exv10w1



 







Exhibit 10.1





 






BUSINESS LOAN AGREEMENT

by and between




PEOPLESUPPORT, INC.,

a Delaware corporation




and




CITIBANK (WEST), FSB




Dated as of July 28, 2006





 





 









 





Citibank (West), FSB




Business Loan Agreement




	 	 	 
	Borrower:

	 	PeopleSupport, Inc.,
	 

	 	a Delaware corporation
	 
	 	 
	Address:

	 	1100 Glendon Avenue
	 

	 	Los Angeles, CA 90024
	 
	 	 
	Date:

	 	July 28, 2006






     THIS BUSINESS LOAN AGREEMENT (“Agreement”) is entered into as of the above date
between Citibank (West), FSB (“Lender”), with offices at 210 West Lexington Drive, Glendale,
California, 91203, and the borrower named above (“Borrower”), whose chief executive office is
located at the above address (“Borrower’s Address”).



1. DEFINITIONS AND INTERPRETATIONS.




     1.1 Definitions. As used in this Agreement, the following terms have the following
meanings:



          “Account” has the meaning set forth in Section 9102(a)(2) of the Code.




          “Account Debtor” means a Person obligated on an Account, chattel paper or General
Intangible.




          “Additional Costs” has the meaning set forth in Section 3.2(vii).




          “Adjusted Quick Ratio” means, as of the date of determination, Quick Assets divided by the
amount of Revolving Loans outstanding.




          “Affiliate” means, with respect to any Person, a relative, partner, shareholder, director,
officer, or employee of such Person, or any parent or subsidiary of such Person, or any Person
controlling, controlled by or under common control with such Person.




          “Audit” means to inspect, audit and copy Borrower’s books and records.



          
“Borrower”
has the meaning set forth in the introduction to this Agreement.



          
“Borrower’s
Address” has the meaning set forth in the introduction to this Agreement.



          “Business Day” means (i) a day on which Lender is open for business in the State of
California, and (ii) a day on which banks are open for dealings in dollar deposits in the London
interbank market.




          “Capital Expenditures” means, for any period, the aggregate of all cash expenditures by
Borrower during that period that, in conformity of GAAP, are or are required to be included in
the property, plant or equipment reflected in the balance sheet of Borrower.




          “Change of Control” shall be deemed to have occurred at such time as a “person” or “group”
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other
than the current holders of the ownership interests in Borrower) becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, as a
result of any




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single transaction or a series of transactions, of more than fifty percent (50%) of the
total voting power of all classes of stock or other ownership interests then outstanding of
Borrower normally entitled to vote in the election of directors or analogous governing body.




          “Closing Date” means the date of the initial funding under this Agreement.




          “Code” means the Uniform Commercial Code as adopted and in effect in the State of California,
from time to time, including revised Division 9 of the Uniform Commercial Code-Secured
Transactions, effective July 1, 2001.




          “Credit Limit” has the meaning set forth in Section 2.1 of this Agreement.




          “Debt” means, as of the date of determination, the sum, but without duplication, of any and
all of Borrower’s (i) indebtedness heretofore or hereafter created, issued, incurred or assumed by
Borrower (directly or indirectly) for or in respect of money borrowed, (ii) all obligations
arising out of capital leases, (iii) all obligations for the deferred purchase price of property
or services, (iv) all indebtedness and liabilities guaranteed by Borrower, and (v) all liabilities
under Title IV of ERISA, less permitted subordinated debt.




          “Debt Collection Assets” means any assets relating to Borrower’s debt collection business and
which are subject to liens of Persons who have an interest in such Debt Collection Assets.




          “Debt Collection Indebtedness” means debt of Borrower incurred in connection with the
purchase of Debt Collection Assets so long as such debt: (i) specifically states that the recourse
of the lender or any other creditor thereunder is limited to the collateral securing the same and
(ii) is secured solely by the Debt Collection Assets which were purchased with the proceeds of
such Debt Collection Indebtedness.




          “Default” means any event which, with notice or passage of time or both, would constitute an
Event of Default.




          “Default Rate” has the meaning set forth in Section 3.3 if this Agreement.




          “Deposit Account” means any demand, time, savings, passbook or similar account now or
hereafter maintained by or for the benefit of Borrower with a bank (as defined in the Code), and
all amounts therein, whether or not restricted or designated for a particular purpose.




          “Dollars or $” means United States dollars.




          “Domestic Receivables” means Receivables where the Account Debtor is located in the United
States.




          “EBITDA” means, for any period, the sum of the following items: (a) net income after tax for
such period, (b) interest expense for such period, (c) depreciation and amortization for such
period, (d) all other non-cash expenses (less non-cash gains), including without limitation
charges resulting from FASB 123R, for such period, (e) income tax expense for such period, (f) all
extraordinary items and (g) non-recurring charges or restructuring charges relating to an
acquisition as agreed to by the Bank (in each instance to the extent deducted in the determination
of net income and, in each case, as determined in accordance with GAAP).




          “Equipment” means all of Borrower’s present and hereafter acquired goods (other than
Inventory, farm products, or consumer goods) including, but not limited to, software embedded in
such goods and all machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dies, jigs, of every kind and description
used in Borrower’s operations or owned by Borrower and any interest in any of the foregoing, and
all attachments, accessories, accessions, replacements, substitutions, additions or improvements
to any of the foregoing, wherever located.





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          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor statute, and any and all regulations thereunder.




          “Event of Default” means any of the events set forth in Section 8.1.




          “F/X Obligations” means Borrower’s obligations under any foreign exchange facility with
Lender.




          “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States, consistently applied.




          “General Intangibles” means all general intangibles of Borrower, whether now owned or
hereafter created or acquired by Borrower, including, without limitation, payment intangibles, all
choses in action, causes of action, corporate or other business records, inventions, designs,
drawings, blueprints, patents, patent applications, trademarks and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all litigation
presently or hereafter pending for any cause or claim (whether in contract, tort or otherwise), and
all judgments now or hereafter arising therefrom, all claims of Borrower against Lender, rights to
purchase or sell real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all insurance policies
and claims (including without limitation, life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and claims, software,
discs, tapes and tape files, claims under guaranties, security interests or other security held by
or granted to Borrower, all rights to indemnification and all other intangible property of every
kind and nature (other than Receivables).




          “Guaranty” means the Guaranty executed by PeopleSupport (Philippines), Inc. a Philippines
corporation, STC Solutions, Inc., a Delaware corporation, ProArm Management, Inc., a Delaware
corporation, PeopleSupport Rapidtext, Inc., a Delaware corporation, The Transcription Company, a
California corporation, and PeopleSupport (Costa Rica), S.R.L., a Costa Rican entity, and any
other Material Subsidiary after the date hereof in favor of Lender.




          “Interest Period” means, with respect to each LIBOR Rate Loan, the period commencing on the
Business Day specified by Borrower in a LIBOR Rate Loan Pricing Worksheet and agreed to by Lender
and ending on the numerically corresponding day thirty (30), sixty (60), ninety (90), or one
hundred twenty (120) days thereafter as Borrower may elect pursuant to the applicable LIBOR Loan
Pricing Worksheet. If any Interest Period would otherwise expire on a day that is not a Business
Day, the Interest Period shall expire on the next succeeding Business Day; provided that no
Interest Period shall extend beyond the RLOC Maturity Date.




          “Inventory” means all of Borrower’s now owned and hereafter acquired goods, including
software embedded in such goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit, and, including without
limitation, all farm products), and all materials and supplies of every kind, nature and
description which are or might be used or consumed in Borrower’s business or used in connection
with the manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of title and other
documents representing any of the foregoing.




          “Lender” has the meaning set forth in the introduction to this
Agreement.




          “Lender Parent” has the meaning set forth in Section
3.2(ix).




          “LIBOR Base Rate” means the rate per annum for United States dollar deposits quoted by Lender
in accordance with its customary procedures and utilizing such electronic or other quotation
sources as it considers appropriate in its sole discretion as the London interbank offered rate
for a period of time approximately equal to the number of months in the relevant Interest Period,
with the




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understanding that such rate is quoted by Lender for the purpose of calculating effective rates of
interest for loans making reference thereto.




