lender (except any reserve
requirement reflected in LIBOR) or Issuing Bank;


 


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(b)                                 subject any
Lender or Issuing Bank to any Tax with respect to any Loan, Loan Document,
Letter of Credit or participation in LC Obligations, or change the basis of
taxation of payments to such Lender or Issuing Bank in respect thereof (except
for Indemnified Taxes or Other Taxes covered by Section 5.9 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender or Issuing Bank); or


 


(c)                                  impose on any
Lender or Issuing Bank or the London interbank market any other condition, cost
or expense affecting any Loan, Loan Document, Letter of Credit or participation
in LC Obligations;


 


and the result thereof shall
be to increase the cost to such Lender of making or maintaining any LIBOR Loan
(or of maintaining its obligation to make any such Loan), or to increase the
cost to such Lender or Issuing Bank of participating in, issuing or maintaining
any Letter of Credit (or of maintaining its obligation to participate in or to
issue any Letter of Credit), or to reduce the amount of any sum received or
receivable by such Lender or Issuing Bank hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or Issuing
Bank, Borrowers will pay to such Lender or Issuing Bank, as applicable, such
additional amount or amounts as will compensate such Lender or Issuing Bank, as
applicable, for such additional costs incurred or reduction suffered.


 


3.7.2.                     Capital
Adequacy.  If any
Lender or Issuing Bank determines that any Change in Law affecting such Lender
or Issuing Bank or any Lending Office of such Lender or such Lender’s or
Issuing Bank’s holding company, if any, regarding capital requirements has or
would have the effect of reducing the rate of return on such Lender’s, Issuing
Bank’s or holding company’s capital as a consequence of this Agreement, or such
Lender’s or Issuing Bank’s Commitments, Loans, Letters of Credit or
participations in LC Obligations, to a level below that which such Lender,
Issuing Bank or holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s, Issuing Bank’s and holding company’s
policies with respect to capital adequacy), then from time to time Borrowers
will pay to such Lender or Issuing Bank, as the case may be, such additional
amount or amounts as will compensate it or its holding company for any such
reduction suffered.


 


3.7.3.                     Compensation.  Failure or delay on the part of any Lender or
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of its right to demand such compensation, but Borrowers
shall not be required to compensate a Lender or Issuing Bank for any increased
costs incurred or reductions suffered more than nine months prior to the date
that the Lender or Issuing Bank notifies Borrower Agent of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or
Issuing Bank’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).


 


3.8.                            Mitigation.  If any
Lender gives a notice under Section 3.5
or requests compensation under Section 3.7,
or if Borrowers are required to pay additional amounts with respect to a Lender
under Section 5.9, then such
Lender shall use reasonable efforts to designate a different Lending Office or
to assign its rights and obligations hereunder to another of its offices,
branches or Affiliates, if, in the judgment of such Lender, such designation or
assignment (a) would eliminate the need for such notice or reduce amounts
payable or to be withheld in the future, as applicable; and (b) would not
subject the Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to it.  Borrowers
shall pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.


 


3.9.                            Funding
Losses.  If for any reason (other
than default by a Lender) (a) any Borrowing of, or conversion to or
continuation of, a LIBOR Loan does not occur on the date specified therefor in
a Notice of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn),
(b) any repayment or conversion of a LIBOR Loan occurs on a day other than
the end of its Interest Period, or (c)


 


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Borrowers fail to repay a LIBOR Loan when required hereunder, then
Borrowers shall pay to Agent its customary administrative charge and to each
Lender all losses and expenses that it sustains as a consequence thereof,
including loss of anticipated profits and any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds.  Lenders shall not be
required to purchase Dollar deposits in the London interbank market or any
other offshore Dollar market to fund any LIBOR Loan, but the provisions hereof
shall be deemed to apply as if each Lender had purchased such deposits to fund
its LIBOR Loans.


 


3.10.                     Maximum Interest.  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 (“maximum rate”).  If Agent or any Lender shall receive interest
in an amount that exceeds the maximum rate, the excess interest shall be
applied to the principal of the Obligations or, if it exceeds such unpaid
principal, refunded to Borrowers.  In
determining whether the interest contracted for, charged or received by Agent
or a Lender exceeds the maximum rate, such Person 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.


 


SECTION 4.        LOAN
ADMINISTRATION


 


4.1.                            Manner of Borrowing and Funding Revolver Loans.


 


4.1.1.                  Notice of
Borrowing.


 


(a)                                 Whenever
Borrowers desire funding of a Borrowing of Revolver Loans, Borrower Agent shall
give Agent a Notice of Borrowing.  Such
notice must be received by Agent no later than 11:00 a.m. (i) on the
Business Day of the requested funding date, in the case of Base Rate Loans, and
(ii) at least three Business Days prior to the requested funding date, in
the case of LIBOR Loans.  Notices
received after 11:00 a.m. shall be deemed received on the next Business
Day.  Each Notice of Borrowing shall be
irrevocable and shall specify (A) the amount of the Borrowing, (B) the
requested funding date (which must be a Business Day), (C) whether the
Borrowing is to be made as Base Rate Loans or LIBOR Loans, and (D) in the
case of LIBOR Loans, the duration of the applicable Interest Period (which
shall be deemed to be 30 days if not specified).


 


(b)                                 Unless payment
is otherwise timely made by Borrowers, the becoming due of any Obligations
(whether principal, interest, fees or other charges, including Extraordinary Expenses, LC Obligations,
Cash Collateral and Bank Product Debt) shall be deemed to be a request
for Base Rate Revolver Loans on the due date, in the amount of such
Obligations.  The proceeds of such
Revolver Loans shall be disbursed as direct payment of the relevant Obligation.  In addition, Agent may, at its option, charge
such Obligations against any operating, investment or other account of a
Borrower maintained with Agent or any of its Affiliates.


 


(c)                                  If Borrowers establish a controlled
disbursement account with Agent or any Affiliate of Agent, then the
presentation for payment of any check or other item of payment drawn on such
account at a time when there are insufficient funds to cover it shall be deemed
to be a request for Base Rate Revolver Loans on the date of such presentation,
in the amount of the check and items presented for payment.  The proceeds of such Revolver Loans may be
disbursed directly to the controlled disbursement account or other appropriate
account.


 


4.1.2.                  Fundings by
Lenders.  Each Lender shall timely honor
its Revolver Commitment by funding its Pro Rata share of each Borrowing of
Revolver Loans that is properly requested hereunder.  Except for Borrowings to be made as Swingline
Loans, Agent shall endeavor to notify Lenders of each 


 


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Notice of Borrowing (or
deemed request for a Borrowing) by 12:00 noon on the proposed funding date for
Base Rate Loans or by 3:00 p.m. at least two Business Days before any proposed
funding of LIBOR Loans.  Each Lender
shall fund to Agent such Lender’s Pro Rata share of the Borrowing to the
account specified by Agent in immediately available funds not later than 2:00 p.m.
on the requested funding date, unless Agent’s notice is received after the
times provided above, in which event Lender shall fund its Pro Rata share by
11:00 a.m. on the next Business Day. 
Subject to its receipt of such amounts from Lenders, Agent shall
disburse the proceeds of the Revolver Loans as directed by Borrower Agent.  Unless Agent shall have received (in
sufficient time to act) written notice from a Lender that it does not intend to
fund its Pro Rata share of a Borrowing, Agent may assume that such Lender has
deposited or promptly will deposit its share with Agent, and Agent may disburse
a corresponding amount to Borrowers.  If
a Lender’s share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not received by Agent, then
Borrowers agree to repay to Agent on demand the
amount of such share, together with interest thereon from the date disbursed
until repaid, at the rate applicable to Base Rate Revolver Loans.


 


4.1.3.                  Swingline
Loans; Settlement.


 


(a)                                 Agent may, but
shall not be obligated to, advance Swingline Loans to Borrowers, up to an
aggregate outstanding amount of $5,000,000, unless the funding is specifically
required to be made by all Lenders hereunder. 
Each Swingline Loan shall constitute a Revolver Loan for all purposes,
except that payments thereon shall be made to Agent for its own account.  The obligation of Borrowers to repay
Swingline Loans shall be evidenced by the records of Agent and need not be evidenced by
any promissory note.


 


(b)                                 To facilitate
administration of the Revolver Loans, Lenders and Agent agree (which agreement
is solely among them, and not for the benefit of or enforceable by any
Borrower) that settlement among them with respect to Swingline Loans and other
Revolver Loans may take place on a date determined from time to time by Agent,
which shall occur at least once each week. 
On each settlement date, settlement shall be made with each Lender in
accordance with the Settlement Report delivered by Agent to Lenders.  Between settlement dates, Agent may in its
discretion apply payments on Revolver Loans to Swingline Loans, regardless of
any designation by Borrower or any provision herein to the contrary.  Each Lender’s obligation to make settlements
with Agent is absolute and unconditional, without offset, counterclaim or other
defense, and whether or not the
Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied.  If, due to an Insolvency Proceeding with
respect to a Borrower or otherwise, any Swingline Loan may not be settled among
Lenders hereunder, then each Lender shall be deemed to have purchased from
Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer
the amount of such participation to Agent, in immediately available funds,
within one Business Day after Agent’s request therefor.


 


4.1.4.                  Notices.  Each Borrower authorizes Agent and Lenders to
extend, convert or continue Loans, effect selections of interest rates, and
transfer funds to or on behalf of Borrowers based on telephonic or e-mailed
instructions.  Borrowers shall confirm
each such request by prompt delivery to Agent of a Notice of Borrowing or
Notice of Conversion/Continuation, if applicable, but if it differs in any
material respect from the action taken by Agent or Lenders, the records of
Agent and Lenders shall govern.  Neither
Agent nor any Lender shall have any liability for any loss suffered by a
Borrower as a result of Agent or any Lender acting upon its understanding of
telephonic or e-mailed instructions from a person believed in good faith by
Agent or any Lender to be a person authorized to give such instructions on a
Borrower’s behalf.


 


4.2.                            Defaulting Lender.   Agent may (but shall not be required to), in
its discretion, retain any payments or other funds received by Agent that are
to be provided to a Defaulting Lender hereunder, and may apply such funds to
such Lender’s defaulted obligations or readvance the funds to Borrowers in
accordance with this Agreement.  The
failure of any Lender to fund a Loan, to make any payment in respect of LC Obligations
or to otherwise perform its obligations hereunder  shall not relieve any other 


 


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Lender of its obligations, and no Lender shall be responsible for
default by another Lender.  Lenders and
Agent agree (which agreement is solely among them, and not for the benefit of
or enforceable by any Borrower) that, solely for purposes of determining a
Defaulting Lender’s right to vote on matters relating to the Loan Documents and
to share in payments, fees and Collateral proceeds thereunder, a Defaulting
Lender shall not be deemed to be a “Lender” until all its defaulted obligations
have been cured.


 


4.3.                            Number
and Amount of LIBOR Loans; Determination of Rate.  Each Borrowing of LIBOR Loans
when made shall be in a minimum amount of $5,000,000, plus any
increment of $1,000,000 in excess thereof.  No more than five Borrowings of LIBOR Loans
may be outstanding at any time, and all LIBOR Loans having the same length and
beginning date of their Interest Periods shall be aggregated together and
considered one Borrowing for this purpose. 
Upon determining LIBOR for any Interest Period requested by Borrowers,
Agent shall promptly notify Borrowers thereof by telephone or electronically
and, if requested by Borrowers, shall confirm any telephonic notice in writing.


 


4.4.                            Borrower Agent.   Each Borrower hereby
designates THQ Inc. (“Borrower Agent”) as its representative and agent
for all purposes under the Loan Documents, including requests for Loans and
Letters of Credit, designation of interest rates, delivery or receipt of
communications, preparation and delivery of Borrowing Base and financial
reports, receipt and payment of Obligations, requests for waivers, amendments
or other accommodations, actions under the Loan Documents (including in respect
of compliance with covenants), and all other dealings with Agent, Issuing Bank
or any Lender.  Borrower Agent hereby
accepts such appointment.  Agent and
Lenders shall be entitled to rely upon, and shall be fully protected in relying
upon, any notice or communication (including any notice of borrowing) delivered
by Borrower Agent on behalf of any Borrower. 
Agent and Lenders may give any notice or communication with a Borrower
hereunder to Borrower Agent on behalf of such Borrower.  Each of Agent, Issuing Bank and Lenders shall
have the right, in its discretion, to deal exclusively with Borrower Agent for
any or all purposes under the Loan Documents. 
Each Borrower agrees that any notice, election, communication,
representation, agreement or undertaking made on its behalf by Borrower Agent
shall be binding upon and enforceable against it.


 


4.5.                            One Obligation.  The Loans, LC Obligations and other
Obligations shall constitute one general obligation of Borrowers and (unless
otherwise expressly provided in any Loan Document) shall be secured by Agent’s
Lien upon all Collateral; provided, however, that Agent and each
Lender shall be deemed to be a creditor of, and the holder of a separate claim
against, each Borrower to the extent of any Obligations jointly or severally
owed by such Borrower.


 


4.6.                            Effect
of Termination.  On the effective date of any termination of
the Commitments, all Obligations shall be immediately due and payable, and Bank of America may terminate its and its Affiliates’ Bank
Products (including, only with the consent of Agent, any Cash Management
Services).  All undertakings of Borrowers
contained in the Loan Documents shall survive any termination, and Agent shall
retain its Liens in the Collateral and all of its rights and remedies under the
Loan Documents until Full Payment of the Obligations.  Notwithstanding Full Payment of the
Obligations, Agent shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Agent may incur as a result of
the dishonor or return of Payment Items applied to Obligations, Agent receives (a) a
written agreement, executed by Borrowers and any Person whose advances are used
in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders
from any such damages; or (b) such Cash Collateral as Agent, in its
discretion, deems necessary to protect against any such damages.  Sections
2.3, 3.4, 3.6, 3.7, 3.9, 5.5,  5.9,
5.10, 12, 14.2 and this  Section, and the obligation of each
Obligor and Lender with respect to each indemnity given by it in any Loan
Document, shall survive Full Payment of the Obligations and any release
relating to this credit facility.


 


SECTION 5.        PAYMENTS


 


5.1.                            General Payment Provisions.  All payments of Obligations shall be made in
Dollars, 


 


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without offset, counterclaim
or defense of any kind, free of (and without deduction for) any Taxes, and in
immediately available funds, not later than 12:00 noon on the due date.  Any payment after such time shall be deemed
made on the next Business Day.  Any
payment of a LIBOR Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9.  Any prepayment of Loans shall be applied
first to Base Rate Loans and then to LIBOR Loans.


 


5.2.                            Repayment
of Revolver Loans.  Revolver Loans shall be due
and payable in full on the Revolver Termination Date, unless payment is sooner
required hereunder.  Revolver Loans may
be prepaid from time to time, without penalty or premium.  If any Asset Disposition includes the disposition
of Accounts, then Net Proceeds equal to the greatest of (a) the net book
value of such Accounts, (b) the reduction in the Borrowing Base upon
giving effect to such disposition, or (c) the actual amount thereof, shall
be applied to the Revolver Loans.  If any Asset Disposition
includes the disposition of Inventory, Intellectual Property or Equipment, then
Net Proceeds equal to the actual amount thereof shall be applied to the
Revolver Loans. 
Notwithstanding anything herein to the contrary, if an Overadvance
exists, Borrowers shall, on the sooner of Agent’s demand or the first Business
Day after any Borrower has knowledge thereof, repay the outstanding Revolver
Loans in an amount sufficient to reduce the principal balance of Revolver Loans
to the Borrowing Base.


 


5.3.                            RESERVED.


 


5.4.                            Payment of Other Obligations.  Obligations other than Loans, including LC Obligations and
Extraordinary Expenses, shall be paid by Borrowers as provided in the
Loan Documents.  If no payment date is
specified and no Loans are outstanding and no Event of Default shall have
occurred and be continuing on the day such Obligations are payable, such
amounts shall be invoiced to Borrowers and payable within five business days of
the date of such invoice.  In all other
cases, such amounts shall be payable on demand and
may be charged to the facility and if so charged shall be deemed to be a Base
Rate Revolver Loan.


 


5.5.                            Marshaling; Payments Set Aside.  None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations.  If any payment by or on
behalf of Borrowers is made to Agent, Issuing Bank or any Lender, or Agent,
Issuing Bank or any Lender exercises a right of setoff, and such payment or the
proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by Agent, Issuing Bank or such Lender
in its discretion) to be repaid to a trustee, receiver or any other Person,
then to the extent of such recovery, the Obligation originally intended to be
satisfied, and all Liens, rights and remedies relating thereto, shall be
revived and continued in full force and effect as if such payment had not been
made or such setoff had not occurred.


 


5.6.                            Post-Default
Allocation of Payments.


 


5.6.1.                  Allocation.
Notwithstanding anything herein to the contrary, during an Event of Default,
monies to be applied to the Obligations, whether arising from payments by
Obligors, realization on Collateral, setoff or otherwise, shall be allocated as
follows:


 


(a)                                 first, to all costs
and expenses, including Extraordinary Expenses, owing to Agent;


 


(b)                                 second, to all
amounts owing to Agent on Swingline Loans;


 


(c)                                  third, to all amounts
owing to Issuing Bank on LC Obligations;


 


(d)                                 fourth, to all
Obligations constituting fees (excluding amounts relating to Bank Products);


 


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(e)                                  fifth, to all
Obligations constituting interest (excluding amounts relating to Bank
Products);


 


(f)                                   sixth, to provide
Cash Collateral for outstanding Letters of Credit;


 


(g)                                  seventh, to all other
Obligations, other than Bank Product Debt; and


 


(h)                                 last, to Bank
Product Debt.


 


Amounts
shall be applied to each category of Obligations set forth above until Full
Payment thereof and then to the next category. 
If amounts are insufficient to satisfy a category, they shall be applied
on a pro rata basis among the Obligations in the category.  The allocations set forth in this Section are
solely to determine the rights and priorities of Agent and Lenders as among
themselves, and may be changed by agreement among them without the consent of
any Obligor.  This Section is not
for the benefit of or enforceable by any Borrower.


 


5.6.2.                  Erroneous
Application.  Agent shall
not be liable for any application of amounts made by it in good faith and, if
any such application is subsequently determined to have been made in error, the
sole recourse of any Lender or other Person to which such amount should have
been made shall be to recover the amount from the Person that actually received
it (and, if such amount was received by any Lender, such Lender hereby agrees
to return it).


 


5.7.                            Application of Payments.  The ledger balance in the main Dominion
Account as of the end of a Business Day shall be applied to the Obligations at
the beginning of the next Business Day, during
any Trigger Period.  If, as a result of
such application, a credit balance exists, the balance shall not accrue interest
in favor of Borrowers and shall be made available to Borrowers as long as no
Default or Event of Default exists.  Each
Borrower irrevocably waives the right to direct the application of any payments
or Collateral proceeds during any Trigger Period, and agrees that Agent shall
have the continuing, exclusive right to apply and reapply same against the
Obligations, in such manner as Agent deems advisable.


 


5.8.                            Loan
Account; Account Stated.


 


5.8.1.                  Loan Account.  Agent shall maintain in accordance with its
usual and customary practices an account or accounts (“Loan Account”)
evidencing the Debt of Borrowers resulting from each Loan or issuance of a
Letter of Credit from time to time.  Any
failure of Agent to record anything in the Loan Account, or any error in doing
so, shall not limit or otherwise affect the obligation of Borrowers to pay any
amount owing hereunder.  Agent may
maintain a single Loan Account in the name of Borrower Agent, and each Borrower
confirms that such arrangement shall have no effect on the joint and several
character of its liability for the Obligations.


