Credit Agreement dated October 30, 2004



  
 CREDIT AGREEMENT 
  
 Dated as of
October 30, 2004 
  
 among 
  
 GATEWAY, INC., GATEWAY PROFESSIONAL LLC, 
  
 GATEWAY MANUFACTURING LLC, AND EMACHINES, INC., 
  
 as Borrowers, 
  
 THE OTHER CREDIT PARTIES SIGNATORY HERETO, 
  
 as Credit Parties, 
  
 THE LENDERS SIGNATORY HERETO 
  
 FROM TIME TO TIME, 
  
 as Lenders, 
  
 and 
  
 GENERAL ELECTRIC CAPITAL CORPORATION, 

 
 as Administrative Agent, Agent and Lender 
  







 Execution Version 
  
 TABLE OF CONTENTS 
  

							
	 	  	 	  	 	  	Page


	1.	  	AMOUNT AND TERMS OF CREDIT	  	1
				
	 	  	1.1	  	Credit Facilities	  	1
				
	 	  	1.2	  	Letters of Credit	  	4
				
	 	  	1.3	  	Prepayments	  	4
				
	 	  	1.4	  	Use of Proceeds	  	6
				
	 	  	1.5	  	Interest and Applicable Margins	  	6
				
	 	  	1.6	  	Eligible Accounts	  	8
				
	 	  	1.7	  	Eligible Inventory	  	11
				
	 	  	1.8	  	Cash Management Systems	  	12
				
	 	  	1.9	  	Fees	  	12
				
	 	  	1.10	  	Receipt of Payments	  	13
				
	 	  	1.11	  	Application and Allocation of Payments	  	13
				
	 	  	1.12	  	Loan Account and Accounting	  	14
				
	 	  	1.13	  	Indemnity	  	14
				
	 	  	1.14	  	Access	  	15
				
	 	  	1.15	  	Taxes	  	16
				
	 	  	1.16	  	Capital Adequacy; Increased Costs; Illegality	  	17
				
	 	  	1.17	  	Single Loan	  	18
			
	2.	  	CONDITIONS PRECEDENT	  	18
				
	 	  	2.1	  	Conditions to the Initial Loans	  	18
				
	 	  	2.2	  	Further Conditions to Each Loan	  	19
			
	3.	  	REPRESENTATIONS AND WARRANTIES	  	20
				
	 	  	3.1	  	Corporate Existence; Compliance with Law	  	20
				
	 	  	3.2	  	Executive Offices, Collateral Locations, FEIN	  	21
				
	 	  	3.3	  	Corporate Power, Authorization, Enforceable Obligations	  	21
				
	 	  	3.4	  	Financial Statements and Projections	  	21
				
	 	  	3.5	  	Material Adverse Effect	  	22
				
	 	  	3.6	  	Ownership of Collateral; Liens	  	22
				
	 	  	3.7	  	Labor Matters	  	23
				
	 	  	3.8	  	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness	  	23

  

 i 








							
	 	  	3.9	  	Government Regulation	  	23
				
	 	  	3.10	  	Margin Regulations	  	24
				
	 	  	3.11	  	Taxes	  	24
				
	 	  	3.12	  	ERISA	  	24
				
	 	  	3.13	  	No Litigation	  	25
				
	 	  	3.14	  	Brokers	  	25
				
	 	  	3.15	  	Intellectual Property	  	25
				
	 	  	3.16	  	Full Disclosure	  	26
				
	 	  	3.17	  	Environmental Matters	  	26
				
	 	  	3.18	  	Insurance	  	27
				
	 	  	3.19	  	Deposit and Disbursement Accounts	  	27
				
	 	  	3.20	  	[intentionally omitted]	  	27
				
	 	  	3.21	  	Trade Relations	  	27
				
	 	  	3.22	  	Bonding; Licenses	  	27
				
	 	  	3.23	  	Solvency	  	27
			
	4.	  	FINANCIAL STATEMENTS AND INFORMATION	  	27
				
	 	  	4.1	  	Reports and Notices	  	27
				
	 	  	4.2	  	Communication with Accountants	  	28
			
	5.	  	AFFIRMATIVE COVENANTS	  	28
				
	 	  	5.1	  	Maintenance of Existence and Conduct of Business	  	28
				
	 	  	5.2	  	Payment of Charges	  	28
				
	 	  	5.3	  	Books and Records	  	29
				
	 	  	5.4	  	Insurance; Damage to or Destruction of Collateral	  	29
				
	 	  	5.5	  	Compliance with Laws	  	30
				
	 	  	5.6	  	Supplemental Disclosure	  	30
				
	 	  	5.7	  	Intellectual Property	  	30
				
	 	  	5.8	  	Environmental Matters	  	30
				
	 	  	5.9	  	Landlords’ Agreements	  	31
				
	 	  	5.10	  	Further Assurances	  	31
				
	 	  	5.11	  	Cash	  	31
				
	 	  	5.12	  	Qualified Cash	  	32
			
	6.	  	NEGATIVE COVENANTS	  	32
				
	 	  	6.1	  	Mergers, Subsidiaries, Etc	  	32

  

 ii 








							
				
	 	  	6.2	  	Investments; Loans and Advances	  	32
				
	 	  	6.3	  	Indebtedness	  	33
				
	 	  	6.4	  	Employee Loans and Affiliate Transactions	  	33
				
	 	  	6.5	  	Capital Structure and Business	  	34
				
	 	  	6.6	  	Guaranteed Indebtedness	  	34
				
	 	  	6.7	  	Liens	  	34
				
	 	  	6.8	  	Sale of Collateral and Intellectual Property	  	34
				
	 	  	6.9	  	ERISA	  	35
				
	 	  	6.10	  	[Intentionally Omitted.]	  	35
				
	 	  	6.11	  	Hazardous Materials	  	35
				
	 	  	6.12	  	[Intentionally Omitted.]	  	35
				
	 	  	6.13	  	Restricted Payments	  	35
				
	 	  	6.14	  	Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year	  	35
				
	 	  	6.15	  	No Impairment of Intercompany Transfers	  	36
			
	7.	  	TERM	  	36
				
	 	  	7.1	  	Termination	  	36
				
	 	  	7.2	  	Survival of Obligations Upon Termination of Financing Arrangements	  	36
			
	8.	  	EVENTS OF DEFAULT; RIGHTS AND REMEDIES	  	36
				
	 	  	8.1	  	Events of Default	  	36
				
	 	  	8.2	  	Remedies	  	38
				
	 	  	8.3	  	Waivers by Credit Parties	  	39
			
	9.	  	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT	  	39
				
	 	  	9.1	  	Assignment and Participations	  	39
				
	 	  	9.2	  	Appointment of Agent	  	42
				
	 	  	9.3	  	Agent’s Reliance, Etc	  	42
				
	 	  	9.4	  	GE Capital and Affiliates	  	43
				
	 	  	9.5	  	Lender Credit Decision	  	43
				
	 	  	9.6	  	Indemnification	  	43
				
	 	  	9.7	  	Successor Agent	  	44
				
	 	  	9.8	  	Setoff and Sharing of Payments	  	44
				
	 	  	9.9	  	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert	  	45

  

 iii 








							
	10.	  	SUCCESSORS AND ASSIGNS	  	47
				
	 	  	10.1	  	Successors and Assigns	  	47
			
	11.	  	MISCELLANEOUS	  	47
				
	 	  	11.1	  	Complete Agreement; Modification of Agreement	  	47
				
	 	  	11.2	  	Amendments and Waivers	  	48
				
	 	  	11.3	  	Fees and Expenses	  	49
				
	 	  	11.4	  	No Waiver	  	51
				
	 	  	11.5	  	Remedies	  	51
				
	 	  	11.6	  	Severability	  	51
				
	 	  	11.7	  	Conflict of Terms	  	51
				
	 	  	11.8	  	Confidentiality	  	51
				
	 	  	11.9	  	GOVERNING LAW	  	52
				
	 	  	11.10	  	Notices	  	53
				
	 	  	11.11	  	Section Titles	  	53
				
	 	  	11.12	  	Counterparts	  	53
				
	 	  	11.13	  	WAIVER OF JURY TRIAL	  	53
				
	 	  	11.14	  	Press Releases and Related Matters	  	54
				
	 	  	11.15	  	Reinstatement	  	54
				
	 	  	11.16	  	Advice of Counsel	  	54
				
	 	  	11.17	  	No Strict Construction	  	54
			
	12.	  	CROSS-GUARANTY	  	54
				
	 	  	12.1	  	Cross-Guaranty	  	54
				
	 	  	12.2	  	Waivers by Borrowers	  	55
				
	 	  	12.3	  	Benefit of Guaranty	  	55
				
	 	  	12.4	  	Waiver of Subrogation, Etc	  	55
				
	 	  	12.5	  	Election of Remedies	  	56
				
	 	  	12.6	  	Limitation	  	56
				
	 	  	12.7	  	Contribution with Respect to Guaranty Obligations	  	57
				
	 	  	12.8	  	Liability Cumulative	  	57

  
 End of TOC 

 

 iv 







 INDEX OF APPENDICES 
  

					
	 Annex A (Recitals)
	 	 -
	  	 Definitions

	 Annex B (Section 1.2)
	 	 -
	  	 Letters of Credit

	 Annex C (Section 1.8)
	 	 -
	  	 Cash Management System

	 Annex D-1 (Section 2.1(a))
	 	 -
	  	 Closing Checklist

	 Annex D-2 (Section 2.2(a)(i))
	 	 -
	  	 Funding Checklist

	 Annex E (Section 4.1(a))
	 	 -
	  	 Financial Statements and Projections — Reporting

	 Annex F (Section 4.1(b))
	 	 -
	  	 Collateral Reports

	 Annex G (Section 6.10)
	 	 -
	  	 [Intentionally Omitted]

	 Annex H (Section 9.9(a))
	 	 -
	  	 Lenders’ Wire Transfer Information

	 Annex I (Section 11.10)
	 	 -
	  	 Notice Addresses

	 Annex J (from Annex A - Commitments definition)
	 	 	  	 Commitments as of Closing Date

			
	 Exhibit 1.1(a)(i)
	 	 -
	  	 Form of Notice of Revolving Credit Advance

	 Exhibit 1.1(a)(ii)
	 	 -
	  	 Form of Revolving Note

	 Exhibit 1.5(e)
	 	 -
	  	 Form of Notice of Conversion/Continuation

	 Exhibit 4.1(b)
	 	 -
	  	 Form of Borrowing Base Certificate

	 Exhibit 9.1(a)
	 	 -
	  	 Form of Assignment Agreement

	 Exhibit B-1
	 	 -
	  	 Application for Standby Letter of Credit

	 Exhibit B-2
	 	 -
	  	 Application for Documentary Letter of Credit

	 Exhibit B-3
	 	 -
	  	 Application and Agreement for Documentary Letter of Credit

	 Exhibit D-2
	 	 -
	  	 Form of Initial Funding Date Opinion

	 Schedule 1.1
	 	 -
	  	 Agent’s Representatives

	 Schedule 1.1(b)
	 	 -
	  	 Ratable Shares of each Borrower

	 Disclosure Schedule 1.4
	 	 -
	  	 Sources and Uses; Funds Flow Memorandum

	 Disclosure Schedule 3.1
	 	 -
	  	 Type of Entity; State of Organization

	 Disclosure Schedule 3.2
	 	 -
	  	 Executive Offices, Collateral Locations, FEIN

	 Disclosure Schedule 3.4(A)
	 	 -
	  	 Financial Statements

	 Disclosure Schedule 3.4(B)
	 	 -
	  	 Pro Forma

	 Disclosure Schedule 3.4(C)
	 	 -
	  	 Projections

	 Disclosure Schedule 3.4(D)        
	 	 -
	  	 Fair Salable Balance Sheet

	 Disclosure Schedule 3.6
	 	 -
	  	 Real Estate and Leases

	 Disclosure Schedule 3.7
	 	 -
	  	 Labor Matters

	 Disclosure Schedule 3.8
	 	 -
	  	 Ventures, Subsidiaries and Affiliates; Outstanding Stock

	 Disclosure Schedule 3.11
	 	 -
	  	 Tax Matters

	 Disclosure Schedule 3.12
	 	 -
	  	 ERISA Plans

	 Disclosure Schedule 3.13
	 	 -
	  	 Litigation

	 Disclosure Schedule 3.15
	 	 -
	  	 Intellectual Property

	 Disclosure Schedule 3.17
	 	 -
	  	 Hazardous Materials

	 Disclosure Schedule 3.18
	 	 -
	  	 Insurance

	 Disclosure Schedule 3.19
	 	 -
	  	 Deposit and Disbursement Accounts


  

 v 








					
	 	 	 	  	 
	 Disclosure Schedule 3.20
	 	 -
	  	 Government Contracts

	 Disclosure Schedule 3.22
	 	 -
	  	 Bonds; Patent, Trademark Licenses

	 Disclosure Schedule 5.1
	 	 -
	  	 Trade Names

	 Disclosure Schedule 6.3
	 	 -
	  	 Indebtedness

	 Disclosure Schedule 6.4(a)
	 	 -
	  	 Transactions with Affiliates

	 Disclosure Schedule 6.7
	 	 -
	  	 Existing Liens

	 Disclosure Schedule E-1
	 	 -
	  	 Excess Cash Flow Adjustments


  

 vi 







 Execution Version 
  
 This CREDIT AGREEMENT (this “Agreement”), dated as of October 30, 2004 among GATEWAY, INC., a Delaware
corporation (“Gateway”), and its subsidiaries GATEWAY PROFESSIONAL LLC, a Delaware limited liability company (“Professional”), GATEWAY MANUFACTURING LLC, a Delaware limited liability company
(“Manufacturing”), EMACHINES, INC., a Delaware corporation (“eMachines”) (Gateway, Professional, Manufacturing and eMachines are sometimes collectively referred to herein as the “Borrowers” and
individually as a “Borrower”); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “GE Capital”), for itself, as Lender, and as Agent
for Lenders, and the other Lenders signatory hereto from time to time. 
  
 RECITALS 
  
 WHEREAS, Borrowers have requested
that Lenders extend a revolving credit facility to Borrowers of up to Two Hundred Million Dollars ($200,000,000) in the aggregate for the purpose of refinancing certain indebtedness of Borrowers and to provide (a) working capital financing for
Borrowers, (b) funds for other general corporate purposes of Borrowers and (c) funds for other purposes permitted hereunder; and for these purposes, Lenders are willing to make certain loans and other extensions of credit to Borrowers of up to such
amount upon the terms and conditions set forth herein; and 
  
 WHEREAS, Borrowers have agreed to secure all of their obligations under the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon certain of their existing and after-acquired
personal property; and 
  
 WHEREAS, capitalized terms used in this
Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules, Exhibits
and other attachments (collectively, “Appendices”) hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These
Recitals shall be construed as part of the Agreement. 
  
 NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows: 
  

	1.	AMOUNT AND TERMS OF CREDIT 

  
 1.1 Credit Facilities. 
  
 (a) Revolving Credit Facility. 
  
 (i) Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrowers from time to time until the Commitment
Termination Date its Pro Rata Share of advances (each, a “Revolving Credit Advance”), which Revolving 






 Credit Advances shall be either based on A/R Borrowing Availability (such Revolving Credit Advances, each an “A/R
Revolving Credit Advance”) or based on Inventory Borrowing Availability (such Revolving Credit Advances, each an “Inventory Revolving Credit Advance”). The Pro Rata Share of the Revolving Loan of any Revolving Lender shall
not at any time exceed its separate Revolving Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section
1.1(a); provided that (i) the amount of any A/R Revolving Credit Advance to be made at any time shall not exceed A/R Borrowing Availability at such time, (ii) the amount of any Inventory Revolving Credit Advance to be made at any time shall not
exceed Inventory Borrowing Availability at such time, (iii) the amount of any Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability at such time and (iv) no Inventory Revolving Credit Advances shall be made prior to
the Inventory Activation Date. Borrowing Availability (including A/R Borrowing Availability and Inventory Borrowing Availability) may be reduced by Reserves imposed by Agent in its reasonable credit judgment. Each Revolving Credit Advance shall be
made on notice by Borrower Representative on behalf of the Borrowers, jointly and severally, individually and collectively, to one of the representatives of Agent identified in Schedule 1.1 at the address specified therein. Any such notice
must be given no later than (1) 2:00 p.m. (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 2:00 p.m. (New York time) on the date which is three (3) Business Days prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a ”Notice of Revolving Credit Advance”) must be given in writing (by telecopy or overnight courier) substantially in the form of Exhibit
1.1(a)(i), shall separately identify the amount of each requested A/R Revolving Credit Advance and Inventory Revolving Credit Advance, and shall include the information required in such Exhibit and such other information as may be required by
Agent. If any Borrower desires to have the Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower Representative must comply with Section 1.5(e). 
  
 (ii) Except as provided in Section 1.12, each Borrower shall execute and deliver to each Revolving Lender a note to
evidence the Revolving Loan Commitment of that Revolving Lender. Each note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender, dated the Initial Funding Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a “Revolving Note” and, collectively, the “Revolving Notes”). Each Revolving Note shall represent the obligation of the Borrowers, jointly and severally, individually and
collectively, to pay the amount of the applicable Revolving Lender’s Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to the Borrowers
together with interest thereon as prescribed in Section 1.5. The entire unpaid balance of the aggregate Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the
Commitment Termination Date. 
  
 (iii) Anything in this Agreement
to the contrary notwithstanding, at the request of Borrower Representative, in its discretion Agent may (but shall have absolutely no obligation to), make Revolving Credit Advances to Borrowers on behalf of Revolving Lenders in amounts that cause
the outstanding balance of the aggregate Revolving Loan to exceed the Aggregate Borrowing Base (any such excess Revolving Credit Advances are herein referred to collectively as “Overadvances”); provided that (A) no such event
or occurrence shall cause or 
  

 2 







 constitute a waiver of Agent’s or Revolving Lenders’ right to refuse to make any further Overadvances or
Revolving Credit Advances to any Borrower, or incur any Letter of Credit Obligations with respect to any Borrower, as the case may be, at any time that an Overadvance exists, and (B) no Overadvance shall result in a Default or Event of Default based
on Borrowers’ failure to comply with Section 1.3(b)(i) for so long as Agent permits such Overadvance to be outstanding, but solely with respect to the amount of such Overadvance. In addition, Overadvances may be made even if the
conditions to lending set forth in Section 2 have not been met. All Overadvances shall constitute Index Rate Loans, shall bear interest at the Default Rate applicable to Inventory Revolving Credit Advances, and shall be payable on the earlier
of demand or the Commitment Termination Date. Except as otherwise provided in Section 1.11(b), the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed $15,000,000 at any time, shall not cause the aggregate
Revolving Loan to exceed the Maximum Amount, and may be revoked prospectively by a written notice to Agent signed by Revolving Lenders holding 66 2/3% of the Revolving Loan Commitments. 
  
 (iv) For the purpose of determining the A/R Revolving Credit Advances and Inventory Revolving Credit Advances outstanding:

  
 (A) prior to the Inventory Activation Date,
all Revolving Loans shall be deemed to be A/R Revolving Credit Advances; and 
  
 (B) thereafter, all Revolving Loans, in an amount not to exceed the Aggregate A/R Borrowing Base, shall be deemed to be A/R Revolving Credit Advances, any excess shall be deemed to be Inventory Revolving Credit
Advances. 
  
 (b) [Intentionally Omitted]. 
  
 (c) [Intentionally Omitted]. 
  
 (d) Reliance on Notices; Appointment of Borrower Representative. Agent
shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume that each Person executing
and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for Agent has actual knowledge to the contrary. Each Borrower hereby designates Gateway as its representative and agent on its
behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of
Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan
Documents. Borrower Representative hereby accepts such appointment. Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and
may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, 
  

 3 







 representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be
deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower. 
  
 1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf of the Borrowers, jointly and severally, individually and collectively, shall have the right to request, and Revolving Lenders agree to incur, or purchase
participations in, Letter of Credit Obligations in respect of each Borrower. 
  
 1.3 Prepayments. 
  
 (a)
Voluntary Prepayments; Reductions in Revolving Loan Commitments. Borrowers may at any time prepay the outstanding Revolving Loans in whole or in part. Borrowers may at any time on at least three (3) days’ prior written notice by Borrower
Representative to Agent permanently reduce (but not terminate) the Revolving Loan Commitment; provided that (A) any such reductions shall be in a minimum amount of $5,000,000 and integral multiples of $250,000 in excess of such amount, (B)
except in connection with the termination of the Revolving Loan Commitments pursuant to the immediately succeeding sentence, the Revolving Loan Commitment shall not be reduced to an amount less than $100,000,000, and (C) after giving effect to such
reductions, Borrowers shall comply with Section 1.3(b)(i). In addition, Borrowers may at any time on at least three (3) days’ prior written notice by Borrower Representative to Agent terminate the Revolving Loan Commitment;
provided that upon such termination, all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B
hereto. Any voluntary reduction or termination of the Revolving Loan Commitment must be accompanied the payment of any LIBOR funding breakage costs in accordance with Section 1.13(b). Upon any such reduction or termination of the Revolving
Loan Commitment, each Borrower’s right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, shall simultaneously be permanently reduced or terminated, as the case may be; provided
that a permanent reduction of the Revolving Loan Commitment shall require a corresponding pro rata reduction in the L/C Sublimit. Each notice of partial prepayment shall designate the Loans or other Obligations to which such prepayment is to be
applied. 
  
 (b) Mandatory Prepayments. 
  
 (i) If at any time the aggregate outstanding balance of the Revolving Loan
exceeds the lesser of (A) the Maximum Amount and (B) the Aggregate Borrowing Base, Borrowers shall immediately repay the aggregate outstanding Revolving Credit Advances to the extent required to eliminate such excess. If any such excess remains
after repayment in full of the aggregate outstanding Revolving Credit Advances, Borrowers shall provide cash collateral for the Letter of Credit Obligations in the manner set forth in Annex B to the extent required to eliminate such excess.
Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii). 
  

 4 







 (ii) Immediately upon receipt by any Credit Party of any cash proceeds of any sale or other disposition
of any Collateral, Borrowers shall prepay the Loans in an amount equal to all such proceeds, net of (A) commissions and other reasonable and customary transaction costs, fees and expenses properly attributable to such transaction and payable by
Borrowers in connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior Liens on such asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection therewith. Any such prepayment shall be applied in accordance with Section 1.3(c). The following shall not be subject to mandatory prepayment under this clause
(ii): (1) proceeds of sales of Inventory in the ordinary course of business or during a time when there are no outstanding Inventory Revolving Credit Advances (whether or not in the ordinary course of business); and (2) proceeds of collection of
Accounts in the ordinary course of business. 
  
 (c)
Application of Certain Mandatory Prepayments. Any prepayments made pursuant to Section 1.3(b)(ii) above shall be applied as follows: first, to Fees and reimbursable expenses of Agent then due and payable pursuant to any of the
Loan Documents; second, to interest then due and payable on Revolving Credit Advances made to that Borrower; third, to the principal balance of Revolving Credit Advances outstanding to that Borrower until the same has been paid in
full; fourth, to any Letter of Credit Obligations of such Borrower to provide cash collateral therefore in the manner set forth in Annex B, until all such Letter of Credit Obligations have been fully cash collateralized in the manner
set forth in Annex B; fifth, to interest then due and payable on the Revolving Credit Advances outstanding to each Borrower, pro rata; sixth, to the principal balance of the Revolving Credit Advances made to each Borrower, pro
rata, until the same has been paid in full, and last to any Letter of Credit Obligations of each Borrower, pro rata, to provide cash collateral therefore in the manner set forth in Annex B, until all such Letter of Credit Obligations have
been fully cash collateralized; provided, however, that so long as no Event of Default shall have occurred and be continuing, or would result after giving effect thereto, any amounts held as cash collateral for any Letter of Credit Obligations
shall, upon demand by Borrower Representative, be returned to the applicable Borrower. The Revolving Loan Commitment shall not be permanently reduced by the amount of any such prepayments. 
  
