Exhibit 10.1




 


 





 


KEMET ELECTRONICS CORPORATION and


 


KEMET ELECTRONICS MARKETING (S) PTE
LTD.,


 


as Borrowers


 




 





 


LOAN AND SECURITY AGREEMENT


 


Dated as of September 30, 2010


 


$50,000,000


 




 





 


CERTAIN FINANCIAL INSTITUTIONS,


 


as Lenders,


 


BANK OF AMERICA, N.A.,


 


as Agent,


 


and


 


BANC OF AMERICA SECURITIES LLC,


 


as Lead Arranger and Bookrunner




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  DEFINITIONS; RULES OF
  CONSTRUCTION

  	
  1

  
	
  1.1.

  	
   

  	
  Definitions

  	
  1

  
	
  1.2.

  	
   

  	
  Accounting
  Terms

  	
  29

  
	
  1.3.

  	
   

  	
  Uniform
  Commercial Code

  	
  29

  
	
  1.4.

  	
   

  	
  Certain
  Matters of Construction

  	
  29

  
	
  Section 2.

  	
   

  	
  CREDIT FACILITIES

  	
  30

  
	
  2.1.

  	
   

  	
  Revolver Commitment

  	
  30

  
	
  2.2.

  	
   

  	
  Letter of Credit Facility

  	
  32

  
	
  Section 3.

  	
   

  	
  INTEREST, FEES AND CHARGES

  	
  35

  
	
  3.1.

  	
   

  	
  Interest

  	
  35

  
	
  3.2.

  	
   

  	
  Fees

  	
  36

  
	
  3.3.

  	
   

  	
  Computation
  of Interest, Fees, Yield Protection

  	
  37

  
	
  3.4.

  	
   

  	
  Reimbursement Obligations

  	
  37

  
	
  3.5.

  	
   

  	
  Illegality

  	
  37

  
	
  3.6.

  	
   

  	
  Inability
  to Determine Rates

  	
  38

  
	
  3.7.

  	
   

  	
  Increased
  Costs; Capital Adequacy

  	
  38

  
	
  3.8.

  	
   

  	
  Mitigation

  	
  39

  
	
  3.9.

  	
   

  	
  Funding Losses

  	
  39

  
	
  3.10.

  	
   

  	
  Maximum
  Interest

  	
  39

  
	
  3.11.

  	
   

  	
  Market Disruption Event

  	
  39

  
	
  Section 4.

  	
   

  	
  LOAN ADMINISTRATION

  	
  40

  
	
  4.1.

  	
   

  	
  Manner of
  Borrowing and Funding Revolver Loans

  	
  40

  
	
  4.2.

  	
   

  	
  Defaulting
  Lender

  	
  42

  
	
  4.3.

  	
   

  	
  Number and Amount of LIBOR Revolver
  Loans; Determination of Rate

  	
  42

  
	
  4.4.

  	
   

  	
  Borrower
  Agent

  	
  42

  
	
  4.5.

  	
   

  	
  One
  Obligation

  	
  42

  
	
  4.6.

  	
   

  	
  Effect of Termination

  	
  42

  
	
  Section 5.

  	
   

  	
  PAYMENTS

  	
  43

  
	
  5.1.

  	
   

  	
  General
  Payment Provisions

  	
  43

  
	
  5.2.

  	
   

  	
  Repayment of Revolver Loans

  	
  43

  
	
  5.3.

  	
   

  	
  Reserved

  	
  43

  
	
  5.4.

  	
   

  	
  Payment
  of Other Obligations

  	
  43

  
	
  5.5.

  	
   

  	
  Marshaling;
  Payments Set Aside

  	
  43

  
	
  5.6.

  	
   

  	
  Post-Default Allocation of Payments

  	
  44

  
	
  5.7.

  	
   

  	
  Application
  of Payments

  	
  44

  
	
  5.8.

  	
   

  	
  Loan Account; Account Stated

  	
  45

  
	
  5.9.

  	
   

  	
  Taxes

  	
  45

  
	
  5.10.

  	
   

  	
  Lender
  Tax Information

  	
  46

  
	
  5.11.

  	
   

  	
  Nature
  and Extent of Certain Liabilities

  	
  47

  
	
  Section 6.

  	
   

  	
  CONDITIONS PRECEDENT

  	
  48

  
	
  6.1.

  	
   

  	
  Conditions
  Precedent to Initial Revolver Loans

  	
  48

  
	
  6.2.

  	
   

  	
  Conditions
  Precedent to All Credit Extensions

  	
  50

  
	
  Section 7.

  	
   

  	
  COLLATERAL

  	
  51

  
	
  7.1.

  	
   

  	
  Grant of
  Security Interest

  	
  51

  
	
  7.2.

  	
   

  	
  Lien on
  Deposit Accounts; Cash Collateral

  	
  52

  
	
  7.3.

  	
   

  	
  Reserved

  	
  53

  
	
  7.4.

  	
   

  	
  Other
  Collateral

  	
  53

  



 

















 


	
  7.5.

  	
   

  	
  No
  Assumption of Liability

  	
  53

  
	
  7.6.

  	
   

  	
  Further
  Assurances

  	
  53

  
	
  Section 8.

  	
   

  	
  COLLATERAL ADMINISTRATION

  	
  53

  
	
  8.1.

  	
   

  	
  Borrowing
  Base Certificates

  	
  53

  
	
  8.2.

  	
   

  	
  Administration of Accounts

  	
  54

  
	
  8.3.

  	
   

  	
  Administration of Inventory

  	
  55

  
	
  8.4.

  	
   

  	
  Administration of Equipment

  	
  55

  
	
  8.5.

  	
   

  	
  Administration of Deposit Accounts

  	
  56

  
	
  8.6.

  	
   

  	
  General Provisions

  	
  56

  
	
  8.7.

  	
   

  	
  Power of
  Attorney

  	
  58

  
	
  8.8.

  	
   

  	
  Conflict
  with Singapore Debenture

  	
  58

  
	
  Section 9.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
  58

  
	
  9.1.

  	
   

  	
  General
  Representations and Warranties

  	
  58

  
	
  9.2.

  	
   

  	
  Complete
  Disclosure

  	
  64

  
	
  9.3.

  	
   

  	
  Amendment
  of Schedules

  	
  64

  
	
  Section 10.

  	
   

  	
  COVENANTS AND CONTINUING AGREEMENTS

  	
  64

  
	
  10.1.

  	
   

  	
  Affirmative
  Covenants

  	
  64

  
	
  10.2.

  	
   

  	
  Negative
  Covenants

  	
  67

  
	
  10.3.

  	
   

  	
  Financial Covenant

  	
  73

  
	
  Section 11.

  	
   

  	
  EVENTS OF DEFAULT; REMEDIES ON DEFAULT

  	
  73

  
	
  11.1.

  	
   

  	
  Events of
  Default

  	
  73

  
	
  11.2.

  	
   

  	
  Remedies
  upon Default

  	
  74

  
	
  11.3.

  	
   

  	
  License

  	
  75

  
	
  11.4.

  	
   

  	
  Setoff

  	
  75

  
	
  11.5.

  	
   

  	
  Remedies Cumulative; No Waiver

  	
  76

  
	
  Section 12.

  	
   

  	
  AGENT

  	
  76

  
	
  12.1.

  	
   

  	
  Appointment, Authority and Duties
  of Agent

  	
  76

  
	
  12.2.

  	
   

  	
  Agreements Regarding Collateral and
  Field Examination Reports

  	
  77

  
	
  12.3.

  	
   

  	
  Reliance
  By Agent

  	
  78

  
	
  12.4.

  	
   

  	
  Action
  Upon Default

  	
  78

  
	
  12.5.

  	
   

  	
  Ratable
  Sharing

  	
  78

  
	
  12.6.

  	
   

  	
  Indemnification of Agent
  Indemnitees

  	
  78

  
	
  12.7.

  	
   

  	
  Limitation
  on Responsibilities of Agent

  	
  79

  
	
  12.8.

  	
   

  	
  Successor Agent and Co-Agents

  	
  79

  
	
  12.9.

  	
   

  	
  Due
  Diligence and Non-Reliance

  	
  80

  
	
  12.10.

  	
   

  	
  Replacement
  of Certain Lenders

  	
  80

  
	
  12.11.

  	
   

  	
  Remittance of Payments and
  Collections

  	
  80

  
	
  12.12.

  	
   

  	
  Agent in
  its Individual Capacity

  	
  81

  
	
  12.13.

  	
   

  	
  Agent
  Titles

  	
  81

  
	
  12.14.

  	
   

  	
  No Third
  Party Beneficiaries

  	
  81

  
	
  Section 13.

  	
   

  	
  BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

  	
  81

  
	
  13.1.

  	
   

  	
  Successors
  and Assigns

  	
  81

  
	
  13.2.

  	
   

  	
  Participations

  	
  81

  
	
  13.3.

  	
   

  	
  Assignments

  	
  82

  
	
  Section 14.

  	
   

  	
  MISCELLANEOUS

  	
  82

  
	
  14.1.

  	
   

  	
  Consents, Amendments and Waivers

  	
  82

  
	
  14.2.

  	
   

  	
  Indemnity

  	
  83

  
	
  14.3.

  	
   

  	
  Notices and Communications

  	
  83

  
	
  14.4.

  	
   

  	
  Performance
  of Borrowers’ Obligations

  	
  84

  
	
  14.5.

  	
   

  	
  Credit
  Inquiries

  	
  84

  
	
  14.6.

  	
   

  	
  Severability

  	
  84

  



 


ii

















 


	
  14.7.

  	
   

  	
  Cumulative
  Effect; Conflict of Terms

  	
  84

  
	
  14.8.

  	
   

  	
  Counterparts

  	
  85

  
	
  14.9.

  	
   

  	
  Entire
  Agreement

  	
  85

  
	
  14.10.

  	
   

  	
  Relationship
  with Lenders

  	
  85

  
	
  14.11.

  	
   

  	
  No
  Advisory or Fiduciary Responsibility

  	
  85

  
	
  14.12.

  	
   

  	
  Confidentiality

  	
  85

  
	
  14.13.

  	
   

  	
  Certifications Regarding Senior
  Notes Documents

  	
  86

  
	
  14.14.

  	
   

  	
  GOVERNING LAW

  	
  86

  
	
  14.15.

  	
   

  	
  CONSENT TO FORUM

  	
  86

  
	
  14.16.

  	
   

  	
  Waivers by Borrowers

  	
  86

  
	
  14.17.

  	
   

  	
  Patriot Act Notice

  	
  87

  
	
  14.18.

  	
   

  	
  Judgment Currency

  	
  87

  



 


LIST OF EXHIBITS AND SCHEDULES


 


	
  Exhibit A

  	
  Revolver Note

  	
   

  
	
  Exhibit B

  	
  Assignment and Acceptance

  	
   

  
	
  Exhibit C

  	
  Assignment Notice

  	
   

  
	
  Exhibit D

  	
  Certain Account Debtors

  	
   

  
	
  Exhibit E-1

  	
  Notice of Borrowing for U.S. Revolver Loans

  	
   

  
	
  Exhibit E-2

  	
  Notice of Borrowing for Singapore Base Rate Revolver
  Loans

  	
   

  
	
  Exhibit E-3

  	
  Notice of Borrowing for Singapore LIBOR Revolver
  Loans

  	
   

  



 


	
  Schedule 1.1

  	
  Revolver
  Commitments of Lenders

  
	
  Schedule 8.5

  	
  Deposit
  Accounts

  
	
  Schedule 8.6.1

  	
  Business
  Locations

  
	
  Schedule 9.1.4

  	
  Names
  and Capital Structure

  
	
  Schedule 9.1.11

  	
  Patents,
  Trademarks, Copyrights and Licenses

  
	
  Schedule 9.1.14

  	
  Environmental
  Matters

  
	
  Schedule 9.1.15

  	
  Restrictive
  Agreements

  
	
  Schedule 9.1.16

  	
  Litigation

  
	
  Schedule 9.1.18

  	
  Pension
  Plan Disclosures

  
	
  Schedule 9.1.20

  	
  Labor
  Contracts

  
	
  Schedule 10.2.2

  	
  Existing
  Liens

  
	
  Schedule 10.2.6

  	
  Scheduled
  Asset Dispositions

  
	
  Schedule 10.2.8

  	
  Certain
  Borrowed Money

  
	
  Schedule 10.2.9

  	
  Permitted
  Restructuring Transactions

  
	
  Schedule 10.2.17

  	
  Existing
  Affiliate Transactions

  



 


iii

















 


LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY AGREEMENT is dated as of September 30, 2010, among KEMET ELECTRONICS
CORPORATION, a Delaware corporation
(“U.S. Borrower”),
KEMET ELECTRONICS
MARKETING (S) PTE LTD.,
a Singapore corporation (“Singapore Borrower” and, together with
U.S. Borrower,
collectively, “Borrowers”), the financial institutions party to this
Agreement from time to time as lenders (collectively, “Lenders”), BANK OF AMERICA, N.A., a national banking association, as
agent for the Lenders (“Agent”), and BANC OF AMERICA
SECURITIES LLC, a Delaware limited liability company, as lead
arranger (in such capacity, “Lead Arranger”) and bookrunner (in such
capacity, “Bookrunner”).


 


R E C I T A L S:


 


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


 


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


 


SECTION 1.         DEFINITIONS; RULES OF CONSTRUCTION


 


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


 


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


 


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


 


Accounts
Formula Amount: as to each Borrower, 85%
of the Value of Eligible Accounts of such Borrower.


 


Acquisition: any acquisition of all or substantially all assets of a Person or more
than 50% of the Equity Interests in a Person.


 


Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.  “Control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise.  “Controlling”
and “Controlled”
have correlative meanings.


 


Agent
Indemnitees: Agent, Lead Arranger,
Bookrunner and their respective officers, directors, employees, Affiliates,
agents and attorneys.


 


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


 


Aggregate
Availability: the Aggregate Borrowing
Base minus the principal balance of all Revolver Loans and LC Obligations.


 

















 


Aggregate
Borrowing Base: the sum of the U.S.
Borrowing Base plus the Singapore Borrowing Base.


 


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


 


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


 


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


 


	
  Level

  	
   

  	
  Fixed Charge

  Coverage Ratio

  	
   

  	
  U.S. Base Rate

  Revolver

  Loans

  	
   

  	
  U.S. LIBOR

  Revolver

  Loans

  	
   

  	
  Singapore Base

  Rate Revolver

  Loans

  	
   

  	
  Singapore

  LIBOR

  Revolver Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  < 1.10

  	
   

  	
  2.50

  	
  %

  	
  3.50

  	
  %

  	
  2.75

  	
  %

  	
  3.75

  	
  %

  
	
  II

  	
   

  	
  >
  1.10 < 1.50

  	
   

  	
  2.25

  	
  %

  	
  3.25

  	
  %

  	
  2.50

  	
  %

  	
  3.50

  	
  %

  
	
  III

  	
   

  	
  > 1.50

  	
   

  	
  2.00

  	
  %

  	
  3.00

  	
  %

  	
  2.25

  	
  %

  	
  3.25

  	
  %

  



 


Until the later of (a) March 30, 2011 and
(b) receipt by Agent pursuant to Section 10.1.2
of the financial statements and corresponding Compliance Certificate for the
Fiscal Quarter ending December 31, 2010, margins shall be determined as if
Level II were applicable.  Thereafter,
the margins shall be subject to increase or decrease upon receipt by Agent
pursuant to Section 10.1.2 of the
financial statements and corresponding Compliance Certificate for the last
Fiscal Quarter, which change shall be effective on the first day of the
calendar month following receipt.  If, by
the first day of a month, any financial statements and Compliance Certificate
due in the preceding month have not been received, then, at the option of Agent
or Required Lenders, the margins shall be determined as if Level I were
applicable, from such day until the first day of the calendar month following
actual receipt.


 


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


 


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


 


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


 


Assignment
Notice: an assignment notice delivered by a Lender
and Eligible Assignee, in the form of Exhibit C.


 


Availability
Reserve: the sum (without duplication) of (a) the
Inventory Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the
Bank Product Reserve; (e) the VAT Reserve; (f) the Dilution Reserve; (g) the
aggregate amount of liabilities secured by Liens upon Collateral that
are senior to Agent’s Liens (but imposition of any such reserve shall not waive
an Event of Default arising 


 


2

















 


therefrom);
(h) preferential claims having priority over a floating charge pursuant to
Section 328 of the Companies Act, Chapter 50 of Singapore; (i) debit
memos aged less than sixty (60) days past due, unprocessed credits and Accounts
that have been subject to revaluation as a result of being denominated in a
foreign currency; and (j) such additional reserves, in such amounts and
with respect to such matters, as Agent in its Credit Judgment may elect to
impose from time to time.


 


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


 


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


 


Bank
of America-Singapore Branch:
Bank of America, N.A., acting through its Singapore Branch.


 


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


 


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


 


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


 


Bankruptcy
Code: Title 11 of the United States Code.


 


BAS: Banc of America Securities LLC, a Delaware limited liability company,
and its successors and assigns.


 


Base
Amount: as defined in Section 10.2.3.


 


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


 


Base
Rate Revolver Loan: collectively and
individually, the U.S. Base Rate Revolver Loans and Singapore Base Rate
Revolver Loans.


 


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


 


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


 


3

















 


Borrower
Agent: as defined in Section 4.4.


 


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


 


Borrowing
Base: (a) the U.S. Borrowing Base, in the case
of U.S. Borrower, (b) the Singapore Borrowing Base, in the case of
Singapore Borrower, and (c) the U.S. Borrowing Base and the Singapore
Borrowing Base, collectively, in each case as the context may require.


 


Borrowing
Base Certificate: a certificate, in form and
substance reasonably satisfactory to Agent, by which Borrower Agent certifies
its calculation of the Borrowing Base of each Borrower.


 


Business
Day: (a) any day other than a Saturday, Sunday
or other day on which commercial banks are authorized to close under the laws
of, or are in fact closed in, North Carolina and New York, (b) if such day
relates to a LIBOR Revolver Loan, any such day on which dealings in Dollar
deposits are conducted between banks in the London interbank Eurodollar market,
and (c) if such day relates to any Borrowing, payment or rate selection by
Singapore Borrower, any such day on which commercial banks are not authorized
to close under the laws of, or are in fact closed in, Singapore.


 


Capital
Expenditures: all liabilities incurred
or expenditures made by a Borrower or Subsidiary for the acquisition of fixed
assets, or any improvements, replacements, substitutions or additions thereto
with a useful life of more than one year, other than to the extent made with
casualty or condemnation proceeds.


 


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


 


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


 


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


 


Cash
Collateralize: the delivery of cash to Agent, as security for
the payment of Obligations, in an amount equal to (a) with respect
to LC Obligations, 105% of the aggregate LC Obligations, and (b) with respect to
any inchoate, contingent or other Obligations (including Obligations arising
under Bank Products), Agent’s good faith estimate of the amount due or to become due,
including all reasonable fees and other amounts relating to such
Obligations.  “Cash Collateralization”
has a correlative meaning.


 


Cash
Dominion Trigger Period: the period (a) commencing
on the earliest day that (i) an Event of Default occurs, (ii) for
five (5) consecutive Business Days, Aggregate Availability has been less
than the greater of (A) 15% of the aggregate Revolver Commitments at such
time and (B) $7,500,000, or (iii) for five (5) consecutive
Business Days, U.S. Availability has been less than $3,750,000; and (b) continuing
until, during the preceding forty-five (45) consecutive days, (i) no Event
of Default has existed, (ii) Aggregate Availability has been greater than
the greater of (A) 15% of the aggregate Revolver Commitments and (B) $7,500,000
at all times, and (iii) U.S. Availability has been greater than $3,750,000
at all times.


 


Cash
Equivalents: (a) marketable
obligations issued or unconditionally guaranteed by, and backed by the full
faith and credit of, the United States government, maturing not more than 12
months after the 


 


4

















 


date
of acquisition; (b) certificates of deposit, time deposits, Eurodollar
time deposits and bankers’ acceptances of and overnight bank deposits with any
commercial bank having, or which is the principal banking subsidiary of a bank
holding company that is a member of the Federal Reserve System or a bank or
trust company organized in any member state of the European Union having,
capital and surplus aggregating in excess of $500,000,000 (or its Eurodollar
equivalent) and a rating of “A” (or such other similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) with maturities of not
more than 12 months from the date of acquisition; (c) repurchase
obligations with a term of not more than thirty (30) days for underlying
investments of the types described in clauses (a) and (b) entered
into with any bank meeting the qualifications specified in clause (b); (d) commercial
paper rated at least A-1 (or the equivalent) by S&P or at least P-1 (or the
equivalent) by Moody’s, and maturing not more than one year after the date of
acquisition; and (e) shares of any money market fund that has at least 95%
of its assets invested continuously in the types of investments referred to
above.


 


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


 


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


 


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


 


Change
of Control: (a) Parent ceases to own and control,
beneficially and of record, directly or indirectly, all Equity Interests in all
Borrowers; (b) any Person or “group” (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended), other than the
Permitted Holders, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of 35% or more of the outstanding voting power of the Equity Interests of the
Borrowers or their direct or indirect parents; (c) a change in the
majority of directors of Parent, unless approved by the then majority of
directors; or (d) all or substantially all of a Borrower’s assets are sold
or transferred, other than sale or transfer to another Borrower.


 


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


 


5
















 


Closing
Date: as defined in Section 6.1.


 


Code: the Internal Revenue Code of 1986.


 


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


 


Commitment
Termination Date: the earliest to occur of
(a) the Revolver Termination Date; (b) the date on which Borrowers terminate
the Revolver Commitments pursuant to Section
2.1.4; (c) the date on which the Revolver Commitments are terminated
pursuant to Section 11.2; or (d) the Put Early Termination
Date if, as of the Put Early
Termination Date, (i) all of the then outstanding Convertible Notes have not
been converted into shares of common stock of Parent in accordance with
the terms of the Convertible Notes Documents and Applicable Law, (ii) subject
to the Refinancing Conditions, all of
the then outstanding Convertible Notes have not been refinanced with
unsecured notes that have a maturity date of at least ninety (90) days after
the Revolver Termination Date, (iii) Agent has not established a reserve
hereunder in respect of the then outstanding Convertible Notes, with Aggregate
Availability after giving effect to such reserve at all times not less than $5,000,000, or (iv) Parent has not provided for the repayment of the Convertible
Note by depositing into an investment account at Bank of America cash in an
aggregate amount equal to the then outstanding amount of such Convertible
Notes.


 


Compliance
Certificate: a certificate, in form and
substance reasonably satisfactory to Agent, by which Borrowers certify
compliance with Sections 10.2.3
and 10.3 and calculate the
applicable Level for the Applicable Margin.


 


Consolidated
Interest Expense: as defined in the Senior
Notes Indenture.


 


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


 


Convertible Notes: the 2.25%
Convertible Senior Notes due 2026
issued by Parent pursuant to the Convertible Notes Indenture.


 


Convertible
Notes Documents: collectively, the
Convertible Notes Indenture, the Convertible Notes and all agreements
(including any security agreement), documents and instruments executed or
delivered in connection with any of the foregoing, in each case as in effect on
the Closing Date (or as amended thereafter with the consent of Agent).


 


Convertible
Notes Indenture: the Indenture dated as of
November 1, 2006  among Parent, as 


 


6

















 


issuer,
and Indenture Trustee, as trustee, as in effect on the Closing Date (or as
amended thereafter with the consent of Agent).


 


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


 


Covenant
Testing Trigger Period: the period (a)
commencing on the earliest day that (i) an Event of Default occurs, (ii) Aggregate
Availability is less than the greater of (A) 15% of the aggregate Revolver
Commitments at such time and (B) $7,500,000, or (iii) U.S. Availability is less
than $3,750,000; and (b) continuing until, during the preceding forty-five (45)
consecutive days, (i) no Event of Default has existed, (ii) Aggregate
Availability has been greater than the greater of (A) 15% of the aggregate
Revolver Commitments and (B) $7,500,000 at all times, and (iii) U.S.
Availability has been greater than $3,750,000 at all times.


 


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


 


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


 


Debt: as applied to any Person, without duplication, (a) Borrowed Money; (b)
all Contingent Obligations; (c) all reimbursement obligations in connection
with letters of credit issued for the account of such Person; and (d) in the
case of a Borrower, the Obligations.  The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.


 


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


 


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


 


Defaulting
Lender: any Lender that (a) fails to make any payment
or provide funds to Agent or any Borrower as required hereunder or fails
otherwise to perform its obligations under any Loan Document, and such failure
is not cured within one (1) Business Day, or (b) is the subject of any
Insolvency Proceeding.


 


Deposit Account Control
Agreements: (a) in the case of U.S. Borrower or any Domestic
Subsidiary, the Deposit Account control agreements to be executed by each
institution maintaining a Deposit Account (other than an Excluded Deposit Account)
for each such Person, in favor of Agent for the benefit of Secured Parties, as
security for the Obligations, each which Deposit Account Control Agreement
shall be reasonably satisfactory to Agent; and (b) in the case of each Foreign
Subsidiary that is an Obligor, the Deposit Account Control Agreements to be
executed by each institution maintaining a Deposit Account (other than an
Excluded Deposit Account) for each such Person, in favor of Agent for the benefit of the Secured
Parties, as security for the Singapore Obligations, each which Deposit Account 


 


7

















 


Control Agreement shall
be reasonably satisfactory to Agent.