 


5.8.2.                  Entries Binding.  Entries made in the Loan Account shall
constitute presumptive evidence of the information contained therein.  If any information contained in the Loan
Account is provided to or inspected by any Person, then such information shall
be conclusive and binding on such Person for all purposes absent manifest
error, except to the extent such Person notifies Agent in writing within 30
days after receipt or inspection that specific information is subject to
dispute.


 


5.9.                            Taxes.


 


5.9.1.                  Payments Free
of Taxes.  All
payments by Obligors of Obligations shall be free and clear of and without
reduction for any Taxes.  If Applicable
Law requires any Obligor or Agent to withhold or deduct any Tax (including
backup withholding or withholding Tax), the withholding or deduction shall be
based on information provided pursuant to Section 5.10
and Agent shall pay the amount withheld or deducted to the relevant
Governmental Authority.  If the
withholding or deduction is 


 


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made on account of
Indemnified Taxes or Other Taxes, the sum payable by Borrowers shall be
increased so that Agent, Lender or Issuing Bank, as applicable, receives an
amount equal to the sum it would have received if no such withholding or
deduction (including deductions applicable to additional sums payable under
this Section) had been made.  Without
limiting the foregoing, Borrowers shall timely pay all Other Taxes to the
relevant Governmental Authorities.


 


5.9.2.                  Payment.  Borrowers shall indemnify, hold harmless and
reimburse (within 10 days after demand therefor) Agent, Lenders and Issuing
Bank for any Indemnified Taxes or Other Taxes (including those attributable to
amounts payable under this Section) withheld or deducted by any Obligor or
Agent, or paid by Agent, any Lender or Issuing Bank, with respect to any
Obligations, Letters of Credit or Loan Documents, whether or not such Taxes
were properly asserted by the relevant Governmental Authority, and including
all penalties, interest and reasonable expenses relating thereto, as well as
any amount that a Lender or Issuing Bank fails to pay indefeasibly to Agent
under Section 5.10.  A certificate as to the amount of any such
payment or liability delivered to Borrower Agent by Agent, or by a Lender or
Issuing Bank (with a copy to Agent), shall be conclusive, absent manifest
error.  As soon as practicable after any
payment of Taxes by a Borrower, Borrower Agent shall deliver to Agent a receipt
from the Governmental Authority or other evidence of payment satisfactory to
Agent.


 


5.10.                     Lender Tax Information.


 


5.10.1.           Status of
Lenders.  Each Lender shall deliver
documentation and information to Agent and Borrower Agent, at the times and in
form required by Applicable Law or reasonably requested by Agent or Borrower
Agent, sufficient to permit Agent or Borrowers to determine (a) whether or
not payments made with respect to Obligations are subject to Taxes, (b) if
applicable, the required rate of withholding or deduction, and (c) such
Lender’s entitlement to any available exemption from, or reduction of,
applicable Taxes for such payments or otherwise to establish such Lender’s
status for withholding tax purposes in the applicable jurisdiction.


 


5.10.2.           Documentation.  If a Borrower is resident for tax purposes in
the United States, any Lender that is a “United States person” within the
meaning of section 7701(a)(30) of the Code shall deliver to Agent and Borrower
Agent IRS Form W-9 or such other documentation or information prescribed
by Applicable Law or reasonably requested by Agent or Borrower Agent to
determine whether such Lender is subject to backup withholding or information
reporting requirements.  If any Foreign Lender
is entitled to any exemption from or reduction of withholding tax for payments
with respect to the Obligations, it shall deliver to Agent and Borrower Agent,
on or prior to the date on which it becomes a Lender hereunder (and from time
to time thereafter upon request by Agent or Borrower Agent, but only if such
Foreign Lender is legally entitled to do so), (a) IRS Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY
and all required supporting documentation; (d) in the case of a Foreign
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the Code, IRS Form W-8BEN and a certificate showing
such Foreign Lender is not (i) a “bank” within the meaning of section
881(c)(3)(A) of the Code, (ii) a “10 percent shareholder” of any
Obligor within the meaning of section 881(c)(3)(B) of the Code, or (iii) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code;
or (e) any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in withholding tax, together with such
supplementary documentation necessary to allow Agent and Borrowers to determine
the withholding or deduction required to be made.


 


5.10.3.           Lender
Obligations.  Each Lender
and Issuing Bank shall promptly notify Borrowers and Agent of any change in
circumstances that would change any claimed Tax exemption or reduction.  Each Lender and Issuing Bank shall indemnify,
hold harmless and reimburse (within 10 days after demand therefor) Borrowers
and Agent for any Taxes, losses, claims, liabilities, penalties, interest and
expenses (including reasonable attorneys’ fees) incurred by or asserted against
a Borrower or Agent by any Governmental Authority due to such Lender’s or
Issuing Bank’s failure to deliver, or inaccuracy or 


 


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deficiency in, any
documentation required to be delivered by it pursuant to this Section.  Each Lender and Issuing Bank authorizes Agent
to set off any amounts due to Agent under this Section against any amounts
payable to such Lender or Issuing Bank under any Loan Document.


 


5.11.                     Nature and Extent of Each Borrower’s Liability.


 


5.11.1.           Joint and
Several Liability.  Each
Borrower agrees that it is jointly and severally liable for, and absolutely and
unconditionally guarantees to Agent and Lenders the prompt payment and
performance of, all Obligations and all agreements under the Loan Documents.  Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection, that such obligations shall not be discharged until Full Payment of
the Obligations, and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity, regularity, enforceability,
subordination or any future modification of, or change in, any Obligations or
Loan Document, or any other document, instrument or agreement to which any
Obligor is or may become a party or be bound; (b) the absence of any
action to enforce this Agreement (including this Section) or any other Loan
Document, or any waiver, consent or indulgence of any kind by Agent or any
Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or
guaranty for the Obligations or any action, or the absence of any action, by
Agent or any Lender in respect thereof (including the release of any security or
guaranty); (d) the insolvency of any Obligor; (e) any election by
Agent or any Lender in an Insolvency Proceeding for the application of Section 1111(b)(2) of
the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other
Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code
or otherwise; (g) the disallowance of any claims of Agent or any Lender
against any Obligor for the repayment of any Obligations under Section 502
of the Bankruptcy Code or otherwise; or (h) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, except Full Payment of all Obligations.


 


5.11.2.           Waivers.


 


(a)                                 Each Borrower
expressly waives all rights that it may have now or in the future under any
statute, at common law, in equity or otherwise, to compel Agent or Lenders to
marshal assets or to proceed against any Obligor, other Person or security for
the payment or performance of any Obligations before, or as a condition to,
proceeding against such Borrower.  Each
Borrower waives all defenses available to a surety, guarantor or accommodation
co-obligor other than Full Payment of all Obligations.  It is agreed among each Borrower, Agent and
Lenders that the provisions of this Section 5.11
are of the essence of the transaction contemplated by the Loan Documents and
that, but for such provisions, Agent and Lenders would decline to make Loans
and issue Letters of Credit.  Each
Borrower acknowledges that its guaranty pursuant to this Section is
necessary to the conduct and promotion of its business, and can be expected to
benefit such business.


 


(b)                                 Agent and
Lenders may, in their discretion, pursue such rights and remedies as they deem
appropriate, including realization upon Collateral or any Real Estate by
judicial foreclosure or non-judicial sale or enforcement, without affecting any
rights and remedies under this Section 5.11.  If, in taking any action in connection with
the exercise of any rights or remedies, Agent or any Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Borrower or other Person, whether because of any Applicable Laws
pertaining to “election of remedies” or otherwise, each Borrower consents to
such action and waives any claim based upon it, even if the action may result
in loss of any rights of subrogation that any Borrower might otherwise have
had.  Any election of remedies that
results in denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Borrower shall not impair any other Borrower’s obligation
to pay the full amount of the Obligations. 
Each Borrower waives all rights and defenses arising out of an election
of remedies, such as nonjudicial foreclosure with respect to any security for
the Obligations, even though that election of remedies destroys such Borrower’s
rights of subrogation against any other Person. 
Agent 


 


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may
bid all or a portion of the Obligations at any foreclosure or trustee’s sale or
at any private sale, and the amount of such bid need not be paid by Agent but
shall be credited against the Obligations. 
The amount of the successful bid at any such sale, whether Agent or any
other Person is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral, and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 5.11, notwithstanding that any present or future
law or court decision may have the effect of reducing the amount of any
deficiency claim to which Agent or any Lender might otherwise be entitled but
for such bidding at any such sale.


 


5.11.3.           Extent of
Liability; Contribution.


 


(a)                                 Notwithstanding
anything herein to the contrary, each Borrower’s liability under this Section 5.11 shall be limited to the
greater of (i) all amounts for which such Borrower is primarily liable, as
described below, and (ii) such Borrower’s Allocable Amount.


 


(b)                                 If any Borrower
makes a payment under this Section 5.11
of any Obligations (other than amounts for which such Borrower is primarily
liable) (a “Guarantor Payment”) that, taking into account all other
Guarantor Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payments in the same proportion that such Borrower’s Allocable Amount bore to
the total Allocable Amounts of all Borrowers, then such Borrower shall be
entitled to receive contribution and indemnification payments from, and to be
reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Guarantor Payment.  The “Allocable
Amount” for any Borrower shall be the maximum amount that could then be
recovered from such Borrower under this Section 5.11
without rendering such payment voidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.


 


(c)                                  Nothing
contained in this Section 5.11
shall limit the liability of any Borrower to pay Loans made directly or
indirectly to that Borrower (including Loans advanced to any other Borrower and
then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower), LC Obligations relating to Letters of Credit issued to support such
Borrower’s business, and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which such Borrower shall be primarily
liable for all purposes hereunder.  Agent
and Lenders shall have the right, at any time in their discretion, to condition
Loans and Letters of Credit upon a separate calculation of borrowing
availability for each Borrower and to restrict the disbursement and use of such
Loans and Letters of Credit to such Borrower.


 


5.11.4.           Joint Enterprise.  Each Borrower has requested that
Agent and Lenders make this credit facility available to Borrowers on a
combined basis, in order to finance Borrowers’ business most efficiently and
economically.  Borrowers’ business is a
mutual and collective enterprise, and Borrowers believe that consolidation of
their credit facility will enhance the borrowing power of each Borrower and
ease the administration of their relationship with Lenders, all to the mutual
advantage of Borrowers.  Borrowers
acknowledge and agree that Agent’s and Lenders’ willingness to extend credit to
Borrowers and to administer the Collateral on a combined basis, as set forth
herein, is done solely as an accommodation to Borrowers and at Borrowers’
request.


 


5.11.5.           Subordination.  Each Borrower hereby subordinates any claims,
including any rights at law or in equity to payment, subrogation,
reimbursement, exoneration, contribution, indemnification or set off, that it
may have at any time against any other Obligor, howsoever arising, to the Full
Payment of all Obligations.


 


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SECTION 6.        CLOSING DATE, CONDITIONS PRECEDENT


 


6.1.                            Closing Date.  In addition to the conditions set forth in Sections 6.2 and Section 6.3,
Lenders shall not be required to fund any requested Loan, issue any Letter of Credit, or
otherwise extend credit to Borrowers hereunder, until the date (“Closing
Date”) that each of the following conditions has been satisfied:


 


(a)                                 This Agreement
and each other Loan Document shall have been duly executed and delivered to
Agent by each of the signatories thereto, and each Obligor shall be in
compliance with all terms hereof and thereof, and Notes shall have been
executed by Borrowers and delivered to each Lender that requests issuance of a
Note.


 


(b)                                 Agent shall
have received acknowledgments of all filings or recordations necessary to
perfect its Liens in the Collateral, as well as UCC and Lien searches and other
evidence satisfactory to Agent that such Liens are the only Liens upon the
Collateral, except Permitted Liens.


 


(c)                                  Intentionally
Omitted.


 


(d)                                 Agent shall
have received certificates, in form and substance reasonably satisfactory to
it, from a knowledgeable Senior Officer of each Borrower certifying that, after
giving effect to the initial Loans and transactions hereunder, (i) such
Borrower is Solvent; (ii) no Default or Event of Default exists; (iii) the
representations and warranties set forth in Section 9
are true and correct; and (iv) such Borrower has complied with all agreements
and conditions to be satisfied by it under the Loan Documents.


 


(e)                                  Agent shall
have received a certificate of a duly authorized officer of each Obligor,
certifying (i) that attached copies of such Obligor’s Organic Documents
are true and complete, and in full force and effect, without amendment except
as shown; (ii) that an attached copy of resolutions authorizing execution
and delivery of the Loan Documents is true and complete, and that such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with
respect to this credit facility; and (iii) to the title, name and
signature of each Person authorized to sign the Loan Documents.  Agent may conclusively rely on this
certificate until it is otherwise notified by the applicable Obligor in
writing.


 


(f)                                   Agent shall
have received a written opinion of Nixon Peabody LLP, as well as
any local counsel to Borrowers or Agent, in form and substance satisfactory to
Agent.


 


(g)                                  Agent shall
have received copies of the charter documents of each Obligor, certified by the
Secretary of State or other appropriate official of such Obligor’s jurisdiction
of organization.  Agent shall have
received good standing certificates for each Obligor, issued by the Secretary
of State or other appropriate official of such Obligor’s jurisdiction of
organization and each jurisdiction where such Obligor’s conduct of business or
ownership of Property necessitates qualification.


 


(h)                                 Intentionally Omitted.


 


(i)                                     Agent shall
have completed its business, financial and legal due diligence of Obligors,
with results satisfactory to Agent. 
Except as set forth on Schedule 9.1.7,
no material adverse change in the financial condition of any Borrower or in the
Obligors (taken as a whole) or in the quality, quantity or value of any
Collateral shall have occurred since March 27, 2008.


 


(j)                                    Borrowers shall
have paid all fees and expenses to be paid to Agent and Lenders on the Closing
Date.


 


(k)                                 Agent shall
have received a Borrowing Base Certificate prepared as of a recent date
reasonably agreed by Agent and Borrower Agent. 
Upon giving effect to the initial funding of Loans and issuance of
Letters of Credit, and the payment by Borrowers of all fees
and expenses incurred in 


 


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connection herewith, the
Liquidity Amount for as of the end of the preceding Fiscal Month shall be not
less than the Target Liquidity Amount for such Fiscal Month.


 


6.2.                            Conditions
Subsequent to Closing Date and Additional Conditions Precedent to All Credit
Extensions.  In addition
to the conditions set forth in Section 6.3,
Lenders shall not be required to fund any requested Loan, issue any Letter of Credit, or
otherwise extend credit to Borrowers hereunder, until the date, which in any
event shall not be later than 60 days after the Closing Date, that each of the
following conditions has been satisfied:


 


(a)                                 Agent shall
have received duly executed agreements establishing each Dominion Account and
related lockbox, in form and substance, and with financial institutions,
satisfactory to Agent, and Control Agreements in form and substance
satisfactory to Agent with respect to each Deposit Account and Securities
Account forming part of the Collateral.


 


(b)                                 Borrower shall
have permitted Agent to have completed a roll-forward of its previous field
examination.  Except as set forth on Schedule 9.1.7, no material adverse change in the financial
condition of any Borrower or in the Obligors (taken as a whole) or in the
quality, quantity or value of any Collateral shall have occurred since March 27,
2008.


 


(c)                                  Agent shall
have received copies of policies or certificates of insurance for the insurance
policies carried by Borrowers, all in compliance with the Loan Documents.


 


Failure
to satisfy the conditions set forth in clauses (a) through (c) of
this Section 6.2 within 60 days of the
Closing Date (or such longer period as agreed to by Agent in its sole
discretion) shall constitute an Event of Default.


 


6.3.                            Conditions Precedent to All Credit Extensions.  Agent, Issuing Bank and Lenders
shall not be required to fund any Loans, arrange for issuance of any Letters of
Credit or grant any other accommodation to or for the benefit of Borrowers,
unless the following conditions are satisfied:


 


(a)                                 No Default or
Event of Default shall exist at the time of, or result from, such funding,
issuance or grant;


 


(b)                                 The
representations and warranties of each Obligor in the Loan Documents shall be
true and correct on the date of, and upon giving effect to, such funding,
issuance or grant (except for representations and warranties that expressly
relate to an earlier date);


 


(c)                                  All conditions
precedent in any other Loan Document shall be satisfied;


 


(d)                                 No event shall
have occurred or circumstance exist that has or could reasonably be expected to
have a Material Adverse Effect;


 


(e)                                  With respect to
issuance of a Letter of Credit, the LC Conditions shall be satisfied; and


 


(f)                                   Section 10.3.1 shall not
otherwise excuse Agent, Issuing Bank and Lenders.


 


Each request (or deemed
request) by Borrowers for funding of a Loan, issuance of a Letter of Credit or
grant of an accommodation shall constitute a representation by Borrowers that
the foregoing conditions are satisfied on the date of such request and on the
date of such funding, issuance or grant. 
As an additional condition to any funding, issuance or grant, Agent
shall have received such other information, documents, instruments and
agreements as it deems reasonably appropriate in connection therewith.


 


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Section 7.                            COLLATERAL


 


7.1.                            Grant of Security Interest.  To secure the prompt payment and performance
of all Obligations, each Borrower hereby grants to Agent, for the benefit of
Secured Parties, a continuing security interest in and Lien upon all Property
of such Borrower, including all of the following Property, whether now owned or
hereafter acquired, and wherever located:


 


(a)                                  all Accounts;


 


(b)                                 all Chattel
Paper, including electronic chattel paper;


 


(c)                                  all Commercial
Tort Claims, including those shown on Schedule 9.1.16;


 


(d)                                 all Deposit
Accounts, other than Deposit Accounts that are part of the Existing ARS
Facilities;


 


(e)                                  all Documents;


 


(f)                                    all General
Intangibles, including Intellectual Property;


 


(g)                                 all Goods,
including Inventory, Equipment and fixtures;


 


(h)                                 all
Instruments;


 


(i)                                     all Investment
Property, other than Investment Property pledged under the Existing ARS
Facilities;


 


(j)                                     all
Letter-of-Credit Rights;


 


(k)                                  all Supporting
Obligations;


 


(l)                                     all monies,
whether or not in the possession or under the control of Agent, a Lender, or a
bailee or Affiliate of Agent or a Lender, including any Cash Collateral;


 


(m)                               all accessions
to, substitutions for, and all replacements, products, and cash and non-cash
proceeds of the foregoing, including proceeds of and unearned premiums with
respect to insurance policies, and claims against any Person for loss, damage
or destruction of any Collateral; and


 


(n)                                 all books and
records (including customer lists, files, correspondence, tapes, computer
programs, print-outs and computer records) pertaining to the foregoing;


 


provided, however that the
Collateral shall not include, and Borrowers shall not be deemed to have granted
a security interest in any lease, license, contract, property rights or
agreement to which any Borrower is a party or any of its rights or interests
thereunder to the extent, but only to the extent and for so long as, the grant
of a security interest or lien in such Property would constitute or result in (1) the
abandonment, invalidation or unenforceability of the right, title or interest
of such Borrower therein or the Property subject thereto or (2) a breach
or termination pursuant to the terms of, or a default under, any such lease,
license, contract, property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to 9-406, 9-407, 9-408 or
9-409 of the UCC or other applicable law); provided, further
that immediately upon the ineffectiveness, lapse, or termination of any such
restriction, the Collateral shall include, and such Borrower shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect.