 (d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with Section 5.4(c) shall be applied to the Revolving Credit Advances of the Borrower that incurred such casualties or losses (or, if such casualties or losses
relate to assets of Credit Parties other than Borrowers, of each Borrower, pro rata). The Revolving Loan Commitment shall not be permanently reduced by the amount of any such prepayments. If insurance or condemnation proceeds received by a
particular Borrower exceed the outstanding principal balances of the Loans to that Borrower, the allocation and application of those proceeds shall be determined by Agent, subject to the approval of Requisite Lenders. 
  
 (e) No Implied Consent. Nothing in this Section 1.3 shall be
construed to constitute Agent’s or any Lender’s consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan Documents. 
  

 5 







 1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the Loans solely for the Refinancing
(and to pay any related transaction expenses), and for any other lawful purpose of Borrowers’ not expressly prohibited by the terms hereof. As of the Initial Funding Date, Disclosure Schedule (1.4) shall contain a description of
Borrowers’ sources and uses of funds as of the Initial Funding Date, including Loans and Letter of Credit Obligations to be made or incurred on that date, and a funds flow memorandum detailing how funds from each source are to be transferred to
particular uses. 
  
 1.5 Interest and Applicable Margins.

  
 (a) Borrowers shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the A/R Revolving Credit Advances (and any other Revolving Credit
Advances other than Inventory Revolving Credit Advances), the Index Rate plus the Applicable A/R Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable LIBOR Rate plus the Applicable A/R Revolver LIBOR Margin
per annum; and (ii) with respect to the Inventory Revolving Credit Advances, the Index Rate plus the Applicable Inventory Revolver Index Margin per annum or, at the election of Borrower Representative, the applicable LIBOR Rate plus the Applicable
Inventory Revolver LIBOR Margin per annum. The Applicable Margins are as set forth in the Closing Side Letter. 
  
 (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. 
  
 (c) All computations of Fees calculated on a per annum basis and interest
shall be made by Agent on the basis of a 360-day year (or, in the case of interest on any Index Rate Loan, on the basis of a 365/366-day year), in each case for the actual number of days occurring in the period for which such interest and Fees are
payable. The Index Rate is a floating rate determined for each day. Each determination by Agent of an interest rate and Fees hereunder shall be presumptive evidence of the correctness of such rates and Fees. 
  
 (d) So long as an Event of Default has occurred and is continuing under
Section 8.1(a), (h) or (i) or so long as any other Event of Default has occurred and is continuing and at the election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice from Agent to Borrower
Representative, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder unless Agent or
Requisite Lenders elect to impose a smaller increase (the “Default Rate”), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default
Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived and shall be payable upon demand. 
  
 (e) Subject to the conditions precedent set forth in Section 2.2, Borrower Representative shall have the option to (i) request that any Revolving
Credit Advance be made as 
  

 6 







 a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after the last day of the LIBOR Period of the Loan to be continued. Any
Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $1,000,000 and integral multiples of $500,000 in excess of such amount. Any such election must be
made by 2:00 p.m. (New York time) on the third Business Day prior to (1) the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3)
the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by 2:00 p.m. (New York
time) on the third Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing or if the additional conditions precedent set forth in Section 2.2 shall not have
been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower Representative must make such election by notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion
or continuation, such election must be made pursuant to a written notice (a “Notice of Conversion/Continuation”) in the form of Exhibit 1.5(e). 
  
 (f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a court of competent jurisdiction
determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest payable hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest rate payable hereunder been (but for the operation of
this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have
received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. 
  
 1.6 Eligible Accounts. All of the Accounts owned by each Borrower and reflected in the most recent Borrowing Base Certificate delivered by Borrower
Representative to Agent shall be “Eligible Accounts” for purposes of this Agreement, except any Account to which any of the exclusionary criteria set forth below applies. Agent shall have the right to establish, modify or eliminate
Reserves against Eligible Accounts from time to time in its reasonable credit judgment. In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below and to establish
new criteria, and to adjust advance rates with respect to Eligible Accounts, in each case in its reasonable credit judgment. Eligible Accounts shall not include any Account of any Borrower: 
  
 (a) that does not arise from the sale of goods or the performance of services
by such Borrower in the ordinary course of its business; 
  

 7 







 (b) (i) upon which such Borrower’s right to receive payment is not absolute or is contingent upon
the fulfillment of any condition whatsoever or (ii) as to which such Borrower is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process or (iii) if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to such Borrower’s completion of further performance under such contract
or is subject to the equitable lien of a surety bond issuer; 
  
 (c) in the event that any defense, counterclaim, setoff or dispute is asserted as to such Account, to the extent of such defense, counterclaim, setoff or dispute; 
  
 (d) that is not a true and correct statement of bona fide indebtedness incurred in the amount of the Account for merchandise
sold to or services rendered and accepted by the applicable Account Debtor; 
  
 (e) with respect to which an invoice, reasonably acceptable to Agent in form and substance, has not been sent to the applicable Account Debtor; 
  
 (f) that (i) is not owned by such Borrower or (ii) is subject to any Lien of any other Person, other than Liens in favor of
Agent, on behalf of itself and Lenders; 
  
 (g) that arises from a
sale to any director, officer, other employee or Affiliate of any Credit Party; 
  
 (h) that arises from a sale where the payment is made pursuant to the use of a credit card or debit card; 
  
 (i) that is the obligation of an Account Debtor that is the United States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless such Borrower has complied with respect to such obligation with the Federal Assignment of Claims Act of 1940, or any applicable state, county or municipal law restricting
assignment thereof, provided, however, that with respect to any such obligations for which Borrowers have not complied with the Federal Assignment of Claims Act of 1940 such obligations shall not be ineligible under this clause (i), to the extent
the aggregate percentage of all such obligations otherwise constituting Eligible Accounts is less than 20% of all Eligible Accounts; 
  
 (j) that is the obligation of an Account Debtor located in a foreign country other than Canada except to the extent (i) payment thereof is assured by a
letter of credit assigned and delivered to Agent, reasonably satisfactory to Agent as to form, amount and issuer, or (ii) such Account is covered by credit insurance in form, substance and amount, and by an insurer, reasonably satisfactory to Agent;

  

 8 







 (k) to the extent such Borrower or any Subsidiary thereof is liable for goods sold or services rendered
by the applicable Account Debtor to such Borrower or any Subsidiary thereof but only to the extent of the potential offset; 
  
 (l) that arises with respect to goods that are delivered on a bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale or other
terms by reason of which the payment by the Account Debtor is or may be conditional; 
  
 (m) that is in default; provided, that, without limiting the generality of the foregoing, an Account shall be deemed in default upon the occurrence of any of the following: 
  
 (i) the Account is not paid within the earlier of: sixty (60) days following
its due date or ninety (90) days following its original invoice date; 
  
 (ii) the Account Debtor obligated upon such Account suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due; or 
  
 (iii) a petition is filed by or against any Account Debtor obligated upon
such Account under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors; 
  
 (n) that is the obligation of an Account Debtor if fifty percent (50%) or more of the Dollar amount of all Accounts owing by
that Account Debtor are ineligible under the criteria set forth in Section 1.6(m)(i); 
  
 (o) as to which Agent’s Lien thereon, on behalf of itself and Lenders, is not a first priority perfected Lien; 
  
 (p) as to which any of the representations or warranties in the Loan Documents pertaining to Accounts are untrue; 
  
 (q) to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper; 
  
 (r) to the extent such Account exceeds any
credit limit established by Agent, in its reasonable credit judgment; provided, that (i) if the concentration limit under paragraph (s) of this Section 1.6 exceeds 15% of Eligible Accounts for either Walmart or Best Buy at a time that
such Account Debtor no longer has a Qualifying Rating, (A) the concentration limit for such Account Debtor and its Affiliates under such paragraph (s) shall be deemed to be no greater than 15% from and after the date upon which such Account Debtor
no longer has a Qualifying Rating; (B) the Borrowers, within two Business Days following the earlier of a request from Agent or the date upon which either Borrower has knowledge that such Account Debtor no longer has a Qualifying Rating, shall
prepare and deliver a revised Borrowing Base Certificate (which may be on a pro forma basis as of the last Borrowing Base Certificate unless Borrowers or Agent elect otherwise) reflecting Borrowing Availability as if the concentration limit under
paragraph (s) of this Section 1.6 for such Account Debtor were 15%; (C) if Borrowing Availability would be less than zero based upon subclause (i)(A) of this proviso (the “Eligibility Shortfall”), then Borrowers 
  

 9 







 shall not be entitled to request and Revolving Lenders shall not be obligated to make any additional Advances unless and
until such Eligibility Shortfall has been repaid; and (D) Borrowers shall immediately repay 50% of the Eligibility Shortfall and shall repay the remaining 50% of the amount of any Eligibility Shortfall within the later of (y) the 14th Business Day
following the date upon which such Account Debtor no longer had a Qualifying Rating; or (z) the date upon which the Borrower is required to deliver the next monthly Borrowing Base Certificate; and (ii) as to any credit limit that is established that
would reduce the amount of credit previously available to an account debtor, such reduced limit shall only apply prospectively to newly created Accounts involving such account debtor and shall not eliminate availability created by Eligible Accounts
of such account debtor that already were included within the Borrowing Base at the time of such reduction in the credit limit; provided, further, that nothing contained in this paragraph (r) is intended to restrict Agent’s
discretion with respect to Eligible Accounts (including concentration limits of 15% or less, advance rates, reserves, and other rights of Agent with respect to exclusions therefrom) save and except that Borrowers shall have the time specified to
cure any Eligibility Shortfall and during that time, the existence of the Eligibility Shortfall shall not be the exclusive basis for a Default or Event of Default or a mandatory prepayment required hereunder other than as set forth in this paragraph
(r); 
  
 (s) to the extent that such Account, together with all
other Eligible Accounts owing by such Account Debtor and its Affiliates (other than Best Buy (so long as Best Buy shall have a Qualifying Rating), Wal-Mart (so long as Wal-Mart shall have a Qualifying Rating) or the United States government or any
political subdivision thereof) as of any date of determination exceed fifteen percent (15%) of all Eligible Accounts, or with respect to any Account owing by Best Buy at any time when Best Buy shall have Qualifying Rating, to the extent such
Account, together will all other Eligible Accounts owing by Best Buy, as of any date of determination exceeds (i) during the period of August 1 though January 31, fifty percent (50%) of all Eligible Accounts, and (ii) at any other time, thirty-five
percent (35%) of all Eligible Accounts, or with respect to any Account owing by Wal-Mart at any time when Wal-Mart shall have Qualifying Rating, to the extent such Account, together will all other Eligible Accounts owing by Wal-Mart, as of any date
of determination exceeds twenty-five percent (25%) of all Eligible Accounts, or with respect to any Account owing by the United States government or any political subdivision thereof, to the extent such Account, together with all other Eligible
Accounts owing by the United States government or any political subdivision thereof, as of any date of determination exceeds twenty percent (20%) of all Eligible Accounts; or  
  
 (t) that is payable in any currency other than Dollars or Canadian dollars (provided, that in the case of currencies other
than Dollars, the Borrowing Base shall be calculated, as of any date of determination, based upon the exchange rate (as determined by Agent in accordance with its customary procedures) then in effect. 
  
 1.7 Eligible Inventory. All of the Inventory owned by the Borrowers
and reflected in the most recent Borrowing Base Certificate delivered by each Borrower to Agent shall be “Eligible Inventory” for purposes of this Agreement, except any Inventory to which any of the exclusionary criteria set forth
below applies. Agent shall have the right to establish, modify or eliminate Reserves against Eligible Inventory from time to time in its reasonable credit judgment. In addition, Agent reserves the right, at any time and from time to time after the

  

 10 







 Closing Date, to adjust the criteria set forth below and to establish new criteria and to adjust advance rates with
respect to Eligible Inventory, in its reasonable credit judgment. Eligible Inventory shall not include any Inventory of any Borrower that: 
  
 (a) is not owned by such Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure such Borrower’s performance with respect to that Inventory), except the Liens in favor of Agent, on behalf of itself and Lenders, and Permitted Encumbrances in favor of
landlords and bailees to the extent permitted in Section 5.9 hereof (subject to Reserves established by Agent in accordance with Section 5.9 hereof); 
  
 (b) (i) is not located on premises owned, leased or rented by such Borrower and set forth in Disclosure Schedule
(3.2), or (ii) is stored at a leased location, unless Agent has given its prior consent thereto and unless either (x) a reasonably satisfactory landlord waiver has been delivered to Agent, or (y) Reserves reasonably satisfactory to Agent have
been established with respect thereto or (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee letter has been received by Agent and Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (iv) is located at an owned location subject to a mortgage in favor of a lender other than Agent unless a reasonably satisfactory mortgagee waiver has been delivered to Agent, or (v) is located at any site if the aggregate book
value of Inventory at any such location is less than $100,000; 
  
 (c) is placed on consignment or is in transit, except for Inventory in transit between domestic locations of Credit Parties as to which Agent’s Liens have been perfected at origin and destination; 
  
 (d) is covered by a negotiable document of title, unless such document has
been delivered to Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent and Lenders; 
  
 (e) is obsolete, slow moving (during the period of June 1 though December 1, in excess of 6 months’ supply and, at all other times, in excess of 3
months’ supply), unsalable, shopworn, seconds, damaged or unfit for sale; 
  
 (f) consists of display items or packing or shipping materials, manufacturing supplies, work-in-process Inventory or refurbished replacement parts; 
  
 (g) consists of goods which have been returned by the buyer; 
  
 (h) is not of a type held for sale in the ordinary course of such Borrower’s business; 
  
 (i) is not subject to a first priority lien in favor of Agent on behalf of
itself and Lenders, subject to Permitted Encumbrances as set forth in clause (e) of the definition thereof (subject to reserves satisfactory to Agent); 
  

(j) breaches any of the representations or warranties pertaining to Inventory set forth in the Loan Documents; 
  

 11 







 (k) consists of any costs associated with “freight-in” charges unless such charges are the
subject of Reserves; 
  
 (l) consists of Hazardous Materials or
goods that can be transported or sold only with licenses that are not readily available; 
  
 (m) is not covered by casualty insurance reasonably acceptable to Agent; 
  
 (n) does not contain or bear as the primary Trademark thereon one of the eMachines or Gateway Trademarks included in the Collateral, except to the extent
Agent shall be satisfied, in its reasonable discretion, that the Agent has the right to sell or otherwise dispose of such Inventory (without the necessity of obtaining any consent or making any payment of royalties or fees other than such royalties
and fees that are the subject of Reserves); or 
  
 (o) is subject
to any patent or trademark license requiring the payment of royalties or fees or requiring the consent of the licensor for a sale thereof by Agent unless the amount of unpaid royalties or fees are the subject of Reserves. 
  
 1.8 Cash Management Systems. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash management systems described in Annex C (the “Cash Management Systems”). 
  
 1.9 Fees.  
  
 (a) Borrowers shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee Letter. 
  
 (b) As additional compensation for the Revolving Lenders, Borrowers shall pay
to Agent, for the ratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non-use of available funds in an amount
equal to the Applicable Unused Line Fee Margin per annum (calculated on the basis of a 365/366 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Amount (as it may be reduced from time to time) and (y) the average
for the period of the daily closing balances of the Revolving Loan outstanding during the period for which such Fee is due. 
  
 (c) [Intentionally omitted] 
  
 (d) Borrowers shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of Credit Fee as provided in Annex B. 
  
 1.10 Receipt of Payments. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in immediately available funds in Dollars to the Collection Account. For purposes of computing interest and Fees and determining Borrowing Availability as of any date, all
payments shall be deemed received on the Business Day on which immediately available funds therefor are received in the Collection Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York time on any Business Day or on a
day that is not a Business Day shall be deemed to have been received on the following Business Day. 
  

 12 







 1.11 Application and Allocation of Payments. 
  
 (a) So long as no Event of Default has occurred and is continuing, (i)
payments consisting of proceeds of Accounts received in the ordinary course of business shall be applied to the Revolving Loan, first to any outstanding Inventory Revolving Credit Advances until paid in full and then to any outstanding A/R Revolving
Credit Advances; (ii) payments matching specific scheduled payments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shall be applied to the Revolving Loan, first to any outstanding Inventory Revolving Credit
Advances until paid in full and then to any outstanding A/R Revolving Credit Advances; and (iv) mandatory prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d). All payments and prepayments applied to a particular Loan shall
be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. As to any other payment, and as to all payments made when an Event of Default has occurred and is continuing or following the Commitment Termination
Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations of Borrowers as Agent may deem advisable notwithstanding any previous entry by Agent in the Loan Account or any other books and records. In the absence of a specific determination by Agent
with respect thereto, payments shall be applied to amounts then due and payable in the following order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2) to interest on the Loans, ratably in proportion to the interest accrued as to
each Loan; (3) to principal payments on the Loans and to provide cash collateral for Letter of Credit Obligations in the manner described in Annex B, ratably to the aggregate, combined principal balance of the other Loans and outstanding
Letter of Credit Obligations; and (4) to all other Obligations, including expenses of Lenders to the extent reimbursable under Section 11.3. 
  
 (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with Section 5.4(a)) and interest and principal, other than principal of the Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan Documents if
and to the extent Borrowers fail to pay promptly any such amounts as and when due, even if the amount of such charges would exceed Borrowing Availability at such time after giving effect to such charges. At Agent’s option and to the extent
permitted by law, any charges so made shall constitute part of the Revolving Loan hereunder. 
  
 1.12 Loan Account and Accounting. Agent shall maintain a loan account (the “Loan Account”) on its books to record: all Advances, all payments made by Borrowers, and all other debits and credits
as provided in this Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with Agent’s customary accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent’s most recent printout or other written statement, shall, absent demonstrable error, be presumptive evidence of the amounts due and owing to Agent and 
  

 13 







 Lenders by each Borrower; provided that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower’s duty to pay the Obligations. Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Loans setting forth the balance of the Loan Account as to each Borrower for the
immediately preceding month. Unless Borrower Representative notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within sixty (60) days after the date of Borrower
Representative’s receipt thereof, each and every such accounting shall be presumptive evidence of all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding
any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time
owing to it. 
  
 1.13 Indemnity. 
  
 (a) Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s respective officers, directors, employees, attorneys, agents and representatives (each, an “Indemnified Person”), from
and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such
credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising
out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, “Indemnified Liabilities”); provided, that no such Credit Party shall be liable for any indemnification
to an Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE
OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. 
  
 (b) To induce Lenders to provide the LIBOR Rate option on the terms provided
herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or occurs as a result of
acceleration, by operation of law or otherwise, but not including any repayment made pursuant to Section 1.16 hereof); (ii) any Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) any
Borrower shall refuse to accept any borrowing of, or shall request a termination 
  

 14 







 of, any borrowing of, conversion into or continuation of, LIBOR Loans after Borrower Representative has given notice
requesting the same in accordance herewith; or (iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith, then Borrowers shall jointly and severally indemnify
and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing. Such indemnification shall include any loss (including loss of margin) or expense arising from the reemployment of
funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; provided, that each Lender may fund each of its
LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written calculation of all amounts payable pursuant to this Section 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection in detail. 
  
 1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon two (2) Business Days’ prior notice as frequently as Agent reasonably determines to be appropriate: (a) provide Agent and any of its officers, employees and agents access to its properties,
facilities, advisors, officers and employees of each Credit Party and to the Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any Credit Party’s books and records, and (c)
permit Agent, and its officers, employees and agents, to inspect, review, evaluate and make test verifications and counts of the Accounts, Inventory and other Collateral of any Credit Party; provided, however, that in the absence of the occurrence
and continuance of an Event of Default, Borrowers shall not be obligated to reimburse Agent for the reasonable costs and expenses (in an amount of up to $750 per day per individual examiner or auditor plus reasonable costs and expenses) of more than
three (3) audits in any twelve month period. If an Event of Default has occurred and is continuing, each such Credit Party shall provide such access to Agent and to each Lender at all times and without advance notice. Furthermore, so long as any
Event of Default has occurred and is continuing, Borrowers shall use commercially reasonable efforts to provide Agent with access to their suppliers and customers. Each Credit Party shall make available to Agent and its counsel reasonably promptly
originals or copies of all books and records that Agent may reasonably request. Each Credit Party shall deliver any document or instrument necessary for Agent, as it may from time to time reasonably request, to obtain records from any service bureau
or other Person that maintains records for such Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by such Credit Party. Agent will give Lenders at least five (5)
days’ prior written notice of regularly scheduled audits. Representatives of other Lenders may accompany Agent’s representatives on regularly scheduled audits at no charge to Borrowers. 
  

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 1.15 Taxes.  
  
 (a) Any and all payments by each Borrower hereunder (including any payments made pursuant to Section 12) or under the
Notes shall be made, in accordance with this Section 1.15, free and clear of and without deduction for any and all present or future Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the Notes, (i) the sum payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional
sums payable under this Section 1.15) Agent or Lenders, as applicable, receive an amount equal to the sum they would have received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii) such Borrower shall
pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, Borrower Representative shall furnish to Agent the original or a certified copy
of a receipt evidencing payment thereof. 
  
 (b) Each Credit Party
that is a signatory hereto shall jointly and severally indemnify and, within ten (10) days of demand therefore, pay Agent and each Lender for the full amount of Taxes that any Borrower is obligated to pay pursuant hereto (including any Taxes imposed
by any jurisdiction on amounts payable under this Section 1.15) paid by Agent or such Lender, as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted. 
  
 (c) Each Lender organized
under the laws of a jurisdiction outside the United States (a “Foreign Lender”) as to which payments to be made under this Agreement or under the Notes are exempt from United States withholding tax under an applicable statute or tax
treaty shall provide to Borrower Representative and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form, certificate or document prescribed by the IRS or the United States certifying as to such Foreign
Lender’s entitlement to such exemption (a “Certificate of Exemption”). Any foreign Person that seeks to become a Lender under this Agreement shall provide a Certificate of Exemption to Borrower Representative and Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if such Person is not exempt from United States withholding tax under an applicable statute or tax treaty or fails to deliver a Certificate of Exemption in advance of
becoming a Lender. 
  
 1.16 Capital Adequacy; Increased Costs;
Illegality. 
  
 (a) If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted after the Closing Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other
funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender’s capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a copy of
such demand to Agent) pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to the amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall be presumptive evidence of the matters set forth therein. 
  

 16 







 (b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the Closing Date, there shall be any increase
in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower Representative and to Agent by such Lender, shall be presumptive evidence of the matters
set forth therein. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such
Lender’s internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b). 
  
 (c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to
make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender’s reasonable opinion,
materially adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Agent, (i) the obligation of such Lender to agree to make or to make or to
continue to fund or maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative
on behalf of such Borrower, within five (5) Business Days after the delivery of such notice and demand or all LIBOR Loans owing to such Lenders shall convert into Index Rate Loans. 
  