 


Dilution Percent: for each
Borrower, the percent, determined for Borrowers’ most recent Fiscal Quarter,
equal to (a) bad debt write-downs or write-offs, discounts, returns, promotions,
credits, credit memos and other dilutive items with respect to Accounts of such
Borrower, divided  by (b) gross sales of such Borrower.


 


Dilution Reserve: a reserve in
amounts established by Agent from time to time in its Credit Judgment to
reflect that the Dilution Percent is or is reasonably anticipated to be greater
than five percent (5%) and is not, in its Credit Judgment, adequately reserved
for on Borrowers’ books.


 


Distribution: any declaration or payment of a distribution, interest or dividend on
any Equity Interest (other than payment-in-kind); or any purchase, redemption,
or other acquisition or retirement for value of any Equity Interest.


 


Dollars: lawful money of the United States.


 


Domestic Subsidiary: a Subsidiary that
is not a Foreign Subsidiary.


 


Dominion Account: (a) a special
account of U.S. Borrower established at Bank of America, over which Agent has
exclusive control for withdrawal purposes during a Cash Dominion Trigger
Period; (b) a special account of Singapore Borrower established at Bank of
America-Singapore Branch, over which Agent has exclusive control for withdrawal
purposes (subject to Singapore Borrower’s right to reborrow in accordance with
the terms of this Agreement).


 


Dormant
Australian Subsidiary: each of KEMET
Electronics Pty Ltd., an Australian corporation, and KEMET Tantalum Pty Ltd.,
an Australian corporation.


 


EBITDA: for any period, for Parent and its Subsidiaries on a consolidated basis,
an amount equal to net income for such period plus (a) the following to
the extent deducted in calculating such net income, without duplication: (i)
Consolidated Interest Expense for such period; (ii) the provision for federal,
state, local and foreign income taxes payable by Parent and its Subsidiaries
for such period; (iii) the amount of depreciation and amortization expense for
such period; (iv) all non-cash impairment charges (to the extent not captured
in amortization) for such period; (v) non-cash expenses resulting from the
grant of stock and stock options and other compensation to management personnel
of Parent and its Subsidiaries; (vi) all non-cash expenses attributable to
minority interests in Subsidiaries; (vii) all other non-cash charges (which, for the avoidance of doubt, shall not
include write downs of Inventory); (viii) non-cash losses from foreign
currency translations; (ix) fees, expenses or charges relating to the
preparation, negotiation and delivery of, and the closing of the financing
transactions contemplated by, the Loan Documents and the Senior Notes; (x) Net
Restructuring Charges (if the result of the calculation of Net Restructuring
Charges is positive); (xi) losses in respect of any Asset Disposition by
Parent and its Subsidiaries (net of fees and expenses relating to the
transaction giving rise thereto), on an after-tax basis; (xii) any net
losses attributable to the early extinguishment of Debt; and (xiii) any
expenses or charges related to any equity offering, any Investment permitted
hereunder, any recapitalization or Debt permitted hereunder (whether or not
successful), the offering of the Senior Notes or the entering into of this
Agreement and the issuance of Revolver Loans; and minus (b) the
following to the extent included in calculating such net income, without
duplication: (i) non-cash gains from foreign currency translations to the
extent included in calculating such net income for such period; (ii) all
non-cash items increasing net income for such period; (iii) Net Restructuring
Charges (if the result of the calculation of Net Restructuring Charges is
negative); (iv) gains in respect of any Asset Disposition by Parent and
its Subsidiaries (net of fees and expenses relating to the transaction giving
rise thereto), on an after-tax basis; and (v) any net gains attributable
to 


 


8

















 


the
early extinguishment of Debt.


 


Eligible
Account: an Account owing to a Borrower that arises in
the Ordinary Course of Business from the sale of goods, is payable in Dollars, Euros, Great
Britain Pounds, Swedish Krona, Swiss Francs or Singapore Dollars, and is deemed
by Agent, in its Credit Judgment, to be an Eligible Account.  Without limiting the foregoing, no Account
shall be an Eligible Account if:


 


(a)           it
is unpaid for more than sixty (60)  days after the original due date, or more than
one hundred twenty (120) days after the original invoice date;


 


(b)           25% or more
of the Accounts owing by the Account Debtor are not Eligible Accounts under the
foregoing clause;


 


(c)           when
aggregated with other Accounts owing by the Account Debtor and its Affiliates,
it exceeds, (i) in the case of U.S. Borrower, 20% of the aggregate Eligible Accounts
(or such higher percentage as Agent may establish for the Account Debtor from
time to time) of U.S. Borrower, and (ii) in the case of Singapore Borrower, 20% of the
aggregate Eligible Accounts (or such higher percentage as Agent may establish
for the Account Debtor from time to time) of Singapore Borrower;


 


(d)           it
does not conform with a covenant or representation herein;


 


(e)           it
is owing by a creditor or supplier, or is otherwise subject to a potential
offset, counterclaim, dispute, deduction, discount, recoupment, reserve,
defense, chargeback, credit, rebate, price adjustment, price protection or
allowance (but ineligibility shall be limited to the amount thereof);


 


(f)            an
Insolvency Proceeding has been commenced by or against the Account Debtor; or
the Account Debtor has failed, has suspended or ceased doing business, is
liquidating, dissolving or winding up its affairs, or is not Solvent; or the
Borrower is not able to bring suit or enforce remedies against the Account
Debtor through judicial process; provided, that Agent in its sole
discretion may determine that such Account shall not be ineligible to the
extent payment thereof has been authorized pursuant to a final, nonappealable
judicial order or decree;


 


(g)           it
is owing from any of the Account Debtors listed on Exhibit D,
as updated by Borrowers from time to time with the consent of Agent (which
consent may be granted or withheld in Agent’s sole discretion), or it is owing
from any Account Debtor which is organized or has its principal office or
assets in The People’s Republic of China (other than Hong Kong);


 


(h)           it
is owing by a Government Authority, unless the Account Debtor is the United
States or any department, agency or instrumentality thereof and the Account has
been assigned to Agent in compliance with the Assignment of Claims Act; provided,
that Accounts not to exceed $250,000 in the aggregate which are owing by any
Governmental Authority shall not be excluded by virtue of this clause (h);


 


(i)            it
is not subject to a duly perfected, first priority Lien in favor of Agent
(including, with respect to Accounts owing by an Account Debtor which is
organized or has its principal office or assets in Sweden or the Netherlands,
as a result of such Account Debtor being notified of the grant of such Lien by
appropriate letter or legended invoice, in customary form and otherwise in form
and content satisfactory to Agent), or is subject to any other Lien (other than
Permitted Liens of the types described in Sections 10.2.2(c)
and (g));


 


9

















 


(j)            the
goods giving rise to it have not been delivered to and accepted by the Account
Debtor, the services giving rise to it have not been accepted by the Account
Debtor, or it
otherwise does not represent a final sale;


 


(k)           it
is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced
to judgment;


 


(l)            its
payment has been extended, the Account Debtor has made a partial payment, or it
arises from a sale on a cash-on-delivery basis;


 


(m)          it
arises from a sale to an Affiliate, from a sale on a bill-and-hold, guaranteed
sale, sale-or-return, sale-on-approval, consignment, or other repurchase or
return basis, from a ship from stock and debit sale, or from a sale to a Person
for personal, family or household purposes;


 


(n)           it
represents a progress billing or retainage;


 


(o)           it
arises from a sale of scrap materials; or


 


(p)           it
includes a billing for interest, fees or late charges, but ineligibility shall
be limited to the extent thereof.


 


In
calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than sixty (60) days old will be excluded.


 


Eligible
Assignee: a Person that is (a) a
Lender, U.S.-based Affiliate of a Lender or Approved Fund; (b) any other
financial institution approved by Agent and Borrower Agent (which approval by
Borrower Agent shall not be unreasonably withheld or delayed, and shall be
deemed given if no objection is made within three (3) Business Days after
notice of the proposed assignment), that is organized under the laws of the
United States or any state or district thereof, has total assets in excess of
$5 billion, extends asset-based lending facilities in its ordinary course of
business and whose becoming an assignee would not constitute a prohibited
transaction under Section 4975 of the Code or any other Applicable Law; and (c)
during any Event of Default, any Person acceptable to Agent in its discretion; provided,
that, in each case, such Person shall be (i) a resident of Singapore for
Singapore tax purposes or (ii) acting through a Lending Office which has been
granted a waiver by the Inland Revenue Authority of Singapore in respect of
payments under Section 12(6) of the Income Tax Act Chapter 134 of Singapore to
be made to such Lending Office free of Singapore withholding tax.


 


Eligible
Equipment:  Equipment owned by U.S. Borrower that Agent,
in its Credit Judgment, deems to be Eligible Equipment.  Without limiting the foregoing, no Equipment
shall be Eligible Equipment unless:


 


(a)           it
is the subject of an Equipment Appraisal;


 


(b)           it
is located in the United States;


 


(c)           it
was purchased by U.S. Borrower in the Ordinary Course of Business and is necessary
or useful to the operations of U.S. Borrower’s business;


 


(d)           it
has been delivered to and accepted by U.S. Borrower and installed at premises
owned or leased by U.S. Borrower;


 


10

















 


(e)           it
is subject to Agent’s Liens, which are perfected as to such Equipment, and is
not subject to any other Lien whatsoever (other than Permitted Liens of the
types described in Sections 10.2.2(c)
and (g));


 


(f)            it
does not constitute a fixture under Applicable Law unless each landlord and
mortgagee in respect of such premises have executed in favor of Agent a Lien
Waiver;


 


(g)           it
does not constitute an accession to other Equipment that is subject to any Lien
(whether or not a Permitted Lien) in favor of any Person other than Agent
unless the holder of any such Lien agrees to disclaim any interest in such
Eligible Equipment; and


 


(h)           it
does not constitute furniture, computer hardware or software (other than
computer hardware or software that is part of manufacturing equipment).


 


Eligible
Inventory: Inventory owned by U.S.
Borrower that Agent, in its Credit Judgment, deems to be Eligible
Inventory.  Without limiting the
foregoing, no Inventory shall be Eligible Inventory unless it:


 


(a)           is
finished goods or raw materials, and not work-in-process, packaging or shipping
materials, labels, samples, display items, bags, replacement parts or
manufacturing supplies;


 


(b)           is
not held on consignment, nor subject to any deposit or down payment;


 


(c)           is
in new and saleable condition and is not damaged, defective, shopworn or
otherwise unfit for sale; provided, that any such defective Inventory
for which Agent has received a written appraisal, in form, scope and
methodology, and by an appraiser, reasonably acceptable to Agent, addressed to
Agent and upon which Agent and Lenders are expressly permitted to rely, shall
be deemed eligible to the extent of the appraised Value thereof;


 


(d)           is
not slow-moving, obsolete or unmerchantable, and does not constitute returned
or repossessed goods (unless such returned or repossessed goods are otherwise
saleable);


 


(e)           meets
all standards imposed by any Governmental Authority, and does not constitute
hazardous materials under any Environmental Law;


 


(f)            conforms
with the covenants and representations herein;


 


(g)           is
subject to Agent’s duly perfected, first priority Lien, and no other Lien
(other than Permitted Liens of the types described in Sections
10.2.2(c), (g) and (m));


 


(h)           is
within the continental United States, is not in transit except between locations
of U.S. Borrower, and is not consigned to any Person;


 


(i)            is
not subject to any warehouse receipt or negotiable Document;


 


(j)            is not subject to any License or
other arrangement that restricts U.S. Borrower’s or Agent’s right to dispose of
such Inventory, unless Agent has received an appropriate
Lien Waiver;


 


(k)           is not located on leased premises or
in the possession of a warehouseman, 


 


11

















 


processor, repairman,
mechanic, shipper, freight forwarder or other Person, unless the lessor or such
Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve
has been established; and


 


(l)            is
reflected in the details of a current perpetual inventory report.


 


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


 


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


 


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


 


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


 


Equipment: as defined in the
UCC, including all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory), and all parts, accessories and special tools therefor, and
accessions thereto.


 


Equipment
Appraisal: with respect to (a)
Equipment owned by U.S. Borrower as of the Closing Date, a written appraisal of
such Equipment delivered to Agent, in form, scope and methodology, and by an
appraiser, reasonably acceptable to Agent, addressed to Agent and upon which
Agent and Lenders are expressly permitted to rely, and (b) Equipment purchased
by U.S. Borrower in each Loan Year after the Closing Date, a written appraisal
of such Equipment purchased in such Loan Year delivered to Agent, in form,
scope and methodology, and by an appraiser, reasonably acceptable to Agent,
addressed to Agent and upon which Agent and Lenders are expressly permitted to
rely; provided, that there shall be no more than one (1) Equipment
Appraisal in any Loan Year and each Equipment Appraisal shall be at Borrowers’
sole cost and expense.  For the avoidance
of doubt, U.S. Borrower shall not be required to (but may) provide an Equipment
Appraisal in any Loan Year after the Closing Date and, in the event that U.S.
Borrower does not in any Loan Year after the Closing Date provide an Equipment
Appraisal, no Equipment purchased in such Loan Year shall be Eligible Equipment
at any time.


 


Equipment
Formula Amount: the lesser of (a)
$3,000,000 and (b) 70% of the NOLV Percentage of the Value of Eligible
Equipment.


 


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


 


ERISA: the Employee Retirement Income Security Act of 1974.


 


12

















 


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


 


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


 


Event
of Default: as defined in Section 11.


 


Excluded
Deposit Account:  (a) a Deposit Account that is (i) exclusively
used for payroll, payroll taxes or employee benefits, (ii) an escrow account,
(iii) a trust account, or (iv) a zero balance account, (b) a Deposit Account of
an Obligor other than FELCO containing not more than $150,000 at any time; provided,
that the aggregate balance of all Excluded Deposit Accounts described in this
clause (b) shall not at any time exceed $1,000,000, and (c) a Deposit Account
of FELCO containing not more than $1,000,000 at any time.


 


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


 


Extraordinary
Expenses: all actual and documented
reasonable out-of-pocket costs, expenses or advances that Agent may incur
during a Default or Event of Default, or during the pendency of an Insolvency
Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor,
any representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents,
Letters of Credit or Obligations, including any lender liability or other
Claims; (c) the exercise, protection or 


 


13

















 


enforcement
of any rights or remedies of Agent in, or the monitoring of, any Insolvency
Proceeding; (d) settlement or satisfaction of any taxes, charges or Liens with
respect to any Collateral; (e) any Enforcement Action; (f) negotiation and
documentation of any modification, waiver, workout, restructuring or
forbearance with respect to any Loan Documents or Obligations; and (g)
Protective Advances.  Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, reasonable
legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees
and commissions, accountants’ fees, environmental study fees, wages and
salaries paid to employees of any Obligor or independent contractors in
liquidating any Collateral, and travel expenses.


 


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


 


Fee Letter: the fee letter
agreement between Bank of America, BAS and Parent.


 


FELCO: The Forest Electric Company, an Illinois corporation.


 


Fiscal Quarter: each period of three months, commencing on the first day of a Fiscal Year.


 


Fiscal Year: the fiscal year
of Parent for accounting and tax purposes, ending on March 31 of each year.


 


Fixed Charge Coverage
Ratio: at any time, the ratio, determined on a
consolidated basis for Parent and its Subsidiaries for the most recently ended
period of four Fiscal Quarters, of (a) EBITDA for such period minus Capital
Expenditures made and cash taxes paid, in each case during such period, to (b)
Fixed Charges for such period.


 


Fixed Charges: for any period, the sum of (a) Consolidated Interest Expense to the
extent paid in cash during such period (net of cash interest income), plus
(b) principal payments made in cash on Borrowed Money during such period (other
than principal payments (i) made in connection with the closing of the offering
of the Senior Notes and (ii) reducing the outstanding amounts of Borrowed Money
associated with revolving, overdraft or factoring facilities unless such
principal payments are accompanied by a permanent reduction in the amount
available for borrowing under such facility), plus (c) Distributions,
dividends and stock buybacks made in cash during such period.


 


FLSA: the Fair Labor Standards Act of 1938.


 


Foreign
Lender: (a) with respect to U.S. Borrower, any Lender
that is organized under the laws of a jurisdiction other than the laws of the
United States, or any state or district thereof; and (b) with respect to
Singapore Borrower, any Lender that is (i) not a resident in Singapore for
Singapore tax purposes and (ii) whose Lending Office has not been granted a
waiver by the Inland Revenue Authority of Singapore in respect of payments
under Section 12(6) of the Income Tax Act, Chapter 134 of Singapore (“ITA”)
to be made to such Lending Office free of Singapore withholding tax.


 


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


 


14

















 


Foreign Subsidiary: a Subsidiary that
is a “controlled foreign corporation” under Section 957 of the Code.


 


Full Payment: with respect to
any Obligations, (a) the full cash payment thereof, including any interest,
fees and other charges accruing during an Insolvency Proceeding (whether or not
allowed in the proceeding); (b) if such Obligations are LC Obligations or
inchoate or contingent in nature, Cash Collateralization thereof (or delivery
of a standby letter of credit acceptable to Agent in its discretion, in the
amount of required Cash Collateral); provided, that no Cash
Collateralization shall be required for “Full Payment” to have occurred with
respect to unasserted indemnification obligations which by their terms survive
termination of this Agreement or any other Loan Document; and (c) a release of any Claims of Obligors against Agent, Lenders and
Issuing Bank arising on or before the payment date.  No
Revolver Loans shall be deemed to have been paid in full until all Revolver
Commitments related to such Revolver Loans have expired or been terminated.


 


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


 


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


 


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


 


Guarantors: Parent, KEMET Services Corporation, a Delaware corporation, KRC Trade
Corporation, a Delaware corporation, FELCO, and each other Person who
guarantees payment or performance of any Obligations.


 


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


 


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


 


Indemnified
Taxes: Taxes other than Excluded Taxes.


 


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


 


Indenture
Trustee: Wilmington Trust Company, as the trustee
under the Convertible Notes Indenture or the Senior Notes Indenture, as
applicable.


 


Information: as defined in Section 14.12.


 


Insolvency
Proceeding: any case or proceeding
commenced by or against a Person under any state, provincial, federal or
foreign law for or in relation, or any agreement of such Person to, (a) the
entry of an order for relief or the filing of a proposal or intent to file a
proposal under the Bankruptcy Code or any other insolvency, debtor relief or
debt adjustment law; (b) the winding-up, judicial management, dissolution,
administration or reorganization (by way of voluntary arrangement, scheme of
arrangement or otherwise) of such Person; (c) the appointment of a receiver,
trustee, liquidator, administrator, judicial 


 


15

















 


manager,
conservator or other custodian for such Person or any part of its Property; (d)
the enforcement of any security over the Collateral or any material part
thereof; (e) the enforcement of any security over any asset or assets (other
than the Collateral) of such Person which the Required Lenders reasonably
determine has or is likely to have a Material Adverse Effect; (f) an assignment
or trust mortgage for the benefit of creditors; or (g) any analogous procedure
or step is taken in any jurisdiction which would have an analogous or
equivalent effect to any of the foregoing clauses (a) to (f) of this
definition.


 


Insurance
Assignment: each collateral assignment
of insurance pursuant to which an Obligor assigns to Agent, for the benefit of
Secured Parties, such Obligor’s rights under business interruption or other
insurance policies as Agent deems appropriate, as security for the Obligations;
provided, that any such assignment by Singapore Borrower or any other
Foreign Subsidiary that is an Obligor shall only provide security for the
Singapore Obligations.


 


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


 


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


 


Interest
Period: as defined in Section 3.1.3.


 


Interest
Rate Fixing Day: in relation to any
Interest Period, two (2) Business Days before the first day of such Interest
Period.


 


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


 


Inventory
Formula Amount: the lesser of (a)
$4,000,000 and (b) 40% of the Value of Eligible Inventory.


 


Inventory
Reserve: reserves established by Agent to reflect
factors that may negatively impact the Value of Inventory, including change in
salability, obsolescence, seasonality, theft, shrinkage, imbalance, change in
composition or mix, markdowns and vendor chargebacks.


 


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


 


IRS: the United States Internal Revenue Service.


 


Issuing
Bank: U.S. Issuing Bank, in the case of U.S.
Letters of Credit issued in favor of U.S. Borrower, and Singapore Issuing Bank,
in the case of Singapore Letters of Credit issued in favor of Singapore
Borrower.


 


16
















 


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


 


KEMET
Asia Pacific: KEMET Electronics Asia
Pacific Pte Ltd., a Singapore corporation.


 


LC Application: an application by
a Borrower (or Borrower Agent on behalf of any
Borrower) to
Issuing Bank for issuance of a Letter of Credit, in form and substance
reasonably satisfactory to Issuing Bank.


 


LC Conditions: the following
conditions necessary for issuance of a Letter of Credit: (a) each of the conditions
set forth in Section 6; (b) after
giving effect to such issuance, total LC Obligations do not exceed the Letter
of Credit Subline, no Overadvance exists and, if no Revolver
Loans are
outstanding, the U.S. LC Obligations do not exceed the U.S. Borrowing Base
(without giving effect to the LC Reserve for purposes of this calculation) and
the Singapore LC Obligations do not exceed the Singapore Borrowing Base
(without giving effect to the LC Reserve for purposes of this calculation); (c) the
expiration date of such Letter of Credit is (i) no more than three hundred
sixty-five (365) days from issuance, in the case of standby Letters of Credit
(subject to automatic renewals), (ii) no more than one hundred twenty
(120) days from issuance, in the case of documentary Letters of Credit, and (iii) at
least twenty (20) Business Days prior to the Revolver Termination Date; (d) the
Letter of Credit and payments thereunder are denominated in Dollars; and (e) the
purpose and form of the proposed Letter of Credit is reasonably satisfactory to
Agent and Issuing Bank.


 


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


 


LC Obligations: (a) the U.S. LC Obligations, in the case of U.S. Borrower, (b) the
Singapore LC Obligations, in the case of Singapore Borrower, and (c) the
U.S. LC Obligations and the Singapore LC Obligations, collectively, in each
case as the context may require.


 


LC Request: a request for
issuance of a Letter of Credit, to be provided by a
Borrower (or Borrower Agent on behalf of such Borrower) to Issuing Bank, in form reasonably
satisfactory to Agent and Issuing Bank.


 


LC Reserve: with respect to
the U.S. Letters of Credit, the aggregate of all U.S. LC Obligations, and with
respect to the Singapore Letters of Credit, the aggregate of all Singapore LC
Obligations, in each case, other than (a) those that have been Cash
Collateralized; and (b) if no Default or Event of Default exists, those
constituting charges owing to the Issuing Bank.


 


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


 


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


 


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


 


Letter of Credit: (a) the U.S. Letters of Credit, in the case of U.S. Borrower, (b) the
Singapore Letters of Credit, in the case of Singapore Borrower, and (c) the
U.S. Letters of Credit and the Singapore 


 


17

















 


Letters
of Credit, collectively, in each case as the context may require.


 


Letter
of Credit Subline: $10,000,000.


 


LIBOR: for any Interest Period with respect to a LIBOR Revolver Loan, the per
annum rate of interest (rounded up, if necessary, to the nearest 1/8th of 1%),
determined by Agent at approximately 11:00 a.m. (London time) two (2) Business
Days prior to commencement of such Interest Period, for a term comparable to
such Interest Period, equal to (a) the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source designated by Agent); or (b) if BBA LIBOR is not available
for any reason, the interest rate at which Dollar deposits in the approximate
amount of the LIBOR Revolver Loan would be offered by Bank of America’s London
branch to major banks in the London interbank Eurodollar market.  If the Board of Governors imposes a Reserve
Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing
rate, divided by 1 minus the Reserve Percentage.


 


LIBOR
Revolver Loan: collectively and
individually, the U.S. LIBOR Revolver Loans and Singapore LIBOR Revolver Loans.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


18

















 


Local
Time: (a) local time in Singapore with respect
to the receipt and sending of notices, and the disbursements and payments made
with respect to, the Singapore Facility, and (b) local time in New York in
all circumstances other than those referred to in the preceding clause (a).


 


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


 


Market
Disruption Event: before close of business
on any Interest Rate Fixing Day for any Interest Period, Agent receives
notification from a Lender that the cost to it of obtaining matching deposits
in the London interbank Eurodollar market would be in excess of LIBOR.


 


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


 


Material
Contract: any agreement or
arrangement to which a Borrower or Subsidiary is party (other than the Loan
Documents) (a) for which breach, termination, nonperformance or failure to
renew could reasonably be expected to have a Material Adverse Effect; or (b) that
relates to Subordinated Debt, or Debt in an aggregate amount of $5,000,000 or
more.


 


Mexico
Pledge Agreement: the Pledge Agreement of
even date herewith, among U.S. Borrower, Agent and a Person reasonably
acceptable to Agent, as depositary, pursuant to which U.S. Borrower has granted
to Agent a Lien on U.S. Borrower’s Inventory located in Mexico.


 


Mexico
Pledge Documents:  the Mexico Pledge Agreement and all other
documents, instruments and agreements now or hereafter executed and/or
delivered which are required to perfect Agent’s Lien on U.S. Borrower’s
Inventory located in Mexico.


 


Moneylenders
Act: means the Singapore Moneylenders Act 2008,
Act 31 of 2008.