 


7.2.                            Lien on Deposit Accounts; Cash Collateral.


 


7.2.1.                     Deposit
Accounts.  To further
secure the prompt payment and performance of all


 


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Obligations, each Borrower
hereby grants to Agent, for the benefit of Secured Parties, a continuing
security interest in and Lien upon all amounts credited to any Deposit Account
of such Borrower, other than Deposit Accounts that are part of the
Existing ARS Facilities, including any sums in any blocked or lockbox
accounts or in any accounts into which such sums are swept.  Each Borrower hereby authorizes and directs
each bank or other depository to deliver to Agent, upon request, all balances
in any Deposit Account maintained by such Borrower, without inquiry into the
authority or right of Agent to make such request.


 


7.2.2.                     Cash Collateral.  Any Cash Collateral may be invested, at Agent’s
discretion, in Cash Equivalents, but Agent shall have no duty to do so,
regardless of any agreement or course of dealing with any Borrower, and shall
have no responsibility for any investment or loss.  Each Borrower hereby grants to Agent, for the
benefit of Secured Parties, a security interest in all Cash Collateral held
from time to time and all proceeds thereof, as security for the Obligations,
whether such Cash Collateral is held in a Cash Collateral Account or
elsewhere.  Agent may apply Cash
Collateral to the payment of any Obligations, in such order as Agent may elect,
as they become due and payable.  Each
Cash Collateral Account and all Cash Collateral shall be under the sole
dominion and control of Agent.  No
Borrower or other Person claiming through or on behalf of any Borrower shall
have any right to any Cash Collateral, until Full Payment of all Obligations.


 


7.3.                            [RESERVED].


 


7.4.                            Other Collateral.


 


7.4.1.                     Commercial Tort
Claims.  Borrowers shall promptly
notify Agent in writing if any Borrower has a Commercial Tort Claim (other
than, as long as no Default or Event of Default exists, a Commercial Tort Claim
for less than $100,000), shall promptly amend Schedule
9.1.16 to include such claim, and shall take such actions as Agent
deems reasonably appropriate to subject such claim to a duly perfected, first
priority Lien in favor of Agent (for the benefit of Secured Parties).


 


7.4.2.                     Certain
After-Acquired Collateral. 
Borrowers shall promptly (or, in the case of registered Intellectual
Property, within the timeframe set forth in Section 10.1.8)
notify Agent in writing if, after the Closing Date, any Borrower obtains any
interest in any Collateral consisting of Deposit Accounts, Chattel Paper,
Documents, Instruments, registered Intellectual Property, Investment Property
or Letter-of-Credit Rights and, upon Agent’s request, shall promptly take such
actions as Agent deems appropriate to effect Agent’s duly perfected, first
priority Lien upon such Collateral, including obtaining any appropriate
possession, control agreement or Lien Waiver. 
If any Collateral is in the possession of a third party, at Agent’s
request, Borrowers shall obtain an acknowledgment that such third party holds
the Collateral for the benefit of Agent.


 


7.5.                            No Assumption of Liability.  The Lien on Collateral
granted hereunder is given as security only and shall not subject Agent or any
Lender to, or in any way modify, any obligation or liability of Borrowers
relating to any Collateral.


 


7.6.                            Further Assurances.  Promptly upon request,
Borrowers shall deliver such instruments, assignments, title certificates, or
other documents or agreements, and shall take such actions, as Agent deems
appropriate under Applicable Law to evidence or perfect its Lien on any
Collateral, or otherwise to give effect to the intent of this Agreement.  Each Borrower authorizes Agent to file any
financing statement that indicates the Collateral as “all assets” or “all
personal property” of such Borrower, or words to similar effect, and ratifies
any action taken by Agent before the Closing Date to effect or perfect its Lien
on any Collateral.


 


7.7.                            Foreign
Subsidiary Stock.  Notwithstanding
Section 7.1, the Collateral shall
include only 65% of the voting stock of any Foreign Subsidiary.


 


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SECTION 8.                        COLLATERAL ADMINISTRATION


 


8.1.                            Borrowing Base Certificates.  By the 20th day of each Fiscal Month,
Borrowers shall deliver to Agent (and Agent shall promptly deliver same to
Lenders) a Borrowing Base Certificate prepared as of the close of business on
the last day of the previous Fiscal Month, and at such other times as Agent may
reasonably request.  During a Trigger
Period, if Agent requests weekly delivery of Borrowing Base Certificates, on
Wednesday of each week, Borrowers shall deliver to Agent (and Agent shall
promptly deliver same to Lenders) a Borrowing Base Certificate prepared as of
the close of business on the last day of the previous week.  All calculations of Availability in any
Borrowing Base Certificate shall originally be made by Borrowers and certified
by a Vice President or Treasurer of Borrower Agent, or a Senior Officer,
provided that Agent may from time to time review and adjust any such
calculation (a) to reflect its reasonable estimate of declines in value of
any Collateral, due to collections received in the Dominion Account or
otherwise; (b) to adjust advance rates to reflect changes in dilution,
quality, mix and other factors affecting Collateral; and (c) to the extent
the calculation is not made in accordance with this Agreement or does not
accurately reflect the Availability Reserve. 
To the extent permitted by the Agent, Borrowers may provide more
frequent Borrowing Base Certificates and Borrowers may update and deliver to
Agent a Borrowing Base Certificate as of the close of business of the prior
week at any time.


 


8.2.                            Administration
of Accounts.


 


8.2.1.                     Records and
Schedules of Accounts.  Each
Borrower shall keep accurate and complete records of its Accounts, including
all payments and collections thereon, and shall submit to Agent sales,
collection, reconciliation and other reports in form reasonably satisfactory to
Agent, on such periodic basis as Agent may reasonably request.  By the 20th day of each Fiscal Month,
Borrowers shall deliver to Agent a detailed aged trial balance of all Accounts
prepared as of the close of business on the last day of the previous Fiscal
Month, specifying each Account’s Account Debtor name and address, amount,
invoice date and due date, showing any discount, allowance, credit, authorized
return or dispute, and including such supporting information (proof of
delivery, copies of invoices and invoice registers, copies of related
documents, repayment histories, status reports and other information) as Agent
may reasonably request.  During a Trigger
Period, on Wednesday of each week, Borrowers shall deliver such information to
Agent prepared as of the close of business on the last day of the previous
week.  If Accounts in an aggregate face
amount of $2,500,000 or more cease to be Eligible Accounts, Borrowers
shall notify Agent of such occurrence promptly (and in any event within one
Business Day) after any Borrower has knowledge thereof.


 


8.2.2.                     Taxes.  If an Account of any Borrower includes a
charge for any Taxes (other than GST taxes assessed on Canadian-based
Accounts), Agent is authorized, in its discretion, to pay the amount thereof to
the proper taxing authority for the account of such Borrower and to charge
Borrowers therefor; provided, however, that neither Agent nor Lenders shall
be liable for any Taxes that may be due from Borrowers or with respect to any
Collateral.


 


8.2.3.                     Account
Verification.  Whether or
not a Default or Event of Default exists, Agent shall have the right at any
time, in the name of Agent, any designee of Agent or any Borrower, to verify
the validity, amount or any other matter relating to any Accounts of Borrowers
by mail, telephone or otherwise. 
Borrowers shall cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process.


 


8.2.4.                     Maintenance of
Dominion Account.  Borrowers
shall maintain Dominion Accounts pursuant to lockbox or other arrangements
acceptable to Agent.  Borrowers shall
obtain an agreement (in form and substance satisfactory to Agent) from each
lockbox servicer and Dominion Account bank, establishing Agent’s control over
and Lien in the lockbox or Dominion Account, which may be exercised by Agent
during any Trigger Period, requiring immediate deposit of all remittances


 


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received in the lockbox to a
Dominion Account, and waiving offset rights of such servicer or bank, except
for customary administrative charges.  If
a Dominion Account is not maintained with Bank of America, Agent may, during any Trigger Period, require
immediate transfer of all funds in such account to a Dominion Account
maintained with Bank of America.  Agent
and Lenders assume no responsibility to Borrowers for any lockbox arrangement
or Dominion Account, including any claim of accord and satisfaction or release
with respect to any Payment Items accepted by any bank.


 


8.2.5.                     Proceeds of
Collateral.  Borrowers
shall request in writing and otherwise take all necessary steps to ensure that
all payments on Accounts or otherwise relating to Collateral are made directly
to a Dominion Account (or a lockbox relating to a Dominion Account).  If any Borrower or Subsidiary receives cash
or Payment Items with respect to any Collateral, it shall hold same in trust
for Agent and promptly (not later than the next Business Day) deposit same into
a Dominion Account.


 


8.3.                            Administration
of Inventory.


 


8.3.1.                     Records and
Reports of Inventory.  Each
Borrower shall keep accurate and complete records of its Inventory, including
costs and daily withdrawals and additions, and shall submit to Agent, on such
periodic basis as Agent may request, a current schedule thereof, in form
reasonably satisfactory to Agent.


 


8.3.2.                     Returns of
Inventory.  No Borrower
shall return any Inventory to a supplier, vendor or other Person, whether for
cash, credit or otherwise, unless such return is in the Ordinary Course of
Business.


 


8.3.3.                     Acquisition,
Sale and Maintenance.  No Borrower
shall acquire or accept any Inventory on consignment or approval, and shall
take all appropriate steps to assure that all Inventory is produced in
accordance with Applicable Law, including the FLSA.  Except as set forth on Schedule
8.3.3, no Borrower shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require a
Borrower to repurchase such Inventory. 
Borrowers shall use, store and maintain all Inventory with reasonable
care and caution, in accordance with applicable standards of any insurance and
in conformity with all Applicable Law, and shall make current rent payments
(within applicable grace periods provided for in leases) at all locations where
any Collateral is located.


 


8.4.                            Administration
of Equipment.


 


8.4.1.                     Records and Schedules
of Equipment.  Each
Borrower shall keep accurate and complete records of its Equipment, including
kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall
submit to Agent, on such periodic basis as Agent may request, a current
schedule thereof, in form reasonably satisfactory to Agent.  Promptly upon request, Borrowers shall
deliver to Agent evidence of their ownership or interests in any Equipment.


 


8.4.2.                     Dispositions of
Equipment.  No Borrower
shall sell, lease or otherwise dispose of any Equipment, without the prior
written consent of Agent, other than (a) the dispositions referred to on Schedule 8.4.2, (b) a Permitted Asset Disposition; or (c) replacement
of Equipment that is worn, damaged or obsolete with Equipment of like function
and value, if the replacement Equipment is acquired substantially
contemporaneously with such disposition and is free of Liens.


 


8.4.3.                     Condition of
Equipment.  The
Equipment is in good operating condition and repair, and all necessary
replacements and repairs have been made so that the value and operating
efficiency of the Equipment is preserved at all times, reasonable wear and tear
excepted.  Each Borrower shall ensure
that the Equipment is mechanically and structurally sound, and capable of performing
the functions for which it was designed, in accordance with manufacturer
specifications.  No Borrower shall permit
Equipment with an aggregate value (when aggregated with all such Equipment
owned by


 


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Borrowers and Subsidiaries)
in excess of $2,000,000 to become affixed to real Property unless any landlord
or mortgagee delivers a Lien Waiver.


 


8.5.                            Administration
of Deposit Accounts.  Schedule 8.5 sets
forth all Deposit Accounts maintained by Borrowers, including all Dominion
Accounts.  Each Borrower shall take all
actions necessary to establish Agent’s control of each such Deposit Account
(other than an account exclusively used in connection with the Existing ARS
Facilities, or for payroll, payroll taxes or employee benefits, or one or more
accounts containing not more than $100,000 in the aggregate at any time).  Except as set forth on Schedule 8.5,
Borrower shall be the sole account holder of each Deposit Account and shall not
allow any other Person (other than Agent) to have control over a Deposit
Account or any Property deposited therein. 
Each Borrower shall promptly notify Agent of any opening or closing of a
Deposit Account and, with the consent of Agent, will amend Schedule 8.5
to reflect same and, for new Deposit Accounts, deliver to Agent a duly executed
Control Agreement with respect thereto prior to crediting any funds to such
Deposit Account.


 


8.6.                            General
Provisions.


 


8.6.1.                     Location of
Collateral.  All
tangible items of Collateral, other than Inventory in transit, shall at all
times be kept by Borrowers at the business or warehouse locations set forth in Schedule 8.6.1, except that Borrowers may (a) make
sales or other dispositions of Collateral in accordance with Section 10.2.6; and (b) move
Collateral to another location in the United States, upon 30 days’ prior
written notice to Agent.


 


8.6.2.                     Insurance of
Collateral; Condemnation Proceeds.


 


(a)                                  Each Borrower
shall maintain insurance with respect to the Collateral, covering casualty,
hazard, theft, malicious mischief, flood and other risks, in amounts, with
endorsements and with insurers (with a Best Rating of at least A7, unless
otherwise approved by Agent) reasonably satisfactory to Agent; provided, however, Borrowers shall not be required to obtain
credit insurance related to their Accounts. 
All proceeds payable in respect of Collateral under each policy shall be
payable to Agent.  From time to time upon
request, Borrowers shall deliver to Agent the originals or certified copies of
its insurance policies and updated flood plain searches.  Unless Agent shall agree otherwise, each
policy shall include satisfactory endorsements (i) showing Agent as loss
payee; (ii) requiring 30 days’ prior written notice to Agent (or such
other period as Agent may consent to) in the event of cancellation of the
policy for any reason whatsoever; and (iii) specifying that the interest
of Agent shall not be impaired or invalidated by any act or neglect of any
Borrower or the owner of the Property, nor by the occupation of the premises
for purposes more hazardous than are permitted by the policy.  If any Borrower fails to provide and pay for
any insurance, Agent may, at its option, but shall not be required to, procure
the insurance and charge Borrowers therefor. 
Each Borrower agrees to deliver to Agent, promptly as rendered, copies
of all reports made to insurance companies. 
While no Event of Default exists, Borrowers may settle, adjust or
compromise any insurance claim, as long as the proceeds are delivered to
Agent.  If an Event of Default exists,
only Agent shall be authorized to settle, adjust and compromise such claims.


 


(b)                                 To the extent there are any Obligations
outstanding, any proceeds of insurance relating to Collateral (other than
proceeds from workers’ compensation or D&O insurance) and any awards
arising from condemnation of any Collateral shall be paid to Agent.  Any such proceeds or awards that relate to
Inventory shall be applied to payment of the Revolver Loans, and then to any
other Obligations outstanding.  Subject
to clause (c) below, any proceeds or awards that relate to Equipment or
Real Estate shall be applied first to Revolver Loans and then to other
Obligations.


 


(c)                                  If requested by Borrowers in writing within 15
days after Agent’s receipt of any insurance proceeds or condemnation awards
relating to any loss or destruction of Equipment or Real


 


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Estate, Borrowers
may use such proceeds or awards to repair or replace such Equipment or Real
Estate (and until so used, the proceeds shall be held by Agent as Cash
Collateral) as long as (i) no Default or Event of Default exists; (ii) such
repair or replacement is promptly undertaken and concluded, in accordance with
plans reasonably satisfactory to Agent; (iii) replacement buildings are
constructed on the sites of the original casualties and are of comparable size,
quality and utility to the destroyed buildings; (iv) the repaired or
replaced Property is free of Liens, other than Permitted Liens that are not
Purchase Money Liens; (v) Borrowers comply with disbursement procedures
for such repair or replacement as Agent may reasonably require; and (vi) the
aggregate amount of such proceeds or awards from any single casualty or
condemnation does not exceed $500,000.


 


8.6.3.                     Protection of
Collateral.  All
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping any Collateral, all Taxes payable with respect to any Collateral
(including any sale thereof), and all other payments required to be made by
Agent to any Person to realize upon any Collateral, shall be borne and paid by
Borrowers.  Agent shall not be liable or
responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is
in Agent’s actual possession), for any diminution in the value thereof, or for
any act or default of any warehouseman, carrier, forwarding agency or other
Person whatsoever, but the same shall be at Borrowers’ sole risk.


 


8.6.4.                     Defense of
Title to Collateral.  Each
Borrower shall at all times defend its title to Collateral and Agent’s Liens
therein against all Persons, claims and demands whatsoever, except Permitted
Liens.


 


8.7.                            Power of Attorney.  Each Borrower hereby irrevocably constitutes
and appoints Agent (and all Persons designated by Agent) as such Borrower’s
true and lawful attorney (and agent-in-fact) for the purposes provided in this
Section.  Agent, or Agent’s designee,
may, without notice and in either its or a Borrower’s name, but at the cost and
expense of Borrowers:


 


(a)                                  Endorse a
Borrower’s name on any Payment Item or other proceeds of Collateral (including
proceeds of insurance) that come into Agent’s possession or control; and


 


(b)                                 During an Event
of Default, (i) notify any Account Debtors of the assignment of their
Accounts, demand and enforce payment of Accounts by legal proceedings or
otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release
any Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as Agent deems
advisable; (iv) collect, liquidate and receive balances in Deposit
Accounts or investment accounts, and take control, in any manner, of proceeds
of Collateral; (v) prepare, file and sign a Borrower’s name to a proof of
claim or other document in a bankruptcy of an Account Debtor, or to any notice,
assignment or satisfaction of Lien or similar document; (vi) receive, open
and dispose of mail addressed to a Borrower, and notify postal authorities to
deliver any such mail to an address designated by Agent; (vii) endorse any
Chattel Paper, Document, Instrument, bill of lading, or other document or
agreement relating to any Accounts, Inventory or other Collateral; (viii) use
a Borrower’s stationery and sign its name to verifications of Accounts and
notices to Account Debtors; (ix) use information contained in any data
processing, electronic or information systems relating to Collateral; (x) make
and adjust claims under insurance policies; (xi) take any action as may be
necessary or appropriate to obtain payment under any letter of credit, banker’s
acceptance or other instrument for which a Borrower is a beneficiary; and (xii)
take all other actions as Agent deems appropriate to fulfill any Borrower’s
obligations under the Loan Documents.


 


SECTION 9.                        REPRESENTATIONS AND WARRANTIES


 


9.1.                            General Representations and Warranties.  To induce Agent and Lenders to
enter into


 


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this Agreement and to make
available the Commitments, Loans and Letters of Credit, each Borrower
represents and warrants that:


 


9.1.1.                     Organization
and Qualification.  Each
Borrower and Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.  Each Borrower and Subsidiary is duly
qualified, authorized to do business and in good standing as a foreign
corporation in each jurisdiction where failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.


 


9.1.2.                     Power and
Authority.  Each
Obligor is duly authorized to execute, deliver and perform its Loan
Documents.  The execution, delivery and
performance of the Loan Documents have been duly authorized by all necessary
action, and do not (a) require any consent or approval of any holders of
Equity Interests of any Obligor, other than those already obtained; (b) contravene
the Organic Documents of any Obligor; (c) violate or cause a default under
any Applicable Law or Material Contract; or (d) result in or require the
imposition of any Lien (other than Permitted Liens) on any Property of any
Obligor.


 


9.1.3.                     Enforceability.  Each Loan Document is a legal, valid and
binding obligation of each Obligor party thereto, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally.