 (d) Within thirty (30) days after receipt by Borrower Representative of written notice and demand from any Lender (an
“Affected Lender”) for payment of additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b) or of any notice pursuant to Section 1.16(c), Borrower Representative may, at its option,
notify Agent and such Affected Lender of its intention to replace the Affected Lender. So long as no Default or Event of Default has occurred and is continuing, Borrower Representative, with the consent of Agent, may obtain, at Borrowers’
expense, a replacement Lender (“Replacement Lender”) for the Affected Lender, which Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain a Replacement Lender within ninety (90) days following notice of
their intention to do so, the Affected Lender must promptly sell and assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees
with respect thereto through the date of such sale and such assignment shall not require the payment of an assignment fee to Agent; provided, that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased

  

 17 







 costs that it is entitled to receive under this Agreement through the date of such sale and assignment. Notwithstanding
the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within 15 days following its receipt of Borrowers’ notice of intention to
replace such Affected Lender. Furthermore, if Borrowers give a notice of intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter, Borrowers’ rights under this Section 1.16(d) in respect of the
event or circumstances that gave rise to such right shall terminate with respect to such Affected Lender and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to Sections 1.15(a),
1.16(a) and 1.16(b). 
  
 1.17 Single Loan. All Loans to
each Borrower and all of the other Obligations of each Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of that Borrower secured, until the Termination Date, by all of the Collateral.

  

	2.	CONDITIONS PRECEDENT 

  
 2.1 Conditions to the Closing Date. No Lender shall be obligated to take, fulfill, or perform any action hereunder on or after the Closing Date
until the following conditions have been satisfied or provided for in a manner reasonably satisfactory to Agent, or waived in writing by Agent and Requisite Lenders: 
  
 (a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof shall have been duly executed by, and
delivered to, Borrowers, each other Credit Party, Agent and Lenders; and Agent shall have received such documents, instruments, agreements and legal opinions as Agent shall reasonably request in connection with the transactions contemplated by this
Agreement and the other Loan Documents, including all those listed in the Closing Checklist attached hereto as Annex D-1, each in form and substance reasonably satisfactory to Agent. 
  
 (b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding
L/Cs. (i) Agent shall have received evidence satisfactory to Agent confirming that all of the Prior Lender Obligations have been repaid in full and all Liens upon any of the property of Borrowers or any of their Subsidiaries in favor of Prior
Lender have been terminated by Prior Lender; and (ii) all letters of credit issued or guaranteed by Prior Lender shall have been terminated or cash collateralized in a manner satisfactory to Agent. 
  
 (c) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation
of the Related Transactions or (ii) an officer’s certificate signed by an executive officer of Gateway in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required. 
  
 (d) Payment of Fees and Costs. Borrowers shall have reimbursed Agent
for all fees, costs and expenses of closing presented as of the Closing Date. 
  

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 (e) Capital Structure: Other Indebtedness. The capital structure of each Credit Party and the
terms and conditions of all Indebtedness of each Credit Party shall be acceptable to Agent in its sole discretion. 
  
 (f) Due Diligence. Agent shall have completed its business and legal due diligence, including background and reference checks with respect to the
Chairman, CEO, CFO and other designated senior management of Gateway agreed to by Borrowers. 
  
 (g) Closing Certified Cash. The Credit Parties shall have Certified Cash of not less than $150 million. 
  
 2.2 Further Conditions to Loans and Letter of Credit Obligations. Notwithstanding any provision herein or in any Loan Document to the contrary, the
obligations of the Lenders to make any Loan or incur any Letter of Credit Obligations shall be subject to the following (in addition to the Closing Date having occurred): 
  
 (a) Further Conditions to the Initial Loans. No Lender shall be obligated to make the initial Loan or incur initial
Letter of Credit Obligations, unless and until the following conditions have been satisfied or provided for in a manner reasonably satisfactory to Agent, or waived in writing by Agent and Requisite Lenders (such date, if any, on which such
conditions have been so satisfied or waived, the “Initial Funding Date”): 
  
 (i) Loan Documents. All Loan Documents having been delivered on or before the Initial Funding Date shall remain in full force and effect, and Agent shall have received such further documents, instruments,
agreements and legal opinions as Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including all those listed in the Funding Checklist attached hereto as Annex D-2,
each in form and substance reasonably satisfactory to Agent. 
  
 (ii) Approvals. Agent shall have received (i) satisfactory evidence (or, shall, in its reasonable discretion, continue to be satisfied with such evidence received under Section 2.1(c), as applicable) that the Credit Parties
have obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents and the consummation of the Related
Transactions or (ii) an officer’s certificate signed by an executive officer of Gateway in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required. 
  
 (iii) Timing. Such Initial Funding Date shall have occurred on or
before January 15, 2005 (or such later date as Agent and Requisite Lenders may approve in writing); 
  
 (iv) Opening Availability. The Eligible Accounts and Eligible Inventory supporting the initial Revolving Credit Advance and the initial Letter of
Credit Obligations incurred and the amount of the Reserves to be established on the Initial Funding Date shall be sufficient in value, as reasonably determined by Agent, to provide Borrowers, collectively, with Borrowing Availability, after giving
effect to the initial Revolving Credit 
  

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 Advance made to each Borrower, the incurrence of any initial Letter of Credit Obligations and the consummation of the
Related Transactions (on a pro forma basis, with trade payables being paid currently, and expenses and liabilities being paid in the ordinary course of business) of at least $20,000,000. 
  
 (v) Payment of Fees. Borrowers shall have paid the Fees required to be paid on or before the Initial Funding Date in
the respective amounts specified in Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and shall have reimbursed Agent for all fees, costs and expenses of closing presented as of the Initial Funding Date. 
  
 (vi) Collateral Audit. Agent shall have conducted its customary
Collateral audit, with results reasonably satisfactory to Agent. 
  
 (vii) Satisfaction with Changes to Disclosure Schedules. Agent shall be satisfied in its reasonable discretion with all updates to the Disclosure Schedules as have been delivered to Agent on or before the Initial Funding Date.

  
 (viii) Initial Certified Cash. The Credit Parties
shall have Certified Cash of not less than $150 million. 
  
 (ix)
eMachines Activation Date. The eMachines Activation Date shall have occurred. 
  
 (b) Further Conditions to Each Loan. Except as otherwise expressly provided herein, no Lender shall be obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof: 
  
 (i) any
representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or incorrect as of such date, except to the extent that such representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted or expressly contemplated by this Agreement and Agent or Requisite Lenders have determined not to make such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result
of the fact that such warranty or representation is untrue or incorrect; 
  
 (ii) any Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of Default; and 
  
 (iii) after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), (i) the outstanding
principal amount of the Revolving Loan would exceed the lesser of the Aggregate Borrowing Base and the Maximum Amount, (ii) the outstanding principal amount of aggregate A/R Revolving Credit Advances would exceed the Aggregate A/R Borrowing Base, or
(iii) the outstanding principal amount of aggregate Inventory Revolving Credit Advances would exceed the lesser of $25,000,000 and the Aggregate Inventory Borrowing Base. 
  

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 The request and acceptance by any Borrower of the proceeds of any Advance, the incurrence of any Letter of Credit
Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section 12 and of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.

  

	3.	REPRESENTATIONS AND WARRANTIES 

  
 To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit Parties executing this Agreement, jointly and severally, make
the following representations and warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall survive the execution and delivery of this Agreement (it being understood, that, for purposes of any representation
and warranty expressly made as of the Initial Funding Date with reference to, or qualified by, a Disclosure Schedule, such reference shall include such updated version, if any, of such Disclosure Schedule as may be made effective (including by
consent of Agent and Requisite Lenders) pursuant to Section 5.6 on or before the Initial Funding Date). 
  
 3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization set forth in Disclosure Schedule (3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not result in exposure to losses or liabilities which could reasonably be
expected to have a Material Adverse Effect; (c) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to conduct its
business as now conducted or proposed to be conducted; (d) subject to specific representations regarding Environmental Laws, has all licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all
notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct; (e) is in compliance with its charter and bylaws or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all applicable provisions of law, except where the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. 
  
 3.2 Executive
Offices, Collateral Locations, FEIN. As of each of the Closing Date and the Initial Funding Date, each Credit Party’s name as it appears in official filings in its state of incorporation or organization, state of incorporation or
organization, organization type, organization number, if any, issued by its state incorporation or organization, and the current 
  

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 location of each Credit Party’s chief executive office and the warehouses and premises at which any Collateral is
located are set forth in Disclosure Schedule (3.2), none of such locations has changed within the four (4) months preceding the Closing Date and each Credit Party has only one state of incorporation or organization. In addition, Disclosure
Schedule (3.2) lists the federal employer identification number of each Credit Party. 
  
 3.3 Corporate Power, Authorization, Enforceable Obligations. The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person’s power; (b) have been duly authorized by all necessary corporate, limited liability company or limited partnership action; (c) do not contravene any provision of such Person’s charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any law or regulation, or any order or decree of any court or Governmental Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under
or accelerate or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound (other than
the Prior Lender Obligations); (f) do not result in the creation or imposition of any Lien upon any of the property of such Person other than those in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other Person, except those referred to in Section 2.1(c), all of which will have been duly obtained, made or complied with prior to the Closing Date. Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a party thereto and each such Loan Document shall constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms.

  
 3.4 Financial Statements and Projections. Except for
the Projections, all Financial Statements concerning Borrowers and their respective Subsidiaries that are referred to below have been prepared in accordance with GAAP consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of footnotes and normal year-end audit adjustments) and present fairly in all material respects the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended. 
  
 (a) Financial Statements. The following Financial Statements attached hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof: 
  
 (i) The audited consolidated and unaudited consolidating balance sheets at
December 31, 2003 and the related statements of income and cash flows of Borrowers and their Subsidiaries for the Fiscal Year then ended, certified by PricewaterhouseCoopers LLP. 
  
 (ii) The unaudited balance sheet(s) at June 30, 2004 and the related consolidated statement(s) of income and cash flows of
Borrowers and their Subsidiaries for the two Fiscal Quarters then ended. 
  
 (b) Pro Forma. The Pro Forma delivered on the date hereof and attached hereto as Disclosure Schedule (3.4(b)) was prepared by Borrowers giving pro forma effect to the Related Transactions, was based on
the unaudited consolidated and consolidating balance sheets 
  

 22 







 of Borrowers and their Subsidiaries dated June 30, 2004, and was prepared in accordance with GAAP (to the extent
applicable), with only such adjustments thereto as would be required in accordance with GAAP. 
  
 (c) Projections. The Projections delivered on the date hereof and attached hereto as Disclosure Schedule (3.4(c)) have been prepared by Borrowers in light of the past operations of their businesses, but
including reasonably estimated future payments of known contingent liabilities, and reflect projections on a quarterly basis for the 2004 and 2005 Fiscal Years and on an annual basis for all periods thereafter through 2007. The Projections are based
upon the same accounting principles as those used in the preparation of the financial statements described above and the estimates and assumptions stated therein, all of which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, as of the Closing Date, reflect Borrowers’ good faith and reasonable estimates of the future financial performance of Borrowers for the period set forth therein. The Projections are not a
guaranty of future performance, and actual results may differ from the Projections. 
  
 3.5 Material Adverse Effect. Between June 30, 2004 and the Closing Date (and between June 30, 2004 and the Initial Funding Date): (a) there has not been any material increase in contingent or noncontingent
liabilities, liabilities for Charges, or obligations with respect to long-term leases or unusual forward or long-term commitments, in each case of the Borrowers considered as a whole, (b) there has not been any material decrease in the assets of the
Borrowers considered as a whole, (c) no contract, lease or other agreement or instrument has been entered into by any Borrower or has become binding upon any Borrower’s assets and no law or regulation applicable to any Borrower has been adopted
that has had or could reasonably be expected to have a Material Adverse Effect, (d) no Credit Party is in default and to the best of Borrowers’ knowledge no third party is in default under any material contract, lease or other agreement or
instrument, that alone or in the aggregate could reasonably be expected to have a Material Adverse Effect. Since June 30, 2004, no event has occurred, that alone or together with other events, has had, or could reasonably be expected to have, a
Material Adverse Effect. 
  
 3.6 Ownership of
Collateral; Liens. Each Credit Party owns good and marketable title to all of its Collateral. As of each of the Closing Date and the Initial Funding Date, none of the Collateral is subject to any Liens other than Permitted Encumbrances, and
there are no facts, circumstances or conditions known to any Credit Party that may result in any Liens (including Liens arising under Environmental Laws) other than Permitted Encumbrances. 
  
 3.7 Labor Matters. Except as set forth on Disclosure Schedule
3.7, as of each of the Closing Date and the Initial Funding Date, (a) no strikes or other material labor disputes against any Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to such matters; (c) all payments due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) no Credit Party is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement (and true and complete copies of any agreements described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no 
  

 23 







 organizing activity involving any Credit Party pending or, to any Credit Party’s knowledge, threatened by any labor
union or group of employees; (f) there are no representation proceedings pending or, to any Credit Party’s knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) there are no material complaints or charges against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual. 
  
 3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of each
of the Closing Date and the Initial Funding Date, no Credit Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person. All of the issued and outstanding Stock of each
Credit Party is owned by each of the Stockholders and in the amounts set forth in Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule (3.8), as of each of the Closing Date and the Initial Funding Date, there are no
outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Credit Party may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of each of the Closing Date and the Initial Funding Date is permitted under Section 6.3, and all outstanding Funded Debt of each
Credit Party as of each of the Closing Date and the Initial Funding Date (except for the Obligations) is described in Disclosure Schedule (6.3). 
  
 3.9 Government Regulation. No Credit Party is an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940. No Credit Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any other federal or state statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of the Letter of Credit Obligations
on behalf of Borrowers, the application of the proceeds thereof and repayment thereof and the consummation of the Related Transactions will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and
Exchange Commission binding on any Borrower. 
  
 3.10 Margin
Regulations. No Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” as
such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as “Margin Stock”). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any of the Loans or other extensions of credit under this Agreement to be considered a “purpose credit” within the meaning of Regulations
T, U or X of the Federal Reserve Board. No Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve Board. 
  

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 3.11 Taxes. Except as described in Disclosure Schedule (3.11), all Federal and other
material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental Authority, and all Charges have been paid prior to
the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof excluding Charges or other amounts being contested in accordance with Section 5.2(b) and unless the failure to so file or pay would not
reasonably be expected to result in fines, penalties or interest in excess of $5,000,000 in the aggregate. Proper and accurate amounts have been withheld by each Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such withholdings have been timely paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of each of the Closing Date and the Initial
Funding Date those taxable years for which any Credit Party’s tax returns are currently being audited by the IRS or any other applicable Governmental Authority, and any assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described in Disclosure Schedule (3.11), as of each of the Closing Date and the Initial Funding Date, no Credit Party has executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. None of the Credit Parties and their respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements) or (b) to each Credit Party’s knowledge, as a transferee. As of each the Closing Date and the Initial Funding Date, no Credit Party has agreed or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect. 
  
 3.12 ERISA. 
  
 (a) Disclosure Schedule (3.12) lists, as of each of the Closing Date and the Initial Funding Date, (i) all ERISA Affiliates and (ii) all Plans and
separately identifies all Pension Plans, including Title IV Plans, Multiemployer Plans, and all Retiree Welfare Plans. Copies of all such listed Plans have been delivered to Agent. Except with respect to Multiemployer Plans, each Qualified Plan has
been determined by the IRS to qualify under Section 401 of the IRC, the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and nothing has occurred that would cause the loss of such
qualification or tax-exempt status. Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the IRC and its terms, including the timely filing of all reports required under the IRC or ERISA. Neither any Credit
Party nor ERISA Affiliate has failed to make any material contribution or pay any material amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. No “prohibited transaction,” as
defined in Section 406 of ERISA and Section 4975 of the IRC, has occurred with respect to any Plan, that would subject any Credit Party to a material tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.

  

 25 







 (b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has any material
Unfunded Pension Liability; (ii) no ERISA Event has occurred or is reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened material claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any material liability as a result of a
complete or partial withdrawal from a Multiemployer Plan; and (v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that term is used in
Section 4041 of ERISA, nor has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at any time within the last five years) with material Unfunded Pension Liabilities been transferred outside of the “controlled group”
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such time). 
  
 3.13 No Litigation. Except as set forth in Disclosure Schedule (3.13), no action, claim, lawsuit, demand, investigation or proceeding is now
pending or, to the knowledge of any Credit Party, threatened against any Credit Party, before any Governmental Authority or before any arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that challenges any Credit
Party’s right or power to enter into or perform any of its obligations under the Loan Documents to which it is a party, or the validity or enforceability of any Loan Document or any action taken thereunder, or (b) that has a reasonable risk of
being determined adversely to any Credit Party and that, if so determined, could reasonably be expected to have a Material Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as of each of the Closing Date and the Initial
Funding Date there is no Litigation pending or, to any Credit Party’s knowledge, threatened, that seeks damages in excess of $5,000,000 or injunctive relief against, or alleges criminal misconduct of, any Credit Party. 
  
 3.14 Brokers. Except as set forth on Disclosure Schedule 3.14,
no broker or finder brought about the obtaining, making or closing of the Loans or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection
therewith. 
  
 3.15 Intellectual Property. As of each of
the Closing Date and the Initial Funding Date, each Credit Party owns or has rights to use all Intellectual Property necessary to continue to conduct its business as now conducted by it or presently proposed to be conducted by it, and each Patent,
Trademark, registered Copyright and License is listed, together with application or registration numbers, as applicable, in Disclosure Schedule (3.15). Each Credit Party conducts its business and affairs without infringement of or
interference with any Intellectual Property of any other Person which could reasonably be expected to have a Material Adverse Effect. Except as set forth in Disclosure Schedule (3.15), no Credit Party is aware of any material infringement
claim by any other Person with respect to any Intellectual Property. 
  
 3.16 Full Disclosure. No information contained in this Agreement, any of the other Loan Documents, Financial Statements or Collateral Reports or other written reports from time to time prepared by any Credit Party and delivered
hereunder or any written statement prepared by any Credit Party and furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains or will contain any untrue statement of a 
  

 26 







 material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein
not misleading in light of the circumstances under which they were made. Projections from time to time delivered hereunder are or will be based upon the estimates and assumptions stated therein, all of which Borrowers believed at the time of
delivery to be reasonable and fair in light of current conditions and current facts known to Borrowers as of such delivery date, and reflect Borrowers’ good faith and reasonable estimates of the future financial performance of Borrowers and of
the other information projected therein for the period set forth therein. Such Projections are not a guaranty of future performance and actual results may differ from those set forth in such Projections. The Liens granted to Agent, on behalf of
itself and Lenders, pursuant to the Collateral Documents will at all times be fully perfected first priority Liens in and to the Collateral described therein, subject, as to priority, only to Permitted Encumbrances. 
  
 3.17 Environmental Matters. 
  
 (a) Except as set forth in Disclosure Schedule (3.17), as of each of
the Closing Date and the Initial Funding Date, to their knowledge: (i) the Credit Parties are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could
reasonably be expected to exceed $1,000,000; (ii) the Credit Parties have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to exceed $1,000,000, and all such Environmental Permits are
valid, uncontested and in good standing; (iii) no Credit Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of
such Credit Party which could reasonably be expected to exceed $1,000,000; (iv) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or
expenses in excess of $1,000,000 or injunctive relief against, or that alleges criminal misconduct by, any Credit Party; and (v) no notice has been received by any Credit Party identifying it as a “potentially responsible party” or
requesting information under CERCLA or analogous state statutes, and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions that may result in any Credit Party being identified as a “potentially responsible
party” under CERCLA or analogous state statutes. 
  
 (b) Each
Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not ever been, in control of any of such Credit Party’s real estate or any Credit Party’s affairs, and (ii) does not have the capacity through the provisions of
the Loan Documents or otherwise to influence any Credit Party’s conduct with respect to the ownership, operation or management of any of its real estate or compliance with Environmental Laws or Environmental Permits. 
  
 3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of each of the Closing Date and the Initial Funding Date, for current occurrences by each Credit Party, as well as a brief description thereof. 
  

 27 







 3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists all banks and
other financial institutions at which any Credit Party maintains deposit, commodities, investment or other accounts as of each of the Closing Date and the Initial Funding Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor. 
  
 3.20 [intentionally omitted]. 
  
 3.21 Trade Relations. As of each of the Closing Date and the Initial
Funding Date, there exists no actual or, to the knowledge of any Credit Party, threatened termination or cancellation of, or any material adverse modification or change in the business relationship of any Credit Party with any supplier essential to
its operations. 
  
 3.22 Bonding; Licenses. Except as set
forth on Disclosure Schedule (3.22), as of each of the Closing Date and the Initial Funding Date, no Credit Party is a party to or bound by any material surety bond agreement or material bonding requirement with respect to products or
services sold by it or any trademark or patent license agreement with respect to products sold by it. 
  
 3.23 Solvency. Both before and after giving effect to (a) the Loans and Letter of Credit Obligations to be made or incurred on the Initial Funding
Date or such other date as Loans and Letter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower Representative; (c) the Refinancing and the
consummation of the other Related Transactions; and (d) the payment and accrual of all transaction costs in connection with the foregoing, the Credit Parties, taken as a whole, are and will be Solvent. 
  

	4.	FINANCIAL STATEMENTS AND INFORMATION 

  
 4.1 Reports and Notices. 
  
 (a) Each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the Termination Date, it shall deliver to
Agent or to Agent and Lenders, as required, the Financial Statements, notices, Projections and other information at the times, to the Persons and in the manner set forth in Annex E. 
  
 (b) Each Credit Party executing this Agreement hereby agrees that, from and
after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the various Collateral Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b)) and other reports at
the times, to the Persons and in the manner set forth in Annex F including all certifications required with respect to Certified Cash balances, the Cash Activation Date and the Cash Flow Activation Date. 
  
 4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has occurred and is continuing, each Lender, following reasonable notice to Gateway, to communicate directly with 
  

 28 







 its independent certified public accountants, including Deloitte & Touche USA LLP, and authorizes and shall instruct
those accountants to communicate to Agent any and all financial statements and supporting financial documentation relating to any Credit Party with respect to the business, results of operations and financial condition of any Credit Party.

  

	5.	AFFIRMATIVE COVENANTS 

  
 Each Credit Party executing this Credit Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof and until the
Termination Date: 
  
 5.1 Maintenance of Existence and Conduct
of Business. Each Credit Party shall: do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its material rights and franchises; continue to conduct its business substantially as now
conducted, anticipated to be conducted, or as otherwise permitted hereunder; at all times maintain, preserve and protect all of its assets and properties necessary to the conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices.

  
 5.2 Payment of Charges. 
  
 (a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to tax, social security and
unemployment withholding with respect to its employees, (ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to warehousemen or bailees in possession of any Collateral, in each
case, before any thereof shall become past due, except in the case of clauses (ii) and (iii) where the failure to pay or discharge such Charges would not result in aggregate liabilities in excess of $5,000,000. 
  
 (b) Each Credit Party may in good faith contest, by appropriate proceedings,
the validity or amount of any Charges, Taxes or claims described in Section 5.2(a); provided, that (i) adequate reserves with respect to such contest are maintained on the books of such Credit Party, in accordance with GAAP; (ii) no
Lien shall be imposed to secure payment of such Charges (other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing the Obligations and such contest is maintained and prosecuted continuously and with diligence
and operates to suspend collection or enforcement of such Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a result of such contest; and (iv) such Credit Party shall promptly pay or discharge such contested Charges,
Taxes or claims and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Credit Party or the conditions set forth in this Section 5.2(b) are no longer met. 
  