          “LIBOR Breakage Costs” mean loss, costs or expense incurred by Lender as a result of any
failure by Borrower to borrow a Revolving Loan on the date for such borrowing specified in the
relevant notice of borrowing hereunder.




          “LIBOR Option” has the meaning set forth in Section 3.2(i).




          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate per annum
(rounded upwards, if necessary, to the next 1/16%) determined by Lender as the sum of (a) the
quotient of (i)the LIBOR Base Rate for such Interest Period, divided by (ii) 100% minus
the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any
change in the Reserve Percentage.




          “LIBOR Rate Loan” means each Revolving Loan that bears interest at a rate determined by
reference to the LIBOR Rate.




          “LIBOR Loan Pricing Worksheet” means an irrevocable request from Borrower to Lender, in the
form set forth on Exhibit B attached hereto, duly executed by Borrower, stating that Borrower
elects to pay interest at the LIBOR Option, and specifying the date such LIBOR Rate Loan is to be
made (which shall be a Business Day), the amount of the LIBOR Rate Loan and the Interest Period
for such LIBOR Rate Loan.




          “Loan Account” has the meaning set forth in Section 2.2.




          “Loan Documents” means this Agreement, the Guaranty and any other agreement, instrument or
document executed in connection herewith or therewith.




          “Marketable Securities” means (i) marketable direct obligations issued by any state of the
United States or any political subdivision of any such state or any public instrumentality thereof
maturing within 3 years from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group or
Moody’s Investors Services, Inc. and (ii) securities traded in a nationally-recognized market.




          “Material Adverse Effect” means a material adverse effect on (i) the business, assets,
condition (financial or otherwise) or results of operations of Borrower or the subsidiaries of
Borrower (taken as a whole with Borrower), or any guarantor (taken as a whole with Borrower) of any
of the Obligations, (ii) the ability of Borrower or any guarantor (taken as a whole with Borrower)
of any of the Obligations to perform its obligations under this Agreement (including, without
limitation, repayment of the Obligations as they come due), or (iii) the validity or enforceability
of this Agreement or any other agreement or document entered into by any party in connection
herewith, or the rights or remedies of Lender hereunder or thereunder.




          “Maximum Funded Debt” means, as of the date of determination, all outstanding
interest-bearing Debt of Borrower, including without limitation outstanding Revolving Loans.




          “Material Subsidiary” means a Subsidiary of Borrower which (i) has annual revenues of $100,000
or greater or (ii) has assets valued at $100,000 or more.




          “Obligations” means all present and future Revolving Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to
Lender, whether evidenced by this Agreement or any note or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, banker’s acceptance, loan,
guaranty, indemnification or otherwise made in connection with this Agreement, whether direct or
indirect (including, without limitation, those acquired by assignment and any participation by
Lender in Borrower’s debts owing to




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others), absolute or contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, reasonable attorneys’ fees (including reasonable attorneys’ fees and
expenses incurred in bankruptcy), expert witness fees and expenses, fees and expenses of
consultants, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility
fees, termination fees, and any other sums chargeable to Borrower under this Agreement or under any
other present or future instrument or agreement between Borrower and Lender delivered or executed
in connection with this Agreement.




          “Overadvance” has the meaning set forth in Section 4.1.



          
“Permitted Liens” means the following:




          (a) purchase money security interests in specific items of Equipment and liens for
non-recourse loans secured by real property;




          (b) leases of specific items of Equipment;




          (c) liens for taxes and assessment not yet delinquent or that are being contested in
good faith by proper proceedings so long as adequate reserves have been established on
Borrower’s
books in accordance with GAAP;




          (d) security interests being terminated substantially concurrently with this
Agreement;




          (e) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens
arising in the ordinary course of business and securing obligations which are not delinquent
or that are
being contested in good faith by proper proceedings so long as adequate reserves have been
established
on Borrower’s books in accordance with GAAP;




          (f) liens imposed by law arising in the ordinary course of business such as
materialmen’s, mechanics’, warehousemen’s, workers compensation and other like Liens; or




          (g) liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods.
“Permitted F/X Indebtedness” means foreign exchange contracts with other financial
institutions with an aggregate maximum unsecured exposure of up to Five Million Dollars
($5,000,000).




          “Person” means any individual, sole proprietorship, general partnership, limited partnership,
limited liability partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, government, or any agency or political division thereof,
or any other entity.




          “Prime Rate” means the variable rate of interest, per annum, published in the “Money Rates”
column or section of The Wall Street Journal (Western Edition) (“WSJ”) as the “prime rate”. In the
event two prime rates are published, the higher rate shall be used. The Prime Rate is an index for
determining one of the interest rates payable under the terms of this Agreement. The Prime Rate is
not necessarily the lowest rate offered by the banks that establish the rate or by Lender. In the
event the WSJ ceases to publish the Prime Rate, Lender, in its reasonable judgment, may substitute
any similar index for the Prime Rate. Any change in the Prime Rate shall take effect on the date
of publication in the WSJ.




          “Prime Rate Loan” means each Revolving Loan that bears interest at a rate determined by
reference to the Prime Rate.




          “Quick Assets” means, as at any date of determination, the sum of Borrower’s cash, cash
equivalents, Marketable Securities and Domestic Receivables minus any Debt Collection Assets.




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          “Receivables” means all of Borrower’s now owned and hereafter acquired Accounts (whether or
not earned by performance), letters of credit, letter of credit rights, license fees, contract
rights, chattel paper (including tangible chattel paper, electronic chattel paper, and intangible
chattel paper), instruments (including promissory notes), drafts, securities, documents,
securities accounts, security entitlements, commodity contracts, commodity accounts, investment
property, supporting obligations and all other forms of obligations at any time owing to Borrower,
all guaranties and other security therefor, all merchandise returned to or repossessed by
Borrower, and all rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.




          “Regulatory Change” means, with respect to Lender, any change on or after the date of this
Agreement in United States federal, state or foreign laws or regulations, including Regulation D,
or the adoption or making on or after such date of any interpretations, directives or requests
applying to a class of lenders including Lender of or under any United States federal or state, or
any foreign, laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or administration thereof.




          “Reserve Percentage” means, on any day, the maximum percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor governmental authority) for determining
the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that
are in effect on such date with respect to eurocurrency funding (currently referred to as
“eurocurrency liabilities”) of Lender, but so long as Lender is not required or directed under
applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.




          “Responsible Officer” means Chief Executive Officer, President and Chief Financial Officer.




          “Revolving Loans” has the meaning set forth in Section 2.1 of this
Agreement.




           “RLOC Maturity Date” means July 28, 2008.




          “Solvent” means, with respect to any Person on a particular date, that on such date (a) at
fair valuations, all of the properties and assets of such Person are greater than the sum of the
debts, including contingent liabilities, of such Person, (b) the present fair salable value of the
properties and assets of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and matured, (c) such
Person is able to realize upon its properties and assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course of business, (d)
such Person does not intend to, and does not believe that it will, incur debts beyond such
Person’s ability to pay as such debts mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which such Person’s
properties and assets would constitute unreasonably small capital after giving due consideration
to the prevailing practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that reasonably can be expected to become an actual or matured liability.




          “Subsidiary” means a corporation, partnership, limited liability company, or other entity in
which Borrower directly or indirectly owns or controls the shares of stock having ordinary voting
power to elect a majority of the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.




     1.2 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting
terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such
terms in accordance with GAAP. In addition, unless otherwise specified herein all accounting terms
used herein shall be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in accordance with GAAP.
All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.



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	 	Business Loan Agreement
	 





     1.3 Construction. Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular and references to the singular include the
plural; references
to any gender include any other gender; the part includes the whole; the term “including” is
not limiting,
and the term “or” has, except where otherwise indicated, the inclusive meaning represented by
the phrase “and/or”. The words, “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.
Article, section,
subsection, clause, exhibit and schedule references are to this Agreement, unless otherwise
specified.
Any reference in this Agreement or any of the Loan Documents to this Agreement or any of the
Loan
Documents includes any and all permitted alterations, amendments, changes, extensions,
modifications,
renewals, or supplements thereto or thereof, as applicable.