 


Moneylenders
Act Reservation: means, if a Lender is an
unlicensed moneylender (as defined in the Moneylenders Act) and is not an
excluded moneylender (as defined in the Moneylenders Act), then the obligations
of the Singapore Borrower to that Lender under the Loan Documents may be
unenforceable against the Singapore Borrower and any money paid by or on behalf
of that Lender under the Loan Documents may not be recoverable.


 


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


 


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


 


Net
Restructuring Charges: for any period, the
amount of (a) costs charged to expense in respect of personnel reductions
and manufacturing relocations in such
period, less (b) costs paid or settled in respect of personnel
reductions and manufacturing relocations in such period.


 


Net
Proceeds: with respect to an Asset
Disposition, proceeds (including, when received, any 


 


19

















 


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


 


NOLV
Percentage: the net orderly liquidation value of
Equipment, expressed as a percentage, expected to be realized at an orderly,
negotiated sale held within a reasonable period of time, net of all liquidation
expenses, as determined from the most recent Equipment Appraisal of U.S.
Borrowers’ Equipment.


 


Notice
of Borrowing: a Notice of Borrowing to
be provided by (a) a Senior Officer of U.S. Borrower to request the
funding of a Borrowing of U.S. Revolver Loans or (b) a Senior Officer of
Singapore Borrower to request the funding of a Borrowing of Singapore Revolver
Loans, in each case in the form of Exhibit E-1, Exhibit E-2
or Exhibit E-3, as applicable.


 


Notice
of Conversion/Continuation: a
Notice of Conversion/Continuation to be provided by (a) U.S. Borrower to
request a conversion or continuation of any U.S. Revolver Loans as U.S. LIBOR
Revolver Loans or (b) Singapore Borrower (or Borrower Agent on behalf of
Singapore Borrower) to request a conversion or continuation of any Singapore
Revolver Loans as Singapore LIBOR Revolver Loans, in each case in form
satisfactory to Agent.


 


Obligations: collectively, the Singapore Obligations and the U.S. Obligations.
Agent may exercise its discretion in determining whether an Obligation is a
U.S. Obligation or a Singapore Obligation.


 


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


 


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


 


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


 


Original
Currency: as defined in Section 14.18.


 


OSHA: the Occupational Safety and Health Act of 1970.


 


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


 


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


 


20

















 


Overadvance: as defined in Section 2.1.5.


 


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


 


Parent: KEMET Corporation, a Delaware corporation.


 


Parent
Default: the declaration or making by Parent of any
Distribution, or the making by Parent of any Restricted Investment or any
payment (whether voluntary or mandatory, or a prepayment, redemption,
retirement, defeasance or acquisition) with respect to any Borrowed Money
evidenced by the Senior Notes or Convertible Notes prior to its due date under
the Senior Notes Documents or the Convertible Notes Documents, as applicable,
which, in each case, would result in an Event of Default if such Distribution
was declared or made, or such Restricted Investment or payment of Borrowed
Money was to be made, by any Borrower; provided, however, that
the purchase by Parent of any Convertible Note which Parent is required to
purchase pursuant to Section 5.2 of the Convertible Notes Indenture shall
not constitute a Parent Default if such Convertible Note is purchased in
accordance with the terms of the Convertible Notes Documents and Applicable Law.


 


Participant: as defined in Section 13.2.


 


Patent Security Agreement: each patent
security agreement pursuant to which an Obligor grants to Agent, for the
benefit of Secured Parties, a security interest in such Obligor’s patents, as
security for the Obligations.


 


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


 


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


 


PBGC: the Pension Benefit Guaranty Corporation.


 


Pension
Plan: any employee pension benefit plan (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer
Plan, that is subject to Title IV of ERISA and is sponsored or maintained by
any Obligor or ERISA Affiliate or to which the Obligor or ERISA Affiliate
contributes or has an obligation to contribute, or in the case of a multiple employer
or other plan described in Section 4064(a) of ERISA, has made
contributions at any time during the preceding five plan years.


 


Permitted
Asset Disposition: an Asset Disposition that
is (a) a sale of Inventory in the Ordinary Course of Business; (b) a
disposition of Property that, in the aggregate during any 12 month period, has
a fair market or book value (whichever is more) of $1,000,000 or less; (c) a
disposition of Property that is obsolete or surplus or, with respect to
Inventory, unmerchantable or otherwise unsalable in the Ordinary Course of
Business; (d) termination of a lease of real or personal Property that is
not necessary for the Ordinary Course of Business, could not reasonably be
expected to have a Material Adverse Effect and does not result from an Obligor’s
default; (e) a replacement of Equipment that is worn, damaged or obsolete
with Equipment of like function and value, if the replacement Equipment is
acquired substantially contemporaneously with such disposition and is free of
Liens; (f) a transfer of Property by a Subsidiary or Obligor to an Obligor
or by any Subsidiary that is not an Obligor to any other Subsidiary; (g) a
transfer of Property that, in the aggregate during the term of this Agreement,
has a fair market value of $5,000,000 or less by an Obligor to any Subsidiary
that is not an Obligor; (h) a lease, sublease, license and sublicense of
Property in the Ordinary Course of Business; (i) set forth on Schedule 10.2.6; (j) a 


 


21

















 


disposition
in the Ordinary Course of Business in connection with the collection or
compromise of an Account reasonably determined by a Borrower to be
uncollectible; (k) a disposition of Property subject to casualty or
condemnation proceedings; (l) an abandonment or expiration of rights to
Intellectual Property in the Ordinary Course of Business; (m) a
liquidation of Cash Equivalents; or (n) approved in writing by Agent and
Required Lenders; provided, that, notwithstanding anything herein to the
contrary, in no event shall transfers of Property by Obligors to Singapore
Borrower or any of its Affiliates organized or having  its principal offices or assets in Singapore
exceed $500,000 in any Fiscal Year.


 


Permitted
Contingent Obligations: Contingent Obligations
(a) arising from endorsements of Payment Items for collection or deposit
in the Ordinary Course of Business; (b) arising from Hedging Agreements permitted
hereunder; (c) existing on the Closing Date, and any extension or
renewal thereof that does not increase the amount of such Contingent Obligation
when extended or renewed; (d) incurred in the Ordinary Course of Business with
respect to surety, appeal or performance bonds, or other similar obligations; (e) arising
from customary indemnification obligations in favor of purchasers in
connection with dispositions of Equipment permitted hereunder; (f) arising
under the Loan Documents; (g) of any Obligor of the Debt of another
Obligor or of any Subsidiary that is not an Obligor of the Debt of Parent or
any Subsidiary, in each case as long as the Debt is permitted hereunder; or (h) in
an aggregate amount of $5,000,000 or less at any time.


 


Permitted Holders: Platinum Equity
Capital Partners, L.P., a Delaware limited partnership, and Platinum Equity
Capital Partners II, L.P., a Delaware limited partnership, and their
Affiliates.


 


Permitted
Lien: as defined in Section 10.2.2.


 


Permitted
Purchase Money Debt: Purchase Money Debt of
Borrowers and Subsidiaries that is unsecured or secured only by a Purchase
Money Lien, as long as the aggregate amount does not exceed $15,000,000 at any
time and its incurrence does not violate Section 10.2.3.


 


Permitted
Restructuring Transaction: any of the
restructuring transactions set forth on Schedule 10.2.9.


 


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


 


Prime
Rate: the rate of interest announced by Bank of
America from time to time as its prime rate. 
Such rate is set by Bank of America on the basis of various factors,
including its costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above or below such rate.  Any
change in such rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change.


 


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


 


Properly
Contested: with respect to any
obligation of an Obligor, (a) the obligation is subject to a bona fide
dispute regarding amount or the Obligor’s liability to pay; (b) the
obligation is being properly contested in good faith by appropriate proceedings
promptly instituted and diligently pursued; (c) 


 


22

















 


appropriate
reserves have been established in accordance with GAAP; (d) non-payment
could not reasonably be expected to have a Material Adverse Effect, nor result
in forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed
on assets of the Obligor, unless bonded and stayed to the reasonable
satisfaction of Agent; and (f) if the obligation results from entry of a
judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.


 


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


 


Protective
Advances: as defined in Section 2.1.6.


 


Purchase
Money Debt: (a) Debt (other than
the Obligations) for payment of any of the purchase price of fixed assets; (b) Debt
(other than the Obligations) incurred within ninety (90) days before or after
acquisition of any fixed assets, for the purpose of financing any of the
purchase price thereof; and (c) any renewals, extensions or refinancings
(but not increases) thereof.


 


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


 


Put
Early Termination Date: August 15,
2011.


 


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


 


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


 


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


 


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


 


Reimbursement Date: as defined in Section 2.2.2.


 


Rent and Charges Reserve: the aggregate of (a) all
past due rent and other amounts owing by an Obligor to any landlord,
warehouseman, processor, repairman, mechanic, shipper, freight forwarder,
broker or other Person who possesses any Collateral or could assert a Lien on
any Collateral; and (b) a reserve at least equal to three months rent and
other charges that could be payable to any such Person, unless it has executed
a Lien Waiver.


 


Report: as defined in Section 12.2.3.


 


Reportable
Event: any of the events set forth in Section 4043(c) of
ERISA, other than events for 


 


23

















 


which
the thirty (30) day notice period has been waived.


 


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


 


Reserve
Percentage: the reserve percentage
(expressed as a decimal, rounded up to the nearest 1/8th of 1%) applicable to
member banks under regulations issued from time to time by the Board of
Governors for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).


 


Restricted
Investment: any Investment by a
Borrower or Subsidiary, other than (a) Investments in Subsidiaries to the
extent existing on the Closing Date; (b) Cash Equivalents that, to the
extent owned by any Obligor and required hereunder, are subject to Agent’s Lien
and control, pursuant to documentation in form and substance reasonably
satisfactory to Agent; (c) loans and advances permitted under Section 10.2.7; (d) Investments
in Obligors; (e) Investments in Subsidiaries by Subsidiaries that are not
Obligors; (f) Investments in Subsidiaries that are not Obligors by
Obligors, in order to maintain required statutory minimum capitalizations of
such Subsidiaries, in an aggregate outstanding amount not to exceed $10,000,000
at any time; (g) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers or the settlement of delinquent
Accounts; (h) Investments in the nature of pledges or deposits with
respect to leases or utilities or to secure goods and services in the Ordinary
Course of Business; (i) Bank Products permitted hereunder; (j) accounts
receivable in the Ordinary Course of Business; and (k) other Investments
in an aggregate outstanding amount not to exceed $2,000,000 at any time.


 


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


 


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


 


Revolver
Loan: collectively, each U.S. Revolver Loan and
Singapore Revolver Loan.


 


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


 


Revolver
Termination Date: September 30, 2014.


 


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


 


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


 


SEC: the United States Securities and Exchange Commission and any successor
thereto.


 


24

















 


Second
Currency: as defined in Section 14.18.


 


Secured
Parties: Agent (including as Security Agent under the
Singapore Debenture and the Singapore Share Charge), Issuing Bank, Lenders
and providers of Bank Products.


 


Securities
Account: as defined in the UCC.


 


Securities
Intermediary: as defined in the UCC.


 


Security
Documents: the Guaranties, Patent
Security Agreements, Trademark Security Agreements, Copyright Security
Agreements, Insurance Assignments, Deposit Account Control Agreements,  Singapore
Debenture, Singapore Share Charge, Mexico Pledge Documents and all other
documents, instruments and agreements now or hereafter securing (or given with
the intent to secure) any Obligations.


 


Senior Notes: the 101⁄2% Senior
Notes due 2018 issued by Parent pursuant
to the Senior
Notes Indenture.


 


Senior
Notes Collateral: the “Collateral” as
defined in the Senior Notes Indenture.


 


Senior
Notes Documents: collectively, the Senior
Notes Indenture, the Senior Notes and all agreements (including any pledge or
other security agreement), documents and instruments executed or delivered in
connection with any of the foregoing.


 


Senior
Notes Indenture: the Indenture dated as of May 5, 2010  among
Parent, as issuer, the guarantors party thereto and Indenture Trustee, as
trustee.


 


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


 


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


 


Singapore
Availability: the Singapore Borrowing
Base minus the aggregate principal amount of all Singapore Revolver Loans and
all Singapore LC Obligations.


 


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


 


Singapore
Borrowing Base: on any date of
determination, an amount equal to the lesser of (a) the Singapore Portion
of the Revolver Commitments, minus the LC Reserve attributable to
Singapore Borrower; and (b) the Accounts Formula Amount attributable to
Singapore Borrower, minus the Availability Reserve to the extent
attributable to Singapore Borrower in Agent’s reasonable discretion.


 


Singapore Debenture: the Debenture of
Singapore Borrower, in form and substance satisfactory to Agent, executed and
delivered by Singapore Borrower to Agent on the Closing Date.


 


Singapore Facility: the credit
facility described in Section 2.1.1(b) hereof
to be provided to Singapore Borrower on the terms and conditions set forth in
this Agreement.


 


25
















 


Singapore Issuing Bank: Bank of America-
Singapore Branch.


 


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


 


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


 


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


 


Singapore
Obligations: (a)(i) the principal
of and premium, if any, and interest on, the Singapore Revolver Loans made
hereunder to, or for the benefit of, Singapore Borrower, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise (including any interest that accrues after the commencement of any
Insolvency Proceeding or any other case or proceeding by or against Singapore
Borrower under any debtor relief law, whether or not allowed in such case or
proceeding), and (ii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise, of Singapore Borrower to a Lender or Singapore
Issuing Bank under this Agreement and the other Loan Documents (including the
Singapore LC Obligations), (b) the due and punctual payment and
performance of all covenants, agreements, obligations and liabilities of
Singapore Borrower under or pursuant to this Agreement or the other Loan
Documents, (c) obligations of Singapore Borrower under any indemnity for
Claims, (d) Extraordinary Expenses of Singapore Borrower, (e) Bank
Product Debt, and (f) other Debts, obligations and liabilities of any kind
owing by Singapore Borrower pursuant to the Loan Documents, whether now
existing or hereafter arising, whether evidenced by a note or other writing,
whether allowed in any Insolvency Proceeding, whether arising from an extension
of credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.


 


Singapore
Portion: at any time, the aggregate amount of the
Revolver Commitments minus the U.S. Portion; provided, that in no event
shall the Singapore Portion exceed $30,000,000.


 


Singapore
Revolver Loan: a loan made to Singapore
Borrower pursuant to Section 2.1.1(b),
and any Singapore Swingline Loan, Overadvance Loan or Protective Advance attributable
to Singapore Borrower.


 


Singapore
Share Charge: the Share Charge of KEMET
Asia Pacific in respect of its Equity Interests in Singapore Borrower, in form
and substance satisfactory to Agent, executed and delivered by KEMET Asia
Pacific on the Closing Date.


 


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


 


Solvent: as to any Person, (I) if such Person is U.S. Borrower or a
Domestic Subsidiary, such Person (a) owns Property whose fair salable
value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present fair salable value (as defined below) is greater than
the probable total liabilities (including 


 


26

















 


contingent,
subordinated, unmatured and unliquidated liabilities) of such Person as they
become absolute and matured; (c) is able to pay all of its debts as they
mature; (d) has capital that is not unreasonably small for its business
and is sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage; (e) is not “insolvent”
within the meaning of Section 101(32) of the Bankruptcy Code; and (f) has
not incurred (by way of assumption or otherwise) any obligations or liabilities
(contingent or otherwise) under any Loan Documents, or made any conveyance in
connection therewith, with actual intent to hinder, delay or defraud either
present or future creditors of such Person or any of its Affiliates; (II) if
such Person is Singapore Borrower, such Person is neither (a) insolvent or
unable to pay all of its debts (including subordinated and contingent debts)
nor (b) determined by a court to be unable to pay its debts within the
meaning of Section 254(2) of the Companies Act, Chapter 50 of
Singapore; and (III) if such Person is a Foreign Subsidiary (other than
Singapore Borrower) (a) owns Property whose fair salable value is greater
than the amount required to pay all of its debts (including contingent,
subordinated, unmatured and unliquidated liabilities); (b) owns Property
whose present fair salable value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured; (c) is
able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; and (e) is not “insolvent” within the meaning of Applicable
Law.  “Fair salable value” means
the amount that could be obtained for assets within a reasonable time, either
through collection or through sale under ordinary selling conditions by a
capable and diligent seller to an interested buyer who is willing (but under no
compulsion) to purchase.


 


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


 


Subsidiary: (a) with respect to any Person (other than Singapore Borrower),
any entity more than 50% of whose voting securities or Equity Interests is
owned by such Person (including indirect ownership by such Person through other
entities in which such Person directly or indirectly owns more than 50% of the
voting securities or Equity Interests) and (b) with respect to Singapore
Borrower, a subsidiary within the meaning of Section 5 of the Companies
Act, Chapter 50 of Singapore.  Unless otherwise
specified, “Subsidiary” refers to a Subsidiary of a Borrower.


 


Swingline
Loan: collectively the U.S. Swingline Loans and the
Singapore Swingline Loans.


 


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


 


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


 


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


 


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


 


UBS
VAT Restricted Cash: cash pledged by U.S. Borrower
to UBS to secure a bank guarantee issued by UBS on behalf of U.S. Borrower in
favor of the Governmental Authority in the Netherlands 


 


27

















 


responsible
for the collection of value added taxes, which cash is reflected on U.S.
Borrower’s books and records as restricted cash.


 


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


 


Unfunded Pension Liability: the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.


 


Upstream
Payment: a Distribution by a Subsidiary of a Borrower
to its shareholders.


 


U.S.
Availability: the U.S. Borrowing Base
minus the aggregate principal amount of all U.S. Revolver Loans and all U.S. LC
Obligations.


 


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


 


U.S.
Borrowing Base: on any date of
determination, an amount equal to the lesser of (a) the U.S. Portion of
the Revolver Commitments, minus the LC Reserve attributable to U.S. Borrower; and (b) the
sum of the Accounts Formula Amount attributable to U.S. Borrower, plus
the Inventory Formula Amount, plus the Equipment Formula Amount, minus
the Availability Reserve to the extent attributable to U.S. Borrower in Agent’s
reasonable discretion.


 


U.S.
Facility: the credit facility
described in Section 2.1.1(a) hereof
to be provided to U.S. Borrower on the terms and conditions set forth in this
Agreement.


 


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


 


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


 


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


 


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


 


U.S.
Obligations: (a)(i) the principal
of and premium, if any, and interest on, the U.S. Revolver Loans made hereunder
to, or for the benefit of, U.S. Borrower, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise
(including any interest that accrues after the commencement of any Insolvency
Proceeding or any other case or proceeding by or against U.S. Borrower under
any debtor relief law, whether or not allowed in such case or proceeding), and (ii) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise, of U.S.
Borrower to a Lender or U.S. Issuing Bank under this Agreement and the other
Loan Documents (including the U.S. LC Obligations), (b) the due and
punctual payment and performance of all covenants, agreements, obligations and
liabilities of U.S. Borrower under or pursuant to this Agreement or the other
Loan Documents, (c) obligations of U.S. Borrower under any 


 


28

















 


indemnity
for Claims, (d) Extraordinary Expenses of U.S. Borrower, (e) Bank
Product Debt, and (f) other Debts, obligations and liabilities of any kind
owing by U.S. Borrower pursuant to the Loan Documents, whether now existing or
hereafter arising, whether evidenced by a note or other writing, whether
allowed in any Insolvency Proceeding, whether arising from an extension of
credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.


 


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


 


U.S.
Portion: at any time, the maximum amount of the
Revolver Commitments that may be borrowed by U.S. Borrower at such time, as set
forth from time to time in a written notice to Agent from Borrower Agent.


 


U.S.
Revolver Loan: a loan made to U.S.
Borrower pursuant to Section 2.1.1(a),
and any U.S. Swingline Loan, Overadvance Loan or Protective Advance
attributable to U.S. Borrower.


 


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


 


Value: (a) for Inventory, its net book value determined on the basis of
the lower of cost or market, calculated on a first-in, first-out basis, and
excluding any portion of cost attributable to intercompany profit among
Borrowers and their Affiliates; (b) for an Account, its face amount, net
of any returns, rebates, discounts (calculated on the shortest terms), credits,
allowances or Taxes (including sales, excise or other taxes) that have been or
could be claimed by the Account Debtor or any other Person; and (c) for
Equipment, the appraised
value thereof, as set forth in the Equipment Appraisal with respect to
such Equipment; provided, that the Value of Equipment shall be reduced
on the first day of each Fiscal Quarter subsequent to the date of such
Equipment Appraisal in an amount equal to one-twentieth (1/20) of such
appraised value; provided, further, that the Value of Equipment
shall be determined by reference to the initial Equipment Appraisal of such
Equipment and not any re-appraisal thereof.


 


VAT
Reserve: the aggregate of all past due amounts owing by an
Obligor in respect of goods and services tax imposed in Singapore or any
other jurisdiction and any equivalent tax applicable in any jurisdiction
including any value added, goods and services or similar tax.


 


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


 


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


 


1.4.         Certain Matters of Construction.  The terms “herein,” “hereof,” “hereunder”
and other 


 


29

















 


words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision.  Any pronoun used shall be deemed to cover all
genders.  In the computation of periods
of time from a specified date to a later specified date, “from” means “from and
including,” and “to” and “until” each mean “to but excluding.”  The terms “including” and “include” shall
mean “including, without limitation” and, for purposes of each Loan Document,
the parties agree that the rule of ejusdem
generis shall not be applicable to limit any provision.  Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan
Document.  All references to (a) laws
or statutes include all related rules, regulations, interpretations, amendments
and successor provisions; (b) any document, instrument or agreement
include any amendments, waivers and other modifications, extensions or renewals
(to the extent permitted by the Loan Documents); (c) any section mean,
unless the context otherwise requires, a section of this Agreement; (d) any
exhibits or schedules mean, unless the context otherwise requires, exhibits and
schedules attached hereto, which are hereby incorporated by reference; (e) any
Person include successors and assigns; (f) time of day mean time of day at
Agent’s notice address under Section 14.3.1,
unless otherwise specified; or (g) discretion of Agent, Issuing Bank
or any Lender mean the sole and absolute discretion of such Person.  All calculations of Value, fundings of
Revolver Loans, issuances of Letters of Credit and payments of Obligations
shall be in Dollars and, unless the context otherwise requires, all
determinations (including calculations of Borrowing Base and financial
covenants) made from time to time under the Loan Documents shall be made in
light of the circumstances existing at such time.  Borrowing Base calculations shall be consistent
with historical methods of valuation and calculation, and otherwise
satisfactory to Agent (and not necessarily calculated in accordance with
GAAP).  Borrowers shall have the burden
of establishing any alleged negligence, misconduct or lack of good faith by
Agent, Issuing Bank or any Lender under any Loan Documents.  No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision.  Whenever
the phrase “to the best of Borrowers’ knowledge” or words of similar import are
used in any Loan Documents, it means actual knowledge of a Senior Officer,
or knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates.


 


SECTION 2.         CREDIT FACILITIES


 


2.1.         Revolver Commitment.


 


2.1.1.       Revolver
Loans.


 


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


 


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


 


30

















 


such
time (including the requested Singapore Revolver Loan) would exceed the
Aggregate Borrowing Base, or (c) so long as Singapore Borrower maintains
Deposit Accounts (other than Excluded Deposit Accounts) at HSBC and until such
time as Agent has received an acknowledgment from HSBC, in the form attached to
the Singapore Debenture, that HSBC has received a notice of assignment, in the
form attached to the Singapore Debenture, with respect to the charge granted by
Singapore Borrower to Agent over Singapore Borrower’s Deposit Accounts
maintained at HSBC, the unpaid balance of Singapore Revolver Loans outstanding
at such time (including the requested Singapore Revolver Loan) would exceed
$7,500,000.


 


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


 


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


 


2.1.4.       Voluntary Reduction or Termination of
Revolver Commitments.


 


(a)           The Revolver Commitments shall terminate on the Revolver
Termination Date, unless sooner terminated in accordance with this
Agreement.  Upon at least ninety (90) days prior written notice to Agent at any time
after the first Loan Year, Borrowers may, at their option, terminate the
Revolver Commitments and this credit facility. 
Any notice of termination given by Borrowers shall be irrevocable.  On the termination date, U.S. Borrower shall
make Full Payment of all U.S. Obligations and Singapore Borrower shall make
Full Payment of all Singapore Obligations.


 


(b)           Borrowers may
permanently reduce the Revolver Commitments, on a Pro Rata basis for each
Lender, upon at least ten (10) Business Days prior written notice to Agent
delivered at
any time after the first Loan Year, which notice shall specify the
amount of the reduction and shall be irrevocable once given. 
Each reduction shall be in a minimum amount of $5,000,000, or an
increment of $1,000,000 in excess thereof.


