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EXHIBIT 10.30    
  


    LOAN AND SECURITY AGREEMENT  


 by and among  


 SILICON GRAPHICS, INC.  


 and  


 EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO  


 as Borrowers,  


 THE LENDERS THAT ARE SIGNATORIES HERETO  


 as the Lenders,  


 FOOTHILL CAPITAL CORPORATION  


 as the Arranger and Administrative Agent,  


 and  


 BANK OF AMERICA, N.A.,

as the Documentation Agent  


 Dated as of April 10, 2001  






 
  
 

    TABLE OF CONTENTS    
  



	 
	 	 
	 	 
	 	Page

	1.	 	DEFINITIONS AND CONSTRUCTION	 	1
	 	 	1.1	 	Definitions	 	1
	 	 	1.2	 	Accounting Terms	 	18
	 	 	1.3	 	Code	 	18
	 	 	1.4	 	Construction	 	18
	 	 	1.5	 	Schedules and Exhibits	 	18
	

2.	
 	

LOAN AND TERMS OF PAYMENT	
 	

18
	 	 	2.1	 	Revolver Advances	 	18
	 	 	2.2	 	[INTENTIONALLY OMITTED]	 	19
	 	 	2.3	 	Borrowing Procedures and Settlements	 	19
	 	 	2.4	 	Payments	 	24
	 	 	2.5	 	Overadvances	 	26
	 	 	2.6	 	Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations	 	26
	 	 	2.7	 	Cash Management	 	27
	 	 	2.8	 	Crediting Payments	 	28
	 	 	2.9	 	Designated Account	 	28
	 	 	2.10	 	Maintenance of Loan Account; Statements of Obligations	 	28
	 	 	2.11	 	Fees	 	29
	 	 	2.12	 	Letters of Credit	 	29
	 	 	2.13	 	LIBOR Option	 	32
	 	 	2.14	 	Capital Requirements	 	34
	 	 	2.15	 	Joint and Several Liability of Borrowers	 	34
	 	 	2.16	 	Interpretation of Certain Aspects of Advances	 	36
	

3.	
 	

CONDITIONS; TERM OF AGREEMENT	
 	

37
	 	 	3.1	 	Conditions Precedent to the Initial Extension of Credit	 	37
	 	 	3.2	 	Conditions Subsequent to the Initial Extension of Credit	 	38
	 	 	3.3	 	Conditions Precedent to all Extensions of Credit	 	39
	 	 	3.4	 	Term	 	39
	 	 	3.5	 	Effect of Termination	 	39
	 	 	3.6	 	Early Termination by Borrowers	 	40
	

4.	
 	

CREATION OF SECURITY INTEREST	
 	

40
	 	 	4.1	 	Grant of Security Interest	 	40
	 	 	4.2	 	Negotiable Property	 	41
	 	 	4.3	 	Collection of Accounts, General Intangibles Collateral, and Negotiable Property Collateral	 	41
	 	 	4.4	 	Delivery of Additional Documentation Required	 	41
	 	 	4.5	 	Power of Attorney	 	41
	 	 	4.6	 	Right to Inspect	 	41
	 	 	4.7	 	[INTENTIONALLY OMITTED]	 	42
	

5.	
 	

REPRESENTATIONS AND WARRANTIES	
 	

42
	 	 	5.1	 	No Encumbrances	 	42
	 	 	5.2	 	Eligible Accounts	 	42
	 	 	5.3	 	Threshold Inventory	 	42
	 	 	5.4	 	Threshold Equipment	 	42
	 	 	5.5	 	Location of Threshold Inventory and Threshold Equipment	 	42



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	 	 	5.6	 	Inventory Records	 	42
	 	 	5.7	 	Location of Chief Executive Office; FEIN	 	43
	 	 	5.8	 	Due Organization and Qualification; Subsidiaries	 	43
	 	 	5.9	 	Due Authorization; No Conflict	 	43
	 	 	5.10	 	Litigation	 	44
	 	 	5.11	 	No Material Adverse Change	 	44
	 	 	5.12	 	Fraudulent Transfer	 	44
	 	 	5.13	 	Employee Benefits	 	44
	 	 	5.14	 	Environmental Condition	 	44
	 	 	5.15	 	Brokerage Fees	 	44
	 	 	5.16	 	Intellectual Property	 	44
	 	 	5.17	 	Leases	 	44
	 	 	5.18	 	DDAs	 	44
	 	 	5.19	 	Complete Disclosure	 	45
	 	 	5.20	 	Indebtedness	 	45
	

6.	
 	