 


9.1.4.                     Capital
Structure  THQ is organized in the state of
Delaware.  The authorized capital stock
of THQ  consists of 225,000,000 shares of
common stock (“THQ Common Stock”) and 1,000,000 shares of preferred stock, (“THQ
Preferred Stock”), each with a par value $0.01 per share. As of January 30,
2009, (a) approximately 67,057,839 shares of THQ Common Stock were issued
and outstanding, and (b) no shares of THQ Preferred Stock were issued and
outstanding. As of March 28, 2009, 9,505,712 shares of THQ Common Stock
were reserved for issuance under the THQ Stock Plans (“THQ Equity Rights”),
including pursuant to the exercise of options or vesting of restricted stock awards.  As of March 28, 2009, 390,000 stock
warrants were outstanding to purchase shares of THQ Common Stock.  No shares of capital stock of THQ are owned
by any Subsidiary of THQ. All of the outstanding shares of capital stock of THQ
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive and similar rights. Except as set forth
above, there are no outstanding (i) shares of capital stock, debt
securities or other voting securities of or ownership interests in THQ, (ii) securities
of THQ convertible into or exchangeable for shares of capital stock, debt
securities or voting securities of or ownership interests in THQ, (iii) subscriptions,
calls, commitments, understandings, restrictions, arrangements, rights, warrants,
options or other rights to acquire from THQ, or obligations of THQ to issue any
capital stock, debt securities, voting securities or other ownership interests
in, or any securities convertible into or exchangeable or exercisable for any
capital stock, voting securities, debt securities or ownership interests in,
THQ, or obligations of THQ to grant, extend or enter into any such agreement or
commitment or (iv) obligations of THQ to repurchase, redeem or otherwise
acquire any outstanding securities of THQ, or to vote or to dispose of any
shares of capital stock of THQ.  Schedule 9.1.4 shows, for each Borrower
(other than THQ) and Subsidiary, its name, its jurisdiction of organization,
its authorized and issued Equity Interests, the holders of its Equity
Interests, and all agreements binding on such holders with respect to their
Equity Interests.  Except as disclosed on
Schedule 9.1.4, in the five years
preceding the Closing Date, no Borrower or Subsidiary has acquired any
substantial assets from any other Person nor been the surviving entity in a
merger or combination.  Each Borrower has
good title to its Equity Interests in its Subsidiaries, subject only to Agent’s
Lien, and all such Equity Interests are duly issued, fully paid and
non-assessable.  Other than as set forth
above with respect to THQ, or on Schedule 9.1.4,
there are no outstanding purchase options, warrants, subscription rights,
agreements to issue or sell, convertible interests, phantom rights or powers of
attorney relating to Equity Interests of any Borrower or Subsidiary.


 


9.1.5.                     Title to
Properties; Priority of Liens.  Each Borrower and Subsidiary has good


 


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and marketable title to (or
valid leasehold interests in) all of its Real Estate, and good title to all of
its personal Property, including all Property reflected in any financial
statements delivered to Agent or Lenders, in each case free of Liens except
Permitted Liens.  Each Borrower and
Subsidiary has paid and discharged all lawful claims that, if unpaid, could
become a Lien on its Properties, other than Permitted Liens.  All Liens of Agent in the Collateral are duly
perfected, first priority Liens, subject only to Permitted Liens that are
expressly allowed to have priority over Agent’s Liens.


 


9.1.6.                     Accounts.  Agent may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by Borrowers
with respect thereto.  Borrowers warrant,
with respect to each Account at the time it is shown as an Eligible Account in
a Borrowing Base Certificate, that:


 


(a)                                  it is genuine
and in all respects what it purports to be, and is not evidenced by a judgment;


 


(b)                                 it arises out
of a completed, bona fide sale
and delivery of goods or rendition of services in the Ordinary Course of Business, and
substantially in accordance with any purchase order, contract or other document
relating thereto;


 


(c)                                  it is for a sum
certain, maturing as stated in the invoice covering such sale or rendition of
services, a copy of which has been furnished or is available to Agent on
request;


 


(d)                                 it is not
subject to any offset, Lien (other than Agent’s Lien), deduction, defense,
dispute, counterclaim or other adverse condition except as arising in the
Ordinary Course of Business and disclosed to Agent; and it is absolutely owing
by the Account Debtor, without contingency in any respect;


 


(e)                                  no purchase
order, agreement, document or Applicable Law restricts assignment of the
Account to Agent (regardless of whether, under the UCC, the restriction is
ineffective), and the applicable Borrower is the sole payee or remittance party
shown on the invoice;


 


(f)                                    no extension,
compromise, settlement, modification, credit, deduction or return has been
authorized with respect to the Account, except discounts or allowances granted
in the Ordinary Course of Business that are reflected in the reports submitted
to Agent hereunder; and


 


(g)                                 to the best of
Borrowers’ knowledge, (i) there are no facts or circumstances that are
reasonably likely to impair the enforceability or collectibility of such
Account; (ii) the Account Debtor had the capacity to contract when the
Account arose, continues to meet the applicable Borrower’s customary credit
standards, is Solvent, is not contemplating or subject to an Insolvency
Proceeding, and has not failed, or suspended or ceased doing business; and (iii) there
are no proceedings or actions threatened or pending against any Account Debtor
that could reasonably be expected to have a material adverse effect on the Account
Debtor’s financial condition.


 


9.1.7.                     Financial
Statements.  The
consolidated and consolidating balance sheets, and related statements of
income, cash flow and shareholder’s equity, of Borrowers and Subsidiaries that
have been and are hereafter delivered to Agent and Lenders, are prepared in
accordance with GAAP applied on a consistent basis during the periods indicated
(except as may be indicated in the notes thereto or, in the case of unaudited
interim financial statements, as may be permitted by Applicable Law), and
fairly present, in all material respects, the consolidated financial positions
and results of operations of Borrowers and Subsidiaries at the dates and for
the periods indicated except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments, which were not or
are not expected to be material in amount. 
Management financial reports and projections that are prepared on a
non-GAAP basis and delivered from time to time to Agent and Lenders have been
prepared in good faith, based on reasonable assumptions in light of the
circumstances at such time.  Except as


 


-49-

















 


disclosed on Schedule 9.1.7, since March 28, 2008, there has been no
change in the condition, financial or otherwise, of any Borrower or Subsidiary
that could reasonably be expected to have a Material Adverse Effect.  No financial statement delivered to Agent or
Lenders at any time contains any untrue statement of a material fact, nor fails
to disclose any material fact necessary to make such statement not materially
misleading.  Each Borrower is Solvent,
and the Borrowers and the Subsidiaries, as a whole, are Solvent.


 


9.1.8.                     Surety
Obligations.  No Borrower
or Subsidiary is obligated as surety or indemnitor under any bond or other
contract that assures payment or performance of any obligation of any Person,
except as permitted hereunder.


 


9.1.9.                     Taxes.  Each Borrower and Subsidiary has filed all
federal, state and local tax returns and other reports that it is required by
law to file, and has paid, or made provision for the payment of, all Taxes upon
it, its income and its Properties that are due and payable, except to the
extent being Properly Contested or are local Taxes (and the associated returns)
in an amount less than $1,000 in any one jurisdictions and which, in the
aggregate, do not exceed $25,000.  The
provision for Taxes on the books of each Borrower and Subsidiary is adequate
for all years not closed by applicable statutes, and for its current Fiscal
Year.


 


9.1.10.               Brokers.  There are no brokerage commissions, finder’s
fees or investment banking fees payable in connection with any transactions
contemplated by the Loan Documents.


 


9.1.11.     Intellectual Property. Each Borrower
and Subsidiary owns or has the lawful right to use all Intellectual Property
used by it and which is necessary for the conduct of its business, without
conflict with any rights of others. 
Except as disclosed on Schedule 9.1.11, there is no pending or, to any
Borrower’s knowledge, threatened Intellectual Property Claim with respect to
any Borrower, any Subsidiary or any of their Property (including any
Intellectual Property) that, if upheld, could reasonably be expected to have a
Material Adverse Effect.  Except as
disclosed on Schedule 9.1.11, no
Borrower or Subsidiary pays or owes any Royalty or other compensation to any
Person with respect to any registered Intellectual Property.  All registered Intellectual Property owned,
used or licensed by, or otherwise subject to any interests of, any Borrower or
Subsidiary is shown on Schedule 9.1.11.


 


9.1.12.               Governmental
Approvals.  Each
Borrower and Subsidiary has, is in compliance with, and is in good standing
with respect to, all Governmental Approvals necessary to conduct its business
and to own, lease and operate its Properties, except where the failure to be in
compliance and good standing could not reasonably be expected to have a
Material Adverse Effect.  All necessary
import, export or other licenses, permits or certificates for the import or
handling of any goods or other Collateral have been procured and are in effect,
and Borrowers and Subsidiaries have complied with all foreign and domestic laws
with respect to the shipment and importation of any goods or Collateral, except
where noncompliance could not reasonably be expected to have a Material Adverse
Effect.


 


9.1.13.               Compliance with
Laws.  Each Borrower and Subsidiary
has duly complied, and its Properties and business operations are in
compliance, in all material respects with all Applicable Law, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect.  There have been no citations,
notices or orders of material noncompliance issued to any Borrower or
Subsidiary under any Applicable Law.  To
Borrowers’ knowledge, no Inventory has been produced in violation of the FLSA.


 


9.1.14.               Compliance with
Environmental Laws.  Except as
disclosed on Schedule 9.1.14, no
Borrower’s or Subsidiary’s past (to the best of Borrowers’ knowledge) or
present operations, Real Estate or other Properties are subject to any federal,
state or local investigation to determine whether any remedial action is needed
to address any environmental pollution, hazardous material or environmental clean-up
that, if it were ordered, could reasonably be expected to have a Material
Adverse Effect.  No


 


-50-

















 


Borrower or Subsidiary has received any material Environmental
Notice.  No Borrower or Subsidiary has any
material contingent liability with respect to any Environmental Release,
environmental pollution or hazardous material on any Real Estate now or
previously owned, leased or operated by it.


 


9.1.15.               Burdensome
Contracts.  No Borrower
or Subsidiary is a party or subject to any contract, agreement or charter
restriction that could reasonably be expected to have a Material Adverse
Effect.  No Borrower or Subsidiary is
party or subject to any Restrictive Agreement, except as shown on Schedule 9.1.15.  No such Restrictive Agreement prohibits the
execution, delivery or performance of any Loan Document by an Obligor.


 


9.1.16.               Litigation.  Except as shown on Schedule 9.1.16, there are no proceedings or investigations
pending or, to any Borrower’s knowledge, threatened against any Borrower or
Subsidiary, or any of their businesses, operations, Properties, prospects or
conditions, that (a) relate to any Loan Documents or transactions
contemplated thereby; or (b) could reasonably be expected to have a
Material Adverse Effect if determined adversely to any Borrower or such
Subsidiary.  Except as shown on such
Schedule, no Obligor has a Commercial Tort Claim (other than, as long as no
Default or Event of Default exists, a Commercial Tort Claim for less than
$100,000).  No Borrower or Subsidiary is
in default with respect to any order, injunction or judgment of any
Governmental Authority.


 


9.1.17.               No Defaults.  Except as shown on Schedule 9.1.17, no event or circumstance has occurred or
exists that constitutes a Default or Event of Default.  No Borrower or Subsidiary is in material
default, and no event or circumstance has occurred or exists that with the
passage of time or giving of notice would constitute a default, under any
Material IP, Material Contract or in the payment of any Borrowed Money.  Except as shown on Schedule 9.1.17, there is no basis upon which any party (other
than a Borrower or Subsidiary) could terminate any Material IP or a Material
Contract prior to its scheduled termination date.


 


9.1.18.               ERISA.  Except as disclosed on Schedule 9.1.18:


 


(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code, and other federal and 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 Borrowers, nothing has occurred which
would prevent, or cause the loss of, such qualification.  Each Obligor and ERISA Affiliate has 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 knowledge of Borrowers, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan
that could 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 in or could reasonably be expected to have 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) no Obligor or 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) no Obligor or 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 Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) no Obligor or ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.


 


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(d)                                 With respect to
any Foreign Plan, (i) all employer
and employee contributions required by law or by the terms of the Foreign Plan
have been made, or, if applicable, accrued, in accordance with normal
accounting practices; (ii) the fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any Foreign Plan funded
through insurance, or the book reserve established for any Foreign Plan,
together with any accrued contributions, is sufficient to procure or provide
for the accrued benefit obligations with respect to all current and former
participants in such Foreign Plan according to the actuarial assumptions and
valuations most recently used to account for such obligations in accordance
with applicable generally accepted accounting principles; and (iii) it has
been registered as required and has been maintained in good standing with
applicable regulatory authorities.


 


9.1.19.               Trade Relations.  There exists no actual or, to Borrowers’
knowledge, threatened termination, limitation or modification of any business
relationship between any Borrower or Subsidiary and any customer or supplier,
or any group of customers or suppliers, who individually or in the aggregate
are material to the business of such Borrower or Subsidiary.  To the best of Borrowers’ knowledge, there
exists no condition or circumstance that could reasonably be expected to impair
the ability of any Borrower or Subsidiary to conduct its business at any time
hereafter in substantially the same manner as conducted on the Closing Date.


 


9.1.20.               Labor Relations.  Except as described on Schedule 9.1.20, no Borrower or Subsidiary
is party to or bound by any collective bargaining agreement, management
agreement or material consulting agreement. 
There are no material grievances, disputes or controversies with any
union or other organization of any Borrower’s or Subsidiary’s employees, or, to
any Borrower’s knowledge, any asserted or threatened strikes, work stoppages or
demands for collective bargaining.


 


9.1.21.               Payable
Practices.  No Borrower
or Subsidiary has made any material change in its historical accounts payable
practices from those in effect on the Closing Date.


 


9.1.22.               Not a Regulated
Entity.  No Obligor is (a) an “investment
company” or a “person directly or indirectly controlled by or acting on behalf
of an investment company” within the meaning of the Investment Company Act of
1940; or (b) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.


 


9.1.23.               Margin Stock.  No Borrower or Subsidiary is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.  No Loan proceeds or Letters of Credit will be
used by Borrowers to purchase or carry, or to reduce or refinance any Debt
incurred to purchase or carry, any Margin Stock or for any related purpose
governed by Regulations T, U or X of the Board of Governors.


 


9.2.                            Complete Disclosure.  No Loan Document contains any untrue
statement of a material fact, nor fails to disclose any material fact necessary
to make the statements contained therein, in light of the circumstances in
which such statements were made, not materially misleading.  There is no fact or circumstance that any
Obligor has failed to disclose to Agent in writing that could reasonably be
expected to have a Material Adverse Effect.


 


SECTION 10.                   COVENANTS AND CONTINUING AGREEMENTS


 


10.1.                     Affirmative Covenants.  As long as any Commitments or Obligations are
outstanding, each Borrower shall, and shall cause each Obligor to:


 


10.1.1.               Inspections;
Appraisals.


 


(a)                                  Permit Agent
from time to time, subject (except when a Default or Event of


 


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Default exists) to
reasonable notice and normal business hours, to visit and inspect the
Properties of any Borrower or any other Obligor, inspect, audit and make
extracts from any Borrower’s or any other Obligor’s books and records, and
discuss with its officers, employees, agents, advisors and independent
accountants such Borrower’s or such Obligor’s business, financial condition,
assets, prospects and results of operations. 
Lenders may participate in any such visit or inspection, at their own
expense.  Neither Agent nor any Lender
shall have any duty to any Borrower to make any inspection, nor to share any
results of any inspection, appraisal or report with any Borrower.  Borrowers acknowledge that all inspections,
appraisals and reports are prepared by Agent and Lenders for their purposes,
and Borrowers shall not be entitled to rely upon them.


 


(b)                                 Reimburse Agent
for all charges, costs and expenses of Agent in connection with examinations of
any Obligor’s books and records or any other financial or Collateral matters as
Agent deems appropriate.  Subject to and
without limiting the foregoing, Borrowers specifically agree to pay Agent’s
then standard charges for each day that an employee of Agent or its Affiliates
is engaged in any examination activities. 
This Section shall not be construed to limit Agent’s right to
conduct examinations or to obtain appraisals at any time in its discretion, nor
to use third parties for such purposes.


 


10.1.2.               Financial and
Other Information.  Keep
adequate records and books of account with respect to its business activities,
in which proper entries are made in accordance with GAAP reflecting all
financial transactions; and furnish to Agent and Lenders:


 


(a)                                  as soon as
available, and in any event within 90 days after the close of each Fiscal Year,
balance sheets as of the end of such Fiscal Year and the related statements of
income, cash flow and shareholders’ equity for such Fiscal Year, on
consolidated and consolidating bases for Borrowers and Subsidiaries, which
consolidated statements shall be audited and certified (without qualification)
by a firm of independent certified public accountants from the Approved List or
otherwise of recognized standing selected by Borrowers and acceptable to Agent,
and shall set forth in comparative form corresponding figures for the preceding
Fiscal Year and other information reasonably requested by Agent;


 


(b)                                 as soon as
available, and in any event within 30 days after the end of each Fiscal Month
and each Fiscal Quarter (but within 60 days after the last Fiscal Month and
Fiscal Quarter in a Fiscal Year), unaudited balance sheets as of the end of
such period and the related statements of income and (for each Fiscal Quarter
only) cash flow for such period and for the portion of the Fiscal Year then
elapsed, on consolidated and consolidating bases for Borrowers and
Subsidiaries, setting forth in comparative form corresponding figures for the
preceding Fiscal Year and certified by the vice president of finance, treasurer
or chief financial officer of Borrower Agent as prepared (x) for each
Fiscal Quarter, in accordance with GAAP, and (y) for each Fiscal Month, on
a consistent basis, and in each case fairly presenting the financial position
and results of operations for such period, subject to normal quarter-end
adjustments and the absence of footnotes;


 


(c)                                  concurrently
with delivery of financial statements under clauses (a) and (b) above,
or more frequently if requested by Agent while a Default or Event of Default
exists, a Compliance Certificate executed by the chief financial officer of
Borrower Agent;


 


(d)                                 concurrently
with delivery of financial statements under clause (a) above, copies of
all management letters and other material reports submitted to Borrowers by
their accountants in connection with such financial statements;


 


(e)                                  not later than
30 days after the end of each Fiscal Year, projections of Borrowers’
consolidated balance sheets, results of operations, cash flow and Availability
for the next Fiscal Year, Fiscal Month by Fiscal Month and for any additional Fiscal Years prepared
by Borrowers;


 


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(f)                                    at Agent’s
request, a listing of each Borrower’s trade payables, specifying the trade creditor
and balance due, and a detailed trade payable aging, all in form reasonably
satisfactory to Agent;


 


(g)                                 promptly after
the sending or filing thereof, copies of any proxy statements, financial
statements or reports that any Borrower has made generally available to its
shareholders; and copies of any regular, periodic and special reports or
registration statements or prospectuses that any Borrower files with the
Securities and Exchange Commission or any other Governmental Authority, or any
securities exchange;


 


(h)                                 promptly after
the sending or filing thereof, copies of any annual report to be filed in
connection with each Plan or Foreign Plan; and


 


(i)                                     such other
reports and information (financial or otherwise) as Agent may reasonably
request from time to time in connection with any Collateral or any Borrower’s,
Subsidiary’s or other Obligor’s financial condition or business.


 


If they are compliant with the requirements set
forth herein, the obligation to deliver the statements referred to in (a) and
(b) above may be satisfied by delivery to Agent of any filings
that any Borrower makes with the Securities and Exchange Commission or any
other Governmental Authority, or any securities exchange.