 


2.1.5.       Overadvances.  If the aggregate Revolver Loans of either
Borrower exceed the Borrowing Base of such Borrower (each, an “Overadvance”)
at any time, the excess amount shall be payable by such Borrower on demand by Agent, but all such Revolver
Loans shall nevertheless constitute U.S. Obligations or Singapore Obligations,
as the case may be, secured by the applicable Collateral and entitled to all
benefits of the Loan Documents.  Unless
its authority has been revoked in writing by Required Lenders, Agent may require
Lenders to honor requests for Overadvance Loans and to forbear from requiring
Borrowers to cure an Overadvance, (a) when no other Event of Default is
known to Agent, as long as (i) the Overadvance does not continue for more
than thirty (30) consecutive days (and no Overadvance may exist for at least
five (5) consecutive days thereafter before further Overadvance Loans are
required), and (ii) the Overadvance is not known by Agent to exceed 10% of the
Aggregate Borrowing Base; and (b) regardless of whether an Event of
Default exists, if Agent discovers an Overadvance not previously known by it to
exist, as long as from the date of such discovery the Overadvance (i) is
not increased by more than $2,500,000, and (ii) does not continue for more
than thirty (30) consecutive days.  In no
event shall Overadvance Loans be required that would cause (a) the
outstanding U.S. Revolver Loans and U.S. LC Obligations to exceed the U.S.
Portion of the aggregate Revolver Commitments, (b) the outstanding
Singapore Revolver Loans and Singapore LC Obligations to exceed the Singapore
Portion of the aggregate Revolver Commitments, or (c) the outstanding
Revolver Loans and LC Obligations to exceed the aggregate Revolver
Commitments.  Any funding of an 


 


31

















 


Overadvance Loan or sufferance of an Overadvance shall
not constitute a waiver by Agent or Lenders of the Event of Default caused
thereby.  In no event shall any Borrower
or other Obligor be deemed a beneficiary of this Section nor authorized to
enforce any of its terms.


 


2.1.6.       Protective
Advances.  Agent shall be authorized,
in its discretion, at any time that any conditions in Section 6 are not satisfied, and
without regard to the Aggregate Availability, Singapore Availability or U.S.
Availability, to make Base Rate Revolver Loans (“Protective Advances”) (a) up
to an aggregate amount outstanding at any time not to exceed 10% of the
Aggregate Borrowing Base, if Agent deems such Revolver Loans necessary
or desirable to preserve or protect Collateral, or to enhance the collectability
or repayment of Obligations; or (b) to pay any other amounts chargeable to
Obligors under any Loan Documents, including costs, fees and expenses.  All Protective Advances allocable to the
Singapore Obligations (as determined by Agent) shall be Singapore Obligations,
secured by the applicable Collateral, and all Protective Advances allocable to
the U.S. Obligations (as determined by Agent) shall be U.S. Obligations,
secured by the applicable Collateral. 
Each Lender shall participate in each Protective Advance on a Pro Rata
basis.  Required Lenders may at any time
revoke Agent’s authority to make further Protective Advances by written notice
to Agent.  Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive.


 


2.1.7.       Reallocation
of U.S. Portion and Singapore Portion. 
Borrowers may from time to time, but in no event more than once in each
Fiscal Quarter, revise the U.S. Portion and Singapore Portion upon not less
than ten (10) Business Days prior written notice to Agent so long as, at
the effective time of such written notice, (a) no Default or Event of
Default exists, (b) the unpaid balance of U.S. Revolver Loans outstanding
at such time would not exceed the U.S. Borrowing Base, as so revised, and (c) the
unpaid balance of Singapore Revolver Loans outstanding at such time would not
exceed the Singapore Borrowing Base, as so revised.


 


2.2.         Letter of
Credit Facility.


 


2.2.1.       Issuance
of Letters of Credit.  Issuing Bank
agrees to issue Letters of Credit from time to time until ten (10) Business
Days prior to the Revolver Termination
Date (or until the Commitment Termination Date, if earlier), on the terms set
forth herein, including the following:


 


(a)           Each Borrower acknowledges that Issuing Bank’s willingness
to issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a
LC Application with respect to the requested Letter of Credit, as well as such
other instruments and agreements as Issuing Bank may customarily require for issuance
of a letter of credit of similar type and amount.  Issuing Bank shall have no obligation to
issue any Letter of Credit unless (i) Issuing Bank receives a LC Request
and LC Application at least three (3) Business Days prior to the requested
date of issuance from the applicable
Borrower (or Borrower Agent on behalf of Singapore Borrower); (ii) each LC Condition is satisfied;
and (iii) if a Defaulting Lender exists, such Lender or Borrowers have
entered into arrangements satisfactory to Agent and Issuing Bank to eliminate
any funding risk associated with the Defaulting Lender.  If Issuing Bank receives written notice from
a Lender at least five (5) Business Days before issuance of a Letter of
Credit that any LC Condition has not been satisfied, Issuing Bank shall
have no obligation to issue the requested Letter of Credit (or any other) until
such notice is withdrawn in writing by that Lender or until Required Lenders
have waived such condition in accordance with this Agreement.  Prior to receipt of any such notice, Issuing
Bank shall not be deemed to have knowledge of any failure of LC Conditions.


 


(b)           Letters of Credit may be requested by a Borrower only (i) to
support obligations of such Borrower or a Subsidiary which is an Obligor
incurred in the Ordinary Course of Business; or (ii) for other purposes as
Agent and Lenders may approve from time to time in writing.  The renewal or extension of any Letter of
Credit shall be treated as the issuance of a new Letter of Credit, except that 


 


32

















 


delivery of a new LC Application shall be required
at the discretion of Issuing Bank.


 


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


 


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


 


2.2.2.       Reimbursement;
Participations.


 


(a)           If Issuing Bank honors any request for payment under a
Letter of Credit, subject to the last sentence of this Section 2.2.2(a),
the applicable Borrower shall pay to Issuing Bank, on the same day (“Reimbursement
Date”), the amount paid by Issuing
Bank under such Letter of Credit, together with interest at the interest rate
for U.S. Base Rate Revolver Loans, in the case of the U.S. LC Obligations, and
the Singapore Base Rate Revolver Loans, in the case of the Singapore LC
Obligations, in each case from the Reimbursement Date until payment by the
applicable Borrower. The obligation of each Borrower to reimburse Issuing Bank
for any payment made under a Letter of Credit issued on its behalf shall be
absolute, unconditional and irrevocable, and shall be paid without regard to
any lack of validity or enforceability of any such Letter of Credit or the
existence of any claim, setoff, defense or other right that any Borrower may
have at any time against the beneficiary. Whether or not Borrower Agent submits
a Notice of Borrowing and without regard to the time of day, U.S. Borrower
shall be deemed to have requested a Borrowing of U.S. Base Rate Revolver Loans
and/or Singapore Borrower shall be deemed to have requested a Borrowing of
Singapore Base Rate Revolver Loans, in each case in an amount necessary to pay
all amounts due Issuing Bank by such Borrower on the applicable Reimbursement
Date and each Lender agrees to fund its Pro Rata share of such Borrowing
whether or not the Revolver Commitments have terminated, an Overadvance exists
or is created thereby, or the
conditions in Section 6 are
satisfied.


 


33

















 


(b)           Upon issuance of a Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally purchased from Issuing Bank,
without recourse or warranty, an undivided Pro Rata interest and participation
in all LC Obligations relating to the Letter of Credit.  If Issuing Bank makes any payment under a
Letter of Credit and the applicable Borrower does not reimburse such payment on
the applicable Reimbursement Date, Agent shall promptly notify Lenders and each
Lender shall promptly (within one (1) Business Day) and unconditionally
pay to Agent, for the benefit of Issuing Bank, the Lender’s Pro Rata share of
such payment.  Upon request by a Lender, Issuing
Bank shall furnish copies of any Letters of Credit and LC Documents in its
possession at such time.


 


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


 


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


 


2.2.3.       Cash
Collateral.  If any LC Obligations,
whether or not then due or payable, shall for any reason be outstanding at any
time (a) that an Event of Default exists, (b) that U.S. Availability
or Singapore Availability, as applicable, is less than zero, (c) after the
Commitment Termination Date, or (d) within ten (10) Business Days
prior to the Revolver Termination
Date, then each Borrower shall, at the applicable Issuing Bank’s or Agent’s
request, Cash Collateralize the stated amount of all of its outstanding Letters
of Credit and pay to the applicable Issuing Bank the amount of all of its other
LC Obligations.  Each Borrower shall, on demand
by the applicable Issuing Bank
or Agent from time to time, Cash Collateralize its LC Obligations that relate
to any Defaulting Lender.  If
either Borrower fails to provide any Cash Collateral as required hereunder,
Lenders may (and shall upon direction of Agent) advance, as Revolver Loans to
such Borrower (which Revolver Loans shall accrue interest at the Base Rate plus
(i) the Applicable Margin for U.S. Base Rate Revolver Loans, in the case
of U.S. Borrower, or (ii) the Applicable Margin for Singapore Base Rate
Loans, in the case of Singapore Borrower), the amount of the Cash Collateral
required (whether or not the Revolver
Commitments have terminated, an Overadvance exists or the conditions in Section 6 are satisfied).


 


34

















 


SECTION 3.         INTEREST, FEES AND CHARGES


 


3.1.         Interest.


 


3.1.1.       Rates
and Payment of Interest.


 


(a)           The Obligations shall bear interest (i) if
a U.S. Base Rate Revolver Loan, at the Base Rate in effect from time to time,
plus the Applicable Margin for U.S. Base Rate Revolver Loans; (ii) if a
U.S. LIBOR Revolver Loan, at LIBOR for the applicable Interest Period, plus the
Applicable Margin for U.S. LIBOR Revolver Loans; (iii) if a Singapore Base
Rate Revolver Loan, at the Base Rate in effect from time to time, plus the
Applicable Margin for Singapore Base Rate Revolver Loans; (iv) if a
Singapore LIBOR Revolver Loan, at LIBOR for the applicable Interest Period,
plus the Applicable Margin for Singapore LIBOR Revolver Loans; (v) if any
other Singapore Obligation (including, to the extent permitted by law, interest
not paid when due), at the Base Rate in effect from time to time, plus the
Applicable Margin for Singapore Base Rate Revolver Loans; and (vi) if any
other U.S. Obligation (including, to the extent permitted by law, interest not
paid when due), at the Base Rate in effect from time to time, plus the
Applicable Margin for U.S. Base Rate Revolver Loans. Interest shall accrue from
the date the Revolver Loan is advanced or the Obligation is incurred or
payable, until paid by the applicable Borrower. If a Revolver Loan is repaid on
the same day made, one (1) day’s interest shall accrue.


 


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


 


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


 


3.1.2.       Application
of LIBOR to Outstanding Revolver Loans.


 


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


 


(b)           Whenever
a Borrower desires to convert or continue Revolver Loans as LIBOR Revolver
Loans, such Borrower (or Borrower Agent on behalf of Singapore Borrower) shall
give Agent a Notice of Conversion/Continuation,
no later than 11:00 a.m. (Local Time) at least three (3) Business
Days before the requested conversion or continuation date.  Promptly after receiving any such notice,
Agent shall notify each Lender thereof. 
Each Notice of Conversion/Continuation shall be irrevocable, and shall
specify the amount of Revolver Loans to be converted or continued, the
conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be thirty (30) days
if not specified).  If, upon the
expiration of any Interest Period in respect of any LIBOR Revolver Loans, the
applicable Borrower shall have failed to deliver a Notice of
Conversion/Continuation, it shall be deemed to have elected to convert (a) such
LIBOR Revolver Loans 


 


35

















 


that
are U.S. LIBOR Revolver Loans into U.S. Base Rate Revolver Loans, and (b) such
LIBOR Revolver Loans that are Singapore LIBOR Revolver Loans into Singapore
Base Rate Revolver Loans.


 


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


 


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


 


(b)           if
any Interest Period commences on a day for which there is no corresponding day
in the calendar month at its end or if such corresponding day falls after the
last Business Day of such month, then the Interest Period shall expire on the
last Business Day of such month; and if any Interest Period would expire on a
day that is not a Business Day, the period shall expire on the next Business
Day; and


 


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


 


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


 


3.2.         Fees.


 


3.2.1.       Unused
Line Fee.  Borrowers shall pay to
Agent, for the Pro Rata benefit of Lenders, a fee equal to 0.75% per annum
times the amount by which the Revolver Commitments exceed the average daily
balance of Revolver Loans and stated amount of Letters of Credit during
any month;  provided,
that such percentage rate shall be reduced to (a) 0.50% per annum for any
month in which the average daily balance of Revolver Loans and stated
amount of Letters of Credit is greater than 33.3% of the Revolver Commitments and less than 66.6%
of the Revolver Commitments, and (b) 0.375% per annum for any month in
which the average daily balance of Revolver Loans and stated amount of
Letters of Credit is greater than or equal to 66.6% of the Revolver Commitments.  Such fee shall be payable in arrears,
on the first day of each month and on the Commitment Termination Date.


 


3.2.2.       LC
Facility Fees.  (a) (i) U.S.
Borrower shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal
to the Applicable Margin in effect for U.S. LIBOR Revolver Loans times the
average daily stated amount of U.S. Letters of Credit, and (ii) Singapore
Borrower shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal
to the Applicable Margin in effect for Singapore LIBOR Revolver Loans times the
average daily stated amount of Singapore Letters of Credit, in each case which
fees shall be payable monthly in arrears, on the first day of each month; (b) each
Borrower shall pay to Agent, for its own account, a fronting fee equal to
0.125% of the stated amount of each Letter of Credit issued on its behalf,
which fee shall be payable monthly in arrears, on the first day of each month;
and (c) each Borrower shall pay to Issuing Bank, for its own account, all
customary charges associated with the issuance, amending, negotiating, payment,
processing, transfer and administration of Letters of Credit issued on its
behalf, which charges shall be paid as and when incurred.  During an Event of Default, the fee payable
under clause (a) shall be increased by 2% per annum.


 


36
















 


3.2.3.       Closing
Fee.  Borrowers shall pay to Agent,
for the benefit of Lenders, the closing fee described in the Fee Letter,
which shall be paid concurrently with the funding of the initial Revolver Loans
hereunder.


 


3.2.4.       Agent
Fees.  In consideration of Agent’s
service as Agent hereunder, Borrowers shall pay to Agent, for its own account,
the fees described in the Fee Letter.


 


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


 


3.4.         Reimbursement Obligations.  Borrowers shall reimburse Agent for all
Extraordinary Expenses.  Borrowers shall
also reimburse Agent for all reasonable out-of-pocket legal (including fees and
expenses of one (1) United States legal counsel and one (1) Singapore
legal counsel (and such other foreign legal counsel as may be required by Agent
after consultation with U.S. Borrower) for Agent), accounting, appraisal,
consulting, and other fees, costs and expenses incurred by it in connection
with (a) negotiation and preparation of any Loan Documents, including any
amendment or other modification thereof; (b) administration of and actions
relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Agent’s
Liens on any Collateral, to maintain any insurance required hereunder or to verify
Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection, audit or appraisal
with respect to any Obligor or Collateral, whether prepared by Agent’s
personnel or a third party.  If, for any reason (including inaccurate
reporting on financial statements or a Compliance Certificate), it is
determined that a higher Applicable Margin should have applied to a period than
was actually applied, then the proper margin shall be applied retroactively and
Borrowers shall immediately pay to Agent, for the Pro Rata benefit of Lenders,
an amount equal to the difference between the amount of interest and fees that
would have accrued using the proper margin and the amount actually paid.  All amounts payable by Borrowers under this Section shall
be payable on demand.


 


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


 


37

















 


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


 


3.7.         Increased Costs; Capital Adequacy.


 


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


 


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


 


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


 


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


 


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


 


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


 


38

















 


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


 


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


 


3.9.         Funding Losses.  Subject to the last sentence of Section 3.11, if for any reason (other than default by
a Lender) (a) any Borrowing of, or conversion to or continuation of, a
LIBOR Revolver Loan does not occur on the date specified therefor in a Notice
of Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any
repayment or conversion of a LIBOR Revolver Loan occurs on a day other than the
end of its Interest Period, or (c) Borrowers fail to repay a LIBOR
Revolver Loan when required hereunder, then Borrowers shall pay to Agent its
customary administrative charge and to each Lender all losses and expenses that
it sustains as a consequence thereof, including loss of anticipated profits and
any loss or expense arising from liquidation or redeployment of funds or from
fees payable to terminate deposits of matching funds.  Lenders shall not be required to purchase
Dollar deposits in the London interbank market or any other offshore Dollar
market to fund any LIBOR Revolver Loan, but the provisions hereof shall be
deemed to apply as if each Lender had purchased such deposits to fund its LIBOR
Revolver Loans.


 


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


 


3.11.       Market Disruption Event.  If a Market Disruption Event
occurs:


 


(a)           the
rate of interest of each Lender’s share of the relevant LIBOR Revolver Loan for
the applicable Interest Period shall be the rate per annum equal to the sum of:


 


(i)            the Applicable
Margin; plus


 


39

















 


(ii)           the higher of (x) the
rate notified to Agent and Borrowers by such Lender, as soon as practicable and
in any event before the applicable Interest Rate Fixing Day, to be that which
expresses as a percentage rate per annum the cost to such Lender of funding
such LIBOR Revolver Loan from whatever source such Lender may reasonably select
and (y) LIBOR; and


 


(b)           (i)            if
Agent or Borrowers require, Agent and Borrowers shall enter into negotiations
(for a period of not more than thirty (30) days) with a view to agreeing on a
substitute basis for determining the applicable rate of interest; and


 


(ii)           any alternative interest rate agreed to between Agent and
Borrowers pursuant to the preceding clause (b)(i) above shall, with the
prior written consent of all Lenders and Borrowers, be binding on all Lenders
and Borrowers.


 


For
the avoidance of doubt, in the event that no substitute basis for determining
the rate of interest is agreed at the end of such thirty (30) day period, the rate
of interest with respect to relevant Loans shall continue to be determined in
accordance with the terms of this Agreement. 
Notwithstanding anything herein to the contrary, if a Market Disruption
Event occurs, Borrowers may convert any pending request for any Borrowing of a
LIBOR Revolver Loan to a request for a Borrowing of a Base Rate Revolver Loan,
or withdraw any pending request for conversion to or continuation of a LIBOR
Revolver Loan, in each case without incurring any obligation to pay any amounts
under Section 3.9.


 


SECTION 4.         LOAN
ADMINISTRATION


 


4.1.         Manner of Borrowing and Funding Revolver Loans.


 


4.1.1.       Notice
of Borrowing.


 


(a)           Whenever
a Borrower desires funding of a Borrowing of Revolver Loans, such Borrower (or
Borrower Agent on behalf of Singapore Borrower) shall give Agent a Notice of
Borrowing.  Such notice must be received
by Agent no later than 11:00 a.m. (Local Time) (i) on the Business
Day of the requested funding date, in the case of Base Rate Revolver Loans, and
(ii) at least three (3) Business Days prior to the requested funding
date, in the case of LIBOR Revolver Loans. 
Notices received after 11:00 a.m. (Local Time) shall be deemed
received on the next Business Day.  Each
Notice of Borrowing shall be irrevocable and shall specify (A) the amount
of the Borrowing, (B) the requested funding date (which must be a Business
Day), (C) whether the Borrowing is to be made as Base Rate Revolver Loans
or LIBOR Revolver Loans, and (D) in the case of LIBOR Revolver Loans, the
duration of the applicable Interest Period (which shall be deemed to be thirty
(30) days if not specified).


 


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


 


(c)           If any Borrower establishes a controlled disbursement account with Agent
or any Affiliate of Agent, then the presentation for payment of any check or
other item of payment drawn on 


 


40

















 


such
account at a time when there are insufficient funds to cover it as of 1:30 p.m.
(Local Time) on the day of presentation shall be deemed to be a request for
U.S. Base Rate Revolver Loans, in the case of any of the foregoing relating to
the U.S. Obligations, and Singapore Base Rate Revolver Loans, in the case of
any of the foregoing relating to the Singapore Obligations, in each case on the
date of such presentation, in the amount of the check and items presented for
payment. The proceeds of such Revolver Loans may be disbursed directly to the
controlled disbursement account or other appropriate account.


 


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


 


4.1.3.       Swingline
Loans; Settlement.


 


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


 


(b)           To
facilitate administration of the Revolver Loans, Lenders and Agent agree (which
agreement is solely among them, and not for the benefit of or enforceable by
any Borrower) that settlement among them with respect to Swingline Loans and
other Revolver Loans may take place on a date determined from time to time by
Agent, which shall occur at least once each week. 
On each settlement date, settlement shall be made with each Lender in
accordance with the Settlement Report delivered by Agent to Lenders.  Between settlement dates, Agent may in its
discretion apply payments on Revolver Loans to Swingline Loans, regardless of
any designation by Borrower or any provision herein to the contrary.  Each Lender’s obligation to make settlements
with Agent is absolute and unconditional, without offset, counterclaim or other
defense, and whether or not the
Revolver Commitments have terminated, an Overadvance exists or the conditions
in Section 6 are satisfied.  If, due to an Insolvency Proceeding with
respect to a Borrower or otherwise, any Swingline Loan may not be settled among
Lenders hereunder, then each Lender shall be deemed to have purchased from
Agent a Pro Rata participation in each unpaid Swingline Loan and shall transfer
the amount of such participation to Agent, in immediately available funds,
within one (1) Business Day after Agent’s request therefor.


 


4.1.4.       Notices.  Each Borrower authorizes Agent and Lenders to
extend, convert or 


 


41

















 


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


 


4.2.         Defaulting Lender.  Agent may (but shall not be required to), in
its discretion, retain any payments or other funds received by Agent that are
to be provided to a Defaulting Lender hereunder, and may apply such funds to
such Lender’s defaulted obligations or readvance the funds to Borrowers in
accordance with this Agreement.  The
failure of any Lender to fund a Revolver Loan, to make any payment in respect of LC
Obligations or to otherwise perform its obligations hereunder  shall not relieve any other Lender of its
obligations, and no Lender shall be responsible for default by another
Lender.  Lenders and Agent agree that,
solely for purposes of determining a Defaulting Lender’s right to vote on
matters relating to the Loan Documents and to share in payments, fees and
Collateral proceeds thereunder, a Defaulting Lender shall not be deemed to be a
“Lender” until all its defaulted obligations have been cured.


 


4.3.         Number and Amount of LIBOR
Revolver Loans; Determination of Rate.  Each Borrowing of LIBOR Revolver Loans when
made shall be in a minimum amount of $500,000, plus any increment of $100,000
in excess thereof.  No more than ten (10) Borrowings
of LIBOR Revolver Loans may be outstanding at any time, and all LIBOR Revolver
Loans of a Borrower having the same length and beginning date of their Interest
Periods shall be aggregated together and considered one Borrowing for this
purpose.  Upon determining LIBOR for any
Interest Period requested by a Borrower, Agent shall promptly notify Borrower
Agent thereof by telephone or electronically and, if requested by Borrower
Agent, shall confirm any telephonic notice in writing.


 


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


 


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


 


4.6.         Effect of Termination.  On the effective date of any termination of
the Revolver 


 


42

















 


Commitments, all Obligations shall be immediately due
and payable, and
any Lender may terminate its and its Affiliates’ Bank Products (including, only
with the consent of Agent, any Cash Management Services).  All undertakings of each Borrower contained
in the Loan Documents shall survive any termination, and Agent shall retain its
Liens in the Collateral and all of its rights and remedies under the Loan
Documents until Full Payment of the Obligations.  Notwithstanding Full Payment of the
Obligations, Agent shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Agent may incur as a result of
the dishonor or return of Payment Items applied to Obligations, Agent receives (a) a
written agreement, executed by Borrowers and any Person whose advances are used
in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders
from any such damages; or (b) such Cash Collateral as Agent, in its
reasonable discretion, deems necessary to protect against any such
damages.  Sections 2.2, 3.4, 3.7, 3.9, 5.5,  5.9, 5.10, 12, 14.2 and this  Section, and the obligation of each
Obligor and Lender with respect to each indemnity given by it in any Loan
Document, shall survive Full Payment of the Obligations and any release
relating to this credit facility.


 


SECTION 5.         PAYMENTS


 


5.1.         General Payment Provisions.  All payments of Obligations
shall be made in Dollars, without offset, counterclaim or defense of any kind,
free of (and without deduction for) any Taxes, and in immediately available
funds, not later than 12:00 noon (Local Time) on the due date. Any payment
after such time shall be deemed made on the next Business Day. Any payment of a
LIBOR Revolver Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9.
Any prepayment of Revolver Loans shall be applied (a) in the case of U.S.
Borrower, first, to U.S. Base Rate Revolver Loans and then to U.S. LIBOR
Revolver Loans and (b) in the case of Singapore Borrower, first, to
Singapore Base Rate Revolver Loans and then to Singapore LIBOR Revolver
Loans.  Unless otherwise specified, all
payments shall be made to Agent, for the Pro Rata benefit of Lenders, in
accordance with the written instructions of Agent.


 


5.2.         Repayment of Revolver Loans.  Revolver Loans shall be due and payable in
full on the Revolver Termination
Date, unless payment is sooner required hereunder.  Revolver Loans may be prepaid from time to
time, without penalty or premium.  During
any Cash Dominion Trigger Period, if any Asset Disposition includes the
disposition of Eligible Equipment, then Net Proceeds equal to the greater of (a) the
net book value of such Eligible Equipment, or (b) the reduction in the
Borrowing Base upon giving effect to such disposition, shall be applied to the
Revolver Loans; provided, that such Net Proceeds shall be applied, first,
to the U.S. Revolver Loans and, second, following Full Payment of the
U.S. Obligations, to the Singapore Revolver Loans.  Notwithstanding anything herein to the
contrary, if an Overadvance exists (including as a result of any Asset
Disposition), the applicable Borrower shall, on the sooner of Agent’s demand or
the first Business Day after such Borrower has knowledge thereof, repay its
outstanding Revolver Loans in an amount sufficient to reduce the principal
balance of Revolver Loans to the U.S. Borrowing Base or Singapore Borrowing
Base, as the case may be.