AFFIRMATIVE COVENANTS	
 	

45
	 	 	6.1	 	Accounting System	 	45
	 	 	6.2	 	Collateral Reporting	 	46
	 	 	6.3	 	Financial Statements, Reports, Certificates	 	46
	 	 	6.4	 	[INTENTIONALLY OMITTED]	 	48
	 	 	6.5	 	Return	 	48
	 	 	6.6	 	Maintenance of Properties	 	48
	 	 	6.7	 	Taxes	 	48
	 	 	6.8	 	Insurance	 	48
	 	 	6.9	 	Location of Threshold Inventory and Threshold Equipment	 	49
	 	 	6.10	 	Compliance with Laws	 	49
	 	 	6.11	 	Leases	 	49
	 	 	6.12	 	Brokerage Commissions	 	49
	 	 	6.13	 	Existence	 	49
	 	 	6.14	 	[INTENTIONALLY OMITTED]	 	49
	 	 	6.15	 	Disclosure Updates	 	49
	

7.	
 	

NEGATIVE COVENANTS	
 	

50
	 	 	7.1	 	Indebtedness	 	50
	 	 	7.2	 	Liens	 	50
	 	 	7.3	 	Restrictions on Fundamental Changes	 	50
	 	 	7.4	 	Disposal of Assets	 	51
	 	 	7.5	 	Change Name	 	51
	 	 	7.6	 	Guarantee	 	51
	 	 	7.7	 	Nature of Business	 	51
	 	 	7.8	 	Prepayments and Amendments	 	51
	 	 	7.9	 	Change of Control	 	51
	 	 	7.10	 	Consignments	 	51
	 	 	7.11	 	Distributions	 	51
	 	 	7.12	 	Accounting Methods	 	51
	 	 	7.13	 	Investments	 	51
	 	 	7.14	 	Transactions with Affiliates	 	52
	 	 	7.15	 	Suspension	 	52
	 	 	7.16	 	[INTENTIONALLY OMITTED]	 	52
	 	 	7.17	 	Use of Proceeds	 	52



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	 	 	7.18	 	Change in Location of Chief Executive Office; Inventory and Equipment with Bailees	 	52
	 	 	7.19	 	[INTENTIONALLY OMITTED]	 	52
	 	 	7.20	 	Financial Covenants	 	52
	

8.	
 	

EVENTS OF DEFAULT	
 	

53
	

9.	
 	

THE LENDER GROUP'S RIGHTS AND REMEDIES	
 	

54
	 	 	9.1	 	Rights and Remedies	 	54
	 	 	9.2	 	Remedies Cumulative	 	56
	

10.	
 	

TAXES AND EXPENSES	
 	

56
	

11.	
 	

WAIVERS; INDEMNIFICATION	
 	

56
	 	 	11.1	 	Demand; Protest; etc.	 	56
	 	 	11.2	 	The Lender Group's Liability for Collateral	 	56
	 	 	11.3	 	Indemnification	 	57
	

12.	
 	

NOTICES	
 	

57
	

13.	
 	

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER	
 	

58
	

14.	
 	

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS	
 	

59
	 	 	14.1	 	Assignments and Participations	 	59
	 	 	14.2	 	Successors	 	61
	

15.	
 	

AMENDMENTS; WAIVERS	
 	

61
	 	 	15.1	 	Amendments and Waivers	 	61
	 	 	15.2	 	Replacement of Holdout Lender	 	62
	 	 	15.3	 	No Waivers; Cumulative Remedies	 	62
	

16.	
 	