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 5.3 Books and Records. Each Credit Party shall keep adequate books and records with respect to its
business activities in which proper entries, reflecting all financial transactions, are made in accordance with GAAP and on a basis consistent with the Financial Statements attached as Disclosure Schedule (3.4(a)). 
  
 5.4 Insurance; Damage to or Destruction of Collateral. 
  
 (a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) as in effect on the date hereof or may obtain and maintain other policies of insurance in form and amounts and with insurers reasonably acceptable to Agent. All policies of
insurance (or the loss payable and additional insured endorsements delivered to Agent) that relate to coverage involving the Collateral shall contain provisions pursuant to which the insurer agrees to provide thirty (30) days (or, if such 30 day
period is not generally available, such lesser maximum period as is available in the market generally) prior written notice to Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If any Credit Party at any
time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto that Agent deems advisable. Agent shall have no obligation to obtain insurance for any Credit Party or pay any premiums therefor. By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from any Credit Party’s failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, court costs and other charges related thereto, shall
be payable on demand by Borrowers to Agent and shall be additional Obligations hereunder secured by the Collateral. 
  
 (b) Agent reserves the right at any time upon any change in any Credit Party’s risk profile (including any change in the product mix maintained by
any Credit Party or any laws affecting the potential liability of such Credit Party) to require additional forms and limits of insurance to, in Agent’s reasonable opinion, adequately protect both Agent’s and Lenders’ interests in all
or any portion of the Collateral and to ensure that each Credit Party is protected by insurance in amounts and with coverage customary for its industry. If reasonably requested by Agent, each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker, reasonably satisfactory to Agent, with respect to its insurance policies. 
  
 (c) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory to Agent, endorsements to all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional insured. Each Credit Party irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated by Agent), so long as any Default or Event
of Default has occurred and is continuing, as such Credit Party’s true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under all policies of insurance relating to coverage of the Collateral,
endorsing the name of such Credit Party on any check or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower Representative shall promptly notify Agent of any loss, damage, or destruction to the Collateral in the amount of $5,000,000 or more, 
  

 30 







 whether or not covered by insurance. After deducting from such proceeds (i) the expenses incurred by Agent in the
collection or handling thereof, and (ii) amounts required to be paid to creditors (other than Lenders) having Permitted Encumbrances, Agent may, at its option, apply such proceeds to the reduction of the Obligations in accordance with Section
1.3(d). Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds could not reasonably be expected to have a Material Adverse Effect, Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property. 
  
 5.5 Compliance with Laws. Each
Credit Party shall comply with all federal, state, local and foreign laws and regulations applicable to it, including those relating to ERISA, labor laws, and Environmental Laws and Environmental Permits, except to the extent that the failure to
comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
  
 5.6 Supplemental Disclosure. From time to time as may be reasonably requested by Agent (which request will not be made more frequently than once
each year and will not be made prior to January 1, 2006 absent the occurrence and continuance of an Event of Default) or at Credit Parties’ election from time to time, the Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or as
an exception to such representation or that is necessary to correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made therein); provided that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure Schedule or
representation, or be deemed a waiver of any Default or Event of Default resulting from the matters disclosed therein, except as consented to by Agent and Requisite Lenders in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that expressly relate only to the Closing Date and/or the Initial Funding Date (except as set forth in the introduction to Section 3 hereof for purposes of representations and warranties made as of the Initial Funding
Date). 
  
 5.7 Intellectual Property. Each Credit Party
will conduct its business and affairs without infringement of or interference with any Intellectual Property of any other Person to the extent such infringement or interference would reasonably be expected to result in a Material Adverse Effect.

  
 5.8 Environmental Matters. Each Credit Party shall and
shall cause each Person within its control to: (a) conduct its operations and keep and maintain its real estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to
have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to comply with Environmental Laws and Environmental Permits pertaining to the presence, generation,
treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its real estate in all material respects; (c) notify Agent promptly after such Credit Party becomes aware of
any violation of Environmental Laws 
  

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 or Environmental Permits or any Release on, at, in, under, above, to, from or about any real estate that is reasonably
likely to result in Environmental Liabilities in excess of $1,000,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or any communication or report received by such Credit Party in connection with any such
violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of $1,000,000, in each case whether or not the Environmental
Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If Agent at any time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its real estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party shall, upon Agent’s written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation
of such environmental reports, at Borrowers’ expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance
reasonably acceptable to Agent, and (ii) if Borrowers shall have not timely performed such environmental audits, permit Agent or its representatives to have access to all real estate for the purpose of conducting such environmental audits and
testing as Agent reasonably deems appropriate, including subsurface sampling of soil and groundwater. Borrowers shall reimburse Agent for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder.

  
 5.9 Landlords’ Agreements. With respect to any
warehouse, processor or converter facility or other location where any material amount of Collateral is stored or located, if Agent has not received a landlord or mortgagee agreement or bailee letter, any Borrower’s Eligible Inventory at that
location shall, in Agent’s discretion, be excluded from the Borrowing Base or be subject to such Reserves as may be established by Agent in its reasonable credit judgment. Each Credit Party shall timely and fully pay and perform its obligations
under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located if a failure to so pay or perform such obligations could reasonably be expected to result in a Material Adverse
Effect. 
  
 5.10 Further Assurances. Each Credit Party
executing this Agreement agrees that it shall and shall cause each other Credit Party to, at such Credit Party’s expense and upon the reasonable request of Agent, duly execute and deliver, or cause to be duly executed and delivered, to Agent
such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of Agent to carry out more effectively the provisions and purposes of this Agreement and each Loan Document. 

 
 5.11 Cash. The Credit Parties shall at all times maintain, or cause
to be maintained, Certified Cash in an amount of not less than $150,000,000. 
  
 5.12 Qualified Cash. Borrowers shall deposit all net cash proceeds of Collateral as Qualified Cash in a Qualified Cash Account subject to the right of Borrowers to withdraw such cash proceeds except during a
Qualified Cash Activation Period. During any 
  

 32 







 Qualified Cash Activation Period, Agent may exercise all rights under the applicable control agreements relating to any
Qualified Cash, including the right to deliver applicable control exercise notices to each applicable bank and securities intermediary and cause all such Qualified Cash to be forwarded immediately to the Collection Account through daily sweeps (or
as otherwise directed by Agent). 
  

	6.	NEGATIVE COVENANTS 

  
 Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof until the Termination
Date: 
  
 6.1 Mergers, Subsidiaries, Etc. During any
Additional Covenant Activation Period, unless the Borrowers are in compliance with Section 5.11 both before and after giving effect to any proposed transaction, no Credit Party shall directly or indirectly, by operation of law or otherwise,
(a) form or acquire any Subsidiary; provided, that the foregoing shall not prevent (i) the formation of a transitory merger Subsidiary formed solely to consummate a Permitted Acquisition that is a Stock Acquisition, (ii) the formation of a
Subsidiary formed solely to consummate a Permitted Acquisition that is an Asset Acquisition, or (iii) the formation of a Subsidiary with respect to which the Borrowers have made a determination that such Subsidiary is to become a Credit Party; or
(b) merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person except that, so long as (i) the Borrowers are in compliance with Section 5.11 both before and after
giving effect to any proposed transaction, the foregoing shall not prevent the consummation of a Permitted Acquisition or the making of an Investment permitted under Section 6.2 hereof, and (ii) no Default or Event of Default has occurred and
is continuing or would result therefrom (A) any Borrower may merge with another Borrower, (B) any Guarantor may merge with any other Guarantor or with a Borrower, (C) any Subsidiary that is not a Credit Party may merge with any other Subsidiary that
is not a Credit Party, and (D) any Subsidiary that is not a Credit Party may merge with a Borrower or a Guarantor with the prior written consent of Agent, such consent not to be unreasonably withheld. Notwithstanding the foregoing, in no event shall
any Credit Party form any Subsidiary or consummate any merger, consolidation, or acquisition of all or substantially all of the Stock of, or other combination or acquisition of, any Person, unless (1) for any such merger or combination including the
Borrower Representative, the Borrower Representative is the survivor thereof, (2) for any such merger or combination including any other Borrower (but not including the Borrower Representative), a Borrower is the survivor thereof, (3) for any such
merger or combination not including a Borrower, the resulting entity is or becomes a Credit Party in connection therewith, (4) any such Person acquired, or Subsidiary formed (other than (x) a transitory merger Subsidiary to be dissolved upon
completion of the applicable merger, or (y) a Subsidiary that is not required to be a Credit Party pursuant to Section 6.10 hereof), by any Credit Party, effective upon such acquisition or formation, becomes a Credit Party. With respect to
any such Subsidiary or Person becoming a Credit Party hereunder, Borrowers shall have provided written notice thereof to Agent, and such Subsidiary or other Person shall have executed and delivered a joinder to the Guaranty and Security Agreement in
order to make such Subsidiary or other Person a party thereto, together with any and all financing statements and other documentation reasonably requested by Agent in order to cause such cause Subsidiary to be obligated with respect to the
Obligations and to include the assets of 
  

 33 







 such Subsidiary that would constitute Collateral within the perfected Liens with respect to the Collateral hypothecated
under the Loan Documents. Any such acquisition by any Credit Party of the Stock or assets of, or merger with or into, any Person other than a Credit Party, or formation of any Subsidiary not becoming a Credit Party in connection therewith, in each
case to the extent during an Additional Covenant Activation Period, shall (without duplication of reductions pursuant to other provisions of this Agreement) reduce the Permitted Acquisition/Investment Amount (such reduction, in the case of any
Permitted Acquisition, limited to the Excess Negative EBITDA of the acquired Person or assets). 
  
 6.2 Investments; Loans and Advances. Except as otherwise expressly permitted by this Section 6, during any Additional Covenant Activation
Period, no Credit Party shall make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise (each, an
“Investment”) unless the Investment Conditions have been met both before and after giving effect to the Investment, except that: (a) Borrowers may hold Investments constituting notes payable, or stock or other securities issued by
Account Debtors to any Borrower pursuant to negotiated agreements with respect to settlement of such Account Debtor’s Accounts in the ordinary course of business consistent with past practices; (b) each Credit Party may maintain (but not renew
or extend after expiration of any applicable term, or otherwise increase the amount of) any Investment made at a time that was not an Additional Covenant Activation Period; (c) Borrowers may invest the Qualified Cash in the Qualified Cash Accounts
(i) as of the Closing Date in the kinds and types of investments that they are then so invested, and (ii) thereafter, as to any new investments made after the Closing Date in other kinds and types of investments as are in conformity with
Gateway’s investment policies previously adopted by its board of directors so long as Agent’s Liens remain perfected therein, (d) Borrowers may invest the their cash and cash equivalents (other than Qualified Cash in the Qualified Cash
Accounts) (i) as of the Closing Date in the kinds and types of investments that they are then so invested, and (ii) thereafter, as to any new investments made after the Closing Date in other kinds and types of investments as are in conformity with
Gateway’s investment policies previously adopted by its board of directors, (e) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, any Credit Party may make investments in, and loans and advances
to, any other Credit Party, (f) Borrowers may make Permitted Acquisitions, and (g) so long as the Investment Conditions are met in connection therewith, Borrowers may make other Investments. Transactions under Section 6.2(f) and Section
6.2(g), in each case made during any Additional Covenant Activation Period, shall reduce (without duplication of reductions pursuant to other provisions of this Agreement) the Permitted Acquisition/Investment Amount (such reduction, with respect
to any Permitted Acquisition, limited to the Excess Negative EBITDA of the acquired Person or assets). 
  
 6.3 Indebtedness. 
  
 (a) No Credit Party shall create, incur or assume any Indebtedness, except (without duplication) (i) existing Indebtedness described in Disclosure
Schedule (6.3); (ii) Indebtedness created after the date hereof by conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect to Equipment and Fixtures or other
capital assets acquired by any Credit Party in the ordinary course of business, and Permitted Refinancings thereof; (iii) the Loans and the other Obligations; 
  

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 (iv) so long as no Default or Event of Default has occurred and is continuing at the time of the initial issuance
thereof, unsecured Subordinated Debt and Permitted Refinancings thereof; (v) so long as no Default or Event of Default has occurred and is continuing at the time of the initial issuance thereof, unsecured Senior Note Debt and Permitted Refinancings
thereof; (vi) so long as no Default or Event of Default has occurred and is continuing at the time of incurrence thereof, unsecured Funded Debt incurred after the Closing Date (other than the Senior Note Debt), provided, that in no event shall the
aggregate principal amount of all such Funded Debt (under this clause (vi)), (x) during any period up to and including June 30, 2005, at any time exceed the Maximum Additional Debt Amount in effect at such time, and (y) during any period after June
30, 2005, when aggregated with the principal amount of all Other L/C Debt in excess of $50,000,000, if any, at any time exceed the Maximum Additional Debt Amount in effect at such time; (vii) so long as no Default or Event of Default has occurred
and is continuing at the time of incurrence thereof, Other L/C Debt (including any such Indebtedness described in Disclosure Schedule (6.3)) in an aggregate outstanding principal amount at all times not in excess $75,000,000, provided, that
for all periods after June 30, 2005, in no event shall the aggregate principal amount of such Other L/C Debt in excess of $50,000,000 (if any), when aggregated with the principal amount of all Funded Debt under clause (vi) above, at any time exceed
the Maximum Additional Debt Amount in effect at such time; and (viii) unsecured Indebtedness (other than Funded Debt) incurred in the ordinary course of the Credit Parties’ business. 
  
 (b) During any Additional Covenant Activation Period, no Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Funded Debt prior to its scheduled due date, other than (i) the Obligations; (ii) payments on Indebtedness permitted by Section
6.3(a)(ii) if the asset securing such Indebtedness has been sold or otherwise disposed of, limited to the net proceeds of such sale or disposition, and additional amounts in excess thereof to the extent not in excess of the then remaining
Permitted Acquisition/Investment Amount (for the applicable Investment Amount Measurement Period ending on and including the date of such payment), (iii) Permitted Refinancings permitted by Section 6.3(a) in accordance with Section
6.3(a); (iv) any payment, purchase, redemption, defeasance or prepayment made solely in Gateway Stock (other than Gateway’s Series A Preferred Stock or Series C Preferred Stock); (v) Other L/C Debt permitted by Section 6.3(a)(vii),
or (vi) payments with respect to Funded Debt permitted under Section 6.3(a)(vi) in an amount not in excess of the then remaining Permitted Acquisition/Investment Amount (for the applicable Investment Amount Measurement Period ending on and
including the date of such payment). 
  
 (c) During any Additional
Covenant Activation Period, any cash payment (other than payments of regularly scheduled interest and Permitted Refinancings permitted by Section 6.3(a) in accordance with Section 6.3(a)) on or with respect to (i) the Senior Note Debt,
(ii) any Funded Debt (permitted under Section 6.3(a)(vi)) prior to its scheduled maturity, or (iii) payments with respect to any Funded Debt permitted by Section 6.3(a)(ii) prior to its scheduled maturity in an amount in excess of the
applicable net sale or disposition proceeds, in each case shall reduce (without duplication of reductions pursuant to other provisions of this Agreement) the Permitted Acquisition/Investment Amount. 
  

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 6.4 Employee Loans and Affiliate Transactions. 
  
 (a) During any Additional Covenant Activation Period, unless the Investment
Conditions have been met both before and after giving effect to a transaction, no Credit Party shall enter into or be a party to any transaction with any Affiliate thereof except in the ordinary course of and pursuant to the reasonable requirements
of such Credit Party’s business and upon fair and reasonable terms that are no less favorable to such Credit Party than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of such Credit Party. In
addition, during any Additional Covenant Activation Period, the terms of these transactions must be disclosed in advance to Agent and Lenders. 
  
 (b) During any Additional Covenant Activation Period, no Credit Party shall enter into any lending or borrowing transaction with any employees of any
Credit Party, except (i) loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs, pension plan advances, and similar purposes and (ii) stock option
financing provided that the Investment Conditions are met both before and after giving effect to such financing. Transactions completed under this Section 6.4(b) during any Additional Covenant Activation Period (other than travel and
entertainment expense advances or relocation costs) shall reduce the Permitted Acquisition/Investment Amount (without duplication of reductions pursuant to other provisions of this Agreement). 
  
 6.5 Capital Structure and Business. No Credit Party shall amend its
charter or bylaws in a manner that would materially adversely affect the rights or remedies of Agent or Lenders under the Loan Documents or such Credit Party’s duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it, anticipated to be conducted, or businesses reasonably related thereto, and other business so long as such other businesses do not constitute, individually or in the aggregate, a material
portion of the Borrowers’ business, taken as a whole. 
  
 6.6
Guaranteed Indebtedness. No Credit Party shall create, incur, or assume any Guaranteed Indebtedness unless such Guaranteed Indebtedness would be permitted to be incurred directly by such Credit Party pursuant to Section 6.3.

  
 6.7 Liens. No Credit Party shall create, incur, assume
or permit to exist any Lien on or with respect to any of the Collateral (whether now owned or hereafter acquired) except for (a) Permitted Encumbrances; and (b) Liens in existence on the date hereof and summarized on Disclosure Schedule (6.7)
securing the Indebtedness described on Disclosure Schedule (6.3) and Permitted Refinancings thereof, including extensions or renewals of any such Liens; provided that the principal amount of the Indebtedness so secured is not increased
and the Lien does not attach to any other property. No Credit Party shall create, incur, assume or permit to exist any Lien on or with respect to the Gateway or eMachines Trademarks, unless such Lien is expressly made junior, subordinate and subject
to the Liens in favor of the Agent and is the subject of an intercreditor agreement in form and substance satisfactory to Agent. 
  
 6.8 Sale of Collateral and Intellectual Property. No Credit Party shall sell, transfer, convey, assign, license or otherwise dispose of any
interest in Collateral, other than the sale of Inventory in the ordinary course of business or the sale of Accounts other than Eligible Accounts in the ordinary of business. No Credit Party shall sell, transfer, convey, assign, license or otherwise
dispose of any interest in the Gateway or eMachines Trademarks (other than as a 
  

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 result of a merger transaction permitted by Section 6.1 hereof as to which Agent’s security interest therein shall
remain perfected or, in the case of licenses, nonexclusive licenses entered into in the ordinary course of Borrowers’ business on arms length terms) unless such sale, transfer, conveyance, assignment, license or disposition is expressly made
junior, subordinate and subject to the Security Agreement. 
  
 6.9
ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur (i) an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (ii) an ERISA
Event to the extent such ERISA Event would reasonably be expected to result in taxes, penalties and other liabilities in an aggregate amount in excess of $2,500,000 in the aggregate. 
  
 6.10 Subsidiaries Other Than Credit Parties. The Credit Parties shall not permit, at any time, the aggregate gross
assets (whether real or personal, or tangible or intangible, in each case based on the highest of cost, book value and fair market value, and without adjustment for any liabilities) of all Subsidiaries that are not then Credit Parties to be in
excess of $50,000,000, and Borrower Representative shall from time to time to designate Subsidiaries (that are not then Credit Parties) to become Credit Parties hereunder to the extent required to cause the Credit Parties to at all times be in
compliance with the foregoing. With respect to any such Subsidiary becoming a Credit Party hereunder, Borrowers shall have provided written notice thereof to Agent, and such Subsidiary shall have executed and delivered a joinder to the Guaranty and
Security Agreement in order to make such Subsidiary a party thereto, together with any and all financing statements and other documentation reasonably requested by Agent in order to cause such cause Subsidiary to be obligated with respect to the
Obligations and to include the assets of such Subsidiary that would constitute Collateral within the perfected Liens with respect to the Collateral hypothecated under the Loan Documents. 
  
 6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its real estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of its real estate or any of the Collateral, other than such violations or Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect. 
  
 6.12 [Intentionally Omitted.] 
  
 6.13 Restricted Payments. During the Additional Covenant Activation
Period, no Credit Party shall make any Restricted Payment, except (a) dividends and distributions by Subsidiaries of any Borrower paid to such Borrower, (b) employee loans permitted under Section 6.4(b), (c) so long as no Event of Default
shall have occurred and is continuing, dividends and distributions by Gateway to its stockholders (other than Permitted Preferred Stock Payments/Repurchases), (d) regularly scheduled payments of interest with respect to Subordinated Debt, and (e)
Permitted Preferred Stock Payments/Repurchases; provided, that the Investment Conditions are met after giving effect to any transaction permitted under this Section 6.13. Transactions completed during any Additional Covenant Activation
Period under Section 6.13(b) (other than travel and entertainment expense advances or relocation costs), (c), or (e) shall reduce the Permitted Acquisition/Investment Amount (without duplication of reductions pursuant to other
provisions of this Agreement). 
  

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 6.14 Change of Corporate Name, State of Incorporation or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the state of its incorporation or other organization (b) change its chief executive office, principal place of business, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its records concerning the Collateral, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other
organization, or (e) change its state of incorporation or organization or incorporate or organize in any additional jurisdictions, in each case without at least ten (10) days prior written notice to Agent and provided that such Borrower shall
have taken such actions and executed such documents as Agent reasonably requests in connection therewith to continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, and provided further that, any
change to such Borrower’s jurisdiction of incorporation or organization, such new jurisdiction shall be located in the United States. No Credit Party shall change its Fiscal Year without giving Agent at least thirty (30) days prior written
notice thereof. 
  
 6.15 No Impairment of Intercompany
Transfers. No Credit Party shall directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents) that could directly or indirectly restrict,
prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of any Borrower to any Borrower or between Borrowers. 
  

	7.	TERM 

  
 7.1 Termination. The financing arrangements contemplated hereby shall be in effect until the Commitment Termination Date, and the Loans and all other Obligations shall be automatically due and payable in full
on such date. 
  
 7.2 Survival of Obligations Upon Termination
of Financing Arrangements. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair
the obligations, duties and liabilities of the Credit Parties or the rights of Agent and Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due, liquidated, contingent or unliquidated, or any transaction or
event occurring prior to such termination, or any transaction or event, the performance of which is required after the Commitment Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding upon the Credit Parties, and all rights of Agent and each Lender, all as contained in the Loan Documents, shall not terminate or expire, but rather shall survive any such
termination or cancellation and shall continue in full force and effect until the Termination Date; provided, that the provisions of Section 11, the payment obligations under Sections 1.15 and 1.16, and the indemnities
contained in the Loan Documents shall survive the Termination Date. 
  

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	8.	EVENTS OF DEFAULT; RIGHTS AND REMEDIES 

  
 8.1 Events of Default. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an
“Event of Default” hereunder: 
  
 (a) Any
Borrower (i) fails to make any payment of principal of the Loans or any of the other Obligations when due and payable (including, without limitation, pursuant to Section 1.3(b)(i)), or (ii) fails to make any payment of interest on, or Fees
owing in respect of, the Loans or any of the other Obligations within ten (10) days of the date when due and payable, or (ii) fails to pay or reimburse Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document within
ten (10) days following Agent’s demand for such reimbursement or payment of expenses. 
  
 (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of Sections 1.4, 1.8, 5.4(a), 5.11 or 6, or any of the provisions set forth in Annex C. 
  
 (c) Any Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4.1 or any provisions set forth in Annexes E or F, respectively, and the same shall remain unremedied for five (5) Business Days or more. 
  
 (d) Any Credit Party fails or neglects to perform, keep or observe any other provision of this Agreement or of any of the
other Loan Documents (other than any provision embodied in or covered by any other clause of this Section 8.1) and the same shall remain unremedied for thirty (30) days or more after the earlier of (i) such Borrower’s actual knowledge
thereof or (ii) such Borrower’s receipt of notice thereof from Agent. 
  