 


5.3.         Reserved.


 


5.4.         Payment of Other Obligations.  Obligations other than Revolver
Loans, including LC Obligations and Extraordinary Expenses, shall be paid by the
applicable Borrower as provided in the Loan Documents or, if no payment date is
specified, on demand.


 


5.5.         Marshaling; Payments Set Aside.  None of Agent or Lenders shall
be under any obligation to marshal any assets in favor of any Obligor or
against any Obligations.  If any payment
by or on behalf of Borrowers is made to Agent, Issuing Bank or any Lender,
or Agent, Issuing Bank or any Lender exercises a right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including 


 


43

















 


pursuant to any settlement entered into by Agent, Issuing
Bank or such Lender in its discretion) to be repaid to a trustee, receiver or
any other Person, then to the extent of such recovery, the Obligation
originally intended to be satisfied, and all Liens, rights and remedies
relating thereto, shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred.


 


5.6.         Post-Default Allocation of
Payments.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(g)           seventh, to all other
Obligations, other than Bank Product Debt (excluding products under Hedging
Agreements, so long as an appropriate Bank Product Reserve has been established
and is in effect therefor); and


 


(h)           last, to Bank Product Debt
(including products under Hedging Agreements, if an appropriate Bank Product
Reserve has not been established and is not in effect therefor).


 


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


 


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


 


5.7.         Application of Payments.  The ledger balance in the main Dominion
Account of Singapore Borrower as of the end of a Business Day shall be applied
to the Singapore Obligations at the beginning of the next Business Day. During
any Cash Dominion Trigger Period the ledger balance in the 


 


44

















 


main Dominion Account of U.S. Borrower as of the end
of a Business Day shall be applied, first, to the U.S. Obligations, and second,
following Full Payment of the U.S. Obligations, to the Singapore Obligations,
in each case at the beginning of the next Business Day. If, as a result of such
application from a Dominion Account, a credit balance exists, the balance shall
not accrue interest in favor of Borrowers and shall be made available to the
applicable Borrower as long as no Default or Event of Default exists. During
the continuance of an Event of Default, each Borrower irrevocably waives the
right to direct the application of any payments or Collateral proceeds, and
agrees that Agent shall have the continuing, exclusive right to apply and
reapply same against any Obligations that such Collateral secures, in the
manner provided for in this Agreement, or, to the extent not so provided, in
such manner as Agent deems advisable.


 


5.8.         Loan Account; Account
Stated.


 


5.8.1.       Loan
Account.  Agent shall maintain in
accordance with its usual and customary practices an account or accounts (“Loan
Account”) evidencing the Debt of each Borrower resulting from each Revolver
Loan or issuance of a Letter of Credit from time to time. Any failure of Agent
to record anything in the Loan Account, or any error in doing so, shall not
limit or otherwise affect the obligation of such Borrower to pay any amount
owing hereunder. Agent may maintain a single Loan Account in the name of
Borrower Agent.


 


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


 


5.9.         Taxes.


 


5.9.1.       Payments
Free of Taxes.  All payments by
Obligors of Obligations shall be free and clear of and without reduction for
any Taxes.  If Applicable Law requires
any Obligor or Agent to withhold or deduct any Tax (including backup
withholding or withholding Tax), the withholding or deduction shall be based on
information provided pursuant to Section 5.10
and Agent shall pay the amount withheld or deducted to the relevant
Governmental Authority.  If the
withholding or deduction is made on account of Indemnified Taxes or Other
Taxes, the sum payable by Borrowers shall be increased so that Agent, Lender or
Issuing Bank, as applicable, receives an amount equal to the sum it would have
received if no such withholding or deduction (including deductions applicable
to additional sums payable under this Section) had been made.  Without limiting the foregoing, Borrowers shall
timely pay all Other Taxes to the relevant Governmental Authorities.


 


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


 


45






 












 


5.9.3.       Tax
Refunds.  If Agent or a Lender
determines in its reasonable discretion that it has received a refund or credit
(in lieu of such refund) of any Indemnified Taxes or Other Taxes as to which it
has been indemnified by a Borrower or with respect to which a Borrower has paid
additional amounts pursuant to this Section 5.9,
Agent or such Lender, as applicable, shall pay over such refund to such
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by such Borrower under this Section 5.9
with respect to the Indemnified Taxes or the Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority with
respect to such refund); provided, however, that if Agent or such
Lender is required to repay all or a portion of such refund to the relevant
Governmental Authority, such Borrower, upon the request of Agent or such
Lender, shall repay the amount paid over to such Borrower that is required to
be repaid (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to Agent or such Lender within three (3) Business
Days after receipt of written notice that Agent or such Lender is required to
repay such refund (or a portion thereof) to such Governmental Authority.  Nothing contained in this Section 5.9.3 shall require Agent or any Lender to make
available its tax returns or any other information which it deems confidential
or privileged to Borrowers or any other person. 
Notwithstanding anything to the contrary herein, in no event will Agent
or any Lender be required to pay any amount to any Borrower, the payment of
which would place Agent or such Lender in a less favorable net after-tax
position than Agent or such Lender would have been in if the additional amounts
giving rise to such refund of any Indemnified Taxes or Other Taxes had never
been paid.


 


5.10.       Lender Tax Information.


 


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


 


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


 


5.10.3.     Lender
Obligations.  Each Lender and Issuing
Bank shall promptly notify 


 


46

















 


Borrowers and Agent of any change in circumstances
that would change any claimed Tax exemption or reduction.  Each Lender and Issuing Bank shall indemnify,
hold harmless and reimburse (within ten (10) days after demand therefor)
Borrowers and Agent for any Taxes, losses, claims, liabilities, penalties,
interest and expenses (including reasonable attorneys’ fees) incurred by or
asserted against a Borrower or Agent by any Governmental Authority due to such
Lender’s or Issuing Bank’s failure to deliver, or inaccuracy or deficiency in,
any documentation required to be delivered by it pursuant to this Section.  Each Lender and Issuing Bank authorizes Agent
to set off any amounts due to Agent under this Section against any amounts
payable to such Lender or Issuing Bank under any Loan Document.


 


5.11.       Nature and Extent of Certain Liabilities.


 


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


 


5.11.2.     Waivers.


 


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


 


(b)           Agent
and Lenders may, in their discretion, pursue such rights and remedies as they
deem appropriate, including realization upon Collateral by judicial foreclosure
or non judicial sale or enforcement, without affecting any rights and remedies
under this Section 5.10.  If, in taking any action in connection with
the exercise of any rights or remedies, Agent or any Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Borrower or other Person, whether because of any Applicable Laws
pertaining to “election of remedies” or otherwise, each Borrower consents to
such action and waives any claim based upon it, even if the action may result
in loss 


 


47

















 


of
any rights of subrogation that any Borrower might otherwise have had.  Any election of remedies that results in
denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Borrower shall not impair any other Borrower’s obligation
to pay the full amount of the Obligations. 
Each Borrower waives all rights and defenses arising out of an election
of remedies, such as nonjudicial foreclosure with respect to any security for
the Obligations, even though that election of remedies destroys such Borrower’s
rights of subrogation against any other Person. 
Agent may bid all or a portion of the Obligations at any foreclosure or
trustee’s sale or at any private sale, and the amount of such bid need not be
paid by Agent but shall be credited against the Obligations.  The amount of the successful bid at any such
sale, whether Agent or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral, and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 5.10, notwithstanding
that any present or future law or court decision may have the effect of
reducing the amount of any deficiency claim to which Agent or any Lender might
otherwise be entitled but for such bidding at any such sale.


 


5.11.3.     Extent
of Liability; Contribution.


 


(a)           Notwithstanding anything herein to
the contrary, U.S. Borrower shall not make any payment pursuant to Section 5.11.1 if, as a result thereof, such payment
would be rendered voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state fraudulent transfer or conveyance
act, or similar statute or common law.


 


(b)           Nothing contained in this Section 5.11 shall limit the liability
of U.S. Borrower to pay Revolver Loans made directly or indirectly to U.S.
Borrower (including Revolver Loans advanced to Singapore Borrower and then
re-loaned or otherwise transferred to, or for the benefit of, U.S. Borrower),
LC Obligations relating to Letters of Credit issued to support U.S. Borrower’s
business, and all accrued interest, fees, expenses and other related
Obligations with respect thereto, for which U.S. Borrower shall be primarily
liable for all purposes hereunder.


 


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


 


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


 


5.11.6.     Limitation.  Notwithstanding
any other term of this Agreement or any other Loan Document, neither Singapore
Borrower nor any other Foreign Subsidiary shall be obligated in respect of any
Obligations of Parent, U.S. Borrower or any other Obligor (other than Singapore
Borrower or such Foreign Subsidiary).


 


SECTION 6.         CONDITIONS
PRECEDENT


 


6.1.         Conditions Precedent to Effectiveness.  This Agreement shall not be
effective until the 


 


48

















 


date (“Closing Date”) that each of the following
conditions has been satisfied:


 


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


 


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


 


(c)           Agent shall have received all notices
of assignment and acknowledgments thereto signed by each Person to whom that
notice or acknowledgment was addressed, all as required in accordance with
Clause 3.3 of the Singapore Debenture; provided, that Agent shall not
deliver any notice of assignment to HSBC until such time as the unpaid balance
of Singapore Revolver Loans then outstanding (including any requested Singapore
Revolver Loan the borrowing of which is pending) exceeds $7,500,000 and,
accordingly, the receipt by Agent of an acknowledgement of HSBC thereto shall
not be a condition to the effectiveness of this Agreement.


 


(d)           Agent shall have received from KEMET
Asia Pacific all original share certificates in respect of the Equity Interests
of Singapore Borrower, undated transfers of such Equity Interests executed in
blank and all other documents to be delivered pursuant to Clause 3.2 of the
Singapore Share Charge.


 


(e)           Agent shall have received true and
correct copies of the Senior Notes Documents and the Convertible Notes
Documents.


 


(f)            Agent shall have received duly
executed agreements establishing each Dominion Account and related lockbox, in
form and substance, and with financial institutions, reasonably satisfactory to
Agent.


 


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


 


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


 


(i)            Agent shall have received a written
opinion of Kirkland & Ellis LLP and WongPartnership LLP, as well as
any other local counsel to Borrowers or Agent, each in form and 


 


49

















 


substance
reasonably satisfactory to Agent.


 


(j)            Agent shall have received copies of
the Organic Documents of each Obligor, certified by the Secretary of State or
other appropriate official of such Obligor’s jurisdiction of organization.  Agent shall have received good standing
certificates for each Obligor (or, with respect to Singapore Borrower, the
analogous certificate available in Singapore), issued by the Secretary of State
or other appropriate official of such Obligor’s jurisdiction of organization
and each jurisdiction where such Obligor’s conduct of business or ownership of
Property necessitates qualification.


 


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


 


(l)            Agent shall have completed its
business, financial and legal due diligence of Obligors, including a
roll-forward of its previous field examination, with results satisfactory to Agent.  Since March 31, 2010, no event shall
have occurred or circumstance exist that has or could reasonably be expected to
have a Material Adverse Effect.


 


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


 


(n)           Agent shall have received, in form
and substance reasonably satisfactory to Agent, interim financial statements
for Parent as of June 30, 2010.


 


(o)           Agent shall have received a Borrowing
Base Certificate prepared as of July 31, 2010 and a separate aging as of July 31,
2010.  On the date hereof, upon giving
effect to the payment by Borrowers of all fees and expenses incurred in
connection herewith, Aggregate Availability shall be at least $48,000,000.


 


(p)           All conditions precedent in any other
Loan Document shall be satisfied.


 


6.2.         Conditions Precedent to All Credit Extensions.  Agent, Issuing Bank and Lenders shall
not be required to fund any Revolver Loans, arrange for issuance of any Letters
of Credit or grant any other accommodation to or for the benefit of a Borrower,
unless the following conditions are satisfied or waived in accordance with Section 14.1:


 


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


 


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


 


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


 


(d)           With respect to issuance of a Letter
of Credit, the LC Conditions shall be satisfied.


 


Each
request (or deemed request) by Borrowers for funding of a Revolver Loan or
issuance of a Letter of Credit shall constitute a representation by the
applicable Borrower that the foregoing conditions are satisfied on the date of
such request and on the date of such funding or issuance.


 


50

















 


SECTION 7.         COLLATERAL


 


7.1.         Grant of Security Interest.


 


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


 


(a)           all
Accounts;


 


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


 


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


 


(d)           all
Deposit Accounts;


 


(e)           all
Documents;


 


(f)            all
General Intangibles, including Intellectual Property;


 


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


 


(h)           all
Instruments;


 


(i)            all
Investment Property;


 


(j)            all
Letter-of-Credit Rights;


 


(k)           all
Supporting Obligations;


 


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


 


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


 


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


 


Notwithstanding anything contained in this Agreement
to the contrary, the term “Collateral” shall not include: (a) voting
Equity Interests of any Foreign Subsidiary which is a “first tier” Subsidiary
of U.S. Borrower, solely to the extent that such Equity Interests represent
more than 65% of the outstanding voting Equity Interests of such Foreign
Subsidiary; (b) any rights or interest in any contract, lease, permit or
License covering real or personal Property of any Obligor if under the terms of
such contract, lease, permit or License, or Applicable Law with respect
thereto, the grant of a security interest or Lien therein is prohibited as a
matter of law or under the terms of such contract, lease, permit or License and
such prohibition or restriction has not been waived or the consent of the other
party to such contract, lease, permit or License has not been obtained (provided,
that, (i) the foregoing exclusions of this clause (b) shall in no way
be construed (A) to apply to the extent that any described prohibition or
restriction is unenforceable under Section 9-406, 9-407, 9-408, or 9-409
of the UCC or other Applicable 


 


51

















 


Law,
or (B) to apply to the extent that any consent or waiver has been obtained
that would permit Agent’s security interest or Lien notwithstanding the
prohibition or restriction on the pledge of such contract, lease, permit or
License and (ii) the foregoing exclusions of clauses (a) and (b) shall
in no way be construed to limit, impair, or otherwise affect any of Agent’s or
any other Secured Party’s continuing security interests in and Liens upon any
rights or interests of any Obligor in or to (A) monies due or to become
due under or in connection with any described contract, lease, permit, License
or Equity Interests, or (B) any proceeds from the sale, license, lease, or
other dispositions of any such contract, lease, permit, License or Equity
Interests); (c) any United States intent-to-use trademark applications to
the extent that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under Applicable Law, provided,
that, upon submission and acceptance by the United States Patent and Trademark
Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or
any successor provision), such intent-to-use trademark application shall be
considered Collateral; (d) the Senior Notes Collateral and the Equity
Interests of any Subsidiary whose Equity Interests constitute Senior Notes
Collateral (but only so long as such Senior Notes Collateral is pledged to
Indenture Trustee pursuant to the Senior Notes Documents); (e) Equity
Interests of any Foreign Subsidiary which is not a “first tier” Subsidiary of
U.S. Borrower or which is a “first tier” Subsidiary of U.S. Borrower organized
in Finland, Germany, Canada or Japan; provided, that, upon the
occurrence of a Cash Dominion Trigger Period, U.S. Borrower shall pledge to
Agent the Equity Interests of each “first tier” Subsidiary of U.S. Borrower
organized in Germany; (f) Equity Interests in any Dormant Australian
Subsidiary, so long as such Dormant Australian Subsidiary (i) does not
conduct any business, obtain any assets or incur any liabilities and (ii) is
dissolved in accordance with Applicable Law on or before December 31,
2010; (g) any interest in Real Estate; (h) Excluded Deposit
Accounts; and (i) the UBS VAT Restricted Cash.


 


7.1.2.       Grant
of Security Interest by Singapore Borrower. 
To secure the prompt payment and performance of all Singapore
Obligations, pursuant to the Singapore Debenture Singapore Borrower has granted
to Agent, for the benefit of Secured Parties, a continuing security interest in
and Lien upon the personal Property of Singapore Borrower as provided therein.


 


7.2.         Lien on Deposit Accounts; Cash Collateral.


 


7.2.1.       Deposit
Accounts.  To further secure the
prompt payment and performance of all Obligations, U.S. Borrower hereby grants
to Agent, for the benefit of Secured Parties, a continuing security interest in
and Lien upon all amounts credited to any Deposit Account of U.S. Borrower,
including any sums in any blocked or lockbox accounts or in any accounts into
which such sums are swept.  U.S. Borrower
hereby authorizes and directs each bank or other depository to deliver to
Agent, upon request during a Cash Dominion Trigger Period, all balances in any
Deposit Account maintained by U.S. Borrower, without inquiry into the authority
or right of Agent to make such request.


 


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


 


52

















 


7.3.         Reserved.


 


7.4.         Other Collateral.


 


7.4.1.       Commercial
Tort Claims.  U.S. Borrower shall
promptly notify Agent in writing if U.S. Borrower has a Commercial Tort Claim
(other than, as long as no Event of Default exists, a Commercial Tort Claim for
less than $500,000), shall promptly amend Schedule 9.1.16
to include such claim, and shall take such actions as Agent deems appropriate
to subject such claim to a duly perfected, first priority Lien in favor of
Agent (for the benefit of Secured Parties).


 


7.4.2.       Certain
After-Acquired Collateral.  U.S.
Borrower shall promptly notify Agent in writing if, after the Closing Date,
U.S. Borrower obtains any interest in any Collateral having an aggregate value
in excess of $500,000 consisting of Deposit Accounts (other than Excluded
Deposit Accounts), Chattel Paper, Documents, Instruments, Investment
Property or Letter-of-Credit Rights and, upon Agent’s request, shall promptly
take such actions as Agent reasonably deems appropriate to effect Agent’s duly
perfected, first priority Lien upon such Collateral, including obtaining any
appropriate possession, control agreement or Lien Waiver.  If any Collateral having an aggregate value
in excess of $500,000 is in the possession of a third party, at Agent’s
request, U.S. Borrower shall obtain an acknowledgment that such third party
holds such Collateral for the benefit of Agent. 
Concurrently with the delivery of the financial statements required
under Sections 10.1.2(a) and 10.1.2(b), U.S. Borrower shall provide Agent with an update
of all Intellectual Property registered or issued to, or applied for by, U.S.
Borrower in the Fiscal Quarter then most recently ended.


 


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


 


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


 


SECTION 8.         COLLATERAL
ADMINISTRATION


 


8.1.         Borrowing Base Certificates.  By the twentieth (20th) day of each month (or, if such twentieth (20th) day is not a Business Day, the first Business Day thereafter),
Borrower Agent shall deliver to Agent (and Agent shall promptly deliver same to
Lenders) a Borrowing Base Certificate prepared as of the last day of the
previous month, and, upon the occurrence and during the continuance of an Event
of Default, at such other times as Agent may request; provided, that,
without limiting the generality of the foregoing, during each Cash Dominion
Trigger Period, Borrowing Base Certificates shall be delivered weekly, by the
close of business on Tuesday of each week, prepared as of the last day of the
previous week.  All calculations of
Aggregate Availability, Singapore Availability and U.S. Availability in any
Borrowing Base Certificate shall originally be made by Borrower Agent and
certified by a Senior Officer, provided that Agent may from time to time review
and adjust any such calculation  (a) to
reflect its reasonable estimate of declines in value of any Collateral, due to
collections received in the Dominion Account or otherwise and (b) to the
extent the calculation is not made in accordance with this Agreement or does
not accurately reflect the Availability Reserve, Singapore Availability or U.S.
Availability.


 


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8.2.         Administration of Accounts.


 


8.2.1.       Records
and Schedules of Accounts.  Each
Borrower shall keep accurate and complete records of its Accounts, including
all payments and collections thereon, and shall submit to Agent sales,
collection, reconciliation and other reports in form reasonably satisfactory to
Agent, on such periodic basis as Agent may reasonably request.  Each Borrower shall also provide to Agent, on
or before the twentieth (20th)
day of each month (or, if such twentieth (20th)
day is not a Business Day, the first Business Day thereafter), a detailed aged
trial balance of all Accounts as of the last day of the preceding month,
specifying each Account’s Account Debtor name and address, amount, invoice date
and due date, showing any discount, allowance, credit, authorized return or
dispute, and including such proof of delivery, copies of invoices and invoice
registers, copies of related documents, repayment histories and status reports
as Agent may reasonably request, together with a reconciliation of monthly
agings to Borrowers’ monthly balance sheet and Borrowers’ monthly watch
list.  If in the first semi-monthly
period of any month Accounts in an aggregate face amount of $300,000 or more
owing by any Account Debtor cease to be Eligible Accounts, Borrowers shall
notify Agent of such occurrence within two (2) Business Days after the end
of such semi-monthly period.


 


8.2.2.       Taxes.  If an Account of any Borrower includes a
charge for any Taxes, Agent is authorized, in its discretion, to pay the amount
thereof to the proper taxing authority for the account of such Borrower and to
charge Borrowers therefor; provided, however, that neither Agent nor Lenders shall
be liable for any Taxes that may be due from a Borrower or with respect to any
Collateral and Agent shall use reasonable efforts to notify U.S. Borrower of
Agent’s payment of such Taxes.


 


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


 


8.2.4.       Maintenance
of Dominion Account.  Borrowers shall
maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable
to Agent.  Borrowers shall obtain an
agreement (in form and substance satisfactory to Agent) from each lockbox
servicer and Dominion Account bank, establishing Agent’s control over and Lien
in the lockbox or Dominion Account, which may be exercised by Agent, in the
case of Singapore Borrower, at all times and, in the case of U.S. Borrower,
during any Cash Dominion Trigger Period, requiring immediate deposit of all
remittances received in the lockbox to a Dominion Account, and waiving offset
rights of such servicer or bank, except for customary administrative
charges.  If a Dominion Account is not
maintained with Bank of America, Agent may, in the case of Singapore Borrower,
at all times and, in the case of U.S. Borrower, during any Cash Dominion
Trigger Period, require immediate transfer of all funds in such account to a
Dominion Account maintained with Bank of America.  Agent and Lenders assume no responsibility to
Borrowers for any lockbox arrangement or Dominion Account, including any claim
of accord and satisfaction or release with respect to any Payment Items
accepted by any bank.


 


8.2.5.       Proceeds
of Collateral.  Each Borrower shall
request in writing and otherwise take all commercially reasonable steps to
cause all payments on Accounts or otherwise relating to Collateral to be made
directly to the applicable Dominion Account (or a lockbox relating to a
Dominion Account) or a Deposit Account subject to a Deposit Account Control
Agreement. If any Borrower or Subsidiary receives cash or Payment Items in
excess of $100,000 in the aggregate with respect to (a) any Collateral of
U.S. Borrower, it shall hold same in trust for Agent and promptly (not more
than four (4) Business Days after receipt) deposit the same into a
Dominion Account of U.S. Borrower or a Deposit 


 


54

















 


Account of U.S. Borrower subject to a Deposit Account
Control Agreement or (b) any Collateral of Singapore Borrower, it shall
hold same in trust for Agent and promptly (not more than four (4) Business
Days after receipt) deposit the same into a Dominion Account of Singapore
Borrower.


 


8.3.         Administration of Inventory.


 


8.3.1.       Records
and Reports of Inventory.  U.S.
Borrower shall keep accurate and complete records of its Inventory, including
costs and daily withdrawals and additions, and shall submit to Agent inventory
and reconciliation reports in form reasonably satisfactory to Agent, on such
periodic basis as Agent may request. 
U.S. Borrower shall conduct weekly cycle counts consistent with
historical practices, and shall provide to Agent the most recently completed
report based on such cycle count promptly upon request therefor, together with
such supporting information as Agent may reasonably request.  Agent may participate in and observe no more
than one period cycle count per Fiscal Year unless an Event of Default exists; provided,
that, notwithstanding the foregoing, Agent may observe any cycle count
commenced or in progress during any inspection or examination conducted by
Agent pursuant to Section 10.1.1.


 


8.3.2.       Returns
of Inventory.  U.S. Borrower shall
not return any Inventory to a supplier, vendor or other Person, whether for
cash, credit or otherwise, unless (a) such return is in the Ordinary
Course of Business; (b) no Event of Default or Overadvance exists or would
result therefrom; (c) Agent is promptly notified if the aggregate Value of
all Inventory returned in any month exceeds $1,000,000; and (d) any payment
received by U.S. Borrower for a return is promptly deposited into a Deposit
Account subject to a Deposit Account Control Agreement.


 


8.3.3.       Acquisition,
Sale and Maintenance.  U.S. Borrower
shall take all steps to assure that all Inventory is produced in accordance
with Applicable Law.  Borrowers shall
use, store and maintain all Inventory with reasonable care and caution, in
accordance with applicable standards of any insurance and in conformity with
all Applicable Law, and shall make current rent payments (within applicable
grace periods provided for in leases) at all locations where any Collateral included
in the Borrowing Base is located.  Each
Compliance Certificate shall set forth a current schedule, in form and content
reasonably satisfactory to Agent, of Inventory of U.S. Borrower at each of U.S.
Borrower’s locations having an aggregate Value at such location in excess of
$100,000 being offered for sale on consignment or approval or any other basis
under which the customer may return or require a Borrower to repurchase such
Inventory.  Concurrently with the delivery
of the financial statements required under Section 10.1.2(a),
U.S. Borrower shall provide Agent with a description, in form and content
reasonably satisfactory to Agent, of all arrangements relating to Inventory
acquired or accepted on consignment or approval having an aggregate Value in excess
of $100,000 for each such arrangement. 
U.S. Borrower shall use good faith efforts to obtain, within sixty (60)
days after the Closing Date and to the extent available under Applicable Law,
waivers of all retention of title rights inuring to the benefit of Subsidiaries
organized in Europe in respect of goods purchased by U.S. Borrower from such
Subsidiaries.