AGENT; THE LENDER GROUP	
 	

63
	 	 	16.1	 	Appointment and Authorization of Agent	 	63
	 	 	16.2	 	Delegation of Duties	 	63
	 	 	16.3	 	Liability of Agent	 	63
	 	 	16.4	 	Reliance by Agent	 	64
	 	 	16.5	 	Notice of Default or Event of Default	 	64
	 	 	16.6	 	Credit Decision	 	64
	 	 	16.7	 	Costs and Expenses; Indemnification	 	65
	 	 	16.8	 	Agent in Individual Capacity	 	65
	 	 	16.9	 	Successor Agent	 	65
	 	 	16.10	 	Lender in Individual Capacity	 	66
	 	 	16.11	 	Withholding Taxes	 	66
	 	 	16.12	 	Collateral Matters	 	68
	 	 	16.13	 	Restrictions on Actions by Lenders; Sharing of Payments	 	69
	 	 	16.14	 	Agency for Perfection	 	69
	 	 	16.15	 	Payments by Agent to the Lenders	 	69
	 	 	16.16	 	Concerning the Collateral and Related Loan Documents	 	70
	 	 	16.17	 	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	 	70
	 	 	16.18	 	Several Obligations; No Liability	 	71
	 	 	16.19	 	Legal Representation of Agent	 	71
	 	 	16.20	 	Disclosure of Classified Material	 	71



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17.	
 	

GENERAL PROVISIONS	
 	

72
	 	 	17.1	 	Effectiveness	 	72
	 	 	17.2	 	Section Headings	 	72
	 	 	17.3	 	Interpretation	 	72
	 	 	17.4	 	Severability of Provisions	 	72
	 	 	17.5	 	Amendments in Writing	 	72
	 	 	17.6	 	Counterparts; Telefacsimile Execution	 	72
	 	 	17.7	 	Revival and Reinstatement of Obligations	 	72
	 	 	17.8	 	Integration	 	72
	 	 	17.9	 	Parent as Agent for Borrowers	 	72




EXHIBITS AND SCHEDULES  



	 
	 	 
	 	Page

	Exhibit A-1	 	Form of Assignment and Acceptance	 	 
	Exhibit B-1	 	Form of Borrowing Base Certificate	 	 
	Exhibit C-1	 	Form of Compliance Certificate	 	 
	Exhibit L-1	 	Form of LIBOR Notice	 	 
	Schedule C-1	 	Commitments	 	75
	Schedule P-1	 	Permitted Liens	 	 
	Schedule 1.1	 	Closing Date Business Plan	 	 
	Schedule 2.7(a)	 	Cash Management Banks	 	 
	Schedule 5.5	 	Locations of Inventory and Equipment	 	 
	Schedule 5.7	 	Chief Executive Office; FEIN	 	 
	Schedule 5.8(b)	 	Capitalization of Borrowers	 	 
	Schedule 5.8(c)	 	List of Borrowers' Subsidiaries	 	 
	Schedule 5.10	 	Litigation	 	 
	Schedule 5.13	 	Benefit Plans	 	 
	Schedule 5.18	 	Demand Deposit Accounts	 	 
	Schedule 5.20	 	Permitted Indebtedness	 	 




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LOAN AND SECURITY AGREEMENT    
  


    THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of April 10, 2001, between and
among, on the one hand, the lenders identified on the signature pages hereof (such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), BANK OF AMERICA, N.A., as the documentation agent for the Lenders ("Documentation Agent") and, on the other hand,  SILICON GRAPHICS, INC., a Delaware corporation ("Parent"), and each of Parent's Subsidiaries
identified on the signature pages hereof (such Subsidiaries, together with Parent, are referred to hereinafter each individually as a "Borrower," and individually and collectively, jointly and
severally, as "Borrowers"). 


    The
parties agree as follows: 


1.  DEFINITIONS AND CONSTRUCTION.  


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



    "Account Debtor" means any Person who is or who may become obligated under, with respect to, or on account of, any Account, General
Intangible Collateral or Negotiable Property Collateral. 


    "Accounts" means all of Borrowers' now owned or hereafter acquired right, title, and interest with respect to
"accounts" (as that term is defined in the Code), and any and all supporting obligations in respect thereof, and as for which the Account Debtor
obligated thereon maintains its chief executive office in the United States or is organized under the laws of the United States or any state thereof. 



    "Additional Documents" has the meaning set forth in Section 4.4. 


    "Administrative Borrower" has the meaning set forth in Section 17.9. 


    "Advances" means advances made by the Lenders, Swing Lender or Agent, as the case may be, pursuant to  Section 2.1(a), Section 2.3(d), Section 2.3(e) or
Section 2.3(i). 



    "Affiliate" means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether
through the ownership of Stock, by contract, or otherwise; provided, however, that, in any event: (a) any Person which owns directly or
indirectly 20% or more of the securities having ordinary voting power for the election of directors or other members of the governing body of a Person or 20% or more of the partnership or other
ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to control such Person; (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person; and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed to be an Affiliate of such Person. 