 (e) (i) a default or breach occurs under any other agreement, document or instrument to which any Credit Party is a party that is not cured within any applicable grace period therefor, and such default or breach is
not waived and such default or breach involves the failure to make any payment when due in respect of any Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess of $15,000,000 in the aggregate (including
(x) undrawn committed or available amounts and (y) amounts owing to all creditors under any combined or syndicated credit arrangements); or (ii) an event, condition or circumstance occurs that causes, or permits any holder of Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of $15,000,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or
the holder of such Indebtedness or Guaranteed Indebtedness or such trustee has the right to demand cash collateral in respect of such Indebtedness or Guaranteed Indebtedness, in each case, regardless of whether such right is exercised, by such
holder or trustee; or, (iii) there shall occur any event or circumstance resulting in an obligation of any Credit Party, or the right of holders of Senior Note Debt (or any portion thereof), to accelerate, put, or convert for cash or to require any
Credit Party to prepay, redeem or repurchase all or any portion of the Senior Note Debt prior to the regularly scheduled maturity thereof, unless such right is payable solely in Gateway Stock (other than Gateway’s Series A Preferred Stock or
Series C Preferred Stock). 
  

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 (f) Any information contained in any Borrowing Base Certificate is untrue or incorrect in any material
respect (other than (i) errors understating the Borrowing Base and (ii) errors occurring when Borrowing Availability continues to exceed $10,000,000 after giving effect to the correction of such errors), or any representation or warranty herein or
in any Loan Document or in any written statement, report, financial statement or certificate (other than a Borrowing Base Certificate) made or delivered to Agent or any Lender by any Credit Party is untrue or incorrect in any material respect as of
the date when made or deemed made. 
  
 (g) Assets of any Credit
Party with a fair market value of $5,000,000 or more are attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any
Credit Party and such condition continues for thirty (30) days or more. 
  
 (h) A case or proceeding is commenced against any Credit Party seeking a decree or order in respect of such Credit Party (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party or for any substantial part of any such Credit Party’s assets, or (iii) ordering the winding-up or liquidation of the
affairs of such Credit Party, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding is granted by a court of competent jurisdiction.

  
 (i) Any Credit Party (i) files a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such
petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party or for any substantial part of any such Credit Party’s assets, (iii) makes
an assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due. 
  
 (j) A final judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate at any time are outstanding against one or more of the Credit Parties (which judgments are not covered by insurance policies as to which liability has been accepted by the insurance carrier), and the same are not, within
thirty (30) days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay. 
  
 (k) Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance
with its terms (or any Credit Party shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be
or otherwise is not valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby. 
  

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 (l) Any Change of Control occurs. 
  
 (m) Any event occurs, whether or not insured or insurable, as a result of which revenue-producing activities cease or are
substantially curtailed at facilities of Borrowers generating more than 25% of Borrowers’ consolidated revenues for the Fiscal Year preceding such event and such cessation or curtailment, to the extent not commenced at other facilities of or on
behalf of Borrowers, continues for more than thirty (30) days. 
  
 8.2 Remedies. 
  
 (a) If any Event of Default has
occurred and is continuing, Agent may (and at the written request of the Requisite Lenders shall), without notice, suspend the Revolving Loan facility with respect to additional Advances and/or the incurrence of additional Letter of Credit
Obligations, whereupon any additional Advances and additional Letter of Credit Obligations shall be made or incurred in Agent’s sole discretion (or in the sole discretion of the Requisite Lenders, if such suspension occurred at their direction)
so long as such Event of Default is continuing. If any Event of Default has occurred and is continuing, Agent may (and at the written request of Requisite Lenders shall), without notice except as otherwise expressly provided herein, increase the
rate of interest applicable to the Loans and the Letter of Credit Fees to the Default Rate. 
  
 (b) If any Event of Default has occurred and is continuing, Agent may (and at the written request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; (ii) reduce the Revolving Loan Commitment from time to time; (iii) declare all or any portion of the Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash collateralized in the manner set forth in Annex B, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrowers and
each other Credit Party; or (iv) exercise any rights and remedies provided to Agent under the Loan Documents or at law or equity, including all remedies provided under the Code; provided, that upon the occurrence of an Event of Default
specified in Sections 8.1(h) or (i), the Commitments shall be immediately terminated and all of the Obligations, including the aggregate Revolving Loan, shall become immediately due and payable without declaration, notice or demand by any
Person. 
  
 8.3 Waivers by Credit Parties. Except as
otherwise provided for in this Agreement or by applicable law, each Credit Party waives (including for purposes of Section 12): (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent on
which any Credit Party may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this regard, (b) all rights to notice and a hearing prior to Agent’s taking possession or control of, or to Agent’s replevy,
attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Agent to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws. 

 

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	9.	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT 

  
 9.1 Assignment and Participations. 
  
 (a) Subject to the terms of this Section 9.1, any Lender may make an assignment to a Qualified Assignee of, or sell participations in, at any time
or times, the Loan Documents, Loans, Letter of Credit Obligations and any Commitment or any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender
shall: (i) require the consent of Agent (which consent shall not be unreasonably withheld or delayed with respect to a Qualified Assignee) and the execution of an assignment agreement (an “Assignment Agreement”) substantially in the
form attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iii) so long as no Default or Event of Default shall have occurred and is continuing, after giving
effect to any such partial assignment, the assignee Lender shall have Commitments in an amount at least equal to $30,000,000 and the assigning Lender shall have retained Commitments in an amount at least equal to $30,000,000; (iv) include a payment
to Agent of an assignment fee of $3,500; and (v) so long as no Event of Default has occurred and is continuing, require the consent of Borrower Representative, which shall not be unreasonably withheld or delayed. In the case of an assignment by a
Lender under this Section 9.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitments or assigned portion thereof from and after the date of such assignment. Each Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrowers to the assignee and that the
assignee shall be considered to be a “Lender”. In all instances, each Lender’s liability to make Loans hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Commitment. In
the event Agent or any Lender assigns or otherwise transfers all or any part of the Obligations, Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon the request of Agent or such Lender, execute new Notes in exchange for the
Notes, if any, being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may at any time pledge the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any Lender that is an investment fund may assign the Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor;
provided, that no such pledge to a Federal Reserve Bank shall release such Lender from such Lender’s obligations hereunder or under any other Loan Document. 
  
 (b) Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all
amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of
any Loan in which such 
  

 42 







 holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant (in each case subject to the terms and conditions in such Sections applicable to the Lenders) and the participant shall be considered to be a “Lender”. Except as set
forth in the preceding sentence no Borrower or Credit Party shall have any obligation or duty to any participant. Neither Agent nor any Lender (other than the Lender selling a participation) shall have any duty to any participant and may continue to
deal solely with the Lender selling a participation as if no such sale had occurred. 
  
 (c) Except as expressly provided in this Section 9.1, no Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender. 
  
 (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if
requested by Agent, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Each Credit Party executing this Agreement shall certify the correctness, completeness and
accuracy, in all material respects of all descriptions of the Credit Parties and their respective affairs contained in any selling materials provided by them and all other information provided by them and included in such materials, except that any
Projections delivered by Borrowers shall only be certified by Borrowers as having been prepared by Borrowers in compliance with the representations contained in Section 3.4(c). 
  
 (e) Any Lender may furnish any information concerning Credit Parties in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants); provided that such Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in Section 11.8.

  
 (f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its Loans or Commitments to a potential Lender or participant, if, as of the date of the proposed assignment or sale, the assignee Lender or participant would be subject to
capital adequacy or similar requirements under Section 1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR Loans under Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).

  
 (g) Notwithstanding anything to the contrary contained herein,
any Lender (a “Granting Lender”), may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing by the Granting Lender to Agent and Borrowers, the option to provide to Borrowers all or any
part of any Loans that such Granting Lender would otherwise be obligated to make to Borrowers pursuant to this Agreement; provided  
  

 43 







 that (i) nothing herein shall constitute a commitment by any SPC to make any Loan; and (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if such Loan were made by such Granting Lender. No SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).
Any SPC may (i) with notice to, but without the prior written consent of, Borrowers and Agent and without paying any processing fee therefor assign all or a portion of its interests in any Loans to the Granting Lender or to any financial
institutions (consented to by Borrowers and Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g) may not be amended without the prior written consent of each Granting
Lender, all or any of whose Loans are being funded by an SPC at the time of such amendment. For the avoidance of doubt, the Granting Lender shall for all purposes, including without limitation, the approval of any amendment or waiver of any
provision of any Loan Document or the obligation to pay any amount otherwise payable by the Granting Lender under the Loan Documents, continue to be the Lender of record hereunder. 
  
 9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all Lenders as Agent under this
Agreement and the other Loan Documents. The provisions of this Section 9.2 are solely for the benefit of Agent and Lenders and no Credit Party nor any other Person shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement and the other Loan Documents, Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for any Credit Party or any other Person. Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement and the other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for failure to disclose, any information relating to any Credit Party or any of their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or
omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct. 
  
 If Agent shall request instructions from Requisite Lenders or all affected
Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders or all affected Lenders, as the case may be, and Agent shall not incur liability to any Person by reason 
  

 44 







 of so refraining. Agent shall be fully justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion of Agent, expose Agent to Environmental Liabilities or (c) if
Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Requisite Lenders or all affected Lenders, as applicable. 
  
 9.3 Agent’s Reliance, Etc. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the
part of any Credit Party or to inspect the Collateral (including the books and records) of any Credit Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 
  
 9.4 GE Capital and Affiliates. With respect to its Commitments hereunder, GE Capital shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GE
Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in, and generally engage in any kind of business with, any Credit Party, any of their Affiliates and any Person who may do business with or own securities of
any Credit Party or any such Affiliate, all as if GE Capital were not Agent and without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees and other consideration from any Credit Party for services in connection
with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between GE Capital as a Lender holding disproportionate interests in the Loans and GE Capital as Agent.

  
 9.5 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender and based on the Financial 
  

 45 







 Statements referred to in Section 3.4(a) and such other documents and information as it has deemed appropriate,
made its own credit and financial analysis of the Credit Parties and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender 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 this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest. 
  
 9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by Agent in connection therewith;
provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross negligence or willful
misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agent is not reimbursed for such expenses by Credit Parties. 
  
 9.7 Successor Agent. Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to Lenders and Borrower Representative. Upon any such resignation, the Requisite
Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within thirty (30) days after the resigning Agent’s giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000. If no
successor Agent has been appointed pursuant to the foregoing, within thirty (30) days after the date such notice of resignation was given by the resigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval of Borrower
Representative, such approval not to be unreasonably withheld or delayed; provided that such approval shall not be required if a Default or an Event of Default has occurred and is continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any 
  

 46 







 appointment as Agent hereunder by a successor Agent or the effective date of the resigning Agent’s resignation, the
resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent’s
resignation hereunder, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement and the other Loan Documents. 
  
 9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to Section 9.9(f), each Lender is hereby authorized at any time or from
time to time, without prior notice to any Credit Party or to any Person other than Agent, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all balances held by it at any of its offices for the account
of any Borrower or Guarantor (regardless of whether such balances are then due to such Borrower or Guarantor) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of any
Borrower or Guarantor against and on account of any of the Obligations that are not paid when due; provided that the Lender exercising such offset rights shall give notice thereof to the affected Credit Party promptly after exercising such rights.
Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such
other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata
Shares (other than offset rights exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16). Each Credit Party that is a Borrower or Guarantor agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase price restored without interest. 
  
 9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert. 
  
 (a) Advances; Payments. 
  
 (i) Agent shall notify Revolving Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00 p.m. (New York
time) on the date such Notice of Revolving Advance is received, by telecopy, telephone or other similar form of transmission. Each Revolving Lender shall make the amount of such Lender’s Pro Rata Share of such Revolving Credit Advance available
to Agent in same day funds by wire transfer to 
  

 47 







 Agent’s account as set forth in Annex H not later than 3:00 p.m. (New York time) on the requested funding
date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent’s sole discretion, before receipt of such
wire transfers), subject to the terms hereof, Agent shall make the requested Revolving Credit Advance to the Borrower designated by Borrower Representative in the Notice of Revolving Credit Advance. All payments by each Revolving Lender shall be
made without setoff, counterclaim or deduction of any kind. 
  
 (ii) Not less than once during each calendar week or more frequently at Agent’s election (each, a “Settlement Date”), Agent shall advise each Lender by telephone, or telecopy of the amount of such Lender’s Pro
Rata Share of principal, interest and Fees paid for the benefit of Lenders with respect to each applicable Loan. Provided that each Lender has funded all payments or Advances required to be made by it and has purchased all participations required to
be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees paid by Borrowers since the previous Settlement Date
for the benefit of such Lender on the Loans held by it. To the extent that any Lender (a “Non-Funding Lender”) has failed to fund all such payments and Advances or failed to fund the purchase of all such participations, Agent shall
be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from Borrowers. Such payments shall be made by wire transfer to such Lender’s account (as specified by such Lender in
Annex H or the applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the next Business Day following each Settlement Date. 
  
 (b) Availability of Lender’s Pro Rata Share. Agent may assume that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled to recover such amount on demand from such Revolving Lender without setoff, counterclaim
or deduction of any kind. If any Revolving Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower Representative and Borrowers shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance funds on behalf of any Revolving Lender or to relieve any Revolving Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights that Borrowers may have against any Revolving Lender as a result of any default by such Revolving Lender hereunder. To the extent that Agent advances funds to any Borrower on behalf of any
Revolving Lender and is not reimbursed therefor on the same Business Day as such Advance is made, Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the applicable Revolving Lender. 

 
 (c) Return of Payments. 
  
 (i) If Agent pays an amount to a Lender under this Agreement in the belief
or expectation that a related payment has been or will be received by Agent from Borrowers and such related payment is not received by Agent, then Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim
or deduction of any kind. 
  

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 (ii) If Agent determines at any time that any amount received by Agent under this Agreement must be
returned to any Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to any Borrower or such
other Person, without setoff, counterclaim or deduction of any kind. 
  
 (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any Revolving Credit Advance or any payment required by it hereunder on the date specified therefor shall not relieve any other Lender (each such other Revolving
Lender, an “Other Lender”) of its obligations to make such Advance or purchase such participation on such date, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or
constitute a “Lender” or a “Revolving Lender” (or be included in the calculation of “Requisite Lenders” hereunder) for any voting or consent rights under or with respect to any Loan Document. At Borrower
Representative’s request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent’s request, sell and assign to Agent or such Person, all of the Commitments of that Non-Funding Lender for an amount equal to the principal balance of all Loans held by such Non-Funding Lender
and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement. 
  
 (e) Dissemination of Information. Agent shall use reasonable efforts to provide Lenders with any notice of Default or
Event of Default received by Agent from, or delivered by Agent to, any Credit Party, with notice of any Event of Default of which Agent has actually become aware and with notice of any action taken by Agent following any Event of Default;
provided, that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s gross negligence or willful misconduct. Lenders acknowledge that Borrowers are required to
provide Financial Statements and Collateral Reports to Lenders in accordance with Annexes E and F hereto and agree that Agent shall have no duty to provide the same to Lenders. 
  
 (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with
each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or the Notes (including exercising any rights of setoff) without first obtaining the prior written consent of Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or with the consent of Agent or Requisite Lenders. 
  

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	10.	SUCCESSORS AND ASSIGNS 

  
 10.1 Successors and Assigns. This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of each Credit Party,
Agent, Lenders and their respective successors and assigns (including, in the case of any Credit Party, a debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the other Loan Documents without the prior express written consent of Agent and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent of Agent and Lenders shall be void. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Credit Party,
Agent and Lenders with respect to the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the terms and provisions of this Agreement or any of the other Loan Documents. 
  

	11.	MISCELLANEOUS 

  
 11.1 Complete Agreement; Modification of Agreement. The Loan Documents constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set forth in Section 11.2. Any letter of interest, commitment letter, fee letter or confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and relating to a financing of substantially similar form, purpose or effect shall be superseded by this Agreement. Notwithstanding the foregoing, the GE Capital Fee Letter shall
survive the execution and delivery of this Agreement and shall continue to be binding obligations of the parties. 
  
 11.2 Amendments and Waivers. 
  
 (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification, termination or waiver of any provision of this Agreement or
any other Loan Document, or any consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders or all affected Lenders, as
applicable. Except as set forth in clauses (b) and (c) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders. 
  
 (b) No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that increases the percentage advance rates set forth in the definition of the Gateway Borrowing Base, the Professional Borrowing Base, the Manufacturing Borrowing Base or the eMachines Borrowing Base, or
that makes less restrictive the nondiscretionary criteria for exclusion from Eligible Accounts and Eligible Inventory set 
  

 50 







 forth in Sections 1.6 and 1.7, shall be effective unless the same shall be in writing and signed by Agent and
Borrowers. No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement that waives compliance with the conditions precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the same shall be in writing and signed by Agent, Requisite Lenders and Borrowers. Notwithstanding anything contained in this Agreement to the contrary, no waiver or consent
with respect to any Default or any Event of Default shall be effective for purposes of the conditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the same shall be in
writing and signed by Agent, Requisite Lenders and Borrowers. 
  
 (c) No amendment, modification, termination or waiver shall, unless in writing and signed by Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’s Commitment; (ii) reduce the principal of,
rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under Section 1.3(b)(ii)) or final
maturity date of the principal amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v) release any Guaranty or, except as otherwise permitted herein or
in the other Loan Documents, release, or permit any Credit Party to sell or otherwise dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate (which action shall be deemed to directly affect all Lenders); (vi) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to take any action hereunder; and (vii) amend or waive this Section 11.2 or the definitions of the term
“Requisite Lenders” insofar as such definitions affect the substance of this Section 11.2. Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of Agent or L/C Issuer under this Agreement or
any other Loan Document shall be effective unless in writing and signed by Agent or L/C Issuer, as the case may be, in addition to Lenders required hereinabove to take such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which it was given. No amendment, modification, termination or waiver shall be required for Agent to take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. No notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other
Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 11.2 shall be binding upon each holder of the Notes
at the time outstanding and each future holder of the Notes. 
  
 (d) If, in connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”): 
  
 (i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clauses (ii), (iii) and (iv) below being referred to as a “Non-Consenting Lender”);

  

 51 







 (ii) requiring the consent of Requisite Lenders, the consent of Lenders holding 51% or more of the
aggregate Commitments is obtained, but the consent of Requisite Lenders is not obtained, 
  
 then, so long as Agent is not a Non-Consenting Lender, at Borrower Representative’s request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s
sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent or such Person, all of the Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest and Fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement. 
  
 (e) Upon payment in full in
cash and performance of all of the Obligations (other than indemnification Obligations), termination of the Commitments, and a release of all claims against Agent and Lenders, and so long as no suits, actions, proceedings or claims are pending
against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, Agent shall deliver to Borrowers termination statements, mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations. 
  
 11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent for all fees, costs and expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii) Agent for all fees, costs
and expenses, including the reasonable fees, costs and expenses of counsel or other advisors (including environmental and management consultants and appraisers), incurred in connection with the negotiation, preparation and filing and/or recordation
of the Loan Documents and incurred in connection with: 
  
 (a)
any amendment, modification or waiver of, consent with respect to, or termination of, any of the Loan Documents or Related Transactions Documents or advice in connection with the syndication and administration of the Loans made pursuant hereto or
its rights hereunder or thereunder; 
  
 (b) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, any Credit Party or any other Person and whether as a party, witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against any or all
of the Credit Parties or any other Person that may be obligated to Agent by virtue of the Loan Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders; provided, further,
that no Person shall be entitled to reimbursement under this clause (c) in respect of any litigation, contest, dispute, suit, proceeding or action to the extent any of the foregoing results from such Person’s gross negligence or willful
misconduct; 
  

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 (c) any attempt to enforce any remedies of Agent against any or all of the Credit Parties or any other
Person that may be obligated to Agent or any Lender by virtue of any of the Loan Documents, including any such attempt to enforce any such remedies in the course of any work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders; 
  
 (d) any workout or restructuring of the Loans during the pendency of one or more Events of Default; and 
  
 (e) efforts to (i) monitor the Loans or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral; 
  
 including, as to each of clauses (a) through (e) above, all reasonable attorneys’
and other professional and service providers’ fees arising from such services and other advice, assistance or other representation, including those in connection with any appellate proceedings, and all reasonable expenses, costs, charges and
other fees incurred by such counsel and others in connection with or relating to any of the events or actions described in this Section 11.3, all of which shall be payable, on demand, by Borrowers to Agent. Without limiting the generality of
the foregoing, such expenses, costs, charges and fees may include: fees, costs and reasonable expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory services.  
  
 11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to require strict performance by the Credit Parties of any provision of this Agreement or any other Loan Document shall not
waive, affect or diminish any right of Agent or such Lender thereafter to demand strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a different type. Subject to the provisions of Section 11.2, none of the undertakings, agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or Event of Default by any Credit Party shall be deemed to have been suspended or waived by Agent or any Lender, unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized employee of Agent and the applicable required Lenders, and directed to Borrowers specifying such suspension or waiver. 
  
 11.5 Remedies. Agent’s and Lenders’ rights and remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies that Agent or any Lender may have under any other agreement, including the other Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required. 
  

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 11.6 Severability. Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other Loan Document shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement or such other Loan Document. 
  
 11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control. 
  
 11.8
Confidentiality. Agent and each Lender agree to use commercially reasonable efforts (equivalent to the efforts Agent or such Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential
all confidential information provided to them by the Credit Parties and designated as confidential (provided, that, all non-public financial information and financial projections provided by any Credit Party shall be deemed confidential whether or
not so designated as confidential) for a period of two (2) years following receipt thereof, except that Agent and any Lender may disclose such information (a) to Persons employed or engaged by Agent or such Lender so long as Agent or such Lender has
policies relative to the maintenance of confidential information; (b) to any bona fide assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 11.8 (and any such bona
fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any Governmental Authority or reasonably
believed (based on advice of counsel) by Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of Agent’s or such Lender’s counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or in connection with any Litigation relative to the Loan Documents or the transactions related thereto to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender. If Agent or any Lender is required in any proceeding, by any court decree, subpoena or legal or administrative order or process, to disclose any such confidential information, Agent or such
Lender, as applicable, will use commercially reasonable efforts to give Borrowers prompt written notice of such request so that Borrowers may seek an appropriate protective order. If in the absence of a protective order, Agent or such Lender is
compelled in a proceeding to disclose any such confidential information, Agent or such Lender, as applicable, may disclose such portion of such confidential information that it is compelled to disclose; provided, however, that Agent or such Lender
shall use commercially reasonable efforts to provide Borrowers written notice of the information to be disclosed as far in advance of its disclosure as is practicable. 
  
 11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
 
  

 54 







 IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY, AGENT AND EACH LENDER HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY, AGENT AND EACH LENDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY, AGENT AND EACH LENDER HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY, AGENT OR SUCH LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY, AGENT AND EACH LENDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY, AGENT OR SUCH LENDER AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S, AGENT’S OR SUCH LENDER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES
MAILS, PROPER POSTAGE PREPAID. 
  
 11.10 Notices.
Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever
any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 11.10); (c)
one (1) Business Day after 
  

 55 







 deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated in Annex I or to such other address (or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated in Annex I to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.

  
 11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 
  
 11.12 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement. 
  