     1.4 Exhibits and Schedules. All of the exhibits and schedules attached hereto shall be
deemed incorporated herein by reference.



     1.5 No Presumption Against Any Party. Neither this Agreement, any of the Loan
Documents, any other documents, agreement, or instrument entered into in connection herewith,
nor any
uncertainty or ambiguity herein or therein shall be construed or resolved using any
presumption against
any party hereto, whether under any rule of construction or otherwise. On the contrary, this
Agreement,
the Loan Documents, and the other documents, instruments, and agreements entered into in
connection
herewith have been reviewed by each of the parties and their counsel and shall be construed
and interpreted according to the ordinary meanings of the words used so as to accomplish fairly
the purposes and intentions of all parties hereto.



     1.6 Independence of Provisions. All agreements and covenants hereunder, under the
Loan Documents and the other documents, instruments, and agreements entered into in connection
herewith shall be given independent effect such that if a particular action or condition is
prohibited by the
terms of any such agreement or covenant, the fact that such action or condition would be
permitted within
the limitations of another agreement or covenant shall not be construed as allowing such
action to be
taken or condition to exist.



2. CREDIT FACILITIES.




     2.1 Revolving Line of Credit. Provided no Default or Event of Default has occurred and
is
continuing, Lender will make loans to Borrower (the “Revolving Loans”) from time to time from
the
Closing Date to the RLOC Maturity Date in a total amount (the “Credit Limit”) at any time
outstanding not
to exceed Twenty Five Million Dollars ($25,000,000.00). Within the foregoing limits,
Borrower may
borrow, partially or wholly prepay and reborrow under this Agreement as set forth herein.



     2.2 Loan Account/Deposit Account. Lender shall maintain on its books a record of
account (“Loan Account”) in which it shall make entries for each Revolving Loan and such other
debits
and credits as shall be appropriate in connection with the credit facility set forth in this
Agreement. Each
Revolving Loan made by Lender shall be deposited in Borrower’s account number 201844586 at
Lender,
or such other account with Lender as designated in writing by Borrower.



3. INTEREST.




     3.1 Prime Rate.



          (i) All Revolving Loans (except for LIBOR Rate Loans) and all other monetary Obligations
shall bear interest at a rate equal to the Prime Rate minus .25 percentage points (twenty-five
basis points), calculated on the basis of a 360-day year for the actual number of days elapsed.




          (ii) Except as otherwise provided in this Agreement, interest on each Prime Rate Loan shall
be due and payable (i) monthly, in arrears, on the last day of each and every month, commencing
August 31, 2006, and (ii) on the RLOC Maturity Date.




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          (iii) Each Prime Rate Loan shall be made upon the irrevocable written request of Borrower in
the form of Exhibit A received by Lender no later than 11:00 a.m. (California time) on the
Business Day such Prime Rate Loan is to be made. Each such notice shall specify the date such
Prime Rate Loan is to be made, which day shall be a Business Day, and the amount of such Prime
Rate Loan, and shall comply with such other requirements as Lender determines are reasonable or
desirable in connection therewith. Any written request for a Prime Rate Loan received by Lender
after 11:00 a.m. (California time) shall not be considered by Lender until the next Business Day.




     3.2 LIBOR Option.



          (i) In lieu of having interest charged at a rate based upon the Prime Rate, Borrower shall
have the option (the “LIBOR Option”) to have interest on all or a portion of the Revolving Loans
accrue interest at the LIBOR Rate plus 0.65 percentage points (sixty-five basis points). Borrower
shall request such LIBOR Rate by delivering to Lender a LIBOR Loan Pricing Worksheet with respect
thereto. The LIBOR Loan Pricing Worksheet shall be received by Lender no later than 11:00 a.m.
(California time) on the same Business Day such LIBOR Rate Loan shall occur. Any LIBOR Loan
Pricing Worksheet received by Lender after 11:00 a.m. (California time) shall not be considered by
Lender until the next Business Day.




          (ii) Interest on each LIBOR Rate Loan shall be payable on the earlier to occur of (i) the
last day of the Interest Period applicable thereto, and (ii) if the Interest Period has a duration
of more than one month, on the last day of each one (1) month interval that occurs during such
Interest Period from the first day of such Interest Period. Interest on each LIBOR Rate Loan shall
be calculated on the basis of a 360-day year for the actual number of days elapsed.




          (iii) Borrower may from time to time submit in writing a request that Prime Rate Loans be
converted to LIBOR Rate Loans or that any existing LIBOR Rate Loans be continued for an additional
Interest Period. Such request shall specify the amount of the Prime Rate Loans which will
constitute LIBOR Rate Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such LIBOR Rate Loans. Each written request for a conversion to a LIBOR Rate Loan or
a continuation of a LIBOR Rate Loan shall be substantially in the form of a LIBOR Loan Pricing
Worksheet and received by Lender no later than 11:00 a.m. (California time) at least one (1)
Business Day prior to the Business Day such conversion or continuation shall occur provided that:




               (A) no Default or Event of Default exists;



               (B) Borrower shall have complied with such customary procedures
as Lender has established from time to time for Borrower’s requests for LIBOR Rate Loans;



               (C) the amount of a LIBOR Rate Loan shall be $100,000.00 or such
greater amount which is an integral multiple of $10,000.00;



               (D) no more than seven (7) LIBOR Rate Loans are outstanding; and



               (E) Lender shall have determined that the Interest Period or LIBOR
Rate is available to Lender and can be readily determined as of the date of the request for such
LIBOR Rate Loan.



          (iv) Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans or continue any
existing LIBOR Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Lender shall not be required to purchase United States Dollar deposits in the London
interbank market or other applicable LIBOR Rate market to fund any LIBOR Rate Loans, but the
provisions hereof shall be deemed to apply as if Lender had purchased such deposits to fund the
LIBOR Rate Loans.




          (v) Each LIBOR Rate Loan shall automatically convert to a Prime Rate Loan on the last day of
the applicable Interest Period, unless Lender has received and approved a duly




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completed LIBOR Loan Pricing Worksheet no later than 11:00 a.m. (California time) at least one (1)
Business Day prior to such last day of the existing Interest Period in accordance with the terms
hereof. After the occurrence of an Event of Default (i) Lender may determine not to permit
Borrower to incur any LIBOR Rate Loans or convert any Prime Rate Loans into LIBOR Rate Loans and
(ii) any LIBOR Rate Loans outstanding at such time shall, at Lender’s option, (x) convert to Prime
Rate Loans; provided that Borrower shall not be responsible for any LIBOR Breakage Costs resulting
from such conversion or (y) expire at the then current Interest Period applicable to such LIBOR
Rate Loans and then be continued as Prime Rate Loans. Unless as provided above, Borrower agrees to
pay to Lender, upon demand by Lender (or Lender may, at its option, charge Borrower’s Loan
Account) any amounts required to compensate Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the conversion of LIBOR Rate
Loans to Prime Rate Loans pursuant to any of the foregoing.




          (vi) If for any reason (including voluntary or mandatory prepayment or acceleration), Lender
receives all or part of the principal amount of a LIBOR Rate Loan prior to the last day of the
Interest Period for such Revolving Loan, Borrower shall immediately notify Borrower’s account
officer at Lender and, on demand by Lender, pay Lender the amount (if any) by which (i) the
additional interest which would have been payable on the amount so received had it not been
received until the last day of such Interest Period exceeds (ii) the interest which would have been
recoverable by Lender by placing the amount so received on deposit in the certificate of deposit
markets or the offshore currency interbank markets or United States Treasury investment products,
as the case may be, for a period starting on the date on which it was so received and ending on the
last day of such Interest Period at the interest rate determined by Lender in its reasonable
discretion. Lender’s determination as to such amount shall be conclusive absent manifest error.