    "Agent" means Foothill, solely in its capacity as agent for the Lenders hereunder, and any successor thereto. 


    "Agent's Account" means an account at a bank designated by Agent from time to time as the account into which Borrowers shall make all
payments to Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent
notifies Administrative Borrower and the Lender Group to the contrary, Agent's Account shall be that certain deposit account bearing account number 


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323-266193 and maintained by Agent with The Chase Manhattan Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA #021000021. 


    "Agent Advances" has the meaning set forth in Section 2.3(e)(i). 



    "Agent's Liens" means the Liens granted by Borrowers to Agent for the benefit of the Lender Group under this Agreement or the other
Loan Documents. 


    "Agent-Related Persons" means Agent together with its Affiliates, officers, directors, employees, and agents. 


    "Agreement" has the meaning set forth in the preamble hereto. 


    "Applicable Prepayment Premium" means, as of any date of determination, an amount equal to (a) during the period of time from
and after the date of the execution and delivery of this Agreement up to the date that is the first anniversary of the Closing Date, 1.0% times the
Maximum Revolver Amount, and (b) during the period of time from and including the date that is the first anniversary of the Closing Date up to the Maturity Date, 0.5%  times the Maximum Revolver
Amount. 


    "Assignee" has the meaning set forth in Section 14.1. 


    "Assignment and Acceptance" means an Assignment and Acceptance in the form of Exhibit A-1. 


    "Authorized Person" means any officer or other employee of Administrative Borrower. 


    "Availability" means, as of any date of determination, if such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a Business Day, the amount that Borrowers are entitled to borrow as Advances under Section 2.1  (after giving effect to all
then outstanding Obligations and all sublimits and reserves applicable hereunder). 



    "Average Daily Balance" means the average Daily Balance of all Advances during a calendar month. 


    "Bank of America" means Bank of America, N.A. 


    "Bankruptcy Code" means the United States Bankruptcy Code, as in effect from time to time. 


    "Base LIBOR Rate" means the rate per annum, determined by Agent in accordance with its customary procedures, and utilizing such
electronic or other quotation sources as it considers appropriate (rounded upwards, if necessary, to the next 1/16%), on the basis of the rates at which Dollar deposits are offered to
major banks in the London interbank market on or about 11:00 a.m. (California time) 2 Business Days prior to the commencement of the applicable Interest Period, for a term and in amounts
comparable to the Interest Period and amount of the LIBOR Rate Loan requested by Administrative Borrower in accordance with this Agreement, which determination shall be conclusive in the absence of
manifest error. 


    "Base Rate" means, the rate of interest announced within Wells Fargo at its principal office in San Francisco as its "prime rate," with
the understanding that the "prime rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate. 


    "Base Rate Loan" means each portion of an Advance that bears interest at a rate determined by reference to the Base Rate. 


2





 


    "Base Rate Margin" means the following margin based upon the Average Daily Balance, to be effective as of the first day of the calendar
month immediately following the end of the applicable calendar month for which the Average Daily Balance is determined: 



	Average Daily Balance
	 	Applicable Base Rate Margin

	Less than $30,000,000	 	0.25 percentage points
	

Greater than or equal to $30,000,000 and less than or equal to $60,000,000	
 	

1.00 percentage points
	

Greater than $60,000,000	
 	

2.00 percentage points






    "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of
ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years. 


    "Board of Directors" means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on
behalf thereof. 


    "Books" means all of each Borrower's now owned or hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General
Intangibles related to such information), excluding (y) books and records relating to (i) General Intangibles other than General Intangibles described above in this definition or in
clause (f) of the definition of "Collateral" in this Section 1.1 or (ii) Real Property, or (z) any of the foregoing which is located outside of the United States. 


    "Borrower" and "Borrowers" have the respective meanings set forth in the preamble to this Agreement. 



    "Borrowing" means a borrowing hereunder consisting of Advances made on the same day by the Lenders (or Agent on behalf thereof), or by
Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance. 


    "Borrowing Base" has the meaning set forth in Section 2.1. 


    "Borrowing Base Certificate" means a certificate in the form of  Exhibit B-1. 