 


8.4.         Administration of Equipment.


 


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


 


8.4.2.       Dispositions
of Equipment.  No Borrower shall
sell, lease or otherwise dispose of any Equipment, without the prior written
consent of Agent, other than a Permitted Asset Disposition.


 


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8.4.3.                     Condition of Equipment.  U.S. Borrower’s Equipment included in the
Borrowing Base is in good operating condition and repair, and all necessary
replacements and repairs have been made so that the value and operating
efficiency of such Equipment is preserved at all times, reasonable wear and
tear excepted.  U.S. Borrower shall
ensure that its Equipment is mechanically and structurally sound, and capable
of performing the functions for which it was designed, in accordance with
manufacturer specifications.  U.S.
Borrower shall not permit any of its Equipment included in the Borrowing Base
to become affixed to Real Estate unless any landlord or mortgagee delivers a
Lien Waiver.


 


8.5.                            Administration of Deposit Accounts.  Schedule 8.5 sets forth all Deposit Accounts
(other than Excluded Deposit Accounts) maintained by Borrowers and the other
Obligors, including all Dominion Accounts. 
Each Borrower and other Obligor shall take all actions necessary to
establish Agent’s control of each such Deposit Account (other than an Excluded
Deposit Account, Deposit Accounts maintained at HSBC and Deposit Accounts
maintained at UniCredit Corporate Banking SpA ); provided, that, within
ninety (90) days after the Closing Date, each such Deposit Account (other than
an Excluded Deposit Account) maintained with a bank or other depository other
than Bank of America or Bank of America-Singapore Branch shall be closed and
all account balances therein shall be transferred to Deposit Accounts
maintained with Bank of America (in the case of Deposit Accounts of U.S.
Borrower) or Bank
of America-Singapore Branch (in the case of Deposit Accounts of Singapore
Borrower); provided, further, that during such ninety (90)
day period (a) each Borrower shall authorize and direct each such other bank
or other depository (other than UniCredit Corporate Banking SpA and, except
during a Cash Dominion Trigger Period, Wells Fargo) to transfer to a Deposit
Account maintained with Bank of America (in the case of Deposit Accounts of
U.S. Borrower) or Bank of America-Singapore Branch (in the case of Deposit Accounts of
Singapore Borrower), on a daily basis, all available balances as of 4:00 p.m.
(Local Time) in each Deposit Account (other than an Excluded Deposit Account)
maintained by such Borrower with such other bank or depository, it being
understood and agreed that no such daily transfer from any Deposit Account
maintained with HSBC in Singapore shall be required prior to October 1, 2010,
and (b) Borrowers shall not make any withdrawals or wire transfers from, draw
any checks against or otherwise conduct any business from any Dollar or Euro
Deposit Account maintained with HSBC in Singapore, except for the daily
transfers required to be made pursuant to the foregoing clause (a) and
collections received into such Deposit Accounts.  Each Borrower and other Obligor shall be the
sole account holder of each Deposit Account and shall not allow any other
Person (other than Agent) to have control over a Deposit Account or any
Property deposited therein.  Each Borrower
shall promptly notify Agent of any opening or closing of a Deposit Account
(other than an Excluded Deposit Account) and will amend Schedule 8.5
within ten (10) days to reflect same.


 


8.6.                            General Provisions.


 


8.6.1.                     Location of Collateral.  All Accounts of U.S. Borrower and Singapore
Borrower shall be paid to the applicable Borrower at all times in the United
States or Singapore, respectively.  All
tangible items of Collateral, other than Inventory in transit and Collateral
not included in the Borrowing Base with a fair market value individually or in
the aggregate not in excess of $50,000, shall at all times be kept by Borrowers
at the business locations set forth in Schedule
8.6.1, except that Borrowers may (a) make sales or other
dispositions of Collateral in accordance with Section 10.2.6;
and (b) move Collateral to another location in the United States,
Singapore or other location specified in Schedule 8.6.1
(as amended within ten (10) days of acquiring any new location), as
applicable.


 


8.6.2.                     Insurance of Collateral; Condemnation Proceeds.


 


(a)                                  Each Borrower and other Obligor shall maintain insurance with respect to
the Collateral, covering casualty, hazard, theft, malicious mischief, flood and
other risks, in amounts, with 


 


56

















 


endorsements
and with insurers (with a Best Rating of at least A7, unless otherwise approved
by Agent) reasonably satisfactory to Agent. 
From time to time upon request, Borrowers shall deliver to Agent the
originals or certified copies of its or other Obligors’ insurance policies.
Unless Agent shall agree otherwise, each such policy shall include satisfactory
endorsements (i) showing Agent as loss payee; (ii) requiring ten (10) days
prior written notice to Agent in the event of cancellation of the policy for
nonpayment of insurance premiums and thirty (30) days prior written notice to
Agent in the event of cancellation of the policy for any other reason
whatsoever; and (iii) specifying that the interest of Agent shall not be
impaired or invalidated by any act or neglect of any Borrower, other Obligor or
the owner of the Property, nor by the occupation of the premises for purposes
more hazardous than are permitted by the policy. If any Borrower or other
Obligor fails to provide and pay for any insurance, Agent may, at its option,
but shall not be required to, procure the insurance and charge Borrowers
therefor. Each Borrower and other Obligor agrees to deliver to Agent, promptly
upon Agent’s reasonable request, copies of all reports made to insurance
companies. While no Event of Default exists, Borrowers and other Obligors may
settle, adjust or compromise any insurance claim, as long as the proceeds are
delivered to Agent to the extent required under Section 8.6.2(b).
If an Event of Default exists, only Agent shall be authorized to settle, adjust
and compromise such claims.


 


(b)                                 Any proceeds of
property insurance relating to any loss or destruction of Eligible Inventory or
Eligible Equipment, any proceeds of business interruption insurance, any awards
arising from condemnation of any Collateral and, at any time when Aggregate
Availability is less than $10,000,000 or U.S. 
Availability is less than $7,500,000, any proceeds of property insurance
relating to any loss or destruction of Property of any Obligor other than
Eligible Inventory or Eligible Equipment, shall be paid to Agent.  Any
proceeds or awards (a) relating to the property and assets of Singapore
Borrower and Foreign Subsidiaries that are Obligors shall be applied, first, to
the Singapore Revolver Loans, and, second, to the other Obligations of
Singapore Borrower, and (b) relating to the property and assets of U.S.
Borrower or Domestic Subsidiaries shall be applied, first, to the U.S. Revolver
Loans, second, to the other Obligations of U.S. Borrower, third, to the
Singapore Revolver Loans, and fourth, the other Obligations of Singapore
Borrower (it being agreed that no amounts shall be applied to any category of
Obligations as so set forth until Full Payment thereof and then to the next
category).  Any such proceeds or awards that relate to
Inventory shall be applied to payment of the Revolver Loans, and then to any
other Obligations outstanding.  Subject
to clause (c) below, any proceeds or awards that relate to Equipment or
Real Estate shall be applied first to Revolver Loans and then to other
Obligations.


 


(c)                                  With respect to any
proceeds relating to any loss or destruction of Equipment or Real Estate
delivered to Agent pursuant to Section 8.6.2(b),
if requested by Borrowers in writing within fifteen (15) days after Agent’s
receipt of any such insurance proceeds or condemnation awards, Borrowers may
use such proceeds or awards to repair or replace such Equipment or Real Estate
(and until so used, the proceeds shall be (i) held by Agent as Cash
Collateral, (ii) fully reserved against the
Borrowing Base, or (iii) some combination thereof acceptable to Agent) as long as (i) no
Default or Event of Default exists; (ii) such repair or replacement is
promptly undertaken and concluded, in accordance with plans reasonably
satisfactory to Agent; (iii) replacement buildings are of comparable size,
quality and utility to the destroyed buildings; (iv) the repaired or
replaced Property is free of Liens, other than Permitted Liens that are not
Purchase Money Liens; and (v) Borrowers comply with disbursement
procedures for such repair or replacement as Agent may reasonably require.


 


8.6.3.                     Protection of Collateral.  All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by the Borrower on whose behalf the
foregoing are incurred. Agent shall not be liable or responsible in any way for
the safekeeping of any Collateral, for any loss or damage thereto (except for
reasonable care in its custody while Collateral is in 


 


57

















 


Agent’s actual possession), for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other Person whatsoever, but the same shall be at the
applicable Borrower’s sole risk.


 


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


 


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


 


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


 


(b)                                 Pay or discharge taxes and Liens levied or placed on or threatened
against any Accounts of any Borrower or, during an Event of Default, pay or
discharge taxes and Liens levied or placed on or threatened against any other
Collateral; and


 


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


 


8.8.                            Conflict with Singapore Debenture.  If any provision contained in
this Section 8 is in direct conflict
with any provision in the Singapore Debenture with respect to administration of
the Collateral of Singapore Borrower, the provision in the Singapore Debenture
shall govern and control.


 


SECTION 9.                            REPRESENTATIONS AND WARRANTIES


 


9.1.                            General Representations and Warranties.  To induce Agent and Lenders to enter into
this Agreement and to make available the Revolver Commitments, Revolver Loans
and Letters of Credit, each Borrower represents and warrants that:


 


9.1.1.                     Organization and Qualification.  Each Borrower and Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.  


 


58

















 


Each Borrower and Subsidiary is duly qualified,
authorized to do business and in good standing as a foreign corporation in each
jurisdiction where failure to be so qualified could reasonably be expected to
have a Material Adverse Effect.


 


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


 


9.1.3.                     Enforceability.  Subject to the Moneylenders Act Reservation,
each Loan Document is a legal, valid and binding obligation of each Obligor
party thereto, enforceable in accordance with its terms, except that the
Singapore Debenture and Singapore Share Charge are required to be stamped with
the Inland Revenue Authority of Singapore and statements containing particulars
of the Singapore Debenture and Singapore Share Charge are required to be filed
with the Accounting and Corporate Regulatory Authority of Singapore (each of
which actions Borrowers agree to complete substantially concurrently with the
occurrence of the Closing Date), and except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally.


 


9.1.4.                     Capital Structure.  Schedule
9.1.4 shows, for each Borrower and Subsidiary, its name, its
jurisdiction of organization, its authorized and issued Equity Interests, the
holders of its Equity Interests, and all agreements binding on such holders
with respect to their Equity Interests. 
Except as disclosed on Schedule 9.1.4,
in the five years preceding the Closing Date, no Borrower or Subsidiary has acquired
any substantial assets from any other Person (other than a Borrower or
Subsidiary) nor been the surviving entity in a merger, amalgamation or
combination.  Each Borrower has good
title to its Equity Interests in its Subsidiaries, subject only to Agent’s
Lien, and all such Equity Interests are duly issued, fully paid and, to the
extent applicable, non-assessable.  There
are no outstanding purchase options, warrants, subscription rights, agreements
to issue or sell, convertible interests, phantom rights or powers of attorney
relating to Equity Interests of any Borrower or Subsidiary.


 


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


 


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


 


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


 


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


 


59

















 


relating
thereto;


 


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


 


(d)                                 it is not subject to any offset, Lien (other than Agent’s Lien and
Permitted Liens of the types described in Sections 10.2.2(c) and
(g)), deduction, defense, dispute,
counterclaim or other adverse condition except as arising in the Ordinary
Course of Business and disclosed to Agent; and it is absolutely owing by the Account
Debtor, without contingency in any respect;


 


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


 


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


 


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


 


9.1.7.                     Financial Statements.  The consolidated and consolidating balance
sheets, and related statements of income, cash flow and shareholder’s equity,
of Parent and its subsidiaries that have been and are hereafter delivered to
Agent and Lenders, are prepared in accordance with GAAP (subject, in the case
of interim financial statements, to year-end adjustments and the absence of
footnotes), and fairly present in accordance with GAAP the financial positions
and results of operations of Borrowers and Subsidiaries at the dates and for
the periods indicated.  All projections
delivered from time to time to Agent and Lenders have been prepared in good
faith, based on reasonable assumptions in light of the circumstances at such
time.  Since March 31, 2010, there
has been no change in the condition, financial or otherwise, of any Borrower or
Subsidiary that could reasonably be expected to have a Material Adverse
Effect.  No financial statement delivered
to Agent or Lenders at any time contains any untrue statement of a material
fact, nor fails to disclose any material fact necessary to make such statement
not materially misleading.  Each Borrower
is and Borrowers and Subsidiaries, taken as a whole, are Solvent.


 


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


 


9.1.9.                     Taxes.  Each Borrower and Subsidiary has filed all
federal and material state and local tax returns and other reports that it is
required by law to file, and has paid, or made provision for the payment of,
all material Taxes upon it, its income and its Properties that are due and
payable, except to the extent being Properly Contested.  The provision for Taxes on the books of each
Borrower and Subsidiary is adequate for all years not closed by applicable
statutes, and for its current Fiscal Year.


 


9.1.10.               Brokers.  There are no brokerage commissions,
finder’s fees or investment 


 


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banking fees payable in connection with any
transactions contemplated by the Loan Documents.


 


9.1.11.               Intellectual
Property. Each Borrower and
Subsidiary owns or has the lawful right to use all Intellectual Property
necessary for the conduct of its business, without conflict with any rights of
others that, individually or cumulatively with all such conflicts, could
reasonably be expected to have a Material Adverse Effect.  There is no pending or, to any Borrower’s
knowledge, threatened Intellectual Property Claim with respect to any Borrower,
any Subsidiary or any of their Property (including any Intellectual Property)
that, individually or cumulatively with all such Intellectual Property Claims
against all Borrowers and Subsidiaries, could reasonably be expected to have a
Material Adverse Effect.  Except as
disclosed on Schedule 9.1.11, no
Borrower or Subsidiary pays or owes any Royalty or other compensation to any
Person with respect to any Intellectual Property that is not generally
available for purchase or license.  All
registered Intellectual Property, and all Intellectual Property for which
registration has been applied for, in each case which is owned, used or licensed
by any Borrower or Subsidiary that is not generally available for purchase or
license, is shown on Schedule 9.1.11.


 


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


 


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


 


9.1.14.               Compliance
with Environmental Laws.  Except as disclosed on Schedule 9.1.14, no Borrower’s or
Subsidiary’s past or present operations, Real Estate or other Properties are
subject to any federal, state or local investigation to determine whether any
remedial action is needed to address any environmental pollution, hazardous
material or environmental clean-up, except where such remedial action could not
reasonably be expected to have a Material Adverse Effect.  No Borrower or Subsidiary has received any
Environmental Notice regarding conditions that could reasonably be expected to
have a Material Adverse Effect.  No
Borrower or Subsidiary has any contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any
Real Estate now or previously owned, leased or operated by it, except
contingent liabilities which could not reasonably be expected to have a
Material Adverse Effect.


 


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


 


9.1.16.               Litigation.  Except as shown on Schedule 9.1.16, there are no proceedings
or 


 


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investigations pending or, to any Borrower’s
knowledge, threatened against any Borrower or Subsidiary, or any of their
businesses, operations, Properties, prospects or conditions, that (a) relate
to any Loan Documents or transactions contemplated thereby; or (b) could
reasonably be expected to have a Material Adverse Effect if determined
adversely to any Borrower or Subsidiary. 
Except as shown on such Schedule, no Obligor has a Commercial Tort Claim
(other than, as long as no Default or Event of Default exists, a Commercial
Tort Claim having a value of less than $500,000).  No Borrower or Subsidiary is in default with
respect to any order, injunction or judgment of any Governmental Authority of (i) the
United States or any political subdivision thereof, (ii) the Republic of
Singapore or any political subdivision thereof or (iii) any other
jurisdiction.


 


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


 


9.1.18.               Benefit
Plans.


 


(a)                                  U.S. Benefit Plans.  Except as disclosed on Schedule
9.1.18:


 


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


 


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


 


(iii)                               (A) No ERISA Event has occurred or is reasonably expected to occur;
(B) no Pension Plan has any Unfunded Pension Liability; (C) no
Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (D) no
Obligor or ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (E) no Obligor or ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.


 


(b)                                 Foreign Benefit Plans.


 


(i)                                 With respect to any Foreign Plan, (A) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if


 


62

















 


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


 


(ii)                                  Each Foreign Plan is in compliance (A) in all material respects
with the requirements of all Applicable Laws of the Republic of Singapore and (B) in
all respects with the requirements of all federal, state, provisional and other
Applicable Laws (other than those of the Republic of Singapore), except where
such failure to be in compliance could not, either singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect .


 


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


 


9.1.19.               Trade
Relations.  There exists no actual or threatened
termination, limitation or modification of any business relationship between
any Borrower or Subsidiary and any customer or supplier, or any group of
customers or suppliers, who individually or in the aggregate are material to
the business of such Borrower or Subsidiary, except as could not reasonably be
expected to result in a Material Adverse Effect.  There exists no condition or circumstance
that could reasonably be expected to impair the ability of any Borrower or
Subsidiary to conduct its business at any time hereafter in substantially the
same manner as conducted on the Closing Date, except as could not reasonably be
expected to result in a Material Adverse Effect.


 


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


 


9.1.21.               Payable
Practices.  No Borrower or Subsidiary has made any change
in its historical accounts payable practices from those in effect on the
Closing Date that could reasonably be expected to have a Material Adverse
Effect.


 


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


 


9.1.23.               Margin
Stock.  No
Borrower or Subsidiary is engaged, principally or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.  No
Revolver Loan proceeds or Letters of Credit will be used by Borrowers to
purchase or 


 


63

















 


carry, or to reduce or refinance any Debt incurred to
purchase or carry, any Margin Stock or for any related purpose governed by
Regulations T, U or X of the Board of Governors.


 


9.1.24.               Dormant
Australian Subsidiaries.  No Dormant Australian Subsidiary conducts any
business or has any material assets, Indebtedness or material liabilities.


 


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


 


9.3.                            Amendment of Schedules.  Except as otherwise provided herein,
concurrently with the delivery of each quarterly and annual Compliance
Certificate, Borrowers shall provide Agent with written notice of any
amendments to the Schedules referred to in Sections 8 and 9 and any representation, warranty, or covenant contained
herein which refers to any such Schedule shall, from and after the first day of
the Fiscal Quarter to which such Compliance Certificate relates, refer to such
Schedule as so amended; provided, however, that in no event shall
the amendment of any such Schedule constitute a waiver by Agent and Lenders of
any Default or Event of Default arising as a result of noncompliance with Section 10 that exists notwithstanding the amendment of
such Schedule.


 


SECTION 10.                     COVENANTS
AND CONTINUING AGREEMENTS


 


10.1.                     Affirmative Covenants.  Until Full Payment of the Obligations has
occurred, each Borrower shall, and shall cause each Subsidiary to:


 


10.1.1.               Inspections;
Appraisals.


 


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


 


(b)                                 Reimburse Agent for all charges, costs and expenses of Agent in
connection with examinations of any Obligor’s books and records or any other
financial or Collateral matters as Agent deems appropriate, up to two times
per Loan Year (or three times per Loan Year if Aggregate Availability at
any time during such Loan Year  is less
than 15% of the aggregate Revolver Commitments at such time for five (5) consecutive
days); provided, however, that if an examination is initiated
during a Default or Event of Default, all charges, costs and expenses therefor
shall be reimbursed by Borrowers without regard to such limits.  Subject to and without limiting the
foregoing, Borrowers specifically agree to pay Agent’s then standard charges
for each day that an employee of Agent or its Affiliates is engaged in any
examination activities.  This Section shall
not be construed to limit Agent’s right to conduct examinations or to obtain appraisals
at any time in its discretion, nor to use third parties for such purposes.


 


10.1.2.               Financial
and Other Information.  Keep adequate records and books of account
with respect to its business activities, in which proper entries are made in
accordance with GAAP 


 


64

















 


reflecting all financial transactions; and furnish to
Agent and Lenders:


 


(a)                                  as soon as available, and in any event within ninety (90) days
after the close of each Fiscal Year, balance sheets as of the end of such
Fiscal Year and the related statements of income, cash flow and shareholders’
equity for such Fiscal Year, on consolidated and consolidating bases for Parent
and its Subsidiaries, which consolidated statements shall be audited and
certified (without qualification as to scope or going concern) by Ernst &
Young LLP or another firm of independent certified public accountants of
recognized standing selected by Parent and reasonably acceptable to Agent, and
shall set forth in comparative form corresponding figures for the preceding
Fiscal Year (it being understood and agreed that the timely filing with the SEC
of Parent’s Form 10-K for such Fiscal Year shall satisfy such delivery
requirement in this clause (a));


 


(b)                                 as soon as available, and in any event within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters, unaudited
balance sheets as of the end of such Fiscal Quarter and the related statements
of income and cash flow for such Fiscal Quarter and for the portion of the
Fiscal Year then elapsed, on consolidated and consolidating bases for Parent
and its Subsidiaries, setting forth in comparative form corresponding figures
for the preceding Fiscal Year and certified by the chief financial officer of
Borrower Agent as prepared in accordance with GAAP and fairly presenting the
financial position and results of operations for such Fiscal Quarter and
period, subject to normal year-end adjustments and the absence of footnotes (it
being understood and agreed that the timely filing with the SEC of Parent’s Form 10-Q
for such Fiscal Quarter shall satisfy such delivery requirement in this clause
(b));


 


(c)                                  as soon as available, and in any event within thirty (30) days
after the end of each month (but within sixty (60) days after the last month in a
Fiscal Year), unaudited balance sheets as of the end of such month and the
related statements of income and cash flow for such month and for the portion
of the Fiscal Year then elapsed, on consolidated and consolidating bases for
Parent and its Subsidiaries, setting forth in comparative form corresponding
figures for the preceding Fiscal Year and certified by the chief financial
officer of Borrower Agent as prepared in accordance with GAAP and fairly
presenting the financial position and results of operations for such month and
period, subject to normal year-end adjustments and the absence of footnotes; provided,
that the financial statements furnished to Agent and Lenders pursuant to this Section 10.1.2(c) for the last month in a Fiscal
Year shall have appended to them supplemental schedules setting forth the same
information for the last Fiscal Quarter of such Fiscal Year;


 


(d)                             concurrently with delivery of financial statements under clauses (a), (b) and
(c) above, or more frequently if requested by Agent while a Default or
Event of Default exists, a Compliance Certificate executed by the chief
financial officer of Borrower Agent; provided, that, unless compliance
with Section 10.3.1 is required at the
time of delivery of any Compliance Certificate, the failure of Borrowers to
maintain the Fixed Charge Coverage Ratio set forth in Section 10.3.1
shall not result in an Event of Default;


 


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


 


(f)                                    prior to the commencement of each Fiscal Year, projections of Parent’s
consolidated balance sheets, results of operations, cash flow and Aggregate
Availability, U.S. Availability and Singapore Availability for such Fiscal
Year, month by month, and for the next two Fiscal Years, year by year;


 


(g)                                 at Agent’s request, a listing of each Borrower’s trade payables, specifying
the 


 


65

















 


trade
creditor and balance due, and a detailed trade payable aging, all in form
satisfactory to Agent;


 


(h)                                 if Parent no longer files reports under Sections 13 and 15(d) of
the Securities Exchange Act of 1934, promptly after the sending or filing
thereof, copies of any proxy statements, financial statements or reports that
any Borrower has made generally available to its shareholders; copies of any
regular, periodic and special reports or registration statements or
prospectuses that any Borrower files with any Governmental Authority or any
securities exchange; and copies of any press releases or other statements made
available by a Borrower to the public concerning material changes to or developments
in the business of such Borrower;


 


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


 


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


 


10.1.3.               Notices.  Notify Agent and Lenders in
writing, promptly after a Borrower’s obtaining knowledge thereof, of any of the
following that affects an Obligor: (a) the threat or commencement of any
proceeding or investigation, whether or not covered by insurance, if an adverse
determination could reasonably be expected to have a Material Adverse Effect; (b) any
pending or threatened labor dispute, strike or walkout, or the expiration of
any material labor contract; (c) any default under or termination of a
Material Contract; (d) the existence of any Default or Event of Default; (e) any
judgment in an amount exceeding $5,000,000; (f) the assertion of any
Intellectual Property Claim, if an adverse resolution could have a Material
Adverse Effect; (g) any violation or asserted violation of any Applicable
Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if an adverse
resolution could reasonably be expected to have a Material Adverse Effect; (h) any
Environmental Release by an Obligor or on any Property owned, leased or
occupied by an Obligor, except as could not reasonably be expected to have a
Material Adverse Effect; or receipt of any Environmental Notice relating to a
condition or occurrence that could reasonably be expected to have a Material
Adverse Effect; (i) the occurrence of any ERISA Event; (j) the
discharge of or any withdrawal or resignation by Borrowers’ independent
accountants; (k) any opening of a new office or place of business, at
least ten (10) days prior to such opening; or (l) the receipt or
delivery of any notice pursuant to any Senior Note or Convertible Note.


 


10.1.4.               Landlord
and Storage Agreements.  Upon request, provide Agent with copies of
all existing agreements and, not less frequently than once in each six (6) month
period, provide Agent with copies of all future agreements, between an Obligor
and any landlord, warehouseman, processor, shipper, bailee or other Person that
owns any premises at which any Collateral may be kept or that otherwise may
possess or handle any Collateral.