 


10.1.3.               Notices.  Notify Agent and Lenders in writing, promptly
after a Borrower’s obtaining knowledge thereof, of any of the following that
affects an Obligor:  (a) the written
threat or commencement of any proceeding or investigation, whether or not
covered by insurance, if an adverse determination could have a Material Adverse
Effect; (b) any pending or threatened material labor dispute, strike or
walkout, or the expiration of any material labor contract; (c) any default
under or termination (other than in accordance with its terms) of a Material
Contract; (d) the existence of any Default or Event of Default; (e) any
judgment in an amount exceeding $1,000,000; (f) the
written assertion of any Intellectual Property Claim, if an adverse resolution
could have a Material Adverse Effect; (g) any violation or asserted violation
of any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws),
if an adverse resolution could reasonably be expected to have a Material
Adverse Effect; (h) any Environmental Release by an Obligor or on any
Property owned, leased or occupied by an Obligor; or receipt of any
Environmental Notice; (i) the occurrence of any ERISA Event; (j) the
discharge of or any withdrawal or resignation by Borrowers’ independent
accountants; or (k) any opening of a new office or place of business, at least
30 days prior to such opening.


 


10.1.4.               Landlord and
Storage Agreements.  Upon
reasonable request, provide Agent with copies of all existing agreements, and
promptly after execution thereof provide Agent with notice of, and if
reasonably requested, copies of all future agreements, between an Obligor and
any landlord, warehouseman, processor, shipper, bailee or other Person that
owns any premises at which any Collateral may be kept or that otherwise may
possess or handle any Collateral.


 


10.1.5.               Compliance with
Laws.  Comply with all Applicable
Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and
laws regarding collection and payment of Taxes, and maintain all Governmental
Approvals necessary to the ownership of its Properties or conduct of its
business, unless failure to comply (other than failure to comply with
Anti-Terrorism Laws) or maintain could not reasonably be expected to have a
Material Adverse Effect.  Without
limiting the generality of the foregoing, if any Environmental Release occurs
at or on any Properties of any Borrower or Subsidiary, it shall act promptly
and diligently to investigate and report to Agent and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.


 


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10.1.6.               Taxes.  Pay and discharge all Taxes prior to the date
on which they become delinquent or penalties attach, unless such Taxes are
being Properly Contested.


 


10.1.7.               Insurance.  In addition to the insurance required
hereunder with respect to Collateral, maintain insurance with insurers
(with a Best Rating of at least A7, unless otherwise approved by Agent)
reasonably satisfactory to Agent, with respect to the
Properties and business of Borrowers and Subsidiaries of such type (including
product liability, workers’ compensation, larceny, embezzlement, or other
criminal misappropriation insurance), in such amounts, and with such coverages
and deductibles as are customary for companies similarly situated, with deductibles
satisfactory to Agent.  Borrowers shall
not be required to obtain credit insurances with respect to their Accounts.


 


10.1.8.               Licenses.


 


(i)                                     Keep each
License affecting any Collateral (including all Material IP and any other
License used in the manufacture, distribution or disposition of Inventory) or
any other material Property of Borrowers and Subsidiaries in full force and
effect in accordance with its terms, except where the failure to maintain such
License in full force and effect is as a result of (x) any Permitted IP
Disposition, or (y) for any License other than Material IP, the acts or
omissions of one or more third parties and not the result of acts or omissions
of any Borrower or Subsidiary;


 


(ii)                                  pay or set-off
all Royalties when due, except to the extent the same are being Properly
Contested.


 


(iii)                               notify Agent of
any default or breach asserted in writing by any Person to have occurred under
any License, and


 


(ii)                                  provide Agent
by the 20th day of each Fiscal Quarter, a schedule, in
form reasonably satisfactory to Agent, and showing (x) any Royalties being
Properly Contested, and (y) all registered Intellectual Property
(specifically delineating registered copyrights, whether owned or licensed from
a third party) that was acquired by any Borrower or Subsidiary, or that was the
subject of a Permitted IP Disposition, or that was modified (and setting forth
in reasonable detail a summary of such modifications), in each case during the
prior Fiscal Quarter.


 


10.1.9.               Future
Subsidiaries.  Promptly
notify Agent upon any Person becoming a Subsidiary and, if such Person is not a
Foreign Subsidiary, cause it to guaranty the Obligations in a manner
satisfactory to Agent, and to execute and deliver such documents, instruments
and agreements and to take such other actions as Agent shall require to
evidence and perfect a Lien in favor of Agent (for the benefit of Secured
Parties) on all assets of such Person, including delivery of such legal opinions, in form and substance
satisfactory to Agent, as it shall deem appropriate.


 


10.2.                     Negative Covenants.  As long as any Commitments or Obligations are
outstanding, each Borrower shall not, and shall cause each other Obligor not
to:


 


10.2.1.               Permitted Debt.  Create, incur, guarantee or suffer to exist
any Debt, except:


 


(a)                                  the
Obligations;


 


(b)                                 Subordinated
Debt;


 


(c)                                  Permitted
Purchase Money Debt;


 


(d)                                 Borrowed Money
(other than the Obligations, Subordinated Debt and Permitted Purchase Money
Debt), but only to the extent outstanding on the Closing Date and not satisfied
with proceeds of the initial Loans;


 


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(e)                                  Bank Product
Debt;


 


(f)                                    Debt that is in existence when a Person
becomes a Subsidiary  or that is secured by an asset when acquired by a Borrower or
Subsidiary, as long as such Debt was not incurred in contemplation of such
Person becoming a Subsidiary  or such acquisition, and does not exceed $500,000 in the aggregate
at any time;


 


(g)                                 Permitted
Contingent Obligations;


 


(h)                                 Refinancing
Debt as long as each Refinancing Condition is satisfied;


 


(i)                                     Debt arising
from loans or advances permitted under Section 10.2.7;


 


(j)                                     Debt incurred
by Borrowers or any Subsidiary arising from agreement for indemnifications or
customary adjustments of purchase price or similar obligations in connection
with Permitted Acquisitions;


 


(k)                                  Debt under the
Existing ARS Facilities;


 


(l)                                     Debt arising
under limited-duration overdraft or ACH lines, copies of the agreements for
which have been delivered to Agent, in any amount not to exceed $3,000,000 in
the aggregate at any time; and


 


(m)                               Debt that is
not included in any of the preceding clauses of this Section, is not secured by
a Lien and does not exceed $500,000 in the aggregate at any time.


 


10.2.2.               Permitted Liens.  Create or suffer to exist any Lien upon any
of its Property, except the following (collectively, “Permitted Liens”):


 


(a)                                  Liens in favor
of Agent;


 


(b)                                 Purchase Money
Liens securing Permitted Purchase Money Debt;


 


(c)                                  Liens for Taxes
not yet due or being Properly Contested;


 


(d)                                 statutory Liens
(other than Liens for Taxes or imposed under ERISA) arising in the Ordinary
Course of Business, but only if (i) payment of the obligations secured
thereby is not yet due or is being Properly Contested, and (ii) such Liens
do not materially impair the value or use of the Property or materially impair
operation of the business of any Borrower or Subsidiary;


 


(e)                                  Liens incurred
or deposits made in the Ordinary Course of Business to secure the performance
of tenders, bids, leases, contracts (except those relating to Borrowed Money),
statutory obligations and other similar obligations, or arising as a result of
progress payments under government contracts, as long as such Liens are at all
times junior to Agent’s Liens;


 


(f)                                    Liens arising
in the Ordinary Course of Business that are subject to Lien Waivers;


 


(g)                                 Liens arising
by virtue of a judgment or judicial order against any Borrower or Subsidiary,
or any Property of a Borrower or Subsidiary, as long as such Liens are (i) in
existence for less than 20 consecutive days or being Properly Contested, and (ii) at
all times junior to Agent’s Liens;


 


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(h)                                 easements,
rights-of-way, restrictions, covenants or other agreements of record, and other
similar charges or encumbrances on Real Estate, that do not secure any monetary
obligation and do not interfere with the Ordinary Course of Business;


 


(i)                                     normal and
customary rights of setoff upon deposits in favor of depository institutions,
and Liens of a collecting bank on Payment Items in the course of collection;


 


(j)                                     to the extent
the same shall constitute a Lien, any interest or title of a lessor or
sublessor under any lease (including Capital Leases) permitted hereunder;


 


(k)                                  Liens securing
an amount not
to exceed $5,000,000 in the aggregate at any time, in connection with any Hedging
Agreements permitted under Section 10.2.15
or to secure facilities permitted under Section 10.2.1(l) provided
that such collateral posting shall not be made in any Deposit Account or
Securities Account owned by or as to which the customer is any Borrower or
Subsidiary; and


 


(l)                                     existing Liens
shown on Schedule 10.2.2.


 


10.2.3.               Capital
Expenditures.  Make
Capital Expenditures in excess of $25,000,000 in the
aggregate during any Fiscal Year; provided, however, that if the amount of
Capital Expenditures permitted to be made in any Fiscal Year exceeds the amount
actually made, up to $5,000,000 of such excess may be carried forward to the next
Fiscal Year.


 


10.2.4.               Distributions;
Upstream Payments.  Declare or
make any Distributions, except Upstream Payments or JAKKS Amounts; or create or
suffer to exist any encumbrance or restriction on the ability of a Subsidiary
to make any Upstream Payment, except for restrictions under the Loan Documents,
under Applicable Law or in effect on the Closing Date as shown on Schedule 9.1.15.


 


10.2.5.               Restricted
Investments.  Make any Restricted
Investment.


 


10.2.6.               Disposition of
Assets.  Make any Asset Disposition,
except a Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, or a transfer of
Property by a Subsidiary or Obligor to a Borrower.


 


10.2.7.               Loans.  Make any loans or other advances of money to
any Person, except (a) advances to a director, officer, employee or
consultant for salary, travel expenses, commissions and similar items in the
Ordinary Course of Business; (b) prepaid expenses and extensions of trade
credit made in the Ordinary Course of Business; (c) deposits with
financial institutions permitted hereunder; (d) advances to publishers of
Intellectual Property utilized or developed by or on behalf of, or at the
direction of, Borrowers in the Ordinary Course of Business and in an amount not to exceed $2,000,000
for any single advance or $5,000,000 in the aggregate at any time; (e) advances
to licensors of Intellectual Property utilized by or on behalf or, or at the
direction of, Borrowers in the Ordinary Course of Business and in an amount not to exceed $25,000,000
for any single advance or $130,000,000 in the aggregate at any time, and (f) as
long as no Default or Event of Default exists, intercompany loans by a Borrower
to another Borrower.


 


10.2.8.                 Restrictions on Payment of Certain Debt.  Make any payments (whether voluntary or
mandatory, or a prepayment, redemption, retirement, defeasance or acquisition)
with respect to any (a) Subordinated Debt, except regularly scheduled
payments of principal, interest and fees, but only to the extent permitted
under any subordination agreement relating to such Debt (and a Senior Officer
of Borrower Agent shall certify to Agent, not less than five Business Days
prior to the date of payment, that all conditions under such agreement have
been satisfied); or (b) Borrowed Money (other than the Obligations or,
solely with the property pledged thereunder, the Existing ARS Facilities) prior
to its due date under the agreements evidencing such Debt as in effect on the Closing
Date (or as amended


 


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thereafter with the consent
of Agent).


 


10.2.9.               Fundamental
Changes; Release of Guarantor.  Merge, combine or consolidate with any
Person, or liquidate, wind up its affairs or dissolve itself, in each case
whether in a single transaction or in a series of related transactions, except
for mergers or consolidations of: (i) a Borrower into another Borrower, (ii) a
Guarantor into another Guarantor, or (iii) a Guarantor into a Borrower;
change its name or conduct business under any fictitious name; change its tax,
charter or other organizational identification number; or change its form or
state of organization; provided  that, notwithstanding any
provision to the contrary in any Loan Document, with the prior written consent
of Agent and upon such conditions as Agent may determine in its discretion, a
Guarantor may be liquidated, wound up and dissolved and its remaining Property
transferred to an Obligor, and any Loan Documents to which it is party
terminated with respect to such Guarantor. 
Agent and Lenders acknowledge that Borrowers are in the process of
liquidating a Subsidiary, THQ Wireless Singapore Pte. Ltd. and agree that the
liquidation and dissolution of such entity shall be permitted within the period
of one year from the Closing Date.


 


10.2.10.         Subsidiaries.  Form or acquire (except
pursuant to any Permitted Acquisition) any Subsidiary after the Closing Date,
except in accordance with Sections 10.1.9 and 10.2.5, or permit any existing Subsidiary to
issue any additional Equity Interests except director’s qualifying shares.


 


10.2.11.         Organic
Documents.  Amend,
modify or otherwise change any of its Organic Documents as in effect on the
Closing Date in any manner that could reasonably be expected to be adverse to
the Agent or any Secured Party or affect or impair the enforceability of any
Loan Document or any Lien on any of the Collateral, without the prior written
consent of Agent.


 


10.2.12.         Tax
Consolidation.  Except with
respect to THQ / JAKKS Pacific or THQ*ICE, file or consent to the filing of any
consolidated federal income tax return with any Person other than Borrowers and
Subsidiaries.


 


10.2.13.         Accounting
Changes.  Make any material change in
accounting treatment or reporting practices, except as required by GAAP and in
accordance with Section 1.2;
or change its Fiscal Year.


 


10.2.14.         Restrictive
Agreements.  Become a
party to any Restrictive Agreement, except a Restrictive Agreement (a) in
effect on the Closing Date; (b) relating to secured Debt permitted
hereunder, as long as the restrictions apply only to collateral for such Debt;
or (c) constituting customary restrictions on assignment in leases and
other contracts.


 


10.2.15.         Hedging
Agreements.  Enter into
any Hedging Agreement, except to hedge risks arising in the Ordinary Course of
Business and not for speculative purposes.


 


10.2.16.         Conduct of
Business.  Engage in
any business, other than its business as conducted on the Closing Date and any
activities incidental thereto.


 


10.2.17.         Affiliate
Transactions.  Enter into
or be party to any transaction with an Affiliate, except (a) transactions
contemplated by the Loan Documents; (b) payment of reasonable compensation
to officers and employees for services actually rendered, and loans and
advances permitted by Section 10.2.7;
(c) payment of customary directors’ fees, and directors’ and officers’
indemnities; (d) transactions solely among Borrowers; (e) transactions
with Affiliates that were consummated prior to the Closing Date, as shown on Schedule 10.2.17; and (f) transactions
with Affiliates in the Ordinary Course of Business, upon fair and reasonable
terms fully disclosed to Agent and no less favorable than would be obtained in
a comparable arm’s-length transaction with a non-Affiliate.


 


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10.2.18.         Plans.  Become party to any Multiemployer Plan or
Foreign Plan, other than any in existence on the Closing Date.


 


10.2.19.         Amendments
to Subordinated Debt.  Amend, supplement or otherwise modify any
document, instrument or agreement relating to any Subordinated Debt, if such
modification (a) increases the principal balance of such Debt, or
increases any required payment of principal or interest; (b) accelerates
the date on which any installment of principal or any interest is due, or adds
any additional redemption, put or prepayment provisions; (c) shortens the
final maturity date or otherwise accelerates amortization; (d) increases
the interest rate; (e) increases or adds any fees or charges; (f) modifies
any covenant in a manner or adds any representation, covenant or default that
is more onerous or restrictive in any material respect for any Borrower or
Subsidiary, or that is otherwise materially adverse to any Borrower, any Subsidiary
or Lenders; or (g) results in the Obligations not being fully benefited by
the subordination provisions thereof.


 


10.3.                     Financial
Covenants.  As long as any Commitments or Obligations are
outstanding, Borrowers shall:


 


10.3.1.               Fixed Charge
Coverage Ratio.  Maintain a
Fixed Charge Coverage Ratio of least 1.0 to 1.0 for the rolling twelve month
period ending at the end of each Subject Month; provided, however,
that the failure to comply with this Section 10.3.1
with respect to any such Subject Month shall not constitute an Event of Default
if: (a) as of the end of such Subject Month, there are no Loans or LC
Obligations outstanding, and (b) the second month immediately following
such Subject Month is not also a Subject Month; provided, further,
however, that to the extent an Event of Default would have been deemed
to have occurred with respect to any such Subject Month absent the immediately
preceding proviso, notwithstanding anything contained herein to the contrary,
Agent, Issuing Bank and Lenders shall not be required to fund any Loans,
arrange for issuance of any Letters of Credit or grant any other accommodation
to or for the benefit of Borrowers following such Subject Month until there
have been at least two consecutive Fiscal Months which are not Subject Months.