    "Business Day" means any day that is not a Saturday, Sunday, or other day on which national banks are authorized or required to close,
except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which banks are closed for dealings in Dollar deposits in the
London interbank market. 


    "Capital Lease" means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. 


    "Capitalized Lease Obligation" means any Indebtedness represented by obligations under Capital Lease. 



    "Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or issued
by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's, (c) commercial paper or other money market instruments maturing no more than
1 year from the date of acquisition thereof and, at the time of acquisition, having a short-term debt rating of A-1 or P-1, or 


3





 


better, or a long-term debt rating of BBB or better, from S&P or Moody's, and (d) certificates of deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank which has a rating of A or A2, or better, from S&P or Moody's, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation. 


    "Cash Management Bank" has the meaning set forth in Section 2.7(a). 


    "Cash Management Account" has the meaning set forth in Section 2.7(a). 


    "Cash Management Agreements" means those certain cash management service agreements, in form and substance satisfactory to Agent, each
of which is among Administrative Borrower, Agent, and one of the Cash Management Banks. 


    "Change of Control" means (a) any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act),
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 35%, or more, of the Stock of Parent having the right to vote for the
election of members of the Board of Directors, or (b) a majority of the members of the Board of Directors do not constitute Continuing Directors. 


    "Classified Material" has the meaning set forth in Section 16.20. 



    "Closing Date" means the date of the making of the initial Advance (or other extension of credit) hereunder or the date on which Agent
sends Administrative Borrower a written notice that each of the conditions precedent set forth in Section 3.1 either have been satisfied or have
been waived. 


    "Closing Date Business Plan" means the set of Projections of Parent for the 3 year period following the Closing Date (on a year
by year basis, and for the 1 year period following the Closing Date, on a quarter by quarter basis), in form and substance (including as to scope and underlying assumptions) satisfactory to
Agent, a copy of which is attached as Schedule 1.1. 


    "Code" means the California Uniform Commercial Code, as in effect from time to time. 


    "Collateral" means all of each Borrower's now owned or hereafter acquired right, title, and interest in and to each of the following: 



    (a) Accounts, 


    (b) Books, 


    (c) Equipment, 


    (d) Inventory,



    (e) money
or other assets of each such Borrower that now or hereafter come into the possession, custody, or control of any member of the Lender Group, and 


    (f)  the
proceeds and products, whether tangible or intangible, of any of the foregoing described in clauses (a) through (e) above, including
(x) proceeds of insurance covering any or all of the foregoing, and (y) any and all Accounts, Books, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Property,
Real Property, money, deposit accounts, or other tangible or intangible property, solely to the extent, in the case of each of the foregoing clauses (x) and (y), resulting from the sale,
exchange, collection, or other disposition of any of the foregoing described in clauses (a) through (e) above, or any portion thereof or interest therein, and the proceeds thereof;
provided, however, that Collateral shall not include such General Intangibles: (i) which cannot be subject to a consensual security interest in favor of Agent without the consent of the
licensor or other party thereto, (ii) as to which any such restriction described in clause (i) is effective and enforceable under applicable law including Section 9318(4) of the
Code 



4





 


or, from and after the effective date thereof, Section 9408 of the revised Article 9 of the Code, and (iii) to which such consent described in clause (i) has not been
obtained by the party granting the security interest. 




    "Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgment agreement of any lessor, warehouseman,
processor, consignee, or other Person in possession of, having a Lien upon,
or having rights or interests in the Equipment or Inventory, in each case, in form and substance satisfactory to Agent. 



    "Collections" means all cash, checks, notes, instruments, and other items of payment
(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of Borrowers, but excluding any of the foregoing directly arising out of the disposition of Real Property or
any patent, trademark or copyright of any Borrower. 


    "Commitment" means, with respect to each Lender, its Commitment, and, with respect to all Lenders, their Commitments, in each case as
such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. 


    "Compliance Certificate" means a certificate substantially in the form of Exhibit C-1  delivered by the chief financial officer of Parent to Agent. 


    "Continuing Director" means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the
Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors
by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or comparable managers) of Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement thereof. 


    "DDA" means any checking or other demand deposit account maintained by any Borrower. 


    "Daily Balance" means, with respect to each day during the term of this Agreement, the amount of an Obligation due at the end of such
day. 


    "Default" means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of
Default. 


    "Defaulting Lender" means any Lender that fails to make any Advance (or other extension of credit) that it is required to make
hereunder on the date that it is required to do so hereunder. 