 11.13
WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. 
  
 11.14 Press Releases and Related Matters. Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital or its affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions Documents without at least two (2) Business Days’ prior
notice to GE Capital and without the prior written consent of GE Capital (which consent will not be unreasonably withheld) unless (and only to the extent that) such Credit Party or Affiliate is required to do so under law, regulation or New York
Stock Exchange Rule and then, in any event, such Credit Party or Affiliate will use commercially reasonable efforts to consult with GE Capital before issuing such press release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of advertising material relating to the financing transactions contemplated by this Agreement using any Borrower’s name, product photographs, logo or trademark. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league table measurements. 
  

 56 







 11.15 Reinstatement. This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Credit Party for liquidation or reorganization, should any Credit Party become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Credit Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned. 
  
 11.16 Advice of Counsel. Each of the
parties represents to each other party hereto that it has discussed this Agreement and, specifically, the provisions of Sections 11.9 and 11.13, with its counsel. 
  
 11.17 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement. 
  

	12.	CROSS-GUARANTY 

  
 12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by
each other Borrower. Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this Section 12 shall not be discharged until payment and
performance, in full, of the Obligations has occurred, and that its obligations under this Section 12 shall be absolute and unconditional, irrespective of, and unaffected by, 
  
 (a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any
other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party; 
  
 (b) the absence of any action to enforce this Agreement (including this Section 12) or any other Loan Document or the waiver or consent by Agent
and Lenders with respect to any of the provisions thereof; 
  
 (c)
the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by Agent and Lenders in respect thereof (including the release of any such security);

  

 57 







 (d) the insolvency of any Credit Party; or 
  
 (e) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor (other than the payment and performance in full of the Obligations). 
  
 Each Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations guaranteed hereunder. 
  
 12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at
law or in equity, or otherwise, to compel Agent or Lenders to marshal assets or to proceed in respect of the Obligations guaranteed hereunder against any other Credit Party, any other party or against any security for the payment and performance of
the Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement
and the other Loan Documents and that, but for the provisions of this Section 12 and such waivers, Agent and Lenders would decline to enter into this Agreement. 
  
 12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this Section 12 are for the benefit of
Agent and Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and Agent or Lenders, the obligations of such other Borrower under the Loan Documents.

  
 12.4 Waiver of Subrogation, Etc. Notwithstanding
anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in Section 12.7, each Borrower hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement,
exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges and agrees that this waiver is intended to benefit Agent and Lenders and shall
not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this Section 12, and that Agent, Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 12.4. 
  
 12.5
Election of Remedies. If Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower or by any other
Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent or any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this
Section 12. If, in the exercise of any of its rights and remedies, Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to “election of remedies” or the like, each Borrower hereby consents to such action by Agent or such Lender and waives any claim based upon such action, even if such action by Agent or such Lender shall
result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent or such Lender. Any election of remedies that results in the denial or impairment of the right of Agent or any
Lender to seek a 
  

 58 







 deficiency judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of
the Obligations. In the event Agent or any Lender shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, Agent or such Lender may bid all or less than the amount of the Obligations and the
amount of such bid need not be paid by Agent or such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent, Lender or any other party 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 12,
notwithstanding that any present or future law or court decision or ruling 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. 

 
 12.6 Limitation. Notwithstanding any provision herein contained to
the contrary, each Borrower’s liability under this Section 12 (which liability is in any event in addition to amounts for which such Borrower is primarily liable under Section 1) shall be limited to an amount not to exceed as of
any date of determination the greater of: 
  
 (a) the net amount
of all Loans advanced to any other Borrower under this Agreement and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower; and 
  
 (b) the amount that could be claimed by Agent and Lenders from such Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such
Borrower’s right of contribution and indemnification from each other Borrower under Section 12.7. 
  
 12.7 Contribution with Respect to Guaranty Obligations. 
  

(a) To the extent that any Borrower shall make a payment under this Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then 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 Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of
the Commitments, such Borrower shall be entitled to receive contribution and indemnification payments from, and 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. 
  
 (b) As of any
date of determination, the “Allocable Amount” of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such 
  

 59 







 Borrower under this Section 12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11
of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law. 
  
 (c) This Section 12.7 is intended only to define the relative rights of Borrowers and nothing set forth in this Section 12.7 is intended to
or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, Fees and expenses with respect thereto for which such Borrower shall be primarily liable. 

 
 (d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such contribution and indemnification is owing. 
  
 (e) The rights of the indemnifying Borrowers against other Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments. 
  
 12.8 Liability Cumulative. The liability of Borrowers under this Section 12 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and
the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary. 
  

 60 







 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above. 

 

			
	 GATEWAY, INC.

		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	EMACHINES, INC.
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	GATEWAY PROFESSIONAL LLC
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	GATEWAY MANUFACTURING LLC
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer


  

 61 








			
	GENERAL ELECTRIC CAPITAL CORPORATION,
	 as Agent and Lender

		
	By:	 	 /s/ Keith J. Alexander


	Name:	 	Keith J. Alexander
	Title:	 	Vice President


  

 62 







 The following Persons are signatories to this Agreement in their capacity as Credit Parties and not as
Borrowers. 
  

			
	GATEWAY COMPANIES, INC.
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	GATEWAY SUB II, LLC
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	GATEWAY TECHNOLOGIES, INC.
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer
	
	COWABUNGA ENTERPRISES, INC.
		
	By:	 	 /s/ Roderick M. Sherwood III


	Name:	 	Roderick M. Sherwood III
	Title:	 	Senior Vice President, Chief Financial Officer


  

 63 







 ANNEX A (Recitals) 
  
 to 
  
 CREDIT AGREEMENT 
  
 DEFINITIONS 
  
 Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere in the Loan Documents) the following respective meanings, and
all references to Sections, Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement: 
  
 “A/R Borrowing Availability” means as of any date of determination as to all Borrowers, the lesser of (i)
the Maximum Amount and (ii) the Aggregate A/R Borrowing Base, in each case, less the A/R Revolving Credit Advances then outstanding. 
  
 “A/R Borrowing Base” means as the context may require, the Gateway A/R Borrowing Base, the Professional A/R Borrowing Base, the
Manufacturing A/R Borrowing Base and the eMachines A/R Borrowing Base or any such A/R Borrowing Base. 
  
 “A/R Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i). 
  
 “Account Debtor” means any Person who may become obligated
to any Credit Party under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible). 
  
 “Accounts” means all “accounts,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party,
including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, or Instruments), (including any such obligations that may be characterized as an account
or contract right under the Code), (b) all of each Credit Party’s rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Credit Party’s rights to any goods represented by any of the foregoing
(including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Credit Party for Inventory sold, leased, licensed,
assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Credit Party or in connection with any other transaction (whether or not yet earned by performance on the part of such Credit Party), (e) all
health care insurance receivables and (f) all collateral security of any kind, given by any Account Debtor or any other Person with respect to any of the foregoing. 
  
 “Acquisition” means (a) any Stock Acquisition, or (b) any Asset Acquisition. 
  

 A-1 







 “Activation Period” and “Activation Notice” have the meanings ascribed thereto
in Annex C. 
  
 “Additional Covenant Activation
Period” means any period during which both the Cash Activation Period and the Cash Flow Activation Period shall have been triggered and shall be then in effect. 
  
 “Advance” means any Revolving Credit Advance. 
  
 “Affiliate” means, with respect to any Person, (a) each Person that, directly or indirectly, owns or
controls, whether beneficially, or as a trustee, guardian or other fiduciary, 10% (20% in the case of the determination under the definition of Eligible Accounts) or more of the Stock having ordinary voting power in the election of directors of such
Person, (b) each Person that controls, is controlled by or is under common control with such Person, (c) each of such Person’s officers, directors, joint venturers and partners and (d) in the case of Borrowers, the immediate family members,
spouses and lineal descendants of individuals who are Affiliates of any Borrower. For the purposes of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise; provided, however, that, with respect to the Credit Parties, the term “Affiliate” shall
specifically exclude Agent and each Lender. 
  
 “Agent” means GE Capital in its capacity as Agent for Lenders or its successor appointed pursuant to Section 9.7. 
  
 “Aggregate A/R Borrowing Base” means as of any date of determination, an amount equal to (i) the sum of the Gateway A/R Borrowing Base,
the Professional A/R Borrowing Base, the Manufacturing A/R Borrowing Base and the eMachines A/R Borrowing Base; less (ii) any Reserves except to the extent already deducted therefrom. 
  
 “Aggregate Borrowing Base” means as of any date of
determination, an amount equal to (i) the sum of the Aggregate A/R Borrowing Base and the Aggregate Inventory Borrowing Base; less (ii) any Reserves except to the extent already deducted therefrom (which Reserves, if any, shall be allocated,
for purposes of determining the effects thereof on the Borrowing Availability with respect to Inventory Revolving Credit Advances and A/R Revolving Credit Advances, as reasonably determined by Agent). 
  
 “Aggregate Inventory Borrowing Base” means as of any date of
determination, an amount equal to (i) the sum of the Gateway Inventory Borrowing Base, the Professional Inventory Borrowing Base, the Manufacturing Inventory Borrowing Base and the eMachines Inventory Borrowing Base; less (ii) any Reserves
except to the extent already deducted therefrom. 
  
 “Agreement” means the Credit Agreement by and among Borrowers, the other Credit Parties party thereto, GE Capital, as Agent and Lender and the other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time. 
  

 A-2 







 “Appendices” has the meaning ascribed to it in the recitals to the Agreement.

  
 “Applicable A/R Revolver Index Margin” means
the per annum interest rate margin from time to time in effect and payable in addition to the Index Rate applicable to the A/R Revolving Credit Advances, as determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Applicable A/R Revolver LIBOR Margin” means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR Rate applicable to the A/R Revolving Credit Advances, as determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Applicable Inventory Revolver Index Margin” means the per
annum interest rate from time to time in effect and payable in addition to the Index Rate applicable to the Inventory Revolving Credit Advances, as determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Applicable Inventory Revolver LIBOR Margin” means the per
annum interest rate from time to time in effect and payable in addition to the LIBOR Rate applicable to the Inventory Revolving Credit Advances, as determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Applicable L/C Margin” means the per annum fee, from time
to time in effect, payable with respect to outstanding Letter of Credit Obligations as determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Applicable Margins” means collectively the Applicable L/C Margin, the Applicable Unused Line Fee Margin,
the Applicable A/R Revolver Index Margin, the Applicable Inventory Revolver Index Margin, the Applicable A/R Revolver LIBOR Margin and the Applicable Inventory Revolver LIBOR Margin. 
  
 “Applicable Unused Line Fee Margin” means the per annum fee, from time to time in effect, payable in
respect of Borrowers’ non-use of committed funds pursuant to Section 1.9(b), which fee is determined by reference to Section 1.5(a) and the Closing Side Letter. 
  
 “Asset Acquisition” means any purchase or other acquisition by Parent or its Subsidiaries of all or
substantially all of the assets of any other Person. 
  
 “Assignment Agreement” has the meaning ascribed to it in Section 9.1(a). 
  
 “Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq. 

 
 “Blocked Accounts” has the meaning ascribed to it in
Annex C. 
  
 “Borrower Representative”
means Gateway, Inc. in its capacity as Borrower Representative pursuant to the provisions of Section 1.1(d). 
  

 A-3 







 “Borrowers” and “Borrower” have the respective meanings ascribed
thereto in the preamble to the Agreement. 
  
 “Borrowing
Availability” means as of any date of determination as to all Borrowers, the lesser of (a) the Maximum Amount and (b) the Aggregate Borrowing Base, in each case, less the amount of the Revolving Loan then outstanding. 
  
 “Borrowing Base” means the Aggregate Borrowing Base.

  
 “Borrowing Base Certificate” means a
certificate to be executed and delivered from time to time by each Borrower in the form attached to the Agreement as Exhibit 4.1(b). 
  
 “Business Day” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the
States of California and/or New York and in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day. 
  
 “Capital Expenditures” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP. 
  
 “Capital Lease” means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person. 
  
 “Capital Lease Obligation” means, with respect to any
Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease. 
  
 “Cash Collateral Account” has the meaning ascribed to it
Annex B. 
  
 “Cash Equivalents” has the
meaning ascribed to it in Annex B. 
  
 “Cash
Activation Period” means any period beginning on any date on which the amount of Certified Cash is less than $200,000,000 and continuing in effect until such date as the amount of Certified Cash shall have been greater than or equal to
$200,000,000 for a period of 30 consecutive days. 
  
 “Cash Flow Activation Period” means any period beginning on any Cash Flow Testing Date for which Excess Cash Flow for Gateway on a consolidated basis is less than zero (for the measurement period with respect to such Cash
Flow Testing Date) and continuing in effect until the first Cash Flow Testing Date thereafter for which Excess Cash Flow for Gateway on a consolidated basis shall be equal to or greater than zero (for the measurement period with respect to such Cash
Flow Testing Date). 
  

 A-4 







 “Cash Flow Testing Date” means September 30, 2004 for the three months then ended,
December 31, 2004 for the six months then ended, March 31, 2005 for the nine months then ended, and each June 30, September 30, December 31 and March 31 thereafter for the last twelve months then ended. 
  
 “Cash Management Systems” has the meaning ascribed to it in
Section 1.8. 
  
 “Certified Cash” means
the net amount of Dollars in unrestricted cash and cash equivalents of the Credit Parties that is in Deposit Accounts or securities accounts maintained (by a branch of a bank or securities intermediary) within the United States and identified on
Disclosure Schedule (3.19), as updated by Borrowers from time to time, as “Certified Cash Accounts” which Certified Cash Accounts are not subject to any Liens, statutory liens or rights of offset, any overdraft, or any other charge
or priority in favor of any Person other than Agent or, for any Deposit Account or securities account, the rights of the applicable bank or securities intermediary maintaining such Deposit Account or securities account with respect to customary
account charges relating thereto (provided, that any amounts subject to any such rights in favor of any such bank or securities intermediary shall be excluded from Certified Cash for purposes of calculation of the amount thereof). For the avoidance
of any doubt, the amount of the Credit Parties’ marketable securities and Qualified Cash at the time of any determination shall be deemed to constitute Certified Cash but only to the extent they are not subject to any Liens, statutory liens or
rights of offset, any overdraft, or any other charge or priority in favor of any Person other than Agent. 
  
 “Change of Control” means any of the following: (a) any person or group of persons (within the meaning of the Securities Exchange Act of
1934,), other than Ted Waitt or John Hui, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934,) of 35% or more of the issued and
outstanding shares of capital Stock of Gateway having the right to vote for the election of directors of Gateway under ordinary circumstances; (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Gateway (together with any new directors whose election by the board of directors of Gateway or whose nomination for election by the Stockholders of Gateway was approved by a vote of the nominating
committee or at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office; (c) Gateway ceases to own, directly or indirectly, and control all of the economic and voting rights associated with all of the outstanding capital Stock of any of the other Credit
Parties. 
  
 “Charges” means all federal, state,
county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit Party, (d) any Credit Party’s ownership or use of any properties or other assets, or (e) any other aspect of any Credit Party’s business. 
  

 A-5 







 “Chattel Paper” means any “chattel paper,” as such term is defined in the
Code, including electronic chattel paper, now owned or hereafter acquired by any Credit Party. 
  
 “Closing Date” means October 30, 2004. 
  
 “Closing Checklist” means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with the Agreement, the other
Loan Documents and the transactions contemplated thereunder, substantially in the form attached hereto as Annex D. 
  
 “Closing Side Letter” means that certain letter, dated as of the Closing Date, between Agent and Borrowers, in form and substance
satisfactory to Agent, with respect to, among other things, the Applicable Margins and proposed terms and conditions relating to the Senior Note Debt. 
  
 “Code” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York;
provided, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s or any Lender’s Lien
on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. 
  
 “Collateral” means the property covered by the Security Agreement and the other Collateral Documents and
any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure the Obligations.

  
 “Collateral Documents” means the Security
Agreement, the Guaranties and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations. 
  
 “Collateral Reports” means the reports with respect to the Collateral referred to in Annex F.

  
 “Collection Account” means that certain
account of Agent, account number 502-328-54 in the name of Agent at DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001 033, or such other account as may be specified in writing by Agent as the “Collection Account”.

  
 “Commitment Termination Date” means the
earliest of (a) October 31, 2009, (b) the date of termination of Lenders’ obligations to make Advances and to incur Letter of Credit Obligations or permit existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the date
of prepayment in full by Borrowers of the Loans and the cancellation and return 
  

 A-6 







 (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations
pursuant to Annex B, and the permanent reduction of all Commitments to zero dollars ($0). 
  
 “Commitments” means (a) as to any Lender, the aggregate of such Lender’s Revolving Loan Commitment as set forth on Annex J to
the Agreement or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate of all Lenders’ Revolving Loan Commitments, which aggregate commitment shall be Two Hundred Million Dollars ($200,000,000)
on the Closing Date, as to each of clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted from time to time in accordance with the Agreement. 
  
 “Compliance Certificate” has the meaning ascribed to it in Annex E. 
  
 “Concentration Accounts” has the meaning ascribed to it in
Annex C. 
  
 “Contracts” means all
“contracts,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, in any event, including all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which any Credit Party may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account. 
  
 “Control Letter” means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated securities in the name of any Credit Party, (ii) a securities intermediary with respect to securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit Party, (iii) a futures commission merchant or clearing house, as applicable, with respect to commodity accounts and commodity contracts held by any Credit Party, whereby,
among other things, the issuer, securities intermediary or futures commission merchant limits any security interest in the applicable financial assets in a manner reasonably satisfactory to Agent, acknowledges the Lien of Agent, on behalf of itself
and Lenders, on such financial assets, and agrees to follow the instructions or entitlement orders of Agent without further consent by the affected Credit Party. 
  
 “Copyright License” means any and all rights now owned or hereafter acquired by any Credit Party under any
written agreement granting any right to use any Copyright or Copyright registration. 
  
 “Copyrights” means all of the following now owned or hereafter adopted or acquired by any Credit Party: (a) all copyrights and General Intangibles of like nature (whether registered or unregistered),
all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state
or territory thereof, or any other country or any political subdivision thereof, and (b) all reissues, extensions or renewals thereof. 
  
 “Credit Parties” means each Borrower and each Guarantor. 
  

 A-7 







 “Default” means any event that, with the passage of time or notice or both, would,
unless cured or waived, become an Event of Default. 
  
 “Default Rate” has the meaning ascribed to it in Section 1.5(d). 
  
 “Deposit Accounts” means all “deposit accounts” as such term is defined in the Code, now or hereafter held in the name of any
Credit Party. 
  
 “Disbursement Accounts” has the
meaning ascribed to it in Annex C. 
  
 “Disclosure
Schedules” means the Schedules prepared by Borrowers and denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the Agreement. 
  
 “Documents” means all “documents,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located. 
  
 “Dollars” or “$” means lawful currency of the United States of America. 
  
 “EBITDA” means, for any Person and with respect to any fiscal period, such Person’s and its Subsidiaries’ consolidated net
earnings (or loss), minus interest income, plus interest expense, cash taxes and depreciation and amortization during such period, in each case, as determined in accordance with GAAP; provided, that in connection with any calculation thereof with
respect to any Person or assets being acquired in connection with an Acquisition, EBITDA shall be calculated without including or consolidating any amounts attributable to Persons or assets not being purchased in connection with such Acquisition.

  
 “Eligibility Shortfall” has the meaning
ascribed to it in Section 1.6(r). 
  
 “Eligible
Accounts” has the meaning ascribed to it in Section 1.6. 
  
 “Eligible Inventory” has the meaning ascribed to it in Section 1.7. 
  
 “Eligible In-Transit Inventory” means all raw materials and finished goods Inventory owned by Borrowers and not covered by Letters of
Credit, and which Inventory is in transit to one of the Borrowers’ facilities (other than Eligible Inventory in transit between domestic locations of Borrowers) and which Inventory (a) has been paid for and is owned by one of the Borrowers, (b)
is fully insured, (c) is subject to a first priority security interest in and lien upon such goods in favor of Agent (except for any possessory lien upon such goods in the possession of a freight carrier or shipping company securing only the freight
charges for the transportation of such goods to such Borrowers), (d) is evidenced or deliverable, upon reasonable request by Agent, pursuant to Documents that have been delivered to Agent or an agent acting on its behalf or designating Agent as
Consignee, and (e) is otherwise deemed to be “Eligible Inventory” hereunder. 
  
 “Eligible L/C Inventory” means all raw materials and finished goods Inventory owned by Borrowers and covered by documentary Letters of Credit, which Inventory is in transit to one of the
Borrowers’ facilities (other than Eligible Inventory in transit between domestic locations of Borrowers) and which Inventory (a) is owned by one of the Borrowers, (b) is fully 
  

 A-8 







 insured, (c) is subject to a first priority security interest in and lien upon such goods in favor of Agent (except for
any possessory lien upon such goods in the possession of a freight carrier or shipping company securing only the freight charges for the transportation of such goods to such Borrowers), (d) is evidenced or deliverable, upon reasonable request by the
Agent, pursuant to Documents that have been delivered to Agent or an agent acting on its behalf or designating Agent as Consignee, and (e) is otherwise deemed to be “Eligible Inventory” hereunder. 
  
 “eMachines” means eMachines, Inc., a Delaware corporation.

  
 “eMachines Activation Date” means the first
date upon which Agent shall be satisfied, in its sole discretion, that it has a valid, perfected and first priority lien upon the Collateral owned by eMachines (and each other Credit Party), which date must be on or before the Initial Funding Date.

  
 “eMachines A/R Borrowing Base” means, as of
any date of determination by Agent, from time to time, an amount at such time equal to 85% of the book value of eMachines’s Eligible Accounts, less any Reserves established by Agent at such time. 
  
 “eMachines Borrowing Base” means, as of any date of
determination by Agent, from time to time, an amount equal to the sum at such time of: 
  
 (a) eMachines A/R Borrowing Base at such time; and 
  
 (b) the eMachines Inventory Borrowing Base at such time. 
  
 in each case, less any Reserves established by Agent at such time (except to the extent already included in the calculation of the eMachines Inventory Borrowing Base or eMachines A/R Borrowing Base). 
  
 “eMachines Inventory Borrowing Base” means, as of any date
of determination by Agent, from time to time, an amount equal at such time to the sum of: 
  
 (i) the least of (a) 50% of the book value of eMachines’ Eligible Inventory valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) 70% of the appraised net orderly liquidation
value of eMachines’ Eligible Inventory; and 
  
 (ii) the
lesser of (a) up to 50% of the book value of eMachines’ aggregate Eligible In-Transit Inventory and Eligible L/C Inventory, in each case valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) up to 70% of the
appraised net orderly liquidation value of eMachines’ aggregate Eligible In-Transit Inventory and Eligible L/C Inventory; 
  
 less any Reserves established by Agent at such time, including, without limitation, in the case of Eligible In-Transit Inventory, Reserves for duties, customs brokers,
freight, taxes, insurance and other Charges and expenses pertaining to such Inventory; provided, that, at no time shall the sum of the eMachines Inventory Borrowing Base and the Inventory Borrowing Base of all other Borrowers at such time
exceed $25,000,000 (any excess above such amount, as such excess shall be allocated by Borrowers for purposes of limitations on the Inventory Borrowing Base of each Borrower, being disregarded for purposes of calculating the Inventory Borrowing Base
of each Borrower and the Aggregate Borrowing Base). 
  

 A-9 







 “Environmental Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or
judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the
Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
§§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251
et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes. 
  
 “Environmental Liabilities” means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any
Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any Environmental Laws, Environmental Permits, or in connection with any
Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property. 
  

“Environmental Permits” means all permits, licenses, authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws. 
  