          (vii) Borrower shall pay to Lender, upon demand by Lender, from time to time such amounts as
Lender may determine to be necessary to compensate it for any costs incurred by Lender that Lender
determines are attributable to its making or maintaining of any amount receivable by Lender
hereunder in respect of any Revolving Loans relating thereto (such increases in costs and
reductions in amounts receivable being herein called “Additional Costs”), in each case resulting
from any Regulatory Change which:




               (A) changes the basis of taxation of any amounts payable to Lender
under this Agreement with respect of any Revolving Loans (other than changes which affect
franchise, capital, branch profit taxes or taxes measured by or imposed on the overall net income
of Lender); or



               (B) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any deposits with or other
liabilities of Lender (including any Revolving Loans or any deposits referred to in the definition
of “LIBOR Base Rate”); or



               (C) imposes any other condition affecting this Section 3.2(vii) (or any
of such extensions of credit or liabilities).



Lender will notify Borrower of any event occurring after the date of this Agreement which will
entitle Lender to compensation pursuant to this Section 3.2(vii) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation. Lender will furnish
Borrower with a statement setting forth the basis and amount of each request by Lender for
compensation under this Section 3.2(vii). Determinations and allocations by Lender for purposes of
this Section 3.2(vii) of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Revolving Loans or of making or maintaining Revolving Loans or on amounts
receivable by it in respect of Revolving Loans, and of the additional amounts required to
compensate Lender in respect of any Additional Costs, shall be conclusive absent manifest error.





          (viii) Borrower shall pay to Lender, upon the request of Lender, such amount or amounts as
shall be sufficient (in the sole good faith opinion of such Lender) to compensate it for any




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	 	Citibank (West), FSB
	 	Business Loan Agreement
	 




LIBOR Breakage Costs, unless such LIBOR Breakage Costs are due solely from Lender’s failure to
make a Revolving Loan specified in a notice of borrowing pursuant to the terms of this Agreement.




          (ix) If Lender shall determine that the adoption or implementation of any applicable law,
rule, regulation or treaty regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by Lender in any
respect, with any directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of Lender or any person or entity controlling Lender (a “Lender Parent”)
as a consequence of its obligations hereunder to a level below that which Lender (or its Lender
Parent) could have achieved but for such adoption, change or compliance (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by Lender to be material, then
from time to time, within 15 days after demand by Lender, Borrower shall pay to Lender such
additional amount or amounts as will compensate Lender for such reduction. A statement of Lender
claiming compensation under this Section and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive, absent manifest error.




          (x) If at any time Lender, in its sole and absolute discretion, determines that: (i) the amount
of the LIBOR Rate Loans for periods equal to the corresponding Interest Periods are not available
to Lender in the offshore currency interbank markets, or (ii) the LIBOR Rate does not accurately
reflect the cost to Lender of lending the LIBOR Rate Loan, then Lender shall promptly give notice
thereof to Borrower, and upon the giving of such notice Lender’s obligation to make the LIBOR Rate
Loans shall terminate, unless Lender and Borrower agree in writing to a different interest rate
applicable to LIBOR Rate Loans. If it shall become unlawful for Lender to continue to fund or
maintain any Revolving Loans, or to perform its obligations hereunder, upon demand by Lender,
Borrower shall prepay the Revolving Loans in full with accrued interest thereon and all other
amounts payable by Borrower hereunder.




     3.3 Default Interest. Upon the occurrence and during the continuance of an Event of Default,
Borrower shall pay interest on the unpaid principal amount of each Revolving Loan owing to Lender
and on the unpaid amount of all interest, fees and other amounts payable hereunder that is not paid
when due, payable on demand by Lender, at a rate per annum (the “Default Rate”) equal at all times
to five percent (5%) per annum above the rate per annum required to be paid on such Revolving Loan
pursuant to Sections 3.1 or 3.2, as the case may be, or, in the case of such other amounts, above
the rate per annum required to be paid on Prime Rate Loans pursuant to Section 3.1 above.



4. PAYMENT OF OBLIGATIONS.




     4.1 Overadvance. If, at any time and for any reason, the amount of the outstanding
Obligations exceeds the Credit Limit (an “Overadvance”), Borrower shall immediately pay
Lender, in cash, the amount of such Overadvance. Lender shall apply such payments (i) first to the
outstanding Revolving Loans that are Prime Rate Loans and (ii) second to the outstanding Revolving Loans
that are LIBOR Rate Loans in an order to minimize LIBOR Breakage Costs.



     4.2 RLOC Maturity Date. On the RLOC Maturity Date, Borrower shall pay and perform in
full all outstanding Revolving Loans and all other Obligations, whether for principal,
interest, costs, fees or otherwise.



     4.3 Manner of Payment. Payment of the Revolving Loans and all other Obligations shall be
withdrawn from Borrower’s account number 201844586 with Lender, or such other account with
Lender as designated in writing by Borrower.



5. CONDITIONS PRECEDENT.




     5.1 Conditions to Initial Revolving Loans. The obligation of Lender to make the
Revolving Loans is subject to the satisfaction, in the sole discretion of Lender, at or prior to
the first advance of funds hereunder, of each, every and all of the following conditions:




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	 	 	 	Business Loan Agreement
	 





          (a) Borrower shall deliver to Lender this Agreement and the Guaranty, in form and
substance satisfactory to Lender in its sole and absolute discretion;




          (b) Lender shall have
received copies of the insurance binders or certificates evidencing Borrower’s compliance with
Section 7.2 of this Agreement.




          (c) Lender shall have received copies of Borrower’s articles and all amendments thereto, and a
certificate of good standing, each certified by the Secretary of State of the state of Borrower’s
organization, and dated a recent date prior to the Closing Date, and Lender shall have received
certificates of foreign qualification for Borrower from the Secretary of State of California.




          (d) Lender shall have received copies of Borrower’s bylaws and all amendments thereto, and
Lender shall have received copies of the resolutions of the board of directors of Borrower,
authorizing the execution and delivery of this Agreement and the other documents contemplated
hereby, and authorizing the transactions contemplated hereunder and thereunder, and authorizing
specific officers of Borrower to execute the same on behalf of Borrower, in each case certified by
the Secretary or other acceptable officer of Borrower as of the Closing Date.




          (e) Lender shall have received evidence from Borrower that Borrower has complied with all tax
withholding and Internal Revenue Service regulations, in form and substance satisfactory to Lender
in its sole and absolute discretion.




          (f) Lender shall have completed its due diligence with respect to Borrower.




          (g) Lender shall have received such other agreements, instruments and documents as Lender may
require in connection with the transactions contemplated hereby, all in form and substance
satisfactory to Lender in Lender’s sole and absolute discretion, and, as applicable, in form for
filing in the appropriate filing office.




          (h) Lender shall have received all out-of-pocket costs incurred by Lender in connection with
the loan documents.




          (i) The Closing Date shall occur no later than July 31, 2006.




     5.2 Conditions to all Revolving Loans. The obligation of Lender to make any Revolving Loans to
Borrower (including the initial Revolving Loans) is further subject to and contingent upon the
fulfillment of each of the following conditions to the satisfaction of Lender:



          (a) The fact that,
immediately before and after the making of any Revolving Loan, no Event of Default or Default shall
have occurred or be continuing; and




          (b) The fact that the representations and warranties of
Borrower contained in this Agreement shall be materially true and correct on and as of the date of
such borrowing.



6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. In order to induce
Lender to enter into this Agreement and to make Revolving Loans, Borrower represents and warrants
to Lender as follows, and Borrower covenants that the following representations will continue to be
true, and that Borrower will at all times comply with all of the following covenants:




     6.1 State of Organization, Existence and Authority. Borrower and each Subsidiary is and will
continue to be, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization which, as to Borrower, is accurately set forth in the heading to
this Agreement. Borrower and each Subsidiary is and will continue to be qualified and licensed to
do business in all jurisdictions in which such qualification or license is required under
applicable law. The execution, delivery and performance by Borrower of this Agreement, and all
other documents contemplated hereby, and any documents executed by a Subsidiary, (a) have been duly
and validly authorized, (b) are enforceable against
Borrower and such Subsidiary in accordance with their terms (except as enforcement may be
limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or



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	 	 	 	Business Loan Agreement
	 




similar laws relating to creditors’ rights generally), and (c) do not violate Borrower’s or
such Subsidiary’s articles, or any law or any material agreement or instrument which is binding
upon Borrower or such Subsidiary or Borrower’s or such Subsidiary’s property, and (d) do not
constitute grounds for acceleration of any material indebtedness or obligation under any material
agreement or instrument that is binding upon Borrower or such Subsidiary or Borrower’s or such
Subsidiary’s property. Borrower will give Lender ten (10) days’ prior written notice before
changing its state of organization.