 


SECTION 11.                   EVENTS
OF DEFAULT; REMEDIES ON DEFAULT


 


11.1.                     Events of Default.  Each of the following shall be an “Event
of Default” hereunder, if the same shall occur for any reason whatsoever,
whether voluntary or involuntary, by operation of law or otherwise:


 


(a)                                  A Borrower fails to pay
any Obligations when due (whether at stated maturity, on demand, upon
acceleration or otherwise);


 


(b)                                 Any
representation, warranty or other written statement of an Obligor made in
connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect when given;


 


(c)                                  A Borrower
breaches or fail to perform any covenant contained in Section 7.2, 8.1, 8.2.4, 8.2.5, 8.6.2 (solely to the extent
insurance has not been maintained as required), 10.1.1, 10.1.2, 10.2 or 10.3;


 


(d)                                 An Obligor
breaches or fails to perform any other covenant contained in any Loan
Documents, and such breach or failure is not cured within 15 days after a
Senior Officer of such Obligor has knowledge thereof or receives written notice
thereof from Agent, whichever is sooner; provided,
however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period or is a willful breach by an Obligor;


 


(e)                                  A Guarantor
repudiates, revokes or attempts to revoke its Guaranty; the


 


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perfection or priority of
any Lien granted to Agent; or any Loan Document ceases to be in full force or
effect for any reason (other than a waiver or release by Agent and Lenders); or
an Obligor or third party denies or contests the validity or enforceability of
any Loan Documents or Obligations, and, solely in the case of denial or contest
by a third party, such denial or contest is not cured or withdrawn within 15
days after a Senior Officer of such Obligor has knowledge thereof or receives
written notice thereof from Agent, whichever is sooner; provided, however, that such
notice and opportunity to cure shall not apply if the denial or contest is not
capable of being cured within such period;


 


(f)                                    Any breach or
default of an Obligor occurs (after giving effect to any express grace or cure
period set forth therein) under any document, instrument or agreement to which
it is a party or by which it or any of its Properties is bound, relating to any
Debt (other than the Obligations) in excess of $1,000,000, if the maturity of or any
payment with respect to such Debt may be accelerated or demanded due to such
breach, and such breach or default is not cured within 15 days (and in any
event prior to any acceleration or demand) after a Senior Officer of such
Obligor has knowledge thereof or receives written notice thereof from Agent,
whichever is sooner; provided, however, that such notice and opportunity to
cure shall not apply if any acceleration or demand has been made, the breach or
default is not capable of being cured within such period, or is a willful
breach by an Obligor;


 


(g)                                 Any judgment or
order for the payment of money is entered against an Obligor in an amount that
is not satisfied when due and which exceeds, individually or cumulatively with
all other unsatisfied judgments or orders against all Obligors, $1,000,000 (net of any
insurance coverage therefor acknowledged in writing by the insurer), unless a
stay of enforcement of such judgment or order is in effect, by reason of a
pending appeal or otherwise, and such judgment or order is not satisfied within
15 days (and in any event prior to attachment of any judgment lien or other
Lien securing the same to any Property of the Borrowers or any Subsidiary)
after a Senior Officer of such Obligor has knowledge thereof or receives
written notice thereof from Agent, whichever is sooner; provided, however, that such
notice and opportunity to satisfy shall not apply if a judgment lien or other
Lien securing the same has attached to any Property of the Borrowers or any
Subsidiary, or the judgment or order is not capable of being cured within such
period, provided that; the foregoing shall not
apply to any arbitration award, judgment or order arising out of litigation
disclosed on Schedule 9.1.16 relating to JAKKS
Pacific Inc. if (i) the same shall be for an amount (including costs and
interest) not to exceed $56,700,000 plus accruals after March 28, 2009,
consistent with past practices, and (ii) no judgment lien or other Lien
securing the same shall have attached to any Property of the Borrowers or any
Subsidiary;


 


(h)                                 A loss, theft,
damage or destruction occurs with respect to any tangible Collateral if the
amount not covered by insurance exceeds $1,000,000, or piracy or
other criminal acts not covered by insurance materially dilutes any
Material IP;


 


(i)                                     An Obligor is
enjoined, restrained or in any way prevented by any Governmental Authority from
conducting any material part of its business; an Obligor suffers the loss,
revocation or termination of any Material IP, or any material permit, lease or
agreement not relating to Intellectual Property and necessary to its business;
there is a cessation of any material part of an Obligor’s business for a
material period of time; any material Collateral or Property of an
Obligor is taken or impaired through condemnation; an Obligor agrees to or
commences any liquidation, dissolution or winding up of its
affairs; or a Borrower is not Solvent or the Obligors (taken as a whole) are
not Solvent;


 


(j)                                     An Insolvency
Proceeding is commenced by an Obligor; an Obligor makes an offer of settlement,
extension or composition to its unsecured creditors generally; a trustee is
appointed to take possession of any substantial Property of or to operate any
of the business of an Obligor; or an Insolvency Proceeding is commenced against
an Obligor and:  the Obligor consents to
institution of the proceeding, the petition commencing the proceeding is not
timely contested by the Obligor, the petition is not dismissed within 60 days
after filing, or an order for relief is entered in the proceeding;


 


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(k)                                  An ERISA Event
occurs with respect to a Pension Plan or Multiemployer Plan that has resulted
or could reasonably be expected to result in liability of an Obligor to a
Pension Plan, Multiemployer Plan or PBGC, or that constitutes grounds for appointment
of a trustee for or termination by the PBGC of any Pension Plan or
Multiemployer Plan; an Obligor or ERISA Affiliate fails to pay when due any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan; or any event similar to the foregoing
occurs or exists with respect to a Foreign Plan, and such ERISA Event or
failure to pay is not satisfied within 15 days (and in any event prior to
attachment of any PBGC lien or other Lien securing the same to any Property of
the Borrowers or any Subsidiary) after a Senior Officer of such Obligor has
knowledge thereof or receives written notice thereof from Agent, whichever is
sooner; provided, however, that such notice and opportunity to satisfy shall not apply
if a PBGC lien or other Lien securing the same has attached to any Property of
the Borrowers or any Subsidiary, or the ERISA Event or failure to pay is not
capable of being cured within such period;


 


(l)                                     An Obligor or
any of its Senior Officers is criminally indicted or convicted for (i) a
felony committed in the conduct of the Obligor’s business, or (ii) violating
any state or federal law (including the Controlled Substances Act, Money
Laundering Control Act of 1986 and Illegal Exportation of War Materials Act)
that could lead to forfeiture of any material Property or any Collateral; or


 


(m)                               A Change of
Control occurs; or any event occurs or condition exists that has a Material
Adverse Effect.


 


11.2.                     Remedies upon Default.  If an Event of Default described in Section 11.1(j) occurs with respect to any
Borrower, then to the extent permitted by Applicable Law, all Obligations shall
become automatically due and payable and all Commitments shall terminate,
without any action by Agent or notice of any kind.  In addition, or if any other Event of Default
exists, Agent may in its discretion (and shall upon written direction of
Required Lenders) do any one or more of the following from time to time:


 


(a)                                  declare any
Obligations immediately due and payable, whereupon they shall be due and
payable without diligence, presentment, demand, protest or notice of any kind,
all of which are hereby waived by Borrowers to the fullest extent permitted by
law;


 


(b)                                 terminate,
reduce or condition any Commitment, or make any adjustment to the Borrowing
Base;


 


(c)                                  require Obligors to Cash Collateralize LC Obligations, Bank Product Debt
and other Obligations that are contingent or not yet due and payable, and, if
Obligors fail promptly to deposit such Cash Collateral, Agent may (and shall
upon the direction of Required Lenders) advance the required Cash Collateral as
Revolver Loans (whether or not an Overadvance exists or is created thereby, or
the conditions in Section 6
are satisfied); and


 


(d)                                 exercise any
other rights or remedies afforded under any agreement, by law, at equity or
otherwise, including the rights and remedies of a secured party under the
UCC.  Such rights and remedies include
the rights to (i) take possession of
any Collateral; (ii) require Borrowers to assemble Collateral, at Borrowers’ expense, and make it available to
Agent at a place designated by Agent; (iii) enter any premises where
Collateral is located and store Collateral on such premises until sold (and if
the premises are owned or leased by a Borrower, Borrowers agree not to charge
for such storage); and (iv) sell or otherwise dispose of any Collateral in
its then condition, or after any further manufacturing or processing thereof,
at public or private sale, with such notice as may be required by Applicable
Law, in lots or in bulk, at such locations, all as Agent, in its discretion,
deems advisable.  Each Borrower agrees
that 10 days’ notice of any proposed sale or other disposition of Collateral by
Agent shall be reasonable.  Agent shall
have the right to conduct such sales on any Obligor’s premises, without charge,
and such sales may be adjourned from time to time in accordance with Applicable
Law.  Agent shall have the right to


 


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sell, lease or otherwise dispose of any Collateral
for cash, credit or any combination thereof, and Agent may purchase any
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of the purchase price, may set off the amount of such price
against the Obligations.


 


11.3.                     License.  Agent is granted an
irrevocable, non-exclusive license or other right to use, license or
sub-license (without payment of royalty or other compensation to any Person)
any or all owned Intellectual Property of Borrowers, and to the extent that
Borrowers are permitted to grant such a license, any or all licensed
Intellectual Property of Borrowers, including Intellectual Property rights in
any computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in connection with the advertising for sale, marketing, selling,
collecting, completing manufacture of, or otherwise exercising any rights or
remedies with respect to, any Collateral. 
Each Borrower’s rights and interests under owned Intellectual Property
and, to the extent not prohibited, licensed Intellectual Property, shall inure
to Agent’s benefit.


 


11.4.                     Setoff.  At any time during an Event of Default,
Agent, Issuing Bank, Lenders, and any of their Affiliates are authorized, to
the fullest extent permitted by Applicable Law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final, in
whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by Agent, Issuing Bank, such Lender or such
Affiliate to or for the credit or the account of an Obligor against any
Obligations, irrespective of whether or not Agent, Issuing Bank, such Lender or
such Affiliate shall have made any demand under this Agreement or any other
Loan Document and although such Obligations may be contingent or unmatured or
are owed to a branch or office of Agent, Issuing Bank, such Lender or such
Affiliate different from the branch or office holding such deposit or obligated
on such indebtedness.  The rights of
Agent, Issuing Bank, each Lender and each such Affiliate under this Section are
in addition to other rights and remedies (including other rights of setoff)
that such Person may have.


 


11.5.                     Remedies
Cumulative; No Waiver.


 


11.5.1.               Cumulative
Rights.  All agreements, warranties,
guaranties, indemnities and other undertakings of Borrowers under the Loan
Documents are cumulative and not in derogation of each other.  The rights and remedies of Agent and Lenders
are cumulative, may be exercised at any time and from time to time,
concurrently or in any order, and are not exclusive of any other rights or
remedies available by agreement, by law, at equity or otherwise.  All such rights and remedies shall continue
in full force and effect until Full Payment of all Obligations.


 


11.5.2.               Waivers.  No waiver or course of dealing shall be
established by (a) the failure or delay of Agent or any Lender to require
strict performance by Borrowers with any terms of the Loan
Documents, or to exercise any rights or remedies with respect to Collateral or
otherwise; (b) the making of any Loan or issuance of any Letter of Credit
during a Default, Event of Default or other failure to satisfy any conditions
precedent; or (c) acceptance by Agent or any Lender of any payment or
performance by an Obligor under any Loan Documents in a manner other than that
specified therein.  It is expressly
acknowledged by Borrowers that any failure to satisfy a financial covenant on a
measurement date shall not be cured or remedied by satisfaction of such
covenant on a subsequent date.


 


SECTION 12.                   AGENT


 


12.1.                     Appointment,
Authority and Duties of Agent.


 


12.1.1.               Appointment and
Authority.  Each Lender
appoints and designates Bank of America as Agent hereunder.  Agent may, and each Lender authorizes Agent
to, enter into all Loan Documents to which Agent is intended to be a party and
accept all Security Documents, for Agent’s benefit and the Pro Rata benefit of
Lenders.  Each Lender agrees that any
action taken by Agent or Required Lenders in accordance with the provisions of
the Loan Documents, and the exercise by Agent or


 


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Required
Lenders of any rights or remedies set forth therein, together with all other
powers reasonably incidental thereto, shall be authorized by and binding upon
all Lenders.  Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive authority
to (a) act as the disbursing and collecting agent for Lenders with respect
to all payments and collections arising in connection with the Loan Documents; (b) execute
and deliver as Agent each Loan Document, including any intercreditor or
subordination agreement, and accept delivery of each Loan Document from any
Obligor or other Person; (c) act as collateral agent for Secured Parties
for purposes of perfecting and administering Liens under the Loan Documents,
and for all other purposes stated therein; (d) manage, supervise or
otherwise deal with Collateral; and (e) take any Enforcement Action or
otherwise exercise any rights or remedies with respect to any Collateral under
the Loan Documents, Applicable Law or otherwise.  The duties of Agent shall be ministerial and
administrative in nature, and Agent shall not have a fiduciary relationship
with any Lender, Secured Party, Participant or other Person, by reason of any
Loan Document or any transaction relating thereto.  Agent alone shall be authorized to determine
whether any Accounts constitute Eligible Accounts, or whether to impose or
release any reserve, and to exercise its Credit Judgment in connection
therewith, which determinations and judgments, if exercised in good faith,
shall exonerate Agent from liability to any Lender or other Person for any
error in judgment.


 


12.1.2.               Duties.  Agent shall not have any duties except those
expressly set forth in the Loan Documents. 
The conferral upon Agent of any right shall not imply a duty on Agent’s
part to exercise such right, unless instructed to do so by Required Lenders in
accordance with this Agreement.


 


12.1.3.               Agent
Professionals.  Agent may
perform its duties through agents and employees.  Agent may consult with and employ Agent
Professionals, and shall be entitled to act upon, and shall be fully protected
in any action taken in good faith reliance upon, any advice given by an Agent
Professional.  Agent shall not be
responsible for the negligence or misconduct of any agents, employees or Agent
Professionals selected by it with reasonable care.


 


12.1.4.               Instructions of
Required Lenders.  The rights
and remedies conferred upon Agent under the Loan Documents may be exercised
without the necessity of joinder of any other party, unless required by
Applicable Law.  Agent may request
instructions from Required Lenders with respect to any act (including the
failure to act) in connection with any Loan Documents, and may seek assurances
to its satisfaction from Lenders of their indemnification obligations under Section 12.6 against all Claims that
could be incurred by Agent in connection with any act.  Agent shall be entitled to refrain from any
act until it has received such instructions or assurances, and Agent shall not
incur liability to any Person by reason of so refraining.  Instructions of Required Lenders shall be
binding upon all Lenders, and no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
in accordance with the instructions of Required Lenders.  Notwithstanding the foregoing, instructions
by and consent of all Lenders shall be required in the circumstances described
in Section 14.1.1, and in no
event shall Required Lenders, without the prior written consent of each Lender,
direct Agent to accelerate and demand payment of Loans held by one Lender
without accelerating and demanding payment of all other Loans, nor to terminate
the Commitments of one Lender without terminating the Commitments of all
Lenders.  In no event shall Agent be
required to take any action that, in its opinion, is contrary to Applicable Law
or any Loan Documents or could subject any Agent Indemnitee to personal
liability.


 


12.2.                     Agreements
Regarding Collateral and Field Examination Reports.


 


12.2.1.               Lien Releases;
Care of Collateral.  Lenders
authorize Agent to release any Lien with respect to any Collateral (a) upon
Full Payment of the Obligations; (b) that is the subject of an Asset
Disposition which Borrowers certify in writing to Agent is a Permitted Asset
Disposition or a Lien which Borrowers certify is a Permitted Lien entitled to
priority over Agent’s Liens (and Agent may rely conclusively on any such
certificate without further inquiry); (c) that does not constitute a
material part of the Collateral; or (d) with the written consent of all
Lenders.  Agent shall have no obligation
whatsoever


 


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to
any Lenders to assure that any Collateral exists or is owned by a Borrower, or
is cared for, protected, insured or encumbered, nor to assure that Agent’s
Liens have been properly created, perfected or enforced, or are entitled to any
particular priority, nor to exercise any duty of care with respect to any
Collateral.


 


12.2.2.               Possession of
Collateral.  Agent and
Lenders appoint each Lender as agent (for the benefit of Secured Parties) for
the purpose of perfecting Liens in any Collateral held or controlled by such
Lender, to the extent such Liens are perfected by possession or control.  If any Lender obtains possession or control of
any Collateral, it shall notify Agent thereof and, promptly upon Agent’s
request, deliver such Collateral to Agent or otherwise deal with it in
accordance with Agent’s instructions.


 


12.2.3.               Reports.  Agent shall promptly forward to each Lender,
when complete, copies of any field audit, examination or appraisal report
prepared by or for Agent with respect to any Obligor or Collateral (“Report”).  Each Lender agrees (a) that
neither Bank of America nor Agent makes any representation or warranty as to
the accuracy or completeness of any Report, and shall not be liable for any
information contained in or omitted from any Report; (b) that the Reports
are not intended to be comprehensive audits or examinations, and that Agent or
any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly
upon Borrowers’ books and records as well as upon representations of Borrowers’
officers and employees; and (c) to keep all Reports confidential and
strictly for such Lender’s internal use, and not to distribute any Report (or
the contents thereof) to any Person (except to such Lender’s Participants,
attorneys and accountants) or use any Report in any manner other than
administration of the Loans and other Obligations.  Each Lender agrees to indemnify and hold
harmless Agent and any other Person preparing a Report from any action such
Lender may take as a result of or any conclusion it may draw from any Report,
as well as from any Claims arising as a direct or indirect result of Agent
furnishing a Report to such Lender.


 


12.3.                     Reliance By Agent.  Agent shall be entitled to rely, and shall be
fully protected in relying, upon any certification, notice or other
communication (including those by telephone, telex, telegram, telecopy or
e-mail) believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person, and upon the advice and statements of Agent
Professionals.


 


12.4.                     Action Upon Default.  Agent shall not be deemed to have knowledge
of any Default or Event of Default unless it has received written notice from a
Lender or Borrower specifying the occurrence and nature thereof.  If any Lender acquires knowledge of a Default
or Event of Default, it shall promptly notify Agent and the other Lenders
thereof in writing.  Each Lender agrees
that, except as otherwise provided in any Loan Documents or with the written
consent of Agent and Required Lenders, it will not take any Enforcement Action,
accelerate Obligations under any Loan Documents, or exercise any right that it
might otherwise have under Applicable Law to credit bid at foreclosure sales,
UCC sales or other similar dispositions of Collateral.  Notwithstanding the foregoing, however, a
Lender may take action to preserve or enforce its rights against an Obligor
where a deadline or limitation period is applicable that would, absent such
action, bar enforcement of Obligations held by such Lender, including the
filing of proofs of claim in an Insolvency Proceeding.


 


12.5.                     Ratable Sharing.  If any Lender shall obtain any payment or
reduction of any Obligation, whether through set-off or otherwise, in excess of
its share of such Obligation, determined on a Pro Rata basis or in accordance
with Section 5.6.1, as
applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and
the other Lenders such participations in the affected Obligation as are
necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 5.6.1, as applicable.  If any of such payment or reduction is
thereafter recovered from the purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.  No Lender shall set
off against any Dominion Account without the prior consent of Agent.


 


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12.6.                     Indemnification
of Agent Indemnitees.  EACH LENDER
SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT NOT
REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER
ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE
INCURRED BY OR ASSERTED AGAINST ANY AGENT INDEMNITEE, PROVIDED THE CLAIM
RELATES TO OR ARISES FROM AN AGENT INDEMNITEE ACTING AS OR FOR AGENT (IN ITS
CAPACITY AS AGENT).  In Agent’s
discretion, it may reserve for any such Claims made against an Agent
Indemnitee, and may satisfy any judgment, order or settlement relating thereto,
from proceeds of Collateral prior to making any distribution of Collateral
proceeds to Lenders.  If Agent is sued by
any receiver, bankruptcy trustee, debtor-in-possession or other Person for any
alleged preference or fraudulent transfer, then any monies paid by Agent in
settlement or satisfaction of such proceeding, together with all interest,
costs and expenses (including attorneys’ fees) incurred in the defense of same,
shall be promptly reimbursed to Agent by each Lender to the extent of its Pro
Rata share.


 


12.7.                     Limitation on Responsibilities of Agent.  Agent shall not be liable to
Lenders for any action taken or omitted to be taken under the Loan Documents,
except for losses directly and solely caused by Agent’s gross negligence or
willful misconduct.  Agent does not
assume any responsibility for any failure or delay in performance or any breach
by any Obligor or Lender of any obligations under the Loan Documents.  Agent does not make to Lenders any express or
implied warranty, representation or guarantee with respect to any Obligations,
Collateral, Loan Documents or Obligor. 
No Agent Indemnitee shall be responsible to Lenders for any recitals,
statements, information, representations or warranties contained in any Loan
Documents; the execution, validity, genuineness, effectiveness or
enforceability of any Loan Documents; the genuineness, enforceability,
collectibility, value, sufficiency, location or existence of any Collateral, or
the validity, extent, perfection or priority of any Lien therein; the validity,
enforceability or collectibility of any Obligations; or the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of any Obligor or Account Debtor.  No Agent Indemnitee shall have any obligation
to any Lender to ascertain or inquire into the existence of any Default or
Event of Default, the observance or performance by any Obligor of any terms of
the Loan Documents, or the satisfaction of any conditions precedent contained
in any Loan Documents.


 


12.8.                     Successor
Agent and Co-Agents.


 


12.8.1.               Resignation;
Successor Agent.  Subject to
the appointment and acceptance of a successor Agent as provided below, Agent
may resign at any time by giving at least 30 days written notice thereof to
Lenders and Borrowers.  Upon receipt of
such notice, Required Lenders shall have the right to appoint a successor Agent
which shall be (a) a Lender or an Affiliate of a Lender; or (b) a
commercial bank that is organized under the laws of the United States or any state
or district thereof, has a combined capital surplus of at least $200,000,000
and (provided no Default or Event of Default exists) is reasonably acceptable
to Borrowers.  If no successor agent is
appointed prior to the effective date of the resignation of Agent, then Agent
may appoint a successor agent from among Lenders.  Upon acceptance by a successor Agent of an
appointment to serve as Agent hereunder, such successor Agent shall thereupon
succeed to and become vested with all the powers and duties of the retiring
Agent without further act, and the retiring Agent shall be discharged from its
duties and obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Sections 12.6
and 14.2. 
Notwithstanding any Agent’s resignation, the provisions of this Section 12 shall continue in effect
for its benefit with respect to any actions taken or omitted to be taken by it
while Agent.  Any successor to Bank of
America by merger or acquisition of stock or this loan shall continue to be
Agent hereunder without further act on the part of the parties hereto, unless
such successor resigns as provided above.