 “Equipment” means all “equipment,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located. 
  
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any
regulations promulgated thereunder. 
  
 “ERISA
Affiliate” means, with respect to any Credit Party, any trade or business (whether or not incorporated) that, together with such Credit Party, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the
IRC. 
  

 A-10 







 “ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate, (a) with
respect to a Title IV Plan, any event described in Section 4043(c) of ERISA for which notice to the PBGC has not been waived; (b) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV 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; (c) the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan in a distress termination described in Section 4041(c) of ERISA or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) with respect to a Title IV Plan, the existence of an “accumulated funding deficiency” (as defined in Section 412 of the IRC or Section 302 of ERISA) whether or not waived, or the failure to make by its
due date a required installment under Section 412(m) of the Code or the failure to make any required contribution to a Multiemployer Plan; (g) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to a Title IV Plan; (h) the making of any amendment to any Title IV Plan which could result in the imposition of a lien or the posting of a bond or other security; (i) with respect to a Title IV
Plan an event described in Section 4062(e) of ERISA; (j) any other event or condition that would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (k) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; (l) the loss of a Qualified Plan’s qualification or tax exempt status; or (m) the termination of a Plan described in Section 4064 of ERISA. 
  
 “Event of Default” has the meaning ascribed to it in Section 8.1. 
  
 “Excess Cash Flow” means, with respect to any Person for any
period, EBITDA for such period, (a) plus (i) restructuring, transformation and integration costs in an aggregate amount for such not in excess of the amount set forth in Disclosure Schedule E-1 hereto for such period, and (ii) interest income
for such period; and (b) minus all of the following for such period, without duplication, (A) Capital Expenditures paid or payable in cash during such period; (B) interest expense paid or payable in cash during such period; (C) principal repayments
of Funded Debt to the extent paid or payable in cash; (D) taxes paid in cash; and (E) dividends paid in cash during such period. All such calculations shall be made for Gateway on a consolidated basis. 
  
 “Excess Negative EBITDA” means, with respect to the Person
or assets that are the subject of an Acquisition, the amount, if any, by which the EBITDA of such Person or assets, as measured for the 12 month period preceding such Acquisition, shall have been less than minus $25,000,000, as determined to the
reasonable satisfaction of Agent. 
  
 “Fair Labor
Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq. 
  

 A-11 







 “Federal Funds Rate” means, for any day, a floating rate equal to the weighted average
of the rates on overnight Federal funds transactions among members of the Federal Reserve System, as determined by Agent, which determination shall be final, binding and conclusive (absent demonstrable error). 
  
 “Federal Reserve Board” means the Board of Governors of the
Federal Reserve System. 
  
 “Fees” means any and
all fees payable to Agent or any Lender pursuant to the Agreement or any of the other Loan Documents. 
  
 “Financial Statements” means the consolidated and consolidating income statements, statements of cash flows and balance sheets of
Borrowers delivered in accordance with Section 3.4 and Annex E. 
  
 “Fiscal Month” means any of the monthly accounting periods of Borrowers. 
  
 “Fiscal Quarter” means any of the quarterly accounting periods of Borrowers, ending on March 31, June 30, September 30 and December 31 of
each year. 
  
 “Fiscal Year” means any of the
annual accounting periods of Borrowers ending on December 31 of each year. 
  
 “Fixtures” means all “fixtures” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party. 
  
 “Funded Debt” means, with respect to any Person, without duplication, all Indebtedness for borrowed money
evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of long term debt, revolving credit and short
term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations (including Letter of Credit Obligations) and, without duplication, Guaranteed Indebtedness consisting of guaranties of
Funded Debt of other Persons. 
  
 “GAAP” means
generally accepted accounting principles in the United States of America consistently applied, as such term is further defined in this Annex A. 
  
 “Gateway” means Gateway, Inc., a Delaware corporation. 
  
 “Gateway A/R Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount
at such time equal to 85% of the book value of Gateway’s Eligible Accounts, less any Reserves established by Agent at such time. 
  
 “Gateway Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount equal to the sum at such time of:

  
 (a) the Gateway A/R Borrowing Base at such time; and

  

 A-12 







 (b) the Gateway Inventory Borrowing Base at such time. 
  
 in each case, less any Reserves established by Agent at such time (except to
the extent already included in the calculation of the Gateway Inventory Borrowing Base or the Gateway A/R Borrowing Base). 
  
 “Gateway Inventory Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount equal at such time to
the sum of: 
  
 (i) the lesser of (a) 50% of the book value of
Gateway’s Eligible Inventory valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) 70% of the appraised net orderly liquidation value of Gateway’s Eligible Inventory; and 
  
 (ii) the lesser of (a) up to 50% of the book value of Gateway’s
aggregate Eligible In-Transit Inventory and Eligible L/C Inventory, in each case valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) up to 70% of the appraised net orderly liquidation value of Gateway’s
aggregate Eligible In-Transit Inventory and Eligible L/C Inventory; 
  
 less any
Reserves established by Agent at such time, including, without limitation, in the case of Eligible In-Transit Inventory, Reserves for duties, customs brokers, freight, taxes, insurance and other Charges and expenses pertaining to such Inventory;
provided, that, at no time shall the sum of the Gateway Inventory Borrowing Base and the Inventory Borrowing Base of all other Borrowers at such time exceed $25,000,000 (any excess above such amount, as such excess shall be allocated by
Borrowers for purposes of limitations on the Inventory Borrowing Base of each Borrower, being disregarded for purposes of calculating the Inventory Borrowing Base of each Borrower and the Aggregate Borrowing Base). 
  
 “GE Capital” means General Electric Capital Corporation, a
Delaware corporation. 
  
 “GE Capital Fee Letter”
means that certain letter, dated as of September 17, 2004, between GE Capital and Borrowers with respect to certain Fees to be paid from time to time by Borrowers to GE Capital. 
  
 “General Intangibles” means all “general intangibles,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, including all right, title and interest that such Credit Party may now or hereafter have in or under any Contract, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents,
and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or Trademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and 
  

 A-13 







 casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life,
key man and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Credit Party or any computer bureau or service company from time to time acting for such Credit Party. 
  
 “Goods” means all “goods” as defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, including embedded software to the extent included in “goods” as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals. 
  
 “Governmental Authority”
means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

  
 “Guaranteed Indebtedness” means as to any
Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation (“primary obligation”) of any other Person (the “primary obligor”)
in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of
the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof. 
  
 “Guaranties” means, collectively, each guaranty executed by any Guarantor in favor of Agent and Lenders in respect of the Obligations.

  
 “Guarantors” means the Credit Parties other
than the Borrowers. 
  
 “Hazardous Material”
means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a “solid waste,” “hazardous
waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” 
  

 A-14 







 “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic
substance” or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance. 
  
 “Indebtedness” means, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred 6 months or more, but excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the Index Rate as in
effect on the Closing Date) of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or
matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations.

  
 “Indemnified Liabilities” has the meaning
ascribed to it in Section 1.13. 
  
 “Indemnified
Person” has the meaning ascribed to in Section 1.13. 
  
 “Index Rate” means, for any day, a floating rate equal to the higher of (i) the rate publicly quoted from time to time by The Wall Street Journal as the “prime rate” (or, if The Wall Street Journal
ceases quoting a prime rate, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent),
and (ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any interest rate provided for in the Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate. 
  
 “Index Rate Loan” means a Loan or portion thereof bearing
interest by reference to the Index Rate. 
  
 “Initial
Funding Date” has the meaning ascribed to it in Section 2.2(a). 
  
 “Instruments” means all “instruments,” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, and, in any event, including 
  

 A-15 







 all certificated securities, all certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. 
  
 “Intellectual Property” means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with such Trademarks.

  
 “Interest Payment Date” means (a) as to any
Index Rate Loan, the first Business Day of each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided, that in the case of any LIBOR Period greater than three months
in duration, interest shall be payable at three-month intervals and on the last day of such LIBOR Period; and provided further that, in addition to the foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment Termination Date shall be deemed to be an “Interest Payment Date” with respect to any interest that has then accrued under the Agreement. 
  
 “Inventory” means all “inventory,” as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software. 
  
 “Inventory Activation Date” means a date selected by Borrower on not less than sixty (60) days prior
written notice to Agent delivered after the Closing Date, so long as prior to such date (a) Agent shall have received appraisals as to all Inventory of the Borrowers, in form and substance acceptable to Agent and reflecting asset values at levels
acceptable to Agent, (b) Agent, for the benefit of the Lenders, shall have a first priority security interest in the rights of Gateway and its Subsidiaries in all General Intangibles affixed to, embedded in or otherwise included in any Inventory of
Borrowers, all on terms and conditions (and pursuant to documentation) satisfactory to Agent (it being understood that, with respect to any license from a non-affiliated third party, such security interest shall not include such license in the event
and to the extent that, and only for so long as, a grant of a Lien on such license is prohibited by law or results in a breach or termination of the terms of, or constitutes a default under, or termination of such license (other than to the extent
that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, or 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) of any relevant jurisdiction) and, in any event, such security interest in
favor of Agent for the benefit of Lenders shall include a security interest in any and all proceeds of Inventory (or any component thereof or General Intangible affixed thereto or embedded or otherwise included therein) subject to such license), and
(c) Agent shall have received an opinion of Borrower counsel, in form and substance reasonably satisfactory to Agent, with respect to such security interest. 
  
 “Inventory Borrowing Availability” means as of any date of determination, the lesser of (i) $25,000,000 less the amount, if any, by which
the sum of the aggregate outstanding 
  

 A-16 







 A/R Revolving Credit Advances exceeds $175,000,000, and (ii) the Aggregate Inventory Borrowing Base, in each case,
less the sum of the aggregate Inventory Revolving Credit Advances then outstanding. 
  
 “Inventory Borrowing Base” means as the context may require, the Gateway Inventory Borrowing Base, the Professional Inventory Borrowing Base, the Manufacturing Inventory Borrowing Base and the
eMachines Inventory Borrowing Base or any such Inventory Borrowing Base. 
  
 “Inventory Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i). 
  
 “Investment” has the meaning ascribed thereto in Section 6.2 hereof. 
  
 “Investment Amount” means, in connection with any proposed Acquisition, Investment, or Restricted Payment,
the amount of the proposed cash payable in connection therewith (whether as consideration, as a capital contribution, loan, or other Investment, or as a dividend, distribution, or otherwise, and including, in the case of any proposed Acquisition,
the Excess Negative EBITDA of the Person or assets that are the subject of such proposed Acquisition) together with the Borrowers’ good faith best estimate (as of the time of the consummation thereof) of the cash restructuring charges, if any,
to be incurred in connection therewith. 
  
 “Investment
Amount Measurement Period” means, as of any date of determination, such portion of the twelve month period ending on (and including) such date during which any Additional Covenant Activation Period shall have been (or shall then be) in
effect. 
  
 “Investment Conditions” means, as of
any date of determination, that (a) no Default or Event of Default has occurred and is continuing or would result from the consummation of the subject transaction, and (b) the sum of (i) the Investment Amount attributable to the subject transaction
plus (ii) the Investment Amounts attributable to all other proposed Acquisitions, Investments, Restricted Payments, and all other amounts for applicable transactions permitted under Section 6.1, Section 6.2, Section 6.3,
Section 6.4 or Section 6.13 (in each case, without duplication, and limited to such Acquisitions, Investments, Restricted Payments or other transactions that, pursuant to the terms of this Agreement, expressly count toward or reduce
the Permitted Acquisition/Investment Amount) during the applicable Investment Amount Measurement Period ending on and including such date, does not exceed the Permitted Acquisition/Investment Amount for the Investment Amount Measurement Period
ending on and including such date. It is the intent of the parties that for each Investment Amount Measurement Period, the Investment Amount with respect to any transaction to which this definition applies only count once against the Permitted
Acquisition/Investment Amount as determined for such Investment Amount Measurement Period. Accordingly, the parties agree, that in determining whether the Investment Conditions have been met, the Investment Amount with respect to any such
transaction will be accumulated with the other Investment Amounts pursuant to clause (b) only to the extent such Investment Amount has not already reduced the Acquisition/Investment Amount for such Investment Amount Measurement Period. 

 

 A-17 







 “Investment Property” means all “investment property” as such term is defined
in the Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of any Credit Party, including the rights of any Credit Party to any securities account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity contracts of any Credit Party; and (v) all
commodity accounts held by any Credit Party. 
  
 “IRC” means the Internal Revenue Code of 1986 and all regulations promulgated thereunder. 
  
 “IRS” means the Internal Revenue Service. 
  
 “L/C Issuer” has the meaning ascribed to it in Annex B. 
  
 “L/C Sublimit” has the meaning ascribed to it in Annex B. 
  
 “Lenders” means GE Capital, the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign all or any portion of the Obligations, such term shall include any assignee of such Lender. 
  
 “Letter of Credit Fee” has the meaning ascribed to it in Annex B. 
  
 “Letter of Credit Obligations” means all outstanding
obligations incurred by Agent and Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Letters of Credit by Agent or another L/C Issuer or the
purchase of a participation as set forth in Annex B with respect to any Letter of Credit. The amount of such Letter of Credit Obligations shall equal the maximum amount that may be payable at such time or at any time thereafter by Agent or
Lenders thereupon or pursuant thereto. 
  
 “Letters of
Credit” means documentary or standby letters of credit issued for the account of any Borrower by any L/C Issuer, and bankers’ acceptances issued by any Borrower, for which Agent and Lenders have incurred Letter of Credit Obligations.

  
 “Letter-of-Credit Rights” means
“letter-of-credit rights” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including rights to payment or performance under a letter of credit, whether or not such Credit Party, as beneficiary, has
demanded or is entitled to demand payment or performance. 
  
 “LIBOR Business Day” means a Business Day on which banks in the City of London are generally open for interbank or foreign exchange transactions. 
  
 “LIBOR Loan” means a Loan or any portion thereof bearing interest by reference to the LIBOR Rate.

  

 A-18 







 “LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on a LIBOR
Business Day selected by Borrower Representative pursuant to the Agreement and ending one, two, three, six or twelve months thereafter, as selected by Borrower Representative’s irrevocable notice to Agent as set forth in Section 1.5(e);
provided, that the foregoing provision relating to LIBOR Periods is subject to the following: 
  
 (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day; 
  
 (b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior to such date; 
  
 (c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendar month; 
  
 (d) Borrower Representative shall select LIBOR Periods so as not to require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and 
  
 (e) Borrower
Representative shall select LIBOR Periods so that there shall be no more than 10 separate LIBOR Loans in existence at any one time. 
  
 “LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent equal to: 
  
 (a) the offered rate for deposits in United States Dollars
for the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR Business Day next preceding the first day of such LIBOR Period (unless such date is not a Business Day, in which event the
next succeeding Business Day will be used); divided by 
  
 (b) a
number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is two (2) LIBOR Business Days prior to the beginning of such LIBOR Period
(including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board that are required to be maintained by a member bank of the Federal Reserve System. 
  
 If such interest rates shall cease to be available from Telerate News Service
(or its successor satisfactory to Agent), the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower Representative. 
  

 A-19 







 “License” means any Copyright License, Patent License, Trademark License or other
license of rights or interests now held or hereafter acquired by any Credit Party. 
  
 “Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction). 
  
 “Litigation” has the meaning ascribed to it in Section 3.13. 
  
 “Loan Account” has the meaning ascribed to it in Section 1.12. 
  
 “Loan Documents” means the Agreement, the Notes, the
Collateral Documents, the Master Standby Agreement, the Master Documentary Agreement, the Closing Date Side Letter and all other agreements, instruments, documents and certificates identified in the Closing Checklist executed and delivered to, or in
favor of, Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of
any Credit Party, or any employee of any Credit Party, and delivered to Agent or any Lender in connection with the Agreement or the transactions contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such
reference becomes operative. 
  
 “Loan” means the
Revolving Loan. 
  
 “Lock Boxes” has the meaning
ascribed to it in Annex C. 
  
 “Manufacturing” means Gateway Manufacturing LLC, a Delaware limited liability company. 
  
 “Manufacturing A/R Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount at such time equal to
85% of the book value of Manufacturing’s Eligible Accounts, less any Reserves established by Agent at such time. 
  
 “Manufacturing Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount equal to the sum at such
time of: 
  
 (a) Manufacturing A/R Borrowing Base at such time;
and 
  
 (b) the Manufacturing Inventory Borrowing Base at such
time. 
  

 A-20 







 in each case, less any Reserves established by Agent at such time (except to the extent already included
in the calculation of the Manufacturing Inventory Borrowing Base or Manufacturing A/R Borrowing Base). 
  
 “Manufacturing Inventory Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount equal at such time
to the sum of: 
  
 (i) the lesser of (a) 50% of the book value
of Manufacturing’s Eligible Inventory valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) 70% of the appraised net orderly liquidation value of Manufacturing’s Eligible Inventory; and 
  
 (ii) the lesser of (a) up to 50% of the book value of Manufacturing’s
aggregate Eligible In-Transit Inventory and Eligible L/C Inventory, in each case valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) up to 70% of the appraised net orderly liquidation value of
Manufacturing’s aggregate Eligible In-Transit Inventory and Eligible L/C Inventory; 
  
 less any Reserves established by Agent at such time, including, without limitation, in the case of Eligible In-Transit Inventory, Reserves for duties, customs brokers, freight, taxes, insurance and other Charges and
expenses pertaining to such Inventory; provided, that, at no time shall the sum of the Manufacturing Inventory Borrowing Base and the Inventory Borrowing Base of all other Borrowers at such time exceed $25,000,000 (any excess above such
amount, as such excess shall be allocated by Borrowers for purposes of limitations on the Inventory Borrowing Base of each Borrower, being disregarded for purposes of calculating the Inventory Borrowing Base of each Borrower and the Aggregate
Borrowing Base). 
  
 “Margin Stock” has the
meaning ascribed to in Section 3.10. 
  
 “Master
Documentary Agreement” means the Master Agreement for Documentary Letters of Credit dated as of the Closing Date (or, if applicable, the Initial Funding Date) among Borrowers, as Applicant(s), and GE Capital. 
  
 “Master Standby Agreement” means the Master Agreement for
Standby Letters of Credit dated as of the Closing Date (or, if applicable, the Initial Funding Date) among Borrowers, as Applicant(s), and GE Capital, as issuer. 
  
 “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, or
financial or other condition of the Borrowers considered as a whole, (b) Borrowers’ ability to pay any of the Loans or any of the other Obligations in accordance with the terms of the Agreement, (c) the Collateral or Agent’s Liens, on
behalf of itself and Lenders, on the Collateral or the priority of such Liens, or (d) Agent’s or any Lender’s rights and remedies under the Agreement and the other Loan Documents. 
  
 “Material Subsidiary” means any Subsidiary of any Borrower
generating more than ten percent (10%) of the revenues of, or possessing more than ten percent (10%) of the assets of, the Borrowers and their Subsidiaries on a consolidated basis. 
  

 A-21 







 “Maximum Amount” means, as of any date of determination, an amount equal to the
Revolving Loan Commitment of all Lenders as of that date. 
  
 “Maximum Additional Debt Amount” means, as of any date of determination, and amount equal to the difference of (a) $25,000,000, less (b) the difference, if positive, of (i) the aggregate initial principal amount of all
Senior Note Debt issued by Gateway on or before such date of determination, less (ii) $275,000,000; provided, that in no event shall the Maximum Additional Debt Amount be less than $10,000,000. 
  
 “Multiemployer Plan” means a “multiemployer plan”
as defined in Section 3(37) or 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of
them. 
  
 “Non-Funding Lender” has the meaning
ascribed to it in Section 9.9(a)(ii). 
  
 “Notes” means the Revolving Notes. 
  
 “Notice of Conversion/Continuation” has the meaning ascribed to it in Section 1.5(e). 
  
 “Notice of Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a). 
  
 “Obligations” means all loans, advances, debts, liabilities
and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by any Credit Party to Agent
or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of credit agreement or other instrument, arising under the Agreement or any of the
other Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or proceeding),
Fees, hedging obligations under swaps, caps and collar arrangements provided by any Lender, expenses, attorneys’ fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan Documents. 
  
 “Other L/C Debt” means Indebtedness of the Credit Parties
under or with respect to letters of credit (other than any Letters of Credit issued pursuant to this Agreement) existing on the Closing Date (and set forth in Disclosure Schedule (6.3)) or issued any time after the Closing Date in the
ordinary course of the Credit Parties’ business for insurance, environmental, regulatory, performance or trade purposes, which Indebtedness is unsecured except to the extent of Liens permitted under clause (k) of the definition of
Permitted Encumbrances. The principal amount of Other L/C Debt at any time shall be equal to the maximum amount that may be payable at such time or at any time thereafter by the Credit Parties thereupon or pursuant thereto. 
  
 “Overadvance” has the meaning ascribed to it in Section
1.1(a)(iii). 
  

 A-22 







 “Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right with respect to any invention on which a Patent is in existence. 
  
 “Patents” means all of the following in which any Credit Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or of any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State, or any other country, and (b) all reissues, continuations, continuations-in-part or extensions thereof. 
  
 “PBGC” means the Pension Benefit Guaranty Corporation.

  
 “Pension Plan” means a Plan described in
Section 3(2) of ERISA. 
  
 “Permitted
Acquisition” means any Acquisition so long as: 
  
 (a)
no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition, 
  
 (b) the assets being acquired, or the Person which is being acquired, are useful in, related to or engaged in, as applicable, the business of Gateway and
its Subsidiaries permitted to be conducted hereunder as determined by the Board of Directors of Gateway in good faith, 
  
 (c) for any such Acquisition during any Additional Covenant Activation Period, the Excess Negative EBITDA of the Person or assets that are the subject of
such Acquisition shall be less than the Permitted Acquisition/Investment Amount immediately prior to giving effect to such Acquisition, and Borrowers have provided Agent with written projections that, on a pro forma basis, the Person or
assets will produce positive EBITDA during the 12 consecutive month period immediately following such Acquisition, 
  
 (d) in the case of an Asset Acquisition by a Credit Party, such Credit Party shall have executed and delivered or authorized, as applicable, any and all
security agreements, financing statements, and other documentation reasonably requested by Agent in order to include the newly acquired assets that would constitute Collateral within the perfected Liens with respect to the Collateral hypothecated
under the Loan Documents, 
  
 (e) in the case of a Stock
Acquisition, Borrowers shall have made a determination as to whether the subject Person is to become a Credit Party and, if so, Borrowers shall have caused such acquired Person to execute and deliver a joinder to the Guaranty and Security Agreement
in order to make such Person a party thereto, together with any and all financing statements and other documentation reasonably requested by Agent in order to cause such cause acquired Person to be obligated with respect to the Obligations and to
include the assets of the acquired Person that would constitute Collateral within the perfected Liens with respect to the Collateral hypothecated under the Loan Document, and 
  
 (f) both before and after giving effect to such Acquisition, the Borrowers are in compliance with Section 5.11 and no
Default or Event of Default has occurred and is 
  

 A-23 







 continuing or would result therefrom, and Agent shall have received an officer’s certificate signed by an executive
officer of Gateway demonstrating to Agent’s satisfaction Borrowers’ compliance with the foregoing (and including a calculation of Excess Negative EBITDA in connection with such Acquisition). 
  
 “Permitted Acquisition/Investment Amount” means (a) so long
as any Additional Covenant Activation Period is not in effect, an unlimited amount (not subject to reduction by any provision hereof); and (b) during any Additional Covenant Activation Period, an aggregate amount equal to $50,000,000 (for the
Investment Amount Measurement Period then ending). 
  