     6.2 Name; Trade Names and Styles. The name of Borrower set forth in the heading to this
Agreement is its correct name. All prior names of Borrower and all of Borrower’s present and prior
trade names are listed on the Schedule attached hereto. Borrower shall give Lender thirty (30)
days’ prior written notice before changing its name or doing business under any trade name.
Borrower has complied, and will in the future comply, with all laws relating to the conduct of
business under a fictitious business name.



     6.3 Place of Business. Borrower’s Address set forth in the heading to this Agreement is the
address and location of Borrower’s chief executive office.



     6.4 Books and Records. Borrower has maintained and will maintain at Borrower’s Address
complete and accurate books and records, comprising an accounting system in accordance with GAAP.



     6.5 Financial Condition, Statements and Reports. All financial statements now or in the future
delivered to Lender have been, and will be, prepared in conformity with GAAP (except, in the case
of unaudited financial statements, for the absence of footnotes and subject to normal year-end
adjustments) and now and in the future will fairly reflect the financial condition of Borrower, at
the times and for the periods therein stated. Between the last date covered by any such statement
provided to Lender and the date hereof, there has been no Material Adverse Effect. Borrower is now
and will continue to be Solvent.



     6.6 Tax Returns and Payments; Pension Contributions. Borrower has timely filed, and will
timely file, all tax returns and reports required by foreign, federal, state and local law, and
Borrower has timely paid, and will timely pay, all foreign, federal, state and local taxes,
assessments, deposits and contributions now or in the future owed by Borrower. Borrower may,
however, defer payment of any contested taxes, provided that Borrower (a) in good faith contests
Borrower’s obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (b) notifies Lender in writing of the commencement of, and any material
development in, the proceedings, and (c) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of Borrower’s assets. As of the date hereof,
Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years
which could result in additional taxes becoming due and payable by Borrower. Borrower has paid, and
shall continue to pay all amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms, and Borrower has not and will not
withdraw from participation in, permit partial or complete termination of, or permit the occurrence
of any other event with respect to, any such plan which could result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.



     6.7 Compliance with Law. Borrower and each Subsidiary has complied, and will comply, in all
material respects, with all provisions of all material foreign, federal, state and local laws and
regulations relating to Borrower or such Subsidiary, including, but not limited to, the Fair Labor
Standards Act, and those relating to Borrower’s or such Subsidiary’s ownership of real or personal
property, the conduct and licensing of Borrower’s or such Subsidiary’s business, and environmental
matters.



     6.8 Material Subsidiaries. All of Borrower’s Material Subsidiaries on the Closing Date are set
forth in the definition of “Guaranty” in Section 1.1. Borrower shall cause all other Subsidiaries
that become Material Subsidiaries after the Closing Date to execute a counterpart to the Guaranty.



     6.9 Litigation. Except as disclosed in the Schedule attached hereto, there is no claim, suit,
litigation, proceeding or investigation pending, or to the best of Borrower’s knowledge, threatened
by or



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	 	 	 	Business Loan Agreement
	 




against or affecting Borrower or any Subsidiary in any court or before any governmental agency
(or any basis therefore known to Borrower) which may result, either separately or in the aggregate,
in a Material Adverse Effect. Borrower will promptly inform Lender in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted by or against
Borrower or any Subsidiary involving any single claim of $1,000,000.00 or more, or involving
$2,000,000.00 or more in the aggregate.




     6.10 Use of Proceeds. All proceeds of all Revolving Loans shall be used solely for lawful
business purposes. Borrower is not purchasing or carrying any “margin stock” (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) and no part of the proceeds
of any Revolving Loan will be used to purchase or carry any “margin stock” or to extend credit to
others for the purpose of purchasing or carrying any “margin stock.”



7. ADDITIONAL DUTIES OF THE BORROWER.




     7.1 Financial and Other Covenants. Borrower shall at all times comply with the following
covenants:



          (a) Borrower shall maintain an Adjusted Quick Ratio of at least 1.25:1.00 as of the last
day of each fiscal quarter-end.




          (b) Borrower shall maintain a Maximum Funded Debt to EBITDA Ratio, measured on a rolling
four-quarter basis, of no greater than 1.50:1.00, measured the last day of each fiscal quarter-end




     7.2 Insurance. Borrower shall at all times carry such business insurance with financially sound
and reputable insurance companies in amounts, covering such risks, and having such deductibles as
is customary for reputable companies engaged primarily in the same business as Borrower.



     7.3 Reports. Borrower, at its expense, shall provide Lender with the written reports set forth
below, and, after the occurrence and continuance of an Event of Default, such other written reports
with respect to Borrower (including budgets, sales projections, operating plans and other financial
documentation), as Lender shall from time to time reasonably request:



          (a) SEC Form 10-Q, together
with company prepared consolidating schedules no later than forty-five (45) days after the end of
each quarter, commencing with the quarter ending September 30, 2006.




          (b) SEC Form 10-K, together with company prepared consolidating schedules no later than ninety
(90) days after the end of Borrower’s fiscal year, commencing with the fiscal year ending December
31, 2006.




          (c) a quarterly loan covenant compliance certificate in the form of Exhibit C attached hereto
no later than forty-five (45) days after the end of each fiscal quarter, commencing with the fiscal
quarter ending September 30, 2006.




     7.4 Access to Books and Records. At reasonable times but not less frequently than annually
and on one (1) Business Day’s notice, Lender, by and through its employees or agents, shall have
the right to perform Audits. Lender shall take reasonable steps to keep confidential all
confidential information obtained in any Auditor appraisal, but Lender shall have the right to
disclose any such information to its auditors, regulatory agencies, and attorneys, and pursuant to
any subpoena or other legal process. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower’s books or records at any location other than
Borrower’s Address, without first notifying Lender of the same and obtaining the written agreement
from such accounting firm, service bureau or other third party to give Lender the same rights with
respect to access to books and records and related rights as Lender has under this Agreement.
Borrower shall reimburse Lender immediately upon demand of the fees and expenses incurred in
connection with said Audit; provided that Borrower shall only have to pay for one
Audit per year (which cost shall be limited to $3,500) unless an Event of Default has occurred
and is continuing.



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	 	 	 	Business Loan Agreement
	 





     7.5 Negative Covenants. Borrower shall not, and shall not permit any of its Subsidiaries
to, without Lender’s prior written consent, do any of the following:



          (a) merge or consolidate with
another entity, except in a transaction in which (1) as to Borrower, (i) the owners of Borrower
hold at least fifty percent (50%) of the ownership interest in the surviving entity immediately
after such merger or consolidation, and (ii) (x) Borrower is the surviving entity or (y) Borrower
is not the surviving entity and Lender has conducted a credit analysis of the surviving entity
which is satisfactory to Lender in its sole discretion and has received the requisite credit
approval and (2) as to any Subsidiary, Borrower holds at least fifty percent (50%) of the ownership
interest in the surviving entity immediately after such merger or consolidation;




          (b) enter into any
other transaction outside the ordinary course of business. For purposes of this Section 7.5, Lender
acknowledges that Borrower’s ordinary course of business includes, but is not limited to, any
activity by it or its subsidiaries related to business process outsourcing, including, without
limitation, acquiring other companies or property which Borrower believes will enhance its position
in such industry;




          (c) sell, lease or license (except for software licensed by Borrower in the
ordinary course of business) any of Borrower’s or any Subsidiary’s assets, or grant any other
security interest (other than a Permitted Lien) in such assets, except for the sale, lease or
license of finished Inventory in the ordinary course of Borrower’s or any Subsidiary’s business,
and except for the sale of obsolete or unneeded Equipment in the ordinary course of business;