 


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


 


66
















 


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


 


10.1.7.               Insurance.  In addition to the insurance
required hereunder with respect to Collateral, maintain insurance with insurers
(with a Best Rating of at least A7, unless otherwise approved by Agent)
reasonably satisfactory to Agent, (a) with respect to the Properties and
business of Borrowers and Subsidiaries of such type (including product
liability, workers’ compensation, larceny, embezzlement, or other criminal
misappropriation insurance), in such amounts, and with such coverages and
deductibles as are customary for companies similarly situated; and (b) business
interruption insurance with coverage of not less than twelve (12) months, with deductibles
and subject to an Insurance Assignment reasonably satisfactory to
Agent.


 


10.1.8.               Licenses.  Keep each material License
affecting any Collateral (including the manufacture, distribution or
disposition of Inventory) or any other material Property of Borrowers and
Subsidiaries in full force and effect; promptly notify Agent of any proposed
modification to any material License, or entry into any material new License,
in each case at least ten (10) days prior to its effective date; pay all
Royalties when due unless being Properly Contested; and notify Agent of any
default or breach asserted by any Person to have occurred under any material
License.


 


10.1.9.               Future
Subsidiaries; Dormant Australian Subsidiaries.  Promptly notify Agent upon (a) any
Person becoming a Subsidiary and, if such Person is not a Foreign Subsidiary,
cause it to guaranty the Obligations in a manner reasonably satisfactory to
Agent, and to execute and deliver such documents, instruments and agreements
and to take such other actions as Agent shall require to evidence and perfect a
Lien in favor of Agent (for the benefit of Secured Parties) on all assets of
such Person which are of a type constituting Collateral, including delivery of
such legal
opinions, in form and substance reasonably satisfactory to Agent, as it shall reasonably
deem
appropriate, and (b) any Dormant Australian Subsidiary conducting
any business or acquiring or otherwise obtaining any assets, Indebtedness
or material liabilities.


 


10.2.                     Negative Covenants.  Until Full Payment of the Obligations has
occurred, each Borrower shall not, and shall cause each Subsidiary not to:


 


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


 


(a)                                  the Obligations;


 


(b)                                 Subordinated Debt;


 


(c)                                  Permitted Purchase Money Debt;


 


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


 


(e)                                  Bank Product Debt incurred in the Ordinary Course of Business;


 


(f)                                    (1) Debt that is in existence when a Person becomes a Subsidiary (and not
incurred in contemplation of such Person becoming a Subsidiary), (2) Debt
that constitutes unsecured seller financing incurred in connection with the
Acquisition of a Subsidiary, (3) Debt that is secured by an asset when
acquired (and not incurred in contemplation of the acquisition of such asset)
by a Borrower or Subsidiary and (4) Debt of Foreign Subsidiaries (other
than Singapore Borrower) that is in existence 


 


67

















 


when a Person becomes, or
is incurred in connection with the Acquisition of, a Foreign Subsidiary, provided,
that with respect to such Debt of Foreign Subsidiaries, such Debt (x) may
be restructured in the context of amended and restated agreements, which
amendment and restatement may, without limitation, alter the number or
identities of lenders or convert the Debt from unsecured to secured Debt
(subject to the limitations set forth in Section 10.2.2(l)),
so long as the aggregate principal amount of the Debt thereunder as of the date
of the Acquisition is not increased and the terms, conditions and covenants set
forth in such amended and restated agreements, taken as a whole, are no more
burdensome than the terms, conditions and covenants set forth in the applicable
agreements in existence prior to such amendment and restatement and (y) may
be replaced with other Debt, including secured Debt (subject to the limitations
set forth in Section 10.2.2(l))
under other Debt agreements so long as the aggregate principal amount of the
Debt as of the date of the Acquisition is not increased and the terms, conditions
and covenants set forth in the replacement Debt agreements, taken as a whole,
are no more burdensome than the terms, conditions and covenants set forth in
the applicable Debt agreements in existence prior to such replacement, in each
case described in the foregoing clauses (1), (2), (3) and (4), as long as (i) on a pro forma basis for the thirty (30) consecutive day period
immediately prior to and upon the incurrence of such Debt, Aggregate
Availability is greater than or equal to 20% of the Revolver Commitments at
such time and the Fixed Charge Coverage Ratio (for this purpose, after giving
pro forma effect to the incurrence of such Debt and, to the extent applicable,
the consummation of such Acquisition) is greater than or equal to 1.1 to 1.0, (ii) upon
the incurrence of such Debt, U.S. Availability is greater than or equal to $5,000,000, and (iii) immediately
prior to and upon the
incurrence of such Debt, no Default or Event of Default exists;


 


(g)                                 Permitted Contingent Obligations;


 


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


 


(i)                                     Debt permitted by Section 10.2.5
and Section 10.2.7;


 


(j)                                     Debt of Foreign Subsidiaries (other than Singapore Borrower) in an
aggregate principal amount at any one time outstanding not to exceed the greater
of (A) $15,000,000 and (B) 5.0% of the total consolidated assets of
the Foreign Subsidiaries (other than Singapore Borrower) calculated on a
consolidated basis in accordance with GAAP; and


 


(k)                                  Debt that is not included in any of the preceding clauses (other than
clause (j)) of this Section 10.2.1,
is not secured by a Lien and does not exceed $25,000,000 in the aggregate at
any one time outstanding, including, without limitation, (i) Debt in
respect of workers’ compensation claims, self-insurance obligations, indemnity,
bid, performance, warranty, release, appeal, surety and similar bonds, letters
of credit for operating purposes and completion guarantees provided or incurred
(including Contingent Obligations with respect thereto) incurred in the Ordinary
Course of Business; (ii) Debt arising from agreements of providing for
indemnification, contribution, earnout, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
acquisition or disposition of any business, assets or equity interests of a
Subsidiary otherwise permitted hereunder; (iii) Debt arising from
customary cash management services or the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against insufficient funds in the
Ordinary Course of Business; provided, that such Debt is extinguished
within five Business Days of incurrence; (iv) customer deposits and
advance payments received in the Ordinary Course of Business from customers for
goods purchased in the ordinary course of business; and (v) Debt
consisting of (A) the financing of insurance premiums or (B) take-or-pay
obligations contained in supply arrangements, in each case, incurred in the
Ordinary Course of Business.


 


10.2.2.               Permitted
Liens.  Create
or suffer to exist any Lien upon any of its Property, 


 


68

















 


except the following (collectively, “Permitted
Liens”):


 


(a)                                  Liens in favor of Agent;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)                                     Liens as set forth in the Senior Notes Documents as in effect on the
Closing Date;


 


(k)                                  Liens securing obligations (other than Debt)
in an aggregate outstanding amount not to exceed $1,000,000;


 


(l)                                     Liens (i) on property of a Person
existing at the time such Person is merged with or into or consolidated with a
Borrower or a Subsidiary, or becomes a Subsidiary (and not created or incurred
in anticipation of such transaction) or (ii) securing Debt permitted by Section 10.2.1(f)(4), provided that,
in each case, such Liens are not extended to the property and assets of
Borrowers and Subsidiaries other than the property or assets acquired or the
property or assets of the Subsidiary acquired subject to the limitations set
forth in Section 10.2.1(f);


 


(m)                               Liens in favor of customs or revenue
authorities arising as a matter of law to secure payment of custom duties in
connection with the importation of goods incurred in the Ordinary Course of
Business; and


 


(n)                                 existing Liens shown on Schedule
10.2.2.


 


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10.2.3.               Capital
Expenditures.  Make Capital Expenditures in excess of
$40,000,000 (the “Base Amount”) in the aggregate during any Fiscal Year
plus any portion of the Base Amount not spent in the immediately preceding
period; provided, that Borrowers and Subsidiaries may make any Capital
Expenditure when, on a pro forma basis for the thirty (30) consecutive day
period immediately prior and upon giving effect thereto, Aggregate Availability
is greater than or equal to 20% of the Revolver Commitments at such time and
the Fixed Charge Coverage Ratio (for this purpose, after giving pro forma
effect to such Capital Expenditures) is greater than or equal to 1.1 to 1.0, so
long as (i) upon giving effect thereto, U.S. Availability is greater than
or equal to
$5,000,000, and (ii) immediately prior and upon giving effect thereto, no
Default or Event of Default exists.


 


10.2.4.               Distributions;
Upstream Payments.  Declare or make any Distributions, except
Upstream Payments; or create or suffer to exist any encumbrance or restriction
on the ability of a Subsidiary to make any Upstream Payment, except for
restrictions under the Loan Documents, under Applicable Law or in effect on the
Closing Date as shown on Schedule 9.1.15.  Notwithstanding the foregoing, any Borrower
may declare and make Distributions (1) if, (a) on a pro forma basis
for the thirty (30) consecutive day period immediately prior and upon giving
effect thereto, Aggregate Availability is greater than or equal to 25% of the
Revolver Commitments at such time and the Fixed Charge Coverage Ratio (for this
purpose, after giving pro forma effect to such Distribution) is greater than or
equal to 1.1 to 1.0, (b) upon giving effect thereto, U.S. Availability is
greater than or equal to $5,000,000, (c) if any such Distribution is
funded by a Borrowing hereunder, the sum of (i) the aggregate amount of
all Distributions funded by Borrowings hereunder plus (ii) the
aggregate amount of all payments of Debt permitted under Section 10.2.8
funded by Borrowings hereunder, shall not exceed $10,000,000
in any Fiscal Year, and (d) immediately prior and upon giving effect
thereto, no Default or Event of Default exists; (2) any Distribution with respect to Equity
Interests within sixty (60) days after declaration thereof if at the
declaration date such payment would not have been prohibited by this Section 10.2.4; (3) the purchase, redemption,
retirement or other acquisition for value of Equity Interests in Parent held by
current or former employees, directors, officers, managers or consultants of
Parent, a Borrower or a Subsidiary (or their estates or beneficiaries under
their estates) upon death, disability, retirement or termination of employment
or pursuant to the terms of any agreement under which such Equity Interests
were issued; provided, that the aggregate cash consideration paid for
all such purchases, redemptions, retirements or other acquisitions of such
Equity Interests does not exceed $2,500,000 in any calendar year (which amount
shall be increased by (x) the amount of any net cash proceeds of key man
life insurance policies received by Parent and Subsidiaries after the Closing
Date that have not been applied to the payment of Distributions pursuant to
this clause (3) and (y) the amount of net cash proceeds received by
Parent and Subsidiaries after the Closing Date from the issuance and sale of
Equity Interests in Parent to employees, directors, officers, managers or
consultants of Parent or any Subsidiary); provided, that any unused
amounts in any calendar year may be carried forward to one or more future
periods; provided, further, that the aggregate amount of
repurchases made pursuant to this clause (3) may not exceed $5,000,000 in
any calendar year; (4) the repurchase of Equity Interests deemed to occur
upon the exercise of stock options, warrants or other convertible or
exchangeable securities to the extent such Equity Interests represent a portion
of the exercise price of those stock options, warrants or other convertible or
exchangeable securities; provided, that the aggregate amount of
repurchases made in cash pursuant to this clause (4) may not exceed
$1,000,000 in any calendar year; (5) cash payment, in lieu of issuance of
fractional shares in connection with the exercise of warrants, options or other
securities convertible into or exchangeable for the Equity Interests of Parent or
a Subsidiary; and (6) other Distributions not in excess of $25,000,000 in
the aggregate since the Closing Date for Parent to fund Permitted Restructuring
Transactions if, (a) on a pro forma basis for the thirty (30)
consecutive day period immediately prior and upon giving effect thereto,
Aggregate Availability is greater than or equal to 20% of the Revolver
Commitments at such time, the Fixed Charge Coverage Ratio (for this purpose,
after giving pro forma effect to such Distribution) is greater than or equal to
1.1 to 1.0, and U.S. Availability is greater than or equal to $5,000,000, and (b) immediately
prior and upon giving effect thereto, no Default or Event of 


 


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Default exists.


 


10.2.5.               Restricted
Investments.  Make any Restricted Investment.  Notwithstanding the foregoing, (a) any
Borrower may make a Restricted Investment not constituting an Acquisition if,
on a pro forma basis for the thirty (30) consecutive day period immediately
prior and upon giving effect thereto, Aggregate Availability is greater than or
equal to 25% of the Revolver Commitments at such time and the Fixed Charge
Coverage Ratio (for this purpose, after giving pro forma effect to such
Investment) is greater than or equal to 1.1 to 1.0 and (b) any Borrower
may make a Restricted Investment constituting an Acquisition if, on a pro forma
basis for the thirty (30) consecutive day period immediately prior and upon
giving effect thereto, Aggregate Availability is greater than or equal to 20%
of the Revolver Commitments at such time and the Fixed Charge Coverage Ratio
(for this purpose, after giving pro forma effect to such Acquisition) is
greater than or equal to 1.1 to 1.0; provided, that, in each case, (i) upon
giving effect thereto, U.S. Availability is greater than or equal to $5,000,000, and (ii) immediately
prior and upon giving effect thereto, no Default or Event of Default exists.


 


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


 


10.2.7.               Loans.  Make any loans or other
advances of money to any Person, except (a) advances to an officer or
employee for salary, travel expenses, commissions and similar items in the
Ordinary Course of Business; (b) prepaid expenses and extensions of trade
credit made in the Ordinary Course of Business; (c) deposits with
financial institutions permitted hereunder; (d) (i) intercompany
loans by a domestic Obligor to a domestic Obligor and (ii) intercompany
loans by a Subsidiary that is not an Obligor to any Subsidiary that is not an
Obligor; and (e) except as permitted in the foregoing clause (d) and
as long as no Default, Event of Default or Overadvance exists or would be
caused thereby, (i) intercompany loans by an Obligor to an Obligor, and (ii) intercompany
loans among Obligors and Subsidiaries (other than intercompany loans from U.S.
Borrower to Singapore Borrower) in an aggregate amount outstanding at any time
not to exceed $10,000,000.


 


10.2.8.               Restrictions
on Payment of Certain Debt.  Make any payments (whether voluntary or
mandatory, or a prepayment, redemption, retirement, defeasance or acquisition)
with respect to any (a) Subordinated Debt, except regularly scheduled
payments of principal, interest and fees, but only to the extent permitted
under any subordination agreement relating to such Debt (and a Senior Officer
of Borrower Agent shall certify to Agent, not less than five (5) Business Days
prior to the date of payment, that all conditions under such agreement have
been satisfied (provided, that the failure to so certify shall not
result in an Event of Default)); or (b) Borrowed Money described on Schedule 10.2.8 prior to its due date under the agreements
evidencing such Debt as in effect on the Closing Date (or as amended thereafter
with the consent of Agent). 
Notwithstanding the foregoing, any Borrower may make any such payment
if, (a) on a pro forma basis for the thirty (30) consecutive day period
immediately prior and upon giving effect thereto, Aggregate Availability is
greater than or equal to 25% of the Revolver Commitments at such time and the
Fixed Charge Coverage Ratio (for this purpose, after giving pro forma effect to
such payment) is greater than or equal to 1.1 to 1.0, (b) upon giving
effect thereto, U.S. Availability is greater than or equal to $5,000,000, (c) if any
such payment is funded by a Borrowing hereunder, the sum of (i) the
aggregate amount of all such payments funded by Borrowings hereunder plus
(ii) the aggregate amount of all Distributions permitted under Section 10.2.4 funded by Borrowings hereunder, shall
not exceed $10,000,000 in any Fiscal Year, and (d) immediately
prior and upon giving effect thereto, no Default or Event of Default exists.


 


10.2.9.               Fundamental
Changes.  Merge,
amalgamate, combine or consolidate with any Person, or liquidate, wind up its
affairs or dissolve itself, in each case whether in a single transaction or in 


 


71

















 


a series of related transactions, except for mergers,
amalgamations or consolidations of a wholly-owned Subsidiary with another
wholly-owned Subsidiary or into a Borrower; change its name or conduct business
under any fictitious name; change its tax, charter or other organizational
identification number; or change its form or state of organization.  Notwithstanding the foregoing, each Borrower
may, and may cause any Subsidiary to, engage in any Permitted Restructuring
Transaction.


 


10.2.10.         Subsidiaries.  Form or acquire any
Subsidiary after the Closing Date, except in accordance with Sections 10.1.9 and 10.2.5; or
permit any existing Subsidiary to issue any additional Equity Interests to any
Person (other than its existing shareholders) except director’s qualifying
shares.


 


10.2.11.         Organic
Documents.  Amend, modify or otherwise change any of its
Organic Documents as in effect on the Closing Date, in each case in any manner
adverse in any material respect to Agent and Lenders.


 


10.2.12.         Tax
Consolidation.  File or consent to the filing of any
consolidated income tax return with any Person other than Borrowers and
Subsidiaries.


 


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


 


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


 


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


 


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


 


10.2.17.         Affiliate
Transactions.  Enter into or be party to any transaction
with an Affiliate involving aggregate consideration in excess of $2,500,000 in
any Fiscal Year, except (a) transactions contemplated by the Loan
Documents; (b) payment of reasonable compensation to officers and
employees for services actually rendered, and loans and advances permitted by Section 10.2.7; (c) payment of
customary directors’ fees and indemnities; (d) transactions solely among Obligors;
(e) transactions with Affiliates shown on Schedule 10.2.17; (f) transactions with Affiliates in the
Ordinary Course of Business, upon fair and reasonable terms fully disclosed to
Agent and no less favorable than would be obtained in a comparable arm’s-length
transaction with a non-Affiliate; (g) transactions solely among
Subsidiaries that are not Obligors; (h) Distributions and Investments that
are permitted hereunder; and (i) payments by Parent or any Subsidiaries to
any of the Permitted Holders made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking
activities, including, without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the Disinterested
Directors (as defined in the Senior Notes Indenture) in good faith; provided
that the aggregate amount of such payments may not exceed $5,000,000 in any
calendar year.


 


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


 


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


 


10.2.20.         UBS VAT Restricted Cash.  Permit the
aggregate amount of UBS VAT Restricted Cash to exceed €2,000,000 at any time.


 


10.3.                     Financial Covenant.  Until Full Payment of the Obligations has
occurred, Borrowers shall:


 


10.3.1.               Fixed
Charge Coverage Ratio.  Maintain a Fixed Charge Coverage Ratio of at
least 1.1 to 1.0 for each period of four Fiscal Quarters ending during or
immediately before any Covenant Testing Trigger Period.


 


SECTION 11.                     EVENTS OF DEFAULT; REMEDIES ON DEFAULT


 


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


 


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


 


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


 


(c)                                  A Borrower breaches or fail to perform any covenant contained in Section 7.2, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.2 or 10.3;


 


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


 


(e)                                  A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an
Obligor denies or contests the validity or enforceability of any Loan Documents
or Obligations, or the perfection or priority of any Lien granted to Agent; or
any Loan Document ceases to be in full force or effect for any reason (other
than a waiver or release by Agent and Lenders or as a result of the termination
thereof in accordance with its terms);


 


(f)                                    Any breach or default of an Obligor occurs under any document,
instrument or agreement to which it is a party or by which it or any of its
Properties is bound, relating to any Debt 


 


73

















 


(other
than the Obligations) in excess of $5,000,000, if the maturity of or any
payment with respect to such Debt may be accelerated or demanded due to such
breach; or any breach or default of an Obligor occurs under any Convertible
Notes Document or Senior Notes Document;


 


(g)                                 Any judgment or order for the payment of money is entered against an
Obligor in an amount that exceeds, individually or cumulatively with all
unsatisfied judgments or orders against all Obligors, $5,000,000 (net of any
insurance coverage therefor unless the insurer has denied coverage), and the
same shall remain undischarged, unvacated or unbonded for a period of sixty
(60) consecutive days during which execution shall not be effectively stayed,
by reason of a pending appeal or otherwise;


 


(h)                                 A loss, theft, damage or destruction occurs (i) with respect to any
Collateral included in the calculation of the Borrowing Base if the amount not
covered by insurance exceeds $5,000,000 and (ii) with respect to any Collateral not
included in the calculation of the Borrowing Base which could reasonably be
expected to have a Material Adverse Effect;


 


(i)                                     An Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business which
could reasonably be expected to have a Material Adverse Effect; an Obligor
suffers the loss, revocation or termination of any material license, permit,
lease or agreement necessary to its business which could reasonably be expected
to have a Material Adverse Effect; there is a cessation of any material part of
an Obligor’s business for a material period of time which could reasonably be
expected to have a Material Adverse Effect; any material Collateral or Property
of an Obligor is taken or impaired through condemnation which could reasonably
be expected to have a Material Adverse Effect; an Obligor agrees to or
commences any liquidation, dissolution or winding up of its affairs; or an
Obligor is not Solvent;


 


(j)                                     Singapore Borrower is declared by the Minister for Finance in Singapore
to be a declared company under the provisions of Part IX of the Companies
Act, Chapter 50 of Singapore.


 


(k)                                  An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an
offer of settlement, extension or composition to its unsecured creditors
generally; a trustee is appointed to take possession of any substantial
Property of or to operate any of the business of an Obligor; or an Insolvency
Proceeding is commenced against an Obligor and: 
the Obligor consents to institution of the proceeding, the petition
commencing the proceeding is not timely contested by the Obligor, the petition
is not dismissed within thirty (30) days after filing, or an order for relief
is entered in the proceeding;


 


(l)                                     An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan that has resulted or could reasonably be expected to result in liability
of an Obligor to a Pension Plan, Multiemployer Plan or PBGC, or that
constitutes grounds for appointment of a trustee for or termination by the PBGC
of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails
to pay when due any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan; or any
event similar to the foregoing occurs or exists with respect to a Foreign Plan
which, in each case, could reasonably be expected to have a Material Adverse
Effect; or


 


(m)                               A Change of Control occurs; any Parent Default occurs; or Parent amends, supplements or otherwise modifies any
of the Senior Notes Documents.


 


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


 


74

















 


from time to time:


 


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


 


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


 


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


 


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


 


11.3.                     License.  For the purpose of enabling Agent to exercise
rights and remedies under this Agreement at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, Agent is hereby granted
an irrevocable, non-exclusive license or other right to use, license or
sub-license (without payment of royalty or other compensation to any Person)
any or all Intellectual Property of each Borrower, computer hardware and
software, trade secrets, brochures, customer lists, promotional and advertising
materials, labels, packaging materials and other Property, in advertising for
sale, marketing, selling, collecting, completing manufacture of, or otherwise
exercising any rights or remedies with respect to, any Collateral.  Each Borrower’s rights and interests under
Intellectual Property shall inure to Agent’s benefit.  The foregoing license shall be subject to
those Licenses granted to the Borrowers in effect on the date hereof and those
granted to any Borrower hereafter, as permitted under the Loan Documents, to
the extent conflicting.


 


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


 


75

















 


Affiliate different from the branch or office holding
such deposit or obligated on such indebtedness; provided, that all such
deposits of Singapore Borrower and any other Foreign Subsidiary shall only be
applied against the Singapore Obligations. 
The rights of Agent, Issuing Bank, each Lender and each such
Affiliate under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Person may have.


 


11.5.                     Remedies Cumulative; No Waiver.


 


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


 


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


 


SECTION 12.                     AGENT


 


12.1.                     Appointment, Authority and Duties of Agent.


 


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


 


12.1.2.               Duties.  Agent shall not have any duties
except those expressly set forth in the


 


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Loan Documents. 
The conferral upon Agent of any right shall not imply a duty on Agent’s
part to exercise such right, unless instructed to do so by Required Lenders in
accordance with this Agreement.


 


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


 


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


 


12.2.       Agreements Regarding Collateral and Field
Examination Reports.


 


12.2.1.     Lien Releases; Care of Collateral.  Lenders authorize Agent to release any Lien
with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that
is the subject of an Asset Disposition which Borrowers certify in writing to
Agent is a Permitted Asset Disposition (other than a Permitted Asset
Disposition to an Obligor) or a Lien which Borrowers certify is a Permitted
Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively
on any such certificate without further inquiry); (c) that does not
constitute a material part of the Collateral; or (d) with the written
consent of all Lenders.  Lenders
authorize Agent to subordinate its Liens to any Purchase Money Lien permitted
hereunder.  Agent shall have no obligation to
assure that any Collateral exists or is owned by a Borrower, or is cared for,
protected or insured, nor to assure that Agent’s Liens have been properly created,
perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.


 


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


 


12.2.3.     Reports.  Agent shall promptly forward to each Lender,
when complete, copies of any field audit, examination or appraisal report
prepared by or for Agent with respect to any Obligor or Collateral (“Report”).  Each Lender agrees (a) that neither Bank
of America nor Agent makes any representation or warranty as to the accuracy or
completeness of any Report, and shall not be liable for


 


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any
information contained in or omitted from any Report; (b) that the Reports
are not intended to be comprehensive audits or examinations, and that Agent or
any other Person performing any audit or examination will inspect only specific
information regarding Obligations or the Collateral and will rely significantly
upon Borrowers’ books and records as well as upon representations of Borrowers’
officers and employees; and (c) to keep all Reports confidential and
strictly for such Lender’s internal use, and not to distribute any Report (or
the contents thereof) to any Person (except to such Lender’s Participants,
attorneys and accountants) or use any Report in any manner other than administration
of the Revolver Loans and other Obligations. 
Each Lender agrees to indemnify and hold harmless Agent and any other
Person preparing a Report from any action such Lender may take as a result of
or any conclusion it may draw from any Report, as well as from any Claims
arising as a direct or indirect result of Agent furnishing a Report to such
Lender.