    "Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from and after the date the relevant payment is
due, and (b) thereafter, at the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto. 



    "Designated Account" means account number 0117109097 of Administrative Borrower maintained with the Designated Account Bank, or such
other deposit account of Administrative Borrower (located within the United States) that has been designated as such, in writing, by Administrative Borrower to Agent. 


    "Designated Account Bank" means Bank of America, whose office is located in Concord, CA 94520, and whose ABA number is 121 000 358. 



    "Dilution" means, as of any date of determination, a percentage, based upon the experience of the immediately prior 90 days,
that is the result of dividing the Dollar amount of (a) bad debt write-downs, 


5





 


discounts, advertising allowances, credits, or other dilutive items with respect to the Accounts during such period, by (b) Borrowers' Collections with respect to Accounts during such period
(excluding extraordinary items) plus the Dollar amount of clause (a). 



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


    "Disbursement Letter" means an instructional letter executed and delivered by Administrative Borrower to Agent regarding the extensions
of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent. 


    "Documentation Agent" means Bank of America, N.A., solely in its capacity as documentation agent for the Lenders hereunder, and any
successor hereto. 


    "Dollars" or "$" means United States dollars. 


    "EBITDA" means, with respect to any fiscal period, Parent's and its Subsidiaries' consolidated net earnings (or loss), minus interest
income and extraordinary gains, including gains on sale of assets, plus interest expense, income taxes, and depreciation and amortization for such period, as determined in accordance with GAAP. 


    "Eligible Accounts" means those Accounts created by one of Borrowers in the ordinary course of its business, that arise out of its sale
of goods, that comply with each of the representations and warranties respecting Eligible Accounts made by Borrowers under the Loan Documents, and that are not excluded as ineligible by virtue of one
or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of
customer deposits and unapplied cash remitted to Borrowers. Eligible Accounts shall not include the following: 



    (a) Accounts
that the Account Debtor has failed to pay within 90 days of original invoice date or Accounts with selling terms of more than 60 days, 



    (b) Accounts
owed by an Account Debtor (or any Person known by any Borrower to be an Affiliate of such Account Debtor) where 50% or more of all Accounts owed by that
Account Debtor (or any such Affiliate) are deemed ineligible under clause (a) above, 


    (c) Accounts
with respect to which the Account Debtor is an employee, Affiliate, or agent of any Borrower (other than any Person that: (A) is not an Affiliate or
employee of any Borrower and (B) has entered into a written distribution agreement with any Borrower), 


    (d) Accounts
arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill
and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, 


    (e) Accounts
that are not payable in Dollars, 


    (f)  Accounts
with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Account is supported by an irrevocable letter of credit
satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the Account is covered by credit
insurance in form, substance, and amount, and by an insurer, satisfactory to Lenders, 



6





 


    (g) Accounts that arise out of the rendition of services by any Person, 


    (h) Accounts
with respect to which the Account Debtor is a creditor of any Borrower, has or has asserted a right of setoff, has disputed its liability, or has made any
claim with respect to its obligation to pay the Account, to the extent of such claim, right of setoff, or dispute, 


    (i)  Accounts
with respect to an Account Debtor whose total obligations owing to Borrowers exceed 10% of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage, 


    (j)  Accounts
with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which a Borrower has
received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor, 



    (k) Accounts
with respect to which the Account Debtor is located in the states of New Jersey, Minnesota, or West Virginia (or any other state that requires a creditor
to file a business activity report or similar document in order to bring suit or otherwise enforce its remedies against such Account Debtor in the courts or through any judicial process of such
state), unless the applicable Borrower has qualified to do business in New Jersey, Minnesota, West Virginia, or such other states, or has filed a business activities report with the applicable
division of taxation, the department of revenue, or with such other state offices, as appropriate, for the then-current year, or is exempt from such filing requirement, 



    (l)  Accounts,
the collection of which, Agent, in its Permitted Discretion, has notified Administrative Borrower that Agent believes to be doubtful by reason of the
Account Debtor's financial condition, 


    (m) Accounts
that are not subject to a valid and perfected first priority Agent's Lien, 


    (n) Accounts
with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account Debtor, 



    (o) Accounts
that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable
Borrower of the subject contract for goods or services, or 


    (p) Accounts
for which the applicable Borrower has executory performance obligations or which have acceptance criteria, until such time as such performance obligations
or acceptance criteria have been completed, accepted or waived, as applicable. 