          (d)
make any loans of any money or other assets, except (i) advances to customers or suppliers in the
ordinary course of business, (ii) travel advances, employee relocation loans and other employee
loans and advances in the ordinary course of business, and (iii) loans to employees, officers and
directors for the purpose of purchasing equity securities of Borrower or any Subsidiary or for any
other purpose satisfactory to Lender; provided, however, that nothing in this Section 7.5 or
elsewhere in this Agreement shall restrict Borrower’s or any Subsidiary’s right to make investments
in Marketable Securities;




          (e) incur any debts outside the ordinary course of business, other than
Permitted F/X Indebtedness and Debt Collection Indebtedness;




          (f) guarantee or otherwise become
liable with respect to the obligations of another party or entity (other than for surety bonds
incurred in the ordinary course of business);




          (g) make any change in Borrower’s or any Subsidiary’s
capital structure which would have a Material Adverse Effect; or




          (h) dissolve or elect to dissolve;




     Transactions permitted by the foregoing provisions of this Section are only permitted if no Default
or Event of Default is continuing or would occur as a result of such transaction.



     7.6 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or
against Lender with respect to or relating to Borrower or any Subsidiary, Borrower shall, without
expense to Lender, make available Borrower and any Subsidiary and any of their officers, employees
and agents and Borrower’s and any Subsidiary’s books and records, to the extent that Lender may
deem them reasonably necessary in order to prosecute or defend any such suit or proceeding.



     7.7 Further Assurances. Borrower agrees, at its expense, on request by Lender, to execute all
documents and take all actions, as Lender, may deem reasonably necessary or useful in order to
fully consummate the transactions contemplated by this Agreement.



     7.8 Primary Operating Account. Within twelve months of the Closing Date, Borrower’s primary
operating banking relationship shall be with Lender. For purposes of this Section 7.8, “Borrower’s



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	 	 	 	Business Loan Agreement
	 




primary operating banking relationship” shall be deemed to mean Borrower’s accounts containing
funds which Borrower reasonably expects to be used in the ordinary course of business within a
ninety (90) day period.




     7.9 Dividends and Distributions. Borrower shall not pay or declare any dividends or
distributions on the ownership interests in Borrower, including dividends or distributions payable
solely in
stock form of ownership interests in Borrower, unless immediately before and after such
payment or declaration no Event of Default or Default shall have occurred or be continuing.



8. EVENTS OF DEFAULT AND REMEDIES.




     8.1 Events of Default. The occurrence of any of the following events shall constitute an
“Event of Default” under this Agreement, and Borrower shall give Lender immediate written notice
thereof:



          (a) Any warranty, representation, statement, report or certificate made or delivered to
Lender by Borrower or any of Borrower’s officers, employees or agents, now or in the future, shall
be untrue or misleading and results in a Material Adverse Effect; or




          (b) Borrower shall fail to pay
when due any Revolving Loan or any interest thereon or any other monetary Obligation (other than
any F/X Obligation) within three (3) Business Days of when due for regularly scheduled payments or
ten (10) Business Days after Borrower’s receipt of notice from Lender of non-regularly scheduled
amounts due; or




          (c) Borrower shall fail to give Lender access to its books and records as provided
in Section 7.4 above, or shall breach any negative covenant set forth in Section 7.5 above; or




          (d)
Borrower shall fail to comply with the financial covenants (if any) set forth in Section 7.1 or
shall fail to perform any other non-monetary Obligation which by its nature cannot be cured; or




          (e)
Borrower shall fail to perform any other non-monetary Obligation, which failure is not cured within
the later of (i) ten (10) days after Borrower receives notice from Lender of the occurrence of such
failure to perform with respect to such non-monetary obligation (but this subsection (i) is only
applicable if no Responsible Officer has prior knowledge of such failure) or (ii) thirty (30) days
after the date due; or




          (f) any default or event of default occurs under any obligation secured by a
Permitted Lien, which is not cured within any applicable cure period or waived in writing by the
holder of the Permitted Lien; or




          (g) Dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or voluntary appointment of a
receiver, trustee or custodian, for all or any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding by Borrower or any guarantor of any of the
Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, or
involuntary appointment of a receiver, trustee or custodian, for all or any part of the property of
Borrower which is not dismissed within sixty (60) days; or




          (h) the commencement of any proceeding
against Borrower or any guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is (i) not timely controverted, or (ii) not
cured by the dismissal thereof within ninety (90) days after the date commenced; or




          (i) revocation
or termination of, or limitation or denial of liability upon, any guaranty of the Obligations or
any attempt to do any of the foregoing, or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or




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	 	 	 	Business Loan Agreement
	 





          (j) revocation or termination of, or limitation or denial of liability upon, any pledge
of any certificate of deposit, securities or other property or asset of any kind pledged by any
third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or
commencement of proceedings by or against any such third party under any bankruptcy or insolvency
law; or




          (k) Borrower or any guarantor of any of the Obligations makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations, other than as permitted
in the applicable subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or




          (l) Except as
permitted under Section 7.5(a), Borrower shall suffer or experience any Change of Control without
Lender’s prior written consent, which consent shall be in the discretion of Lender in the exercise
of its reasonable business judgment; or




          (m) Borrower shall generally not pay its debts as they
become due, or Borrower shall conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or suffer any transfer of any of its property which
may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or




          (n) Borrower
defaults on any of its F/X Obligations, which default is not cured within five (5) Business Days of
such default; or




          (o) there shall be any Material Adverse Effect.




     8.2 Remedies. Upon the occurrence
and during the continuance of any Event of Default, Lender, at its option, and without notice or
demand of any kind (all of which are hereby expressly waived
by Borrower), may do any one or more of the following:



          (a) Cease making Revolving Loans or
otherwise extending credit to Borrower under this Agreement or any other document or agreement;




          (b)
Accelerate and declare all or any part of the Obligations to be immediately due, payable and
performable, notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation;




          (c) Demand and receive possession of copies of any of
Borrower’s federal and state income tax returns and copies of the books and records utilized in the
preparation thereof or referring thereto.



All reasonable attorneys’ fees, expenses, costs, liabilities and obligations incurred by Lender
(including reasonable attorneys’ fees and expenses incurred in connection with bankruptcy) with
respect to the foregoing shall be due from Borrower to Lender on demand. Lender may charge the same
to Borrower’s Loan Account, and the same shall thereafter bear interest at the same rate as is
applicable to the Prime Rate Loans. Without limiting any of Lender’s rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to the Obligations shall
be increased by an additional five percent (5%) per annum.




     8.3 Power of Attorney. After the occurrence and continuance of an Event of Default, Borrower
grants to Lender an irrevocable power of attorney coupled with an interest, authorizing and
permitting Lender (acting through any of its employees, attorneys or agents) at any time, at its
option, but without obligation, with or without notice to Borrower, and at Borrower’s expense, to
do any or all of the following, in Borrower’s name or otherwise, but Lender agrees to exercise the
following powers in a commercially reasonable manner:



          (a) Execute on behalf of Borrower any
documents that Lender may, in its sole discretion, deem advisable in order to exercise a right of
Borrower or Lender, or in order to fully





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consummate all the transactions contemplated under this Agreement, and all other present and
future agreements;




          (b) Pay any sums required on account of Borrower’s taxes or to secure the
release of any liens therefor, or both;




          (c) Take any action or pay any sum required of Borrower
pursuant to this Agreement and any other present or future agreements.