 


12.8.2.               Separate
Collateral Agent.  It is the
intent of the parties that there shall be no violation of any Applicable Law
denying or restricting the right of financial institutions to transact business
in any jurisdiction.  If Agent believes
that it may be limited in the exercise of any rights or


 


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remedies under the Loan Documents due to any Applicable
Law, Agent may appoint an additional Person who is not so limited, as a
separate collateral agent or co-collateral agent.  If Agent so appoints a collateral agent or
co-collateral agent, each right and remedy intended to be available to Agent
under the Loan Documents shall also be vested in such separate agent.  Every covenant and obligation necessary to
the exercise thereof by such agent shall run to and be enforceable by it as
well as Agent.  Lenders shall execute and
deliver such documents as Agent deems appropriate to vest any rights or
remedies in such agent.  If any
collateral agent or co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such
agent, to the extent permitted by Applicable Law, shall vest in and be
exercised by Agent until appointment of a new agent.


 


12.9.                     Due Diligence and Non-Reliance.  Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations hereunder.  Each Lender has made such inquiries
concerning the Loan Documents, the Collateral and each Obligor as such Lender
feels necessary.  Each Lender further
acknowledges and agrees that the other Lenders and Agent have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations.  Each Lender will,
independently and without reliance upon the other Lenders or Agent, and based
upon such financial statements, documents and information as it deems
appropriate at the time, continue to make and rely upon its own credit
decisions in making Loans and participating in LC Obligations, and in taking or
refraining from any action under any Loan Documents.  Except for notices, reports and other
information expressly requested by a Lender, Agent shall have no duty or
responsibility to provide any Lender with any notices, reports or certificates
furnished to Agent by any Obligor or any credit or other information concerning
the affairs, financial condition, business or Properties of any Obligor (or any
of its Affiliates) which may come into possession of Agent or any of Agent’s
Affiliates.


 


12.10.              Replacement
of Certain Lenders.  If a Lender (a) is a Defaulting Lender,
or (b) fails to give its consent to any amendment, waiver or action for
which consent of all Lenders was required and Required Lenders consented, then,
in addition to any other rights and remedies that any Person may have, Agent
may, by notice to such Lender within 120 days after such event, require such
Lender to assign all of its rights and obligations under the Loan Documents to
Eligible Assignee(s) specified by Agent, pursuant to appropriate
Assignment and Acceptance(s) and within 20 days after Agent’s notice.  Agent is irrevocably appointed as
attorney-in-fact to execute any such Assignment and Acceptance if the Lender
fails to execute same.  Such Lender shall
be entitled to receive, in cash, concurrently with such assignment, all amounts
owed to it under the Loan Documents, including all principal, interest and fees
through the date of assignment (but excluding any prepayment charge).


 


12.11.              Remittance of Payments and
Collections.


 


12.11.1.         Remittances
Generally.  All
payments by any Lender to Agent shall be made by the time and on the day set
forth in this Agreement, in immediately available funds.  If no time for payment is specified or if
payment is due on demand by
Agent and request for payment is made by Agent by 11:00 a.m. on a Business
Day, payment shall be made by Lender not later than 2:00 p.m. on such day,
and if request is made after 11:00 a.m., then payment shall be made by
11:00 a.m. on the next Business Day. 
Payment by Agent to any Lender shall be made by wire transfer, in the
type of funds received by Agent.  Any
such payment shall be subject to Agent’s right of offset for any amounts due
from such Lender under the Loan Documents.


 


12.11.2.         Failure to Pay.  If any Lender fails to pay any amount when
due by it to Agent pursuant to the terms hereof, such amount shall bear
interest from the due date until paid at the rate determined by Agent as
customary in the banking industry for interbank compensation.  In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent, nor shall any


 


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Defaulting Lender be entitled to interest on any amounts
held by Agent pursuant to Section 4.2.


 


12.11.3.         Recovery of
Payments.  If Agent
pays any amount to a Lender in the expectation that a related payment will be
received by Agent from an Obligor and such related payment is not received,
then Agent may recover such amount from each Lender that received it.  If Agent determines at any time that an
amount received under any Loan Document must be returned to an Obligor or paid
to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be
required to distribute such amount to any Lender.  If any amounts received and applied by Agent
to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, each Lender shall pay to Agent, on demand,
such Lender’s Pro Rata share of the amounts required to be returned.


 


12.12.              Agent in its
Individual Capacity.  As a Lender, Bank of America shall have the
same rights and remedies under the other Loan Documents as any other Lender,
and the terms “Lenders,” “Required Lenders” or any similar term shall include
Bank of America in its capacity as a Lender. 
Each of Bank of America and its Affiliates may accept deposits from,
maintain deposits or credit balances for, invest in, lend money to, provide
Bank Products to, act as trustee under indentures of, serve as financial or
other advisor to, and generally engage in any kind of business with, Obligors
and their Affiliates, as if Bank of America were any other bank, without any
duty to account therefor (including any fees or other consideration received in
connection therewith) to the other Lenders. 
In their individual capacity, Bank of America and its Affiliates may
receive information regarding Obligors, their Affiliates and their Account
Debtors (including information subject to confidentiality obligations), and
each Lender agrees that Bank of America and its Affiliates shall be under no
obligation to provide such information to Lenders, if acquired in such
individual capacity and not as Agent hereunder.


 


12.13.              Agent Titles.  Each
Lender, other than Bank of America, that is designated (on the cover page of
this Agreement or otherwise) by Bank of America as an “Agent” or “Arranger” of
any type shall not have any right, power, responsibility or duty under any Loan
Documents other than those applicable to all Lenders, and shall in no event be
deemed to have any fiduciary relationship with any other Lender.


 


12.14.              No Third
Party Beneficiaries.  This Section 12
is an agreement solely among Lenders and Agent, and shall survive Full Payment
of the Obligations.  This Section 12 does not confer any rights
or benefits upon Borrowers or any other Person.  As between Borrowers and Agent, any action
that Agent may take under any Loan Documents or with respect to any Obligations
shall be conclusively presumed to have been authorized and directed by Lenders.


 


SECTION 13.                   BENEFIT
OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS


 


13.1.                     Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of Borrowers, Agent, Lenders, and their
respective successors and assigns, except that (a) no Borrower shall have
the right to assign its rights or delegate its obligations under any Loan
Documents; and (b) any assignment by a Lender must be made in compliance
with Section 13.3.  Agent may treat the Person which made any
Loan as the owner thereof for all purposes until such Person makes an
assignment in accordance with Section 13.3.  Any authorization or consent of a Lender
shall be conclusive and binding on any subsequent transferee or assignee of
such Lender.


 


13.2.                     Participations.


 


13.2.1.               Permitted Participants;
Effect.  Any Lender may, in the ordinary course of its
business and in accordance with Applicable Law, at any time sell to a financial
institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Loan Documents.  Despite any sale by a Lender of participating
interests to a Participant, such Lender’s obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the
other parties


 


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hereto for performance of such obligations, such Lender shall remain
the holder of its Loans and Commitments for all purposes, all amounts payable
by Borrowers shall be determined as if such Lender had not sold such participating
interests, and Borrowers and Agent shall continue to deal solely and directly
with such Lender in connection with the Loan Documents.  Each Lender shall be solely
responsible for notifying its Participants of any matters under the Loan
Documents, and Agent and the other Lenders shall not have any obligation or
liability to any such Participant.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.9 unless Borrowers
agree otherwise in writing.


 


13.2.2.               Voting Rights.  Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Commitment Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
any Borrower, Guarantor or substantial portion of the Collateral.


 


13.2.3.               Benefit of
Set-Off.  Borrowers agree that each
Participant shall have a right of set-off in respect of its participating
interest to the same extent as if such interest were owing directly to a
Lender, and each Lender shall also retain the right of set-off with respect to
any participating interests sold by it. 
By exercising any right of set-off, a Participant agrees to share with
Lenders all amounts received through its set-off, in accordance with Section 12.5 as if such Participant
were a Lender.


 


13.3.                     Assignments.


 


13.3.1.               Permitted
Assignments.  A Lender
may assign to an Eligible Assignee any of its rights and obligations under the
Loan Documents, as long as (a) each assignment is of a constant, and not a
varying, percentage of the transferor Lender’s rights and obligations under the
Loan Documents and, in the case of a partial assignment, is in a minimum
principal amount of $5,000,000 (unless otherwise agreed by
Agent in its discretion) and integral multiples of $1,000,000 in excess of
that amount; (b) except in the case of an assignment in whole of a Lender’s
rights and obligations, the aggregate amount of the Commitments retained by the
transferor Lender is at least $5,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each
such assignment shall execute and deliver to Agent, for its acceptance and
recording, an Assignment and Acceptance. 
Nothing herein shall limit the right of a Lender to pledge or assign any
rights under the Loan Documents to (i) any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of the
Board of Governors and any Operating Circular issued by such Federal Reserve
Bank, or (ii) counterparties to swap agreements relating to any Loans; provided,
however, that any payment by Borrowers to the
assigning Lender in respect of any Obligations assigned as described in this
sentence shall satisfy Borrowers’ obligations hereunder to the extent of such
payment, and no such assignment shall release the assigning Lender from its
obligations hereunder.


 


13.3.2.               Effect;
Effective Date.  Upon delivery to
Agent of an assignment notice in the form of Exhibit C
and a processing fee of $3,500 (unless otherwise agreed by Agent
in its discretion), the assignment shall become effective as specified in the notice, if
it complies with this Section 13.3.  From such effective date, the Eligible
Assignee shall for all purposes be a Lender under the Loan Documents, and shall
have all rights and obligations of a Lender thereunder.  Upon consummation of an assignment, the
transferor Lender, Agent and Borrowers shall make appropriate arrangements for
issuance of replacement and/or new Notes, as applicable.  The transferee Lender shall comply with Section 5.10 and deliver, upon
request, an administrative questionnaire satisfactory to Agent.


 


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SECTION 14.                     MISCELLANEOUS


 


14.1.                     Consents,
Amendments and Waivers.


 


14.1.1.               Amendment.  No modification of any Loan Document,
including any extension or amendment of a Loan Document or any waiver of a
Default or Event of Default, shall be effective without the prior written
agreement of Agent (with the consent of Required Lenders) and each Obligor
party to such Loan Document; provided, however, that


 


(a)                                  without the
prior written consent of Agent, no modification shall be effective with respect
to any provision in a Loan Document that relates to any rights, duties or
discretion of Agent;


 


(b)                                 without the
prior written consent of Issuing Bank, no modification shall be effective with
respect to any LC Obligations or Section 2.3;


 


(c)                                  without the
prior written consent of each affected Lender, no modification shall be
effective that would (i) increase the Commitment of such Lender; or (ii) reduce
the amount of, or waive or delay payment of, any principal, interest or fees
payable to such Lender; and


 


(d)                                 without the
prior written consent of all Lenders (except a Defaulting Lender as provided in
Section 4.2), no modification
shall be effective that would (i) extend the Revolver Termination Date; (ii) alter
Section 5.6, 7.1 (except to add Collateral) or 14.1.1; (iii) amend the definitions of
Borrowing Base (and the defined terms used in such definition), Pro Rata or
Required Lenders; (iv) increase any advance rate or increase total
Commitments; (vi) release Collateral with a book value greater than $10,000,000 during any
calendar year, except as currently contemplated by the Loan Documents; or (vii) release
any Obligor from liability for any Obligations, if such Obligor is Solvent at
the time of the release.


 


14.1.2.               Limitations.  The agreement of Borrowers shall not be
necessary to the effectiveness of any modification of a Loan Document that
deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank
as among themselves.  Only the consent of
the parties to any agreement relating to a Bank Product shall be required for
any modification of such agreement, and any non-Lender that is party to a Bank
Product agreement shall have no right to participate in any manner in
modification of any other Loan Document. 
Any waiver or consent granted by Agent or Lenders hereunder shall be
effective only if in writing and only for the matter specified.


 


14.1.3.               Payment for
Consents.  No Borrower
will, directly or indirectly, pay any remuneration or other thing of value,
whether by way of additional interest, fee or otherwise, to any Lender (in its
capacity as a Lender hereunder) as consideration for
agreement by such Lender with any modification of any Loan Documents, unless
such remuneration or value is concurrently paid, on the same terms, on a Pro
Rata basis to all Lenders providing their consent.


 


14.2.                     Indemnity.  EACH
BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS
THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING
CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  In no event shall any party to a Loan
Document have any obligation thereunder to indemnify or hold harmless an
Indemnitee with respect to a Claim that is determined in a final,
non-appealable judgment by a court of competent jurisdiction to result from the
gross negligence or willful misconduct of such Indemnitee.


 


14.3.                     Notices
and Communications.


 


14.3.1.               Notice Address.  Subject to Section 4.1.4,
all notices and other communications by or to a party hereto shall be in
writing and shall be given to any Borrower, at Borrower Agent’s address shown
on the signature pages hereof, and to any other Person at its address
shown on the signature pages


 


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hereof (or, in the case of a
Person who becomes a Lender after the Closing Date, at the address shown on its
Assignment and Acceptance), or at such other address as a party may hereafter
specify by notice in accordance with this Section 14.3.  Each such notice or other communication shall
be effective only (a) if given by facsimile transmission, when transmitted
to the applicable facsimile number, if confirmation of receipt is received; (b) if
given by mail, three Business Days after deposit in the U.S. mail, with
first-class postage pre-paid, addressed to the applicable address; or (c) if
given by personal delivery, when duly delivered to the notice address with
receipt acknowledged.  Notwithstanding
the foregoing, no notice to Agent pursuant to Section 2.1.4,
2.3, 3.1.2, 4.1.1 or 5.3.3
shall be effective until actually received by the individual to whose attention
at Agent such notice is required to be sent. 
Any written notice or other communication that is not sent in conformity
with the foregoing provisions shall nevertheless be effective on the date
actually received by the noticed party. 
Any notice received by Borrower Agent shall be deemed received by all
Borrowers.


 


14.3.2.               Electronic
Communications; Voice Mail.  Electronic mail and internet websites may be
used only for routine communications, such as financial statements, Borrowing
Base Certificates and other information required by Section 10.1.2,
administrative matters, distribution of Loan Documents for execution, and
matters permitted under Section 4.1.4.  Agent and Lenders make no assurances as to
the privacy and security of electronic communications.  Electronic and voice mail may not be used as
effective notice under the Loan Documents.


 


14.3.3.               Non-Conforming
Communications.  Agent and
Lenders may rely upon any notices purportedly given by or on behalf of any
Borrower even if such notices were not made in a manner specified herein, were
incomplete or were not confirmed, or if the terms thereof, as understood by the
recipient, varied from a later confirmation. 
Each Borrower shall indemnify and hold harmless each Indemnitee from any
liabilities, losses, costs and expenses arising from any telephonic
communication purportedly given by or on behalf of a Borrower.


 


14.4.                     Performance of Borrowers’ Obligations.  Agent may, in its discretion at
any time and from time to time, at Borrowers’ expense, pay any amount or do any
act required of a Borrower under any Loan Documents or otherwise lawfully
requested by Agent to (a) enforce any Loan Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral;
or (c) defend or maintain the validity or priority of Agent’s Liens in any
Collateral, including any payment of a judgment, insurance premium, warehouse
charge, finishing or processing charge, or landlord claim, or any discharge of
a Lien.  All payments, costs and expenses
(including Extraordinary Expenses) of Agent under this Section shall be
reimbursed to Agent by Borrowers.  If no
Loans are outstanding and no Event of Default shall have occurred and be
continuing on the day such amounts are demanded, such amounts shall be invoiced
to Borrowers and payable within five business days of the date of such
invoice.  In all other cases, such
amounts shall be payable on demand and
may be charged to the facility and if so charged shall be deemed to be a Base
Rate Revolver Loan.  Any payment made or
action taken by Agent under this Section shall be without prejudice to any
right to assert an Event of Default or to exercise any other rights or remedies
under the Loan Documents.


 


14.5.                     Credit Inquiries.  Each Borrower hereby authorizes Agent and
Lenders (but they shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning any Borrower or Subsidiary.


 


14.6.                     Severability.  Wherever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be valid under Applicable
Law.  If any provision is found to be
invalid under Applicable Law, it shall be ineffective only to the extent of
such invalidity and the remaining provisions of the Loan Documents shall remain
in full force and effect.


 


14.7.                     Cumulative Effect; Conflict of Terms.  The provisions of the Loan
Documents are cumulative.  The parties
acknowledge that the Loan Documents may use several limitations, tests or


 


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measurements to regulate
similar matters, and they agree that these are cumulative and that each must be
performed as provided.  Except as
otherwise provided in another Loan Document (by specific reference to the applicable
provision of this Agreement), if any provision contained herein is in direct
conflict with any provision in another Loan Document, the provision herein
shall govern and control.


 


14.8.                     Counterparts.  Any Loan Document may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement shall become effective when
Agent has received counterparts bearing the signatures of all parties hereto.  Delivery of a signature page of any Loan
Document by telecopy or other electronic means shall be effective as delivery
of a manually executed counterpart of such agreement.


 


14.9.                     Entire Agreement.  Time is of the essence of the Loan
Documents.  The Loan Documents constitute
the entire contract among the parties relating to the subject matter hereof,
and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof.


 


14.10.              Relationship
with Lenders.  The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender.  Amounts payable
hereunder to each Lender shall be a separate and independent debt.  It shall not be necessary for Agent or any
other Lender to be joined as an additional party in any proceeding for such
purposes.  Nothing in this Agreement and
no action of Agent or Lenders pursuant to the Loan Documents shall be deemed to
constitute Agent and Lenders to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Borrower.


 


14.11.              No Advisory
or Fiduciary Responsibility.  In connection with all aspects of each
transaction contemplated by any Loan Document, Borrowers acknowledge and agree
that (a)(i) this credit facility and any related arranging or other
services by Agent, any Lender, any of their Affiliates or any arranger are arm’s-length
commercial transactions between Borrowers and such Person; (ii) Borrowers
have consulted their own legal, accounting, regulatory and tax advisors to the
extent they have deemed appropriate; and (iii) Borrowers are capable of
evaluating and understanding, and do understand and accept, the terms, risks
and conditions of the transactions contemplated by the Loan Documents; (b) each
of Agent, Lenders, their Affiliates and any arranger is and has been acting
solely as a principal in connection with this credit facility, is not the
financial advisor, agent or fiduciary for Borrowers, any of their Affiliates or
any other Person, and has no obligation with respect to the transactions
contemplated by the Loan Documents except as expressly set forth therein; and (c) Agent,
Lenders, their Affiliates and any arranger may be engaged in a broad range of
transactions that involve interests that differ from those of Borrowers and
their Affiliates, and have no obligation to disclose any of such interests to
Borrowers or their Affiliates.  To the
fullest extent permitted by Applicable Law, each Borrower hereby waives and
releases any claims that it may have against Agent, Lenders, their Affiliates
and any arranger with respect to any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction contemplated by
a Loan Document.