 “Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes or assessments or other governmental Charges not yet due and payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen’s compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Credit Party is a party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers,’ mechanics’ or
similar liens arising in the ordinary course of business, so long as such Liens attach only to Equipment, Fixtures and/or real estate; (e) carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary
course of business and securing liabilities in an outstanding aggregate amount not in excess of $5,000,000 at any time, so long as such Liens attach only to Inventory or Equipment; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or judgment lien not constituting an Event of Default under Section 8.1(j); (h) zoning restrictions, easements, licenses, or other restrictions on the use of any
real estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such real estate; (i) currently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; (j) Liens expressly permitted under clause (b) of Section 6.7 of the Agreement; (k) Liens on cash deposits securing Other L/C Debt, in an aggregate amount for all such cash deposits at all times not in
excess of the lesser of (i) 117% of the undrawn face amount of the outstanding Other L/C Debt and (y) such maximum amount as may be permitted for Other L/C Debt at such time pursuant to Section 6.3(a)(vii), and (l) such additional Liens in
effect on the Closing Date as Agent and Requisite Lenders may approve in writing in their sole discretion (for so long as any such approval may remain in effect pursuant to the terms thereof). 
  
 “Permitted Preferred Stock Payments/Repurchases” means (i)
accrued but unpaid dividends on Gateway’s outstanding Series A Preferred Stock and/or Series C Preferred Stock and (ii) any redemption or purchase of the Series A Preferred Stock and/or Series C Preferred Stock pursuant to Gateway’s
Restated Certificate of Incorporation as in effect on the date hereof (including any negotiated discount thereon negotiated between Gateway and the holder thereof). 
  
 “Permitted Refinancing” means, with respect to any Indebtedness, any refinancing, renewal or extension
thereof so long as: (i) such refinancing, renewal, or extension does not result in an increase in the principal amount of, or interest rate with respect to, such Indebtedness, (ii) such refinancing, renewal, or extension does not result in a
shortening of the average weighted maturity of such Indebtedness, nor is it on terms or conditions, that, taken as a 
  

 A-24 







 whole, are materially more burdensome or restrictive to the applicable Borrower, as determined by Agent, (iii) if the
Indebtedness that is refinanced, renewed, or extended was subordinated to the Obligations (in right or payment or lien priority), then the such refinancing, renewal, or extension Indebtedness must be subordinated to the Obligations on terms and
conditions, and pursuant to documentation, at least as favorable to Lenders as those applicable to the refinanced, renewed, or extended Indebtedness, and (iv) such refinancing, renewal or extension is Indebtedness that could otherwise be incurred
pursuant to the terms hereof. 
  
 “Person” means
any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state,
county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof). 
  
 “Plan” means, at any time, an “employee benefit plan,” as defined in Section 3(3) of ERISA, that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to or has maintained, contributed to or had an obligation to contribute to at any time within the past 7 years on behalf of participants who are or were employed by any Credit
Party or ERISA Affiliate. 
  
 “Prior Lender”
means Congress Financial Corporation (Western). 
  
 “Prior
Lender Obligations” means the obligations of eMachines owing to Prior Lender. 
  
 “Proceeds” means “proceeds,” as such term is defined in the Code, including (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party from time
to time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable to any Credit Party from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of
all or any part of the Collateral by any Governmental Authority (or any Person acting under color of governmental authority), (c) any claim of any Credit Party against third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of any Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark License, (d) any recoveries by
any Credit Party against third parties with respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in,
or damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and all other
amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral. 
  
 “Professional” means Gateway Professional LLC, a Delaware limited liability company. 
  

 A-25 







 “Professional A/R Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount at such time equal to 85% of the book value of Professional’s Eligible Accounts, less any Reserves established by Agent at such time. 
  
 “Professional Borrowing Base” means, as of any date of determination by Agent, from time to time, an amount
equal to the sum at such time of: 
  
 (a) Professional A/R
Borrowing Base at such time; and 
  
 (b) the Professional
Inventory Borrowing Base at such time. 
  
 in each case, less any
Reserves established by Agent at such time (except to the extent already included in the calculation of the Professional Inventory Borrowing Base or Professional A/R Borrowing Base). 
  
 “Professional Inventory Borrowing Base” means, as of any date of determination by Agent, from time to time,
an amount equal at such time to the sum of: 
  
 (i) the least of
(a) equal to 50% of the book value of Professional’s Eligible Inventory valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) equal to 70% of the appraised net orderly liquidation value of
Professional’s Eligible Inventory; and 
  
 (ii) the lesser
of (a) up to 50% of the book value of Professional’s aggregate Eligible In-Transit Inventory and Eligible L/C Inventory, in each case valued at the lower of cost (determined on a first-in, first-out basis) or market, and (b) up to 70% of the
appraised net orderly liquidation value of Professional’s aggregate Eligible In-Transit Inventory and Eligible L/C Inventory; 
  
 less any Reserves established by Agent at such time, including, without limitation, in the case of Eligible In-Transit Inventory, Reserves for duties, customs brokers,
freight, taxes, insurance and other Charges and expenses pertaining to such Inventory; provided, that, at no time shall the sum of the Professional Inventory Borrowing Base and the Inventory Borrowing Base of all other Borrowers at such time
exceed $25,000,000 (any excess above such amount, as such excess shall be allocated by Borrowers for purposes of limitations on the Inventory Borrowing Base of each Borrower, being disregarded for purposes of calculating the Inventory Borrowing Base
of each Borrower and the Aggregate Borrowing Base). 
  
 “Pro Forma” means the unaudited consolidated and consolidating balance sheet of Borrowers and their Subsidiaries as of June 30, 2004 after giving pro forma effect to the Related Transactions. 
  
 “Projections” means Borrowers’ forecasted consolidated
and consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary or division-by-division basis, if applicable, and otherwise consistent
with the historical Financial Statements of the Borrowers, together with appropriate supporting details and a statement of underlying assumptions. 
  

 A-26 







 “Pro Rata Share” means with respect to all matters relating to any Lender, (a) with
respect to the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, (b) with respect to all Loans, the percentage obtained by dividing
(i) the aggregate Commitments of that Lender by (ii) the aggregate Commitments of all Lenders, and (c) with respect to all Loans on and after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding
principal balance of the Loans held by that Lender, by (ii) the outstanding principal balance of the Loans held by all Lenders. 
  
 “Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and which,
through its applicable lending office, is capable of lending to Borrowers without the imposition of any withholding or similar taxes; provided that no Person proposed to become a Lender after the Closing Date and determined by Agent to be
acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified Assignee, and no Person or Affiliate of such Person proposed to become a Lender after the Closing Date and that holds Subordinated Debt or Stock issued by any
Credit Party shall be a Qualified Assignee. 
  
 “Qualified
Cash” means, as of any date of determination, the amount of Certified Cash that is subject to perfection in favor of Agent pursuant to control agreements (including, with respect to any such securities account, a Control Letter and with
respect to any Deposit Account, a blocked account agreement) in form and substance satisfactory to Agent, which control agreements shall provide, among other things, that the bank or securities intermediary executing such agreement (i) has no rights
of setoff or recoupment or any other claim against such account, as the case may be, other than for payment of its service fees and other charges directly related to the administration of such account and, as applicable, for returned checks or other
items of payment, and (ii) agrees to follow the instructions or entitlement orders of Agent without further consent by the affected Credit Party, including, with respect to funds in any such account, upon the instructions of Agent, to immediately
forward by daily sweep all such funds to the Collection Account or as otherwise directed by Agent. 
  
 “Qualified Cash Account” means any deposit account or securities account that is subject to a control agreement in form and substance
satisfactory to Agent and holds Qualified Cash. 
  
 “Qualified Cash Activation Period” and “Qualified Cash Activation Notice” have the meanings ascribed thereto in Annex C. 
  
 “Qualified Cash Triggering Event” means any of the following: (i) the occurrence and continuation of an
Event of Default under Section 8.1(a), including by virtue of the 
  

 A-27 







 acceleration of all or any portion of the Obligations, (ii) the occurrence and continuation of an Event of Default under
Section 8.1(b) relative to Section 5.11, (iii) the occurrence and continuation of an Event of Default under Section 8.1(b) relative to Section 6, (iv) the occurrence and continuation of an Event of Default under Section 8.1(h) or (v) the occurrence
and continuation of an Event of Default under Section 8.1(i). 
  
 “Qualified Plan” means a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC. 
  
 “Qualifying Rating” means, for any Person, a corporate rating of at least BB from S&P or at least Ba from Moody’s 
  
 “Refinancing” means the repayment in full by Borrowers of
the Prior Lender Obligations on the Closing Date. 
  
 “Related Transactions” means the initial borrowing under the Revolving Loan on the Closing Date, the Refinancing, the payment of all fees, costs and expenses associated with all of the foregoing and the execution and
delivery of all of the Related Transactions Documents. 
  
 “Related Transactions Documents” means the Loan Documents and all other agreements or instruments executed in connection with the Related Transactions. 
  
 “Release” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting,
emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water,
ground water or property. 
  
 “Requisite Lenders”
means Lenders having (a) more than 66 2/3% of the Commitments of all Lenders, or (b) if the Commitments have been terminated, more than 66 2/3% of the aggregate outstanding amount of all Loans. 
  
 “Reserves” means (a) reserves established by Agent from time
to time against Eligible Inventory pursuant to Section 5.9, and (b) such other reserves against Eligible Accounts, Eligible Inventory or Borrowing Availability of any Borrower that Agent may, in its reasonable credit judgment, establish from
time to time. Without limiting the generality of the foregoing, Reserves established to ensure the payment of accrued interest with respect to the Obligations shall be deemed to be a reasonable exercise of Agent’s credit judgment. 

 
 “Restricted Payment” means, with respect to any Credit
Party (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party’s Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Subordinated Debt; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any 
  

 A-28 







 outstanding warrants, options or other rights to acquire Stock of such Credit Party now or hereafter outstanding; (e) any
payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Credit Party’s Stock or of a claim for reimbursement, indemnification or contribution arising out
of or related to any such claim for damages or rescission; and (f) any payment of management fees (or other fees of a similar nature) by such Credit Party to any Stockholder of such Credit Party or its Affiliates. Notwithstanding the foregoing,
Restricted Payments shall exclude any payment, prepayment or distribution made in Gateway Stock. 
  
 “Retiree Welfare Plan” means, at any time, a welfare plan (within the meaning of Section 3(1) of ERISA) that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant after such participant’s termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC or other similar state law and at
the sole expense of the participant or the beneficiary of the participant. 
  
 “Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i). 
  
 “Revolving Lenders” means, as of any date of determination, Lenders having a Revolving Loan Commitment. 
  
 “Revolving Loan” means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii) the aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit Obligations. 
  
 “Revolving Loan Commitment” means (a) as to any Lender, the aggregate commitment of such Lender to make Revolving Credit Advances or incur Letter of Credit Obligations as set forth on Annex J
to the Agreement or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit Advances or incur Letter of Credit Obligations, which aggregate
commitment shall be Two Hundred Million Dollars ($200,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with the Agreement. 
  
 “Revolving Note” has the meaning ascribed to it in Section 1.1(a)(ii). 
  
 “Security Agreement” means the Security Agreement of even
date herewith entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party that is a signatory thereto. 
  
 “Senior Note Debt” means unsecured notes issued by Gateway after the Initial Funding Date on terms and conditions (and in such aggregate
initial amount and issuance dates) satisfactory to Agent and Lenders. 
  
 “Software” means all “software” as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, other than software embedded in any category of Goods, including all computer programs and
all supporting information provided in connection with a transaction related to any program. 
  

 A-29 







 “Solvent” means, with respect to any Person on a particular date, that on such date (a)
the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the 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 does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as
such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property would constitute an unreasonably small capital. The
amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be
reasonably be expected to become an actual or matured liability. 
  
 “Specified Restricted Payment” means a Restricted Payment made pursuant to Section 6.13(e) hereof. 
  
 “Stock” means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934). 
  
 “Stock Acquisition” means the acquisition by Gateway or its wholly-owned Subsidiaries of any other Person, including any such acquisition
that is consummate by means of a merger. 
  
 “Stockholder” means, with respect to any Person, each holder of Stock of such Person. 
  
 “Subordinated Debt” means any unsecured Indebtedness of Gateway incurred after the Closing Date that is subordinated to the Obligations
in a manner and form reasonably satisfactory to Agent and Lenders, as to right and time of payment and as to any other rights and remedies thereunder. 
  
 “Subsidiary” means, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an 
  

 A-30 







 interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of which
any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower. 
  
 “Supermajority Revolving Lenders” means Lenders having (a)
80% or more of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been terminated, 80% or more of the aggregate outstanding amount of the Revolving Loan and Letter of Credit Obligations. 
  
 “Supporting Obligations” means all “supporting
obligations” as such term is defined in the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property. 
  
 “Taxes” means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Agent or a Lender by the jurisdictions under the laws of which Agent and Lenders are organized or conduct business or any political
subdivision thereof. 
  
 “Termination Date” means
the date on which (a) the Loans have been repaid in full, (b) all other Obligations due and payable under the Agreement and the other Loan Documents have been discharged (c) all Letter of Credit Obligations have been cash collateralized, canceled or
backed by standby letters of credit in accordance with Annex B, and (d) none of Borrowers shall have any further right to borrow any monies under the Agreement. 
  
 “Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is subject to Title IV of
ERISA or Section 412 of the IRC, and that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. 
  
 “Trademark License” means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use any Trademark. 
  
 “Trademarks” means all of the following now owned or hereafter existing or adopted or acquired by any Credit Party: (a) all trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the foregoing. 
  
 “Unfunded Pension Liability” means, at any time, the
aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each 
  

 A-31 







 such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a
period of five (5) years following a transaction which might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction. 
  
 Unless otherwise specifically provided herein,
any accounting term used in the Agreement shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. All other undefined terms contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or
Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and
not to any particular Section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule. 
  
 Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders. The words “including,” “includes” and “include” shall be deemed to be followed by the words
“without limitation”; the word “or” is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party, such words are intended to signify that such Credit Party has actual knowledge or awareness of a particular fact or circumstance or that such Credit Party, if it had
exercised reasonable diligence, would have known or been aware of such fact or circumstance. 
  
  

 A-32 







 ANNEX B (Section 1.2) 
 to 
 CREDIT AGREEMENT 
  
 LETTERS OF CREDIT 
  
 (a) Issuance. Subject to the terms and conditions of the Agreement,
Agent and Revolving Lenders agree to incur, from time to time prior to the Commitment Termination Date, upon the request of Borrower Representative on behalf of and for the account of the Borrowers, jointly and severally, individually and
collectively, Letter of Credit Obligations by causing Letters of Credit to be issued by GE Capital or a Subsidiary thereof or a bank or other legally authorized Person selected by or acceptable to Agent in its sole discretion (each, an “L/C
Issuer”) for such Borrower’s account and guaranteed by Agent; provided, that if the L/C Issuer is a Revolving Lender, then such Letters of Credit shall not be guaranteed by Agent but rather each Revolving Lender shall, subject
to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time exceed the least of (i) Fifty Million Dollars ($50,000,000) (the “L/C Sublimit”) and (ii) the Maximum Amount less the aggregate outstanding principal
balance of the Revolving Credit Advances, and (iii) the Aggregate Borrowing Base less the aggregate outstanding principal balance of the Revolving Credit Advances. No such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, unless otherwise determined by the Agent, in its sole discretion (including with respect to customary evergreen provisions), and neither Agent nor Revolving Lenders shall be under any obligation to incur
Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of Credit having an expiry date that is later than the Commitment Termination Date. 
  
 (b) (i) Advances Automatic; Participations. In the event that Agent or any Revolving Lender shall make any payment on
or pursuant to any Letter of Credit Obligation, such payment shall then be deemed automatically to constitute a Revolving Credit Advance to the Borrowers under Section 1.1(a) of the Agreement regardless of whether a Default or Event of
Default has occurred and is continuing and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in Section 2, and each Revolving Lender shall be obligated to pay its Pro Rata Share thereof in accordance
with the Agreement. The failure of any Revolving Lender to make available to Agent for Agent’s own account its Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or in respect of a Letter of Credit shall not relieve
any other Revolving Lender of its obligation hereunder to make available to Agent its Pro Rata Share thereof, but no Revolving Lender shall be responsible for the failure of any other Revolving Lender to make available such other Revolving
Lender’s Pro Rata Share of any such payment. 
  
 (ii) If it
shall be illegal or unlawful for any Borrower to incur Revolving Credit Advances as contemplated by paragraph (b)(i) above because of an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it shall be illegal or
unlawful for any Revolving Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is a Revolving Lender, then (A) 
  

 B-1 







 immediately and without further action whatsoever, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal to such Revolving Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit Obligations
in respect of all Letters of Credit then outstanding and (B) thereafter, immediately upon issuance of any Letter of Credit, each Revolving Lender shall be deemed to have irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as
the case may be) an undivided interest and participation in such Revolving Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit Obligations with respect to such Letter of Credit on the date of such issuance.
Each Revolving Lender shall fund its participation in all payments or disbursements made under the Letters of Credit in the same manner as provided in the Agreement with respect to Revolving Credit Advances. 
  
 (c) Cash Collateral. 
  
 (i) If Borrowers are required to provide cash collateral for any Letter of
Credit Obligations pursuant to the Agreement, including Section 8.2 of the Agreement, prior to the Commitment Termination Date, each Borrower will pay to Agent for the ratable benefit of itself and Revolving Lenders cash or cash equivalents
acceptable to Agent (“Cash Equivalents”) in an amount equal to 105% of the maximum amount then available to be drawn under each applicable Letter of Credit outstanding for the benefit of such Borrower. Such funds or Cash Equivalents
shall be held by Agent in a cash collateral account (the “Cash Collateral Account”) maintained at a bank or financial institution acceptable to Agent. The Cash Collateral Account shall be in the name of one or more of the Borrowers
and shall be pledged to, and subject to the control of, Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent. Each Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a security interest in all
such funds and Cash Equivalents held in the Cash Collateral Account from time to time and all proceeds thereof, as security for the payment of all amounts due in respect of the Letter of Credit Obligations and other Obligations, whether or not then
due. The Agreement, including this Annex B, shall constitute a security agreement under applicable law. 
  
 (ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (A) provide cash collateral therefor in the manner described above, or (B) cause all such Letters of Credit and guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or letters) of credit
in guaranty of such Letter of Credit Obligations, which stand-by letter (or letters) of credit shall be of like tenor and duration (plus thirty (30) additional days) as, and in an amount equal to 105% of, the aggregate maximum amount then available
to be drawn under, the Letters of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a Person, and shall be subject to such terms and conditions, as are be satisfactory to Agent in its sole discretion.

  
 (iii) From time to time after funds are deposited in the Cash
Collateral Account by any Borrower, whether before or after the Commitment Termination Date, Agent may apply such funds or Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such order as Agent may elect,
as shall be or shall become due and payable by such Borrower to Agent and Lenders with respect to such Letter of Credit Obligations of such Borrower and, upon the satisfaction in full of all Letter of Credit Obligations of such Borrower, to any
other Obligations of any Borrower then due and payable. 
  

 B-2 







 (iv) No Borrower nor any Person claiming on behalf of or through any Borrower shall have any right to
withdraw any of the funds or Cash Equivalents held in the Cash Collateral Account, except that upon the termination of all Letter of Credit Obligations and the payment of all amounts payable by Borrowers to Agent and Lenders in respect thereof, any
funds remaining in the Cash Collateral Account shall be applied to other Obligations then due and owing and upon payment in full of such Obligations, any remaining amount shall be paid to Borrowers or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be held as additional collateral. 
  
 (d) Fees and Expenses. Borrowers agree to pay to Agent for the benefit of Revolving Lenders, as compensation to such Lenders for Letter of Credit Obligations incurred hereunder, (i) all costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations, and (ii) for each month during which any Letter of Credit Obligation shall remain outstanding, a fee (the “Letter of Credit Fee”) in an amount equal to
the Applicable L/C Margin from time to time in effect multiplied by the maximum amount available from time to time to be drawn under the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders in
arrears, on the first day of each month and on the Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees (including all per annum fees), charges and expenses of such L/C Issuer in respect of the
issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued. 
  
 (e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two (2) Business Days’ prior written notice requesting the incurrence of any Letter of Credit Obligation. The notice shall be accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) and a completed Application for Standby Letter of Credit or Agreement for Documentary Letter of Credit and Application for Documentary Letter of Credit(as applicable)in the form of Exhibit B-1, or B-2 and B-3 attached hereto.
Notwithstanding anything contained herein to the contrary, Letter of Credit applications by Borrower Representative and approvals by Agent and the L/C Issuer may be made and transmitted pursuant to electronic codes and security measures mutually
agreed upon and established by and among Borrower Representative, Agent and the L/C Issuer. 
  
 (f) Obligation Absolute. The obligation of Borrowers to reimburse Agent and Revolving Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the obligations of each Revolving Lender to make payments to Agent with respect to Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrowers
and Revolving Lenders shall be paid strictly in accordance with the terms hereof under all circumstances including the following: 
  
 (i) any lack of validity or enforceability of any Letter of Credit or the Agreement or the other Loan Documents or any other agreement;

  

 B-3 







 (ii) the existence of any claim, setoff, defense or other right that any Borrower or any
of their respective Affiliates or any Lender may at any time have against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such transferee may be acting), Agent, any Lender, or any other Person,
whether in connection with the Agreement, the Letter of Credit, the transactions contemplated herein or therein or any unrelated transaction (including any underlying transaction between any Borrower or any of their respective Affiliates and the
beneficiary for which the Letter of Credit was procured); 
  
 (iii) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; 
  
 (iv) payment by
Agent (except as otherwise expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or guaranty thereof against presentation of a demand, draft or certificate or other document that does not comply with the
terms of such Letter of Credit or such guaranty; 
  
 (v) any other circumstance or event whatsoever, that is similar to any of the foregoing; or 
  
 (vi) the fact that a Default or an Event of Default has occurred and is continuing. 
  
 (g) Indemnification; Nature of Lenders’ Duties. 
  
 (i) In addition to amounts payable as elsewhere provided in the Agreement,
Borrowers hereby agree to pay and to protect, indemnify, and save harmless Agent and each Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees and
allocated costs of internal counsel) that Agent or any Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of Agent or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct of Agent or such Lender (as finally determined by a court of competent jurisdiction). 
  
 (ii) As between Agent and any Lender and Borrowers, Borrowers assume all
risks of the acts and omissions of, or misuse of any Letter of Credit by beneficiaries, of any Letter of Credit. In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law, neither Agent nor any Lender shall be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the 
  

 B-4 







 validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in
order to demand payment under such Letter of Credit; provided, that in the case of any payment by Agent under any Letter of Credit or guaranty thereof, Agent shall be liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent jurisdiction) in determining that the demand for payment under such Letter of Credit or guaranty thereof complies on its face with any applicable requirements for a
demand for payment under such Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be in cipher; (E)
errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a payment under any Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the
proceeds of any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from causes beyond the control of Agent or any Lender. None of the above shall affect, impair, or prevent the vesting of any of Agent’s or
any Lender’s rights or powers hereunder or under the Agreement. 
  
 (iii) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit application, reimbursement agreement or similar document,
instrument or agreement between or among Borrowers and such L/C Issuer, including an Application and Agreement For Documentary Letter of Credit, a Master Documentary Agreement and a Master Standby Agreement entered into with Agent. 
  

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