Any and all sums paid and any and all costs, expenses, liabilities, obligations and reasonable
attorneys’ fees incurred by Lender (including reasonable attorneys’ fees and expenses incurred
pursuant to bankruptcy) with respect to the foregoing shall be added to and become part of the
Obligations, and shall be payable on demand. Lender may charge the foregoing to Borrower’s Loan
Account and the foregoing shall thereafter bear interest at the same rate applicable to the Prime
Rate Loans. In no event shall Lender’s rights under the foregoing power of attorney or any of
Lender’s other rights under this Agreement be deemed to indicate that Lender is in control of the
business, management or properties of Borrower. Borrower shall pay, indemnify, defend, and hold
Lender and each of its officers, directors, employees, counsel, agents, and attorneys-in-fact
(each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against
any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorneys fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether suit is brought),
at any time asserted against, imposed upon, or incurred by any of them in connection with or as a
result of or related to the execution, delivery, enforcement, performance, and administration of
this Agreement and any other Loan Documents or the transactions contemplated herein, and with
respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan
Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event or circumstance in any manner
related thereto (all the foregoing, collectively, the “Indemnified Liabilities”). Borrower shall
have no obligation to any Indemnified Person hereunder with respect to any Indemnified Liability to
have resulted from the gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of the Obligations.




     8.4 Remedies Cumulative. In addition to the rights and remedies set forth in this
Agreement, Lender shall have all the other rights and remedies accorded a secured party in
equity, under the Code, and under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between Lender and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by Lender of one or
more of its rights or remedies shall not be deemed an election, nor bar Lender from subsequent
exercise or partial exercise of any other rights or remedies. The failure or delay of Lender to
exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been indefeasibly paid
and performed.



9. GENERAL PROVISIONS.




     9.1 Application of Payments. All payments with respect to the Obligations may be applied, and
in Lender’s sole discretion reversed and
re-applied, to the Obligations, in such order and manner
as Lender shall determine in its sole discretion; provided that before the occurrence of an Event
of Default, Lender shall apply payments (i) first to the outstanding Revolving Loans that are Prime
Rate Loans and (ii) second to the outstanding Revolving Loans that are LIBOR Rate Loans in an order
to minimize LIBOR Breakage Costs.



     9.2 Charges to Accounts. Lender may, in its discretion, require that Borrower pay monetary
Obligations in cash to Lender, or charge them to Borrower’s Loan Account, in which event they will
bear interest from the date due to the date paid at the same rate applicable to Prime Rate Loans.



     9.3 Monthly Accountings. Lender shall provide Borrower monthly with a copy of the Loan
Account that reflects all advances, charges, expenses and payments made pursuant to this Agreement.




17









 








	 	 	 	 	 
	Citibank (West), FSB

	 	 	 	Business Loan Agreement
	 




Such Loan Account shall be deemed correct, accurate and binding on Borrower and an account
stated (except for reverses and reapplications of payments made and corrections of errors
discovered by Lender), unless Borrower notifies Lender in writing to the contrary within thirty
(30) days after each Loan Account is rendered, describing the nature of any alleged errors or
omissions.




     9.4 Notices. All notices to be given under this Agreement shall be in writing and shall be
given either personally or by reputable private delivery service or by regular first-class mail,
facsimile or certified mail return receipt requested. All notices to Borrower shall be addressed
to Borrower at the address shown in the heading to this Agreement, or at any other address
designated in writing by Borrower to Lender. All notices to Lender shall be addressed to Lender at
the address set forth in the introductory paragraph of this Agreement, to the attention of the
Commercial Banking Division, Manager, Note Department, or at any other address designated in
writing by Lender to Borrower. All notices shall be deemed to have been given upon delivery in the
case of notices personally delivered, faxed (at time of confirmation of transmission), or at the
expiration of one (1) Business Day following delivery to a private delivery service, or two (2)
Business Days following the deposit thereof in the United States mail, with postage prepaid.



     9.5 Severability. Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this
Agreement, which shall continue in full force and effect.



     9.6 Integration. This Agreement and such other written agreements, documents and instruments
as may be executed in connection herewith are the final, entire and complete agreement between
Borrower and Lender and supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which are not set forth
in this Agreement or in other written agreements signed by the parties in connection herewith.



     9.7 Waivers. The failure of Lender at any time or times to require Borrower to strictly comply
with any of the provisions of this Agreement or any other present or future agreement between
Borrower and Lender shall not waive or diminish any right of Lender later to demand and receive
strict compliance therewith. Any waiver of any Default shall not waive or affect any other
Default, whether prior or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and delivered to Lender
shall be deemed to have been waived by any act or knowledge of Lender or its agents or employees,
but only by a specific written waiver signed by an authorized officer of Lender and delivered to
Borrower. Borrower waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty at any time held by
Lender on which Borrower is or may in any way be liable, and notice of any action taken by Lender,
unless expressly required by this Agreement.



     9.8 No Liability for Ordinary Negligence. Neither Lender, nor any of its directors, officers,
employees, agents, attorneys or any other Person affiliated with or representing Lender shall be
liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred
or suffered by Borrower or any other party through the ordinary negligence of Lender, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated with or
representing Lender, but nothing herein shall relieve Lender from liability for its own gross
negligence or willful misconduct.



     9.9 Amendment. The terms and provisions of this Agreement may not be waived or amended,
except in a writing executed by Borrower and a duly authorized officer of Lender.



     9.10 Time of Essence. Time is of the essence in the performance by Borrower of each and every
obligation under this Agreement.



     9.11 Attorneys’ Fees, Costs and Charges. Borrower shall reimburse Lender for all reasonable
attorneys’ fees (including reasonable attorneys’ fees and expenses incurred pursuant to bankruptcy)
and all filing, recording, search, title insurance, appraisal, audit (subject to Section 7.4), and



18









 





	 	 	 	 	 
	Citibank (West), FSB

	 	 	 	Business Loan Agreement
	 




other costs incurred by Lender, pursuant to, or in connection with, or relating to this
Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable
attorneys’ fees and costs (including reasonable attorneys’ fees and expenses incurred pursuant to
bankruptcy) Lender incurs in order to do the following: prepare and negotiate this Agreement and
the documents relating to this Agreement; obtain legal advice in connection with this Agreement or
Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend
actions by, Account Debtors; commence, intervene in, or defend any action or proceeding; initiate
any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of Borrower’s books and records; and otherwise represent Lender in any litigation relating to
Borrower. If either Lender or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party in such action shall be entitled to recover its costs and
reasonable attorneys’ fees (including reasonable attorneys’ fees and expenses incurred pursuant to
bankruptcy), including (but not limited to) reasonable attorneys’ fees and costs incurred in the
enforcement of, execution upon or defense of any order, decree, award or judgment. Borrower shall
also pay Lender’s standard charges for returned checks and for wire transfers, in effect from time
to time. If Borrower does not pay the amounts required under this Section 9.11 within ten (10) days
of written demand, all reasonable attorneys’ fees, costs and charges (including reasonable
attorneys’ fees and expenses incurred pursuant to bankruptcy)
and other fees, costs and charges to which Lender may be entitled pursuant to this Agreement may be
charged by Lender to Borrower’s Loan Account and shall thereafter bear interest at the same rate as
the Revolving Loan. Notwithstanding anything to the contrary herein, Borrower shall only be
responsible to reimburse Lender for reasonable attorneys’ fees that Lender incurs on and before the
Closing Date in an amount not to exceed $10,000.




     9.12 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of
Borrower and Lender; provided, however, that Borrower may not assign or transfer any of its rights
under this Agreement without the prior written consent of Lender, and any prohibited assignment
shall be void. No consent by Lender to any assignment shall release Borrower from its liability for
the Obligations. Lender may assign its rights and delegate its duties hereunder without the
consent of Borrower. Lender reserves the right to syndicate (at Lender’s sole cost and expense) all
or a portion of the transaction created herein or sell, assign, transfer, negotiate, or grant
participations in all or any part of, or any interest in Lender’s rights and benefits hereunder. In
connection with any such syndication, assignment or participation, Lender may disclose all
documents and information which Lender now or hereafter may have relating to Borrower or Borrower’s
business. To the extent that Lender assigns its rights and obligations hereunder to a third
Person, Lender thereafter shall be released from such assigned obligations to Borrower.



     9.13 Publicity. Lender is hereby authorized, at its expense and in its sole discretion, to
issue appropriate press releases and to cause a tombstone to be published announcing the
consummation of this transaction and the aggregate amount thereof.