 


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


 


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


 


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


 


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


 


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expenses (including attorneys’ fees) incurred in the
defense of same, shall be promptly reimbursed to Agent by each Lender to the
extent of its Pro Rata share.


 


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


 


12.8.       Successor Agent and Co-Agents.


 


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


 


12.8.2.     Separate
Collateral Agent.  It is the intent
of the parties that there shall be no violation of any Applicable Law denying
or restricting the right of financial institutions to transact business in any
jurisdiction.  If Agent believes that it
may be limited in the exercise of any rights or remedies under the Loan
Documents due to any Applicable Law, Agent may appoint an additional Person who
is not so limited, as a separate collateral agent or co-collateral agent.  If Agent so appoints a collateral agent or
co-collateral agent, each right and remedy intended to be available to Agent
under the Loan Documents shall also be vested in such separate agent.  Every covenant and obligation necessary to
the exercise thereof by such agent shall run to and be enforceable by it as
well as Agent.  Lenders shall execute and
deliver such documents as Agent deems appropriate to vest any rights or
remedies in such agent.  If any
collateral agent or co-collateral agent shall die or dissolve, become incapable
of acting, resign or be removed, then all the rights and remedies of such
agent, to the extent permitted by Applicable Law, shall vest in and be
exercised by Agent until appointment of a new agent.


 


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


 


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


 


12.11.     Remittance of Payments and Collections.


 


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


 


12.11.2.        Failure
to Pay.  If any Lender fails to pay
any amount when due by it to Agent pursuant to the terms hereof, such amount
shall bear interest from the due date until paid at the rate determined by
Agent as customary in the banking industry for interbank compensation.  In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent, nor shall any
Defaulting Lender be entitled to interest on any amounts held by Agent pursuant
to Section 4.2.


 


12.11.3.        Recovery
of Payments.  If Agent pays any amount
to a Lender in the expectation that a related payment will be received by Agent
from an Obligor and such related payment is not received, then Agent may
recover such amount from each Lender that received it.  If Agent determines at any time that an amount
received under any Loan Document must be returned to an Obligor or paid to any
other Person pursuant to Applicable Law or otherwise, then, notwithstanding any
other


 


80

















 


term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. 
If any amounts received and applied by Agent to any Obligations are
later required to be returned by Agent pursuant to Applicable Law, each Lender
shall pay to Agent, on demand, such
Lender’s Pro Rata share of the amounts required to be returned.


 


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


 


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


 


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


 


SECTION 13.       BENEFIT OF AGREEMENT;
ASSIGNMENTS AND PARTICIPATIONS


 


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


 


13.2.       Participations.


 


13.2.1.     Permitted
Participants; Effect.  Any Lender
may, in the ordinary course of its business and in accordance with Applicable
Law, at any time sell to a financial institution (“Participant”) a
participating interest in the rights and obligations of such Lender under any
Loan Documents.  Despite any sale by a
Lender of participating interests to a Participant, such Lender’s obligations
under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for performance of such
obligations, such Lender shall remain the holder of its Revolver Loans and
Revolver Commitments for all purposes, all amounts payable by Borrowers shall
be determined as if such Lender had not sold such participating interests, and
Borrowers and Agent shall continue to deal solely and directly with such Lender
in connection with the Loan Documents. 
Each Lender shall be solely responsible for notifying its Participants
of any matters under the Loan Documents, and Agent and the


 


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other
Lenders shall not have any obligation or liability to any such
Participant.  A Participant that would be
a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.9 unless Borrowers agree otherwise in
writing.


 


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


 


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


 


13.3.       Assignments.


 


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


 


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


 


SECTION 14.       MISCELLANEOUS.


 


14.1.       Consents, Amendments and Waivers.


 


14.1.1.     Amendment.  No modification of any Loan Document,
including any extension or amendment of a Loan Document or any waiver of a
Default or Event of Default, shall be effective


 


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without the prior written agreement of Agent (with the
consent of Required Lenders) and each Obligor party to such Loan Document; provided,
however, that


 


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


 


(b)           without
the prior written consent of Issuing Bank, no modification shall be effective
with respect to any LC Obligations or Section 2.2;


 


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


 


(d)           without
the prior written consent of all Lenders (except a Defaulting Lender as
provided in Section 4.2), no modification
shall be effective that would (i) extend the Revolver  Termination Date; (ii) alter Section 5.6, 7.1 (except to add Collateral) or 14.1.1; (iii) amend the definition of
Borrowing Base (or any defined term used in such definition), Pro Rata or
Required Lenders; (iv) increase any advance rate or increase total
Revolver Commitments; (vi) release Collateral with a book value greater
than $5,000,000 during any calendar year, except as currently contemplated by
the Loan Documents; or (vii) release any Obligor from liability for any
Obligations, if such Obligor is Solvent at the time of the release.


 


14.1.2.     Limitations.  The agreement of Borrowers shall not be
necessary to the effectiveness of any modification of a Loan Document that
deals solely with the rights and duties of Lenders, Agent and/or Issuing Bank
as among themselves.  Only the consent of
the parties to the Fee Letter or any agreement relating to a Bank Product shall
be required for any modification of such agreement, and any non-Lender that is
party to a Bank Product agreement shall have no right to participate in any
manner in modification of any other Loan Document.  The making of any Revolver Loans during the
existence of a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default, nor to establish a course of
dealing.  Any waiver or consent granted
by Agent or Lenders hereunder shall be effective only if in writing and only
for the matter specified.


 


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


 


14.2.       Indemnity.  EACH
BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY CLAIMS
THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING
CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  In no event shall any party to a Loan
Document have any obligation thereunder to indemnify or hold harmless an
Indemnitee with respect to a Claim that is determined in a final,
non-appealable judgment by a court of competent jurisdiction to result from the
gross negligence or willful misconduct of such Indemnitee.  Borrowers agree to pay all reasonable fees
and out-of-pocket expenses that are incurred by each Lender in connection with
the enforcement or protection of its rights in connection with the Agreement or
any other Loan Document.


 


14.3.       Notices and Communications.


 


14.3.1.     Notice
Address.  Subject to Section 4.1.4, all notices and other communications


 


83

















 


by
or to a party hereto shall be in writing and shall be given to any Borrower, at
Borrower Agent’s address shown on the signature pages hereof, and to any
other Person at its address shown on the signature pages hereof (or, in
the case of a Person who becomes a Lender after the Closing Date, at the
address shown on its Assignment and Acceptance), or at such other address as a
party may hereafter specify by notice in accordance with this Section 14.3. 
Each such notice or other communication shall be effective only (a) if
given by facsimile transmission, when transmitted to the applicable facsimile
number, if confirmation of receipt is received; (b) if given by mail,
three (3) Business Days after deposit in the U.S. mail, with first-class
postage pre-paid, addressed to the applicable address; or (c) if given by
personal delivery, when duly delivered to the notice address with receipt
acknowledged.  Notwithstanding the
foregoing, no notice to Agent pursuant to Section 2.1.4,
2.2, 3.1.2, 4.1.1 or 5.3.3
shall be effective until actually received by the individual to whose attention
at Agent such notice is required to be sent. 
Any written notice or other communication that is not sent in conformity
with the foregoing provisions shall nevertheless be effective on the date
actually received by the noticed party. 
Any notice received by Borrower Agent shall be deemed received by all
Borrowers.


 


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


 


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


 


14.4.       Performance of Borrowers’ Obligations.  Agent may, in its discretion at
any time and from time to time, at Borrowers’ expense, pay any amount or do any
act required of a Borrower under any Loan Documents or otherwise lawfully
requested by Agent to (a) enforce any Loan Documents or collect any
Obligations; (b) protect, insure, maintain or realize upon any Collateral;
or (c) defend or maintain the validity or priority of Agent’s Liens in any
Collateral, including any payment of a judgment, insurance premium, warehouse
charge, finishing or processing charge, or landlord claim, or any discharge of
a Lien.  All payments, costs and expenses
(including Extraordinary Expenses) of Agent under this Section shall be
reimbursed to Agent by Borrowers, on demand, with
interest from the date incurred to the date of payment thereof at the Default
Rate applicable to Base Rate Revolver Loans. 
Any payment made or action taken by Agent under this Section shall
be without prejudice to any right to assert an Event of Default or to exercise
any other rights or remedies under the Loan Documents.


 


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


 


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


 


14.7.       Cumulative Effect; Conflict of Terms.  The provisions of the Loan
Documents are


 


84

















 


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


 


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


 


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


 


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


 


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


 


14.12.     Confidentiality.  Each of Agent, Lenders and Issuing Bank
agrees to maintain the confidentiality of all Information (as defined below),
except that Information may be disclosed (a) to its Affiliates, and to its
and their partners, directors, officers, employees, agents, advisors and
representatives (provided such Persons are informed of the confidential nature
of the Information and instructed to keep it confidential); (b) to the
extent requested by any governmental, regulatory or self-regulatory authority
purporting to have jurisdiction over it or its Affiliates; (c) to the
extent required by Applicable Law or by any subpoena or other legal process; (d) to
any other party hereto; (e) in connection with any action or proceeding,
or other exercise of rights or remedies, relating to any Loan Documents or
Obligations; (f)


 


85

















 


subject to an agreement containing provisions
substantially the same as this Section, to any Transferee or any actual or
prospective party (or its advisors) to any Bank Product; (g) with the
consent of Borrower Agent; or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) is
available to Agent, any Lender, Issuing Bank or any of their Affiliates on
a nonconfidential basis from a source other than Borrowers.  Notwithstanding the foregoing, Agent and
Lenders may publish or disseminate general information describing this credit
facility, including the names and addresses of Borrowers and a general
description of Borrowers’ businesses, and may use Borrowers’ logos, trademarks
or product photographs in advertising materials.  As used herein, “Information” means
all information received from an Obligor or Subsidiary relating to it or its
business, other than any information that is available to Agent, any Lender or
Issuing Bank on a nonconfidential basis prior to disclosure by the Obligor or
Subsidiary, provided that, in the case of information received from an
Obligor or Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information pursuant to this Section shall be deemed to
have complied if it exercises the same degree of care that it accords its own
confidential information.  Each of Agent,
Lenders and Issuing Bank acknowledges that (i) Information may include
material non-public information concerning an Obligor or Subsidiary; (ii) it
has developed compliance procedures regarding the use of material non-public
information; and (iii) it will handle such material non-public information
in accordance with Applicable Law, including federal and state securities laws.


 


14.13.     Certifications
Regarding Senior Notes Documents.  Borrowers certify to Agent and Lenders that
neither the execution or performance of the Loan Documents nor the incurrence
of any Obligations by Borrowers violates any of the Senior Notes
Documents.  Borrowers further certify
that the Revolver Commitments and Obligations constitute a “Credit Facility”
and “Permitted Debt” under the Senior Notes Documents.


 


14.14.     GOVERNING
LAW.  THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS) ; PROVIDED,
HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL
GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY
LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN
COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO
THAT EXTENT.


 


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


 


14.16.     Waivers
by Borrowers.  To the fullest extent permitted by Applicable
Law, each 


 


86

















 


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


 


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


 


14.18.     Judgment Currency.  If for the purpose of obtaining judgment in any court it is necessary to
convert an amount due hereunder in the currency in which it is due (the “Original
Currency”) into another currency (the “Second Currency”), the rate
of exchange applied shall be that at which, in accordance with normal banking
procedures, Agent could purchase in the New York foreign exchange market, the
Original Currency with the Second Currency on the date two (2) Business
Days preceding that on which judgment is given. Each Borrower agrees that its
obligation in respect of any Original Currency due from it hereunder shall,
notwithstanding any judgment or payment in such other currency, be discharged
only to the extent that, on the Business Day following the date Agent receives
payment of any sum so adjudged to be due hereunder in the Second Currency,
Agent may, in accordance with normal banking procedures, purchase, in the New
York foreign exchange market, the Original Currency with the amount of the
Second Currency so paid; and if the amount of the Original Currency so
purchased or could have been so purchased is less than the amount originally
due in the Original Currency, the applicable Borrower agrees as a separate
obligation and notwithstanding any such payment or judgment to indemnify Agent
against such loss. The term “rate of exchange” in this Section 14.18
means the spot rate at which Agent, in accordance with normal
practices, is able on the relevant date to purchase the Original Currency with
the Second Currency, and includes any premium and costs of exchange payable in
connection with such purchase.


 


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


 


87
















 


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


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  KEMET ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William M. Lowe, Jr.

  
	
   

  	
  Name:

  	
  William
  M. Lowe, Jr.

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
  Address:

  
	
   

  	
  2835 KEMET Way

  
	
   

  	
  Simpsonville, South Carolina 29681

  
	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
  Telecopy: (864) 228-4161

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Kirkland & Ellis, LLP

  
	
   

  	
  300 North LaSalle Street

  
	
   

  	
  Chicago, Illinois 60654

  
	
   

  	
  Attention: H. Kurt von
  Moltke, P.C.

  
	
   

  	
  Telecopy: (312) 862-2200

  
	
   

  	
  E-mail:
  kvonmoltke@kirkland.com

  
	
   

  	
   

  
	
   

  	
  KEMET ELECTRONICS MARKETING (S) PTE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  How Kian Peng

  
	
   

  	
  Name:

  	
  How
  Kian Peng

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
  Address:

  
	
   

  	
  1 Scotts Road

  
	
   

  	
  #15-07/10 Shaw Centre

  
	
   

  	
  Singapore 228208

  
	
   

  	
  Attn: How Kian Peng

  
	
   

  	
  Telecopy: +65 6586 1902

  



 


Signature Page to Loan
and Security Agreement


 

















 


	
   

  	
  AGENT
  AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as
  Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven Blumberg

  
	
   

  	
  Name:

  	
  Steven
  Blumberg

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
  Address:

  
	
   

  	
  3000 Galleria Parkway

  
	
   

  	
  Suite 800

  
	
   

  	
  Atlanta, Georgia 30339

  
	
   

  	
  Attn: Andrew Doherty

  
	
   

  	
  Telecopy: (312) 453-4665

  
	
   

  	
  E-mail: andrew.doherty@baml.com

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Otterbourg, Steindler,
  Houston & Rosen, P.C.

  
	
   

  	
  230 Park Avenue

  
	
   

  	
  New York, New York 10169

  
	
   

  	
  Attention: Richard L. Stehl

  
	
   

  	
  Telecopy: (917) 368-7109

  
	
   

  	
  E-mail:     rstehl@oshr.com

  



 


Signature Page to Loan and Security
Agreement


 

















 


EXHIBIT A


to


Loan and Security Agreement


 


REVOLVER NOTE


 


	
  September         ,
  2010

  	
   

  	
  $                                      

  	
   

  	
  New York, New York

  



 


[KEMET ELECTRONICS
CORPORATION,
a Delaware corporation][KEMET ELECTRONICS MARKETING (S) PTE LTD.,
a Singapore corporation]  (“Borrower”), for value received, hereby unconditionally promises
to pay to the order of
                                                        
(“Lender”), the principal sum of
                                                            
DOLLARS
($                      ),
or such lesser amount as may be advanced by Lender as [U.S.][Singapore] Revolver
Loans and owing as [U.S.][Singapore] LC
Obligations from time to time under the Loan Agreement described below,
together with all accrued and unpaid interest thereon.  Terms are used herein as defined in the Loan
and Security Agreement dated as of September [29],
2010, among Borrower, [KEMET Electronics
Corporation, a Delaware
corporation][KEMET Electronics Marketing (S) Pte Ltd., a Singapore
corporation], Bank of America, N.A.,
as Agent, Lender, and certain other financial institutions, as such agreement may
be amended, modified, renewed or extended from time to time (“Loan Agreement”).


 


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


 


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


 


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


 


In
no contingency or event whatsoever shall the amount paid or agreed to be paid
to the holder of this Revolver Note for the use, forbearance or detention of
money advanced hereunder exceed the highest lawful rate permitted under
Applicable Law.  If any such excess
amount is inadvertently paid by Borrower or inadvertently received by the
holder of this Revolver Note, such excess shall be returned to Borrower or
credited as a payment of principal, in accordance with the Loan Agreement.  It is the intent


 

















 


hereof
that Borrower not pay or contract to pay, and that holder of this Revolver Note
not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrower under
Applicable Law.


 


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


 


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


 


 


	
  Attest:

  	
   

  	
  KEMET ELECTRONICS [CORPORATION]

  [MARKETING (S) PTE LTD.]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
  Title:

  



 


2

















 


EXHIBIT B


to


Loan and Security Agreement


 


ASSIGNMENT AND ACCEPTANCE


 


Reference
is made to the Loan and Security Agreement dated as of September [29], 2010, as amended (“Loan
Agreement”), among KEMET ELECTRONICS CORPORATION, a Delaware corporation (“U.S. Borrower”), KEMET ELECTRONICS MARKETING (S) PTE LTD., a Singapore corporation (“Singapore
Borrower” and, together with U.S. Borrower, collectively, “Borrowers”),
BANK OF AMERICA, N.A., as agent (“Agent”)
for the financial institutions from time to time party to the Loan Agreement (“Lenders”),
and such Lenders.  Terms are used herein
as defined in the Loan Agreement.


 


                                                           (“Assignor”)
and                                                   
                          
(“Assignee”) agree as follows:


 


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


 


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


 


3.             Assignee (a) represents and
warrants that it is legally authorized to enter into this Assignment and
Acceptance; (b) confirms that it has received copies of the Loan Agreement
and such other Loan Documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it shall, independently and without reliance
upon Assignor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; 


 

















 


(d) confirms
that it is an Eligible Assignee; (e) appoints and authorizes Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Agreement as are delegated to Agent by the terms thereof, together with such
powers as are incidental thereto; (f) agrees that it will observe and
perform all obligations that are required to be performed by it as a “Lender”
under the Loan Documents; and (g) represents and warrants that the
assignment evidenced hereby will not result in a non-exempt “prohibited
transaction” under Section 406 of ERISA.


 


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


 


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


 


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


 


 


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


 


 


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


 


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


 


 


ABA
No.


 


Account
No.


Reference:


 


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


 


 


ABA
No.


 


Account
No.


Reference:


 


2

















 


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


 


	
   

  	
   

  
	
   

  	
  (“Assignee”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (“Assignor”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  



 


3
















 


EXHIBIT C


to


Loan and Security Agreement


 


ASSIGNMENT NOTICE


 


Reference
is made to (1) the Loan and Security Agreement dated as of September [29], 2010, as amended (“Loan
Agreement”), among KEMET ELECTRONICS CORPORATION, a Delaware corporation (“U.S. Borrower”), KEMET ELECTRONICS MARKETING (S) PTE LTD., a Singapore corporation (“Singapore
Borrower” and, together with U.S. Borrower, collectively, “Borrowers”),
BANK OF AMERICA, N.A., as agent (“Agent”)
for the financial institutions from time to time party to the Loan Agreement (“Lenders”),
and such Lenders; and (2) the Assignment and Acceptance dated as of
                        ,
20     (“Assignment Agreement”), between
                                    
(“Assignor”) and
                                        
(“Assignee”).  Terms are used
herein as defined in the Loan Agreement.


 


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


 


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


 


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


 


 


 


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


 


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


 


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


 


	
   

  	
   

  
	
   

  	
  (“Assignee”)

  



 

















 


	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (“Assignor”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  



 


 


ACKNOWLEDGED
AND AGREED,


AS
OF THE DATE SET FORTH ABOVE:


 


BORROWER AGENT:*


 


KEMET ELECTRONICS CORPORATION


 


 


	
  By

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  



 






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


 


 


BANK OF AMERICA, N.A.,


as
Agent


 


 


	
  By

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  



 


2

















 


EXHIBIT E-1


to


Loan and Security Agreement


 


NOTICE OF BORROWING


 


Date: 
                            ,
20


 


To:                             Bank of America, N.A., as agent under the Loan and Security Agreement,
dated as of September         , 2010
(as amended, restated, replaced, refinanced, modified or supplemented from time
to time, the “Loan Agreement”), by and among KEMET Electronics
Corporation, a Delaware corporation (“U.S. Borrower” or “Borrower
Agent”), KEMET Electronics Marketing (S) Pte Ltd., a Singapore
corporation (“Singapore Borrower” and, together with U.S. Borrower,
collectively, “Borrowers”), the financial institutions party thereto
from time to time as lenders (collectively, “Lenders”) and Bank of
America, N.A., a national banking association, as agent for the Lenders (“Agent”).


 


Ladies
and Gentlemen:


 


The
undersigned Borrower Agent refers to the Loan Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you irrevocable
notice of the Borrowing requested by the undersigned specified below:


 


1.                                      The Business Day of the proposed Borrowing is
                          ,
201     (the “Borrowing Date”).


 


2.                                      The aggregate amount of the proposed Borrowing is as follows:


 


U.S. Revolver Loans
[$                        ].


 


3.                                      The Borrowing is to be comprised of
[$                    
of U.S. Base Rate Revolver Loans]
[$                        
of U.S. LIBOR Revolver Loans].


 


4.                                      The duration of the Interest Period(s) for the LIBOR Revolver
Loans, if any, included in the Borrowing shall be as follows: [List
duration(s)].


 


The
undersigned Borrower Agent hereby certifies that the following statements are
true on the date hereof, and will be true on the Borrowing Date, both before
and after giving effect to the proposed Borrowing and to the application of the
proceeds therefrom:


 


(a)                                 No Default or Event of Default exists or would result from such
Borrowing;


 


(b)                                 The representations and warranties of each Obligor in the Loan Documents
are true and correct in all material respects (except for representations and
warranties that expressly relate to an earlier date); and


 

















 


(c)                                  No event has occurred and no circumstance exists that has had or could
reasonably be expected to have a Material Adverse Effect.


 


 


	
   

  	
  BORROWER AGENT

  
	
   

  	
   

  
	
   

  	
  KEMET ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  



 


2

















 


EXHIBIT E-2


to


Loan and Security Agreement


 


<TO BE TYPED ON COMPANY’S LETTER-HEAD>


 


Date:


 


	
  Bank
  of America, NA

  	
  Fax
  No:

  
	
  #17-00
  Republic Plaza Tower 1

  	
  Original
  to follow

  
	
  9
  Raffles Place

  	
   

  
	
  Singapore
  048619

  	
   

  



 


Attention:  Ms Joy Tan, Client Service Team


 


Dear
Sirs,


 


DRAWDOWN
OF REVOLVING FACILITY (SINGAPORE BASE RATE REVOLVER LOAN) OF XXXXXX (Amount in
USD)


 


1.              We
wish to drawdown a Singapore Base Rate Revolver Loan as follows:


 


Amount:


Value
Date:


 


2.              Please
debit the above drawdown amount from the Loan Account ####-#####-### and credit
to the Disbursement Account No: ####-#####-###


 


3.                                      The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the Borrowing Date, both before and
after giving effect to the proposed Borrowing and to the application of the
proceeds therefrom:


 


(a)                                 No Default or Event of Default exists or would result from such
Borrowing;


 


(b)                                 The representations and warranties of each Obligor in the Loan Documents
are true and correct in all material respects (except for representations and
warranties that expressly relate to an earlier date); and


 


(c)                                  No event has occurred and no circumstance exists that has had or could
reasonably be expected to have a Material Adverse Effect.


 

















 


Yours
faithfully,


<NAME
OF CREDIT TAKER>


 


 


	
   

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  	
  Authorized
  Signatory

  



 


 


[to
be signed in accordance to the Board Resolution for operation of the credit
facility]


 


2

















 


EXHIBIT E-3


to


Loan and Security Agreement


 


<TO BE TYPED ON COMPANY’S LETTER-HEAD>


 


Date:


 


	
  Bank
  of America, NA

  	
  Fax
  No:

  
	
  #17-00
  Republic Plaza Tower 1

  	
  Original
  to follow

  
	
  9
  Raffles Place

  	
   

  
	
  Singapore
  048619

  	
   

  



 


Attention:  Ms Joy Tan, Client Service Team


 


Dear
Sirs,


 


DRAWDOWN
OF SHORT TERM ADVANCE (SINGAPORE LIBOR REVOLVER LOAN) OF XXXXXX (Amount in USD)


 


1.              We
wish to drawdown a short term advance as follows:


 


Amount:


Value Date:


Maturity Date:


Tenure:


Interest Cost:


 


2.              Please
credit the loan proceeds to the Disbursement Account No: ####-#####-###


 


3.                                      The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the Borrowing Date, both before and
after giving effect to the proposed Borrowing and to the application of the
proceeds therefrom:


 


(a)                                 No Default or Event of Default exists or would result from such
Borrowing;


 


(b)                                 The representations and warranties of each Obligor in the Loan Documents
are true and correct in all material respects (except for representations and
warranties that expressly relate to an earlier date); and


 


(c)                                  No event has occurred and no circumstance exists that has had or could
reasonably be expected to have a Material Adverse Effect.


 

















 


Yours
faithfully,


<NAME
OF CREDIT TAKER>


 


 


	
   

  	
   

  	
   

  
	
  Authorized
  Signatory

  	
   

  	
  Authorized
  Signatory

  



 


 


[to
be signed in accordance to the Board Resolution for operation of the credit
facility]


 
















 


SCHEDULE
1.1


to


Loan
and Security Agreement


 


REVOLVER COMMITMENTS OF LENDERS


 


	
  Lender

  	
   

  	
  Revolver Commitment

  	
   

  
	
  Bank
  of America, N.A.

  	
   

  	
  $

  	
  50,000,000