 


14.12.              Confidentiality.  Each of Agent, Lenders and Issuing Bank
agrees to maintain the confidentiality of all Information (as defined below),
except that Information may be disclosed (a) to its Affiliates, and to its
and their partners, directors, officers, employees, agents, advisors and
representatives (provided such Persons are informed of the confidential nature
of the Information and instructed to keep it confidential); (b) to the
extent requested by any governmental, regulatory or self-regulatory authority
purporting to have jurisdiction over it or its Affiliates; (c) to the
extent required by Applicable Law or by any subpoena or other legal process; (d) to
any other party hereto; (e) in connection with any action or proceeding,
or other exercise of rights or remedies, relating to any Loan Documents or
Obligations; (f) subject to an agreement containing provisions
substantially the same as this Section, to any Transferee or any actual or
prospective party (or its advisors) to any Bank Product; (g) with the
consent of Borrower Agent; or (h) to the extent such Information (i) becomes
publicly available other than as a result of a


 


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breach of this Section or
(ii) is available to Agent, any Lender, Issuing Bank or any of their
Affiliates on a nonconfidential basis from a source other than Borrowers and
Agent, Lender or Issuing Bank shall not have been advised in writing that a
confidentiality obligation existed with respect to such Information.  Notwithstanding the foregoing, Agent and
Lenders may publish or disseminate general information describing this credit
facility, including the names and addresses of Borrowers and a general description
of Borrowers’ businesses, and, with the Borrowers’ consent (not to be
unreasonably withheld or delayed) may use Borrowers’ logos, trademarks or
product photographs in advertising materials. 
As used herein, “Information” means all information received from
an Obligor or Subsidiary relating to it or its business that is identified as
confidential when delivered.  Any Person
required to maintain the confidentiality of Information pursuant to this Section shall
be deemed to have complied if it exercises the same degree of care that it
accords its own confidential information. 
Each of Agent, Lenders and Issuing Bank acknowledges that (i) Information
may include material non-public information concerning an Obligor or
Subsidiary; (ii) it has developed compliance procedures regarding the use
of material non-public information; and (iii) it will handle such material
non-public information in accordance with Applicable Law, including federal and
state securities laws.


 


14.13.              [RESERVED]


 


14.14.              GOVERNING LAW.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING
EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).


 


14.15.              Consent to Forum.


 


14.15.1.           Forum. 
EACH BORROWER HEREBY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH
JURISDICTION OVER CALIFORNIA, IN ANY PROCEEDING OR DISPUTE RELATING IN
ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE
BROUGHT BY IT SOLELY IN ANY SUCH COURT. 
EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES
THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. 
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 14.3.1.  Nothing herein shall limit the right of Agent
or any Lender to bring proceedings against any Obligor in any other court, nor
limit the right of any party to serve process in any other manner permitted by
Applicable Law.  Nothing in this
Agreement shall be deemed to preclude enforcement by Agent of any judgment or
order obtained in any forum or jurisdiction.


 


14.15.2.           Arbitration.  Notwithstanding any other provision of this
Agreement to the contrary, any controversy or claim among the parties relating
in any way to any Obligations or Loan Documents, including any alleged tort,
shall at the request of any party hereto be determined by binding arbitration
conducted in accordance with the United States Arbitration Act (Title 9 U.S.
Code).  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 (“AAA”), and the terms of this Section.  In the event of any inconsistency, the terms
of this Section shall control.  If
AAA is unwilling or unable to serve as the provider of arbitration or to
enforce any provision of this Section, Agent may designate another arbitration
organization with similar procedures to serve as the provider of
arbitration.  The arbitration proceedings
shall be conducted in Los Angeles, California. 
The arbitration hearing shall commence within 90 days of the arbitration
demand and close within 90 days thereafter. 
The arbitration award must be issued within 30 days after close of the
hearing (subject to extension by the arbitrator for up to 60 days upon a
showing of good cause), and shall include a concise


 


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written
statement of reasons for the award.  The
arbitrator shall give effect to applicable statutes of limitation in
determining any controversy or claim, and for these purposes, 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 Section or whether a controversy or claim is arbitrable
shall be determined by the arbitrator. 
The arbitrator shall have the power to award legal fees to the extent
provided by this Agreement.  Judgment
upon an arbitration award may be entered in any court having jurisdiction.  The arbitrator shall not have the power to
commit errors of law or legal reasoning, and any award may be reviewed and
vacated or corrected on appeal to a court of competent jurisdiction for any
such error.  The institution and
maintenance of an action for judicial relief or pursuant to a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.  No controversy or claim shall be submitted to
arbitration without the consent of all parties if, at the time of the proposed
submission, such controversy or claim relates to an obligation secured by Real
Estate, but if all parties do not consent to submission of such a controversy
or claim to arbitration, it shall be determined as provided in the next
sentence.  At the request of any party, a
controversy or claim that is not submitted to arbitration as provided above
shall be determined by judicial reference; and if such an election is made, the
parties shall designate to the court a referee or referees selected under the
auspices of the AAA in the same manner as arbitrators are selected in AAA
sponsored proceedings and the presiding referee of the panel (or the referee if
there is a single referee) shall be an active attorney or retired judge; and
judgment upon the award rendered by such referee or referees shall be entered
in the court in which proceeding was commenced. 
None of the foregoing provisions of this Section shall limit the
right of Agent or Lenders to exercise self-help remedies, such as setoff,
foreclosure or sale of any Collateral or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after or during any
arbitration proceeding.  The exercise of
a remedy does not waive the right of any party to resort to arbitration or
reference.  At Agent’s option,
foreclosure under a mortgage may be accomplished either by exercise of power of
sale thereunder or by judicial foreclosure.


 


14.16.              Waivers
by Borrowers.  To the fullest extent permitted by Applicable
Law, each Borrower waives (a) the right to trial by jury (which Agent and
each Lender hereby also waives) in any proceeding or dispute of any kind
relating in any way to any Loan Documents, Obligations or Collateral; (b) presentment,
demand, protest, notice of presentment, default, non-payment, maturity,
release, compromise, settlement, extension or renewal of any commercial paper,
accounts, documents, instruments, chattel paper and guaranties at any time held
by Agent on which a Borrower may in any way be liable, and hereby ratifies
anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that
might be required by a court prior to allowing Agent to exercise any rights or
remedies; (e) the benefit of all valuation, appraisement and exemption
laws; (f) any claim against Agent or any Lender, on any theory of
liability, for special, indirect, consequential, exemplary or punitive damages
(as opposed to direct or actual damages) in any way relating to any Enforcement
Action, Obligations, Loan Documents or transactions relating thereto; and (g) notice
of acceptance hereof.  Each Borrower acknowledges that the foregoing
waivers are a material inducement to Agent and Lenders entering into this
Agreement and that Agent and Lenders are relying upon the foregoing in their
dealings with Borrowers.  Each Borrower
has reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel.  In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.


 


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14.17.              Patriot Act Notice.  Agent and Lenders hereby notify
Borrowers that pursuant to the requirements of the Patriot Act, Agent and
Lenders are required to obtain, verify and record information that identifies
each Borrower, including its legal name, address, tax ID number and other
information that will allow Agent and Lenders to identify it in accordance with
the Patriot Act.  Agent and Lenders will
also require information regarding each personal guarantor, if any, and may
require information regarding Borrowers’ management and owners, such as legal
name, address, social security number and date of birth.


 


[Remainder of page intentionally left blank; signatures begin on
following page]


 


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IN WITNESS WHEREOF, this Agreement
has been executed and delivered as of the date set forth above.


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  THQ
  INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul J. Pucino

  	
   

  
	
   

  	
  Name:

  	
  Paul
  J. Pucino

  	
   

  
	
   

  	
  Title:
  Chief Financial Officer & Executive Vice

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  29903
  Agoura Road

  
	
   

  	
  Agoura
  Hills, CA 91301

  
	
   

  	
  Attn:
  Paul J. Pucino

  
	
   

  	
  Telecopy:
  (818) 871-8755

  
					



 


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  AGENT
  AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as
  Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bobby Bans

  	
   

  
	
   

  	
  Name:

  	
  Bobby
  Bans

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  55
  S. Lake Avenue, Suite 900

  
	
   

  	
  Pasadena,
  CA 91101

  
	
   

  	
  Attn:
  Bobby Bans or Account Executive

  
	
   

  	
  Telecopy:
  (626) 584-4600

  
						



 


-76-

















 


EXHIBIT A


to


Loan and Security Agreement


 


REVOLVER
NOTE


 


	
  [Date]

  	
  $[_________]

  	
  [Pasadena,
  CA]

  



 


THQ INC., a Delaware corporation (“THQ” and,
together with any other Person at any time after the date hereof becomes a
Borrower in accordance with the terms hereof, each individually a “Borrower”
and collectively, “Borrowers”), for value received, hereby
unconditionally promise to pay, on a joint and several basis, to the order of [_________] (“Lender”),
the principal sum of [_________] DOLLARS ($[_________]), or such
lesser amount as may be advanced by Lender as Revolver Loans and owing as LC
Obligations from time to time under the Loan Agreement described below,
together with all accrued and unpaid interest thereon.  Terms are used herein as defined in the Loan
and Security Agreement dated as of June 30, 2009, among Borrowers, Bank of
America, N.A., as Agent, Lender, and certain other financial institutions, as
such agreement may be amended, modified, renewed or extended from time to time
(“Loan Agreement”).


 


Principal of and interest on this Note
from time to time outstanding shall be due and payable as provided in the Loan
Agreement.  This Note is issued pursuant
to and evidences Revolver Loans and LC Obligations under the Loan Agreement, to
which reference is made for a statement of the rights and obligations of Lender
and the duties and obligations of Borrowers. 
The Loan Agreement contains provisions for acceleration of the maturity
of this Note upon the happening of certain stated events, and for the
borrowing, prepayment and reborrowing of amounts upon specified terms and
conditions.


 


The holder of this Note is hereby authorized by
Borrowers to record on a schedule annexed to this Note (or on a supplemental
schedule) the amounts owing with respect to Revolver Loans and LC Obligations,
and the payment thereof.  Failure to make
any notation, however, shall not affect the rights of the holder of this Note
or any obligations of Borrowers hereunder or under any other Loan Documents.


 


Time is of the essence of this Note.  Each Borrower and all endorsers, sureties and
guarantors of this Note hereby severally waive demand, presentment for payment,
protest, notice of protest, notice of intention to accelerate the maturity of
this Note, diligence in collecting, the bringing of any suit against any party,
and any notice of or defense on account of any extensions, renewals, partial
payments, or changes in any manner of or in this Note or in any of its terms,
provisions and covenants, or any releases or substitutions of any security, or
any delay, indulgence or other act of any trustee or any holder hereof, whether
before or after maturity.  Borrowers
jointly and severally agree to pay, and to save the holder of this Note
harmless against, any liability for the payment of all costs and expenses (including
without limitation reasonable attorneys’ fees) if this Note is collected by or
through an attorney-at-law.


 


In no contingency or event whatsoever shall the
amount paid or agreed to be paid to the holder of this Note for the use,
forbearance or detention of money advanced hereunder exceed the highest lawful
rate permitted under Applicable Law.  If
any such excess amount is inadvertently paid by Borrowers or inadvertently
received by the holder of this Note, such excess shall be returned to Borrowers
or credited as a payment of principal, in accordance with the Loan
Agreement.  It is the intent hereof that
Borrowers not pay or contract to pay, and that holder of this Note not receive
or contract to receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may be paid by Borrowers under Applicable Law.


 


This Note shall be governed by the laws of the State
of California, without giving effect to any conflict of law principles (but
giving effect to federal laws relating to national banks).


 

















 


IN WITNESS WHEREOF, this Revolver
Note is executed as of the date set forth above.


 


 


	
  Attest:

  	
   

  	
  THQ INC.,

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Secretary

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  
							



 


--
A - 2 --

















 


EXHIBIT B


to


Loan and Security Agreement


 


ASSIGNMENT
AND ACCEPTANCE


 


Reference is made to the Loan and Security Agreement
dated as of June 30, 2009, as amended (“Loan Agreement”), among THQ
INC., a Delaware corporation (“THQ” and, together with any other
Person at any time after the date hereof becomes a Borrower in accordance with
the terms hereof, each individually a “Borrower” (and collectively, “Borrowers”), BANK OF AMERICA, N.A., as agent (“Agent”)
for the financial institutions from time to time party to the Loan Agreement (“Lenders”),
and such Lenders.  Terms are used herein
as defined in the Loan Agreement.


 


[_________] (“Assignor”) and [_________] (“Assignee”)
agree as follows:


 


1.                                       Assignor hereby
assigns to Assignee and Assignee hereby purchases and assumes from Assignor (a) a
principal amount of $[_________] of Assignor’s outstanding Revolver Loans and $[_________] of Assignor’s participations in LC
Obligations, and (b) the amount of $[_________] of Assignor’s
Revolver Commitment (which represents [__]% of the total Revolver Commitments)
(the foregoing items being, collectively, the “Assigned Interest”),
together with an interest in the Loan Documents corresponding to the Assigned
Interest.  This Agreement shall be
effective as of the date (“Effective Date”) indicated in the
corresponding Assignment Notice delivered to Agent, provided such Assignment
Notice is executed by Assignor, Assignee, Agent and Borrower Agent, if
applicable.  From and after the Effective
Date, Assignee hereby expressly assumes, and undertakes to perform, all of
Assignor’s obligations in respect of the Assigned Interest, and all principal,
interest, fees and other amounts which would otherwise be payable to or for
Assignor’s account in respect of the Assigned Interest shall be payable to or
for Assignee’s account, to the extent such amounts accrue on or after the
Effective Date.


 


2.                                       Assignor (a) represents
that as of the date hereof, prior to giving effect to this assignment, its
Revolver Commitment is $[_________], and the outstanding balance of its Revolver
Loans and participations in LC Obligations is $[_________]; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any other instrument
or document furnished pursuant thereto, other than that Assignor is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; and (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers or the performance by Borrowers of their
obligations under the Loan Documents.  [Assignor is attaching the Note[s] held by it and requests that
Agent exchange such Note[s] for new Notes payable to Assignee [and Assignor].]


 


3.                                       Assignee (a) represents
and warrants that it is legally authorized to enter into this Assignment and
Acceptance; (b) confirms that it has received copies of the Loan Agreement
and such other Loan Documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and Acceptance;
(c) agrees that it shall, independently and without reliance upon Assignor
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (d) confirms that it is an Eligible Assignee; (e) appoints
and authorizes Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Agreement as are delegated to Agent by the terms
thereof, together with such powers as are incidental thereto; (f) agrees
that it will observe and perform all obligations that are required to be
performed by it as a “Lender” under the Loan Documents; 


 

















 


and
(g) represents and warrants that the assignment evidenced hereby will not
result in a non-exempt “prohibited transaction” under Section 406 of
ERISA.


 


4.                                       This Agreement
shall be governed by the laws of the State of California. 
If any provision is found to be invalid under Applicable Law, it shall
be ineffective only to the extent of such invalidity and the remaining
provisions of this Agreement shall remain in full force and effect.


 


5.                                       Each notice or
other communication hereunder shall be in writing, shall be sent by messenger,
by telecopy or facsimile transmission, or by first-class mail, shall be deemed
given when sent and shall be sent as follows:


 


(a)                                  If to Assignee,
to the following address (or to such other address as Assignee may designate
from time to time):


 


__________________________


__________________________


__________________________


 


(b)                                 If to Assignor, to the
following address (or to such other address as Assignor may designate from time
to time):


 


__________________________


__________________________


__________________________


__________________________


 


Payments hereunder shall be made by wire transfer of
immediately available Dollars as follows:


 


If to Assignee, to the following account (or to such
other account as Assignee may designate from time to time):


 


______________________________


______________________________


ABA No._______________________


______________________________


Account No.____________________


Reference: 
_____________________


 


If to Assignor, to the following account (or to such
other account as Assignor may designate from time to time):


 


______________________________


______________________________


ABA No._______________________


______________________________


Account No.____________________


Reference: 
_____________________


 


--
B - 2 --

















 


IN WITNESS WHEREOF, this
Assignment and Acceptance is executed as of [_________].


 


_____________________________________


(“Assignee”)


 


 


By___________________________________


     Title:


 


 


_____________________________________


(“Assignor”)


 


 


By___________________________________


     Title:


 


--
B - 3 --

















 


EXHIBIT C


to


Loan and Security Agreement


 


ASSIGNMENT
NOTICE


 


Reference is made to (1) the Loan and
Security Agreement dated as of June 30, 2009, as amended (“Loan Agreement”),
among THQ INC., a Delaware corporation (“THQ”
and, together with any other Person at any time after the date hereof becomes a
Borrower in accordance with the terms hereof, each individually a “Borrower”
(and collectively, “Borrowers”), BANK OF AMERICA, N.A., as agent (“Agent”) for the
financial institutions from time to time party to the Loan Agreement (“Lenders”),
and such Lenders; and (2) the Assignment and Acceptance dated as
of [_________], 20__ (“Assignment Agreement”), between [_________] (“Assignor”)
and [_________] (“Assignee”).  Terms are used herein as
defined in the Loan Agreement.


 


Assignor hereby notifies Borrowers and Agent of
Assignor’s intent to assign to Assignee pursuant to the Assignment Agreement (a) a
principal amount of $[_________] of Assignor’s outstanding Revolver Loans and $[_________] of Assignor’s participations in LC
Obligations, and (b) the amount of $[_________] of Assignor’s
Revolver Commitment (which represents [__]% of the total Revolver Commitments)
(the foregoing items being, collectively, the “Assigned Interest”),
together with an interest in the Loan Documents corresponding to the Assigned
Interest.  This Agreement shall be
effective as of the date (“Effective Date”) indicated below, provided
this Assignment Notice is executed by Assignor, Assignee, Agent and Borrower
Agent, if applicable.  Pursuant to the
Assignment Agreement, Assignee has expressly assumed all of Assignor’s
obligations under the Loan Agreement to the extent of the Assigned Interest, as
of the Effective Date.


 


For purposes of the Loan Agreement, Agent shall deem
Assignor’s Revolver Commitment to be reduced by $[_________], and Assignee’s
Revolver Commitment to be increased by $[_________].


 


The address of Assignee to which notices and
information are to be sent under the terms of the Loan Agreement is:


 


________________________


________________________


________________________


________________________


 


The address of Assignee to which payments are to be
sent under the terms of the Loan Agreement is shown in the Assignment and
Acceptance.


 


This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3 of the Loan
Agreement.  Please acknowledge your
acceptance of this Notice by executing and returning to Assignee and Assignor a
copy of this Notice.


 

















 


IN WITNESS WHEREOF, this
Assignment Notice is executed as of [_________].


 


_____________________________________


(“Assignee”)


 


 


By___________________________________


     Title:


 


 


_____________________________________


(“Assignor”)


 


 


By___________________________________


     Title:


 


ACKNOWLEDGED
AND AGREED,


AS
OF THE DATE SET FORTH ABOVE:


 


BORROWER AGENT:*


 


_________________________________


 


 


By_______________________________


     Title:


 


*
No signature required if Assignee is a Lender, U.S.-based Affiliate of a Lender
or Approved Fund, or if an Event of Default exists.


 


 


BANK OF AMERICA, N.A.,


as
Agent


 


 


By_______________________________


     Title:


 


--
C - 2 --