     9.14 Confidentiality. Lender agrees that material, non-public information (“Confidential
Information”) regarding Borrower, its operations, assets, and existing and contemplated business
plans shall be treated by Lender in a confidential manner, and shall not be disclosed by Lender to
Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors,
accountants, auditors, and consultants of Lender, (b) to subsidiaries and Affiliates of Lender,
provided that any such subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 9.14, (c) as may be required by statute, decision,
or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by
Borrower or its subsidiaries or as requested or required by any governmental authority pursuant to
any subpoena or other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by Lender), (f) in
connection with any assignment, prospective assignment, sale, prospective sale, participation or
prospective participations, or pledge or prospective pledge of Lender’s interest under this
Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing
to receive such information hereunder subject to the terms of this Section, and (g) in connection
with any



19









 





	 	 	 	 	 
	Citibank (West), FSB

	 	 	 	Business Loan Agreement
	 




litigation or other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such parties under this
Agreement or the other Loan Documents. For purposes of hereof, “Confidential Information” includes
all documents, materials and information concerning Borrower, including without limitation its
PeopleSupport Center in Makati City, Philippines (the “Service Center”), which (a) are furnished,
made available or otherwise disclosed by Borrower or on Borrower’s behalf and (b) are designated by
Borrower in writing as being confidential, excluding however from this requirement, any
information obtained or disclosed in connection with the visit of any of Lender’s representative to
the Service Center. Confidential Information excludes any documents, materials and information
which (i) was or becomes generally available to the public other than as a result of a disclosure
by Lender, (ii) was available to Lender on a non-confidential basis prior to its disclosure by
Borrower or (iii) becomes available to Lender on a non-confidential basis from an independent
source, provide that such source was not itself bound by an obligation of confidentiality owed by
Borrower and known to Lender. The provisions of this Section 9.14 shall survive the termination of
this Agreement.




     9.15 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions
hereunder and all rights and obligations of Lender and Borrower shall be governed by the internal
laws of the State of California, without regard to its conflicts of law principles. As a material
part of the consideration to Lender to enter into this Agreement, Borrower (a) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall, at Lender’s
option, be litigated in courts located within California, and that the exclusive venue therefor
shall be Los Angeles County; (b) consents to the jurisdiction and venue of any such court and
consents to service of process in any such action or proceeding by personal delivery or any other
method permitted by law; and (c) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such action or
proceeding.



     9.16 Mutual Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW, BORROWER AND
LENDER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN LENDER AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR BORROWER OR
ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
LENDER OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.



[Execution Page Follows]





20









 








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



	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	LENDER:
	 
	 	 	 	 	 	 	 	 
	PEOPLESUPPORT, INC.	 	 	 	CITIBANK (WEST), FSB
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Lance Rosenzweig 	 	 	 	By: 	/s/ John Curry 	  
	 

	 	 
	 	 	 	 	 
	 

	 	Lance Rosenzweig, President and Chief
	 	 	 	 	John Curry
	 

	 	Executive Officer
	 	 	 	 	Vice President






S-1

Business Loan Agreement





 









 







SCHEDULE TO

BUSINESS LOAN AGREEMENT




	 	 	 
	Borrower:

	 	PEOPLESUPPORT, INC.,
	 

	 	a Delaware corporation
	 
	 	 
	Address:

	 	1100 Glendon Avenue
	 

	 	Los Angeles, CA 90024
	 
	 	 
	Date:

	 	July 28, 2006





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




REPRESENTATIONS, WARRANTIES AND COVENANTS




	 	 	 	 	 	 	 
	Section 7.2 -

	 	Prior Names of
	 	 	 	 
	 

	 	Borrower:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.2 -

	 	Prior Trade Names	 	 	 	 
	 

	 	of Borrower:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.2 -

	 	Existing Trade Names	 	 	 	 
	 

	 	of Borrower:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.3 -

	 	Other Locations and	 	 	 	 
	 

	 	Addresses:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.10 -

	 	Material Adverse	 	 	 	 
	 

	 	Litigation:	 	 	 	 
	 

	 	 	 	 	 	 





Schedule to

Business Loan Agreement




 









 





	 	 	 
	Citibank (West), FSB
	 	Business Loan Agreement
	 





Exhibit A




Line of Credit Advance Authorization




See attached.




 









 





	 	 	 
	Citibank (West), FSB
	 	Business Loan Agreement
	 





EXHIBIT B




LIBOR Loan Pricing Worksheet




	 	 	 	 	 
	Borrower(s) Name:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Note Amount:
	 	 	 	 
	 

	 	 	 	 





	 	 	 	 	 	 	 	 	 
	 

	 	Obligor #:
	 	Classification
	 	Risk
	 	Request
	 

	 	 	 	 	 	Rating
	 	Date:
	 
	 	 	 	 	 	 	 	 
	Term
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Effective Date:                                        	 	Index Rate:                                 	 	Spread:                       	 	Fixed Rate:                   
	 
	 	 	 	 	 	 	 	 
	Maturity Date:	 	 	 	 






	 	 	 	 	 
	Obligation Note #:

	 	Term:
	 	o thirty (30) days o sixty (60) days
	 

	 	 	 	o ninety (90) days o one hundred twenty
	 

	                                             	 	 	(120) days





Notified Customer of Rate:                                                Rate Verified By:
                                        



The undersigned authorizes Lender to disburse the proceeds of this new libor note with terms
indicated above.



The undersigned hereby represents and warrants to lender as follows:



All representatives and warranties contained in the Loan and Security Agreement (a) are materially
true, correct, complete and accurate as the date of this request as if made this date and (b) will
be materially true, correct, complete and accurate as of the requested date of disbursement above,
as if made on that date. No event of Default under the Loan and Security Agreement has occurred
that remains uncured, and no event has occurred which with the passage of time would result in the
Event of Default under the Loan and Security Agreement.



Borrowers Signature:                                                                     
                                 Date:                                         



 


Bank Use



Repayment Terms:            Interest:                                               
                               Principal:
                                        




	 	 	 	 	 	 	 	 	 	 	 
	Auto Debit IFR Tranche:

	 	 No 
________
	 	Yes:  X
	 	Checking	 	 	 	 
	 

	 	 	 	 	 	Account #: ____________________________
	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 





	 	 	 	 	 
	Prepared By:

	 	 	 	 
	 

	 	 	 	 
	 
	Approved By:
	 	 	 	 
	 

	 	 	 	 




NOTE DEPARTMENT PURPOSES ONLY




3









 





	 	 	 
	Citibank (West), FSB
	 	Business Loan Agreement
	 





	 	 	 	 	 
	APPROVED BY:

	 	 	 	 
	 

	 	 	 	 





EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE




     This certificate is given by PeopleSupport, Inc. (“Borrower”) pursuant to Section 7.3(c) of that
certain Business Loan Agreement dated as of July 28, 2006 among Borrower and Citibank (west), FSB
(“Lender”) (as such agreement may have been amended, restated, supplemented or otherwise modified
from time to time, the “Loan Agreement”). Capitalized terms used herein without definition shall
have the meanings set forth in the Loan Agreement.



     The officer executing this certificate is the Chief Financial Officer of Borrower and as such is
duly authorized to execute and deliver this certificate on behalf of Borrower. By executing this
certificate such officer hereby certifies to Lender that:



     1. The calculations set forth on the Attachment hereto are true and accurate
computations of the financial covenants.



     2. As of the date hereof no Default or Event of Default exists.



     Dated this ___day of                     , 200_



	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Title: Chief Financial Officer







4










 







	 	 	 
	Citibank (West), FSB

	 	Business Loan Agreement
	 





ATTACHMENT TO COMPLIANCE CERTIFICATE




ALL TERMS USED HEREIN SHALL HAVE THE MEANING

ASCRIBED TO SUCH TERMS IN THE LOAN AGREEMENT




	 	 	 	 	 	 	 	 	 
	1. Adjusted Quick Ratio
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A. Cash:
	 	 	                                        	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B. Cash Equivalents:
	 	 	                                        	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	C. Total Receivables:                                         
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	D. Receivables which the Account Debtor

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