    "Eligible Transferee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and
having total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development
or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States,
(c) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its
business and having (together with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender that was party hereto as of the Closing Date,
and (e) during the continuation of an Event of Default, any other Person approved by Agent. 


    "Environmental Actions" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or 


7





 


releases of Hazardous Materials from (a) any assets, properties, or businesses of any Borrower or any predecessor in interest, (b) adjoining properties or businesses, or (c) or
onto any facilities which received Hazardous Materials generated by any Borrower or any predecessor in interest. 


    "Environmental Law" means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or judgment, to the extent binding on Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251 et seq; the Toxic Substances Control Act, 15 USC,
§ 2601 et seq; the Clean Air Act, 42 USC § 7401 et seq.; the Safe Drinking Water
Act, 42 USC. § 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. § 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC. § 11001 et
seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et seq.; and the Occupational Safety and Health Act,
29 USC. §651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state and local or foreign counterparts
or equivalents, in each case as amended from time to time. 


    "Environmental Liabilities and Costs" means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any Governmental Authority or any third party, and which relate to any Environmental Action. 



    "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. 


    "Equipment" means all of Borrowers' now owned or hereafter acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, spare parts, goods (other than consumer goods, farm products, or Inventory), including all
attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, in each case to the extent that any of the foregoing is located anywhere within
the United States. 


    "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto. 


    "ERISA Affiliate" means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the
employees of a Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to
ERISA that is a party to an arrangement with a Borrower and whose employees are aggregated with the employees of a Borrower under IRC Section 414(o). 


    "ERISA Event" means (a) a Reportable Event (as defined in Section 4043 of ERISA) with respect to any Benefit Plan or
Multiemployer Plan, (b) the withdrawal of a Borrower or any of its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which it was a "substantial employer" (as defined
in Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a distress termination (as described in Section 4041(c) of ERISA),
(d) the institution by the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e) any event or 


8





 


condition (i) that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan or
Multiemployer Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of a Borrower, any of its Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any security to any plan under Section 401(a)(29)
of the IRC by a Borrower or its Subsidiaries or any of their ERISA Affiliates. 


    "Event of Default" has the meaning set forth in Section 8. 


    "Excess Availability" means the amount, as of the date any determination thereof is to be made, equal to the sum of:
(i) Availability minus the aggregate amount, if any, of all trade payables of Borrowers aged in excess of their historical levels with respect
thereto and all book overdrafts in excess of their historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion, plus (ii) unrestricted cash and
Cash Equivalents of Parent and its Subsidiaries on a consolidated basis. 


    "Exchange Act" means the Securities Exchange Act of 1934, as in effect from time to time. 


    "Fee Letter" means that certain fee letter, dated as of even date herewith, between Borrowers and Agent, in form and substance
satisfactory to Agent. 


    "FEIN" means Federal Employer Identification Number. 


    "Foothill" means Foothill Capital Corporation, a California corporation. 


    "Funding Date" means the date on which a Borrowing occurs. 


    "Funding Losses" has the meaning set forth in Section 2.13(b)(ii). 



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


    "General Intangibles" means all of Borrowers' now owned or hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports, catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other than goods, Accounts, Books, Inventory, Equipment Investment Property, and Negotiable Property. 


    "General Intangibles Collateral" means that portion of the General Intangibles which is included in the Collateral as proceeds of other
Collateral. 


    "Governing Documents" means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other
organizational documents of such Person. 


    "Governmental Authority" means any federal, state, local, or other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body. 


    "Hazardous Materials" means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable
laws or regulations as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic substances," or any other formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, 


9





 


reproductive toxicity, or "EP toxicity," (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and
(d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million. 


    "Holdout Lender" has the meaning set forth in Section 15.2(a). 


    "Indebtedness" means (a) all obligations of a Borrower for borrowed money, (b) all obligations of a Borrower evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations of a Borrower in respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations of a Borrower under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Borrower, irrespective of whether such obligation or liability is assumed, (e) all obligations of a Borrower for the deferred purchase
price of assets (other than trade debt incurred in the ordinary course of a Borrower's business and repayable in accordance with customary trade practices), and (f) any obligation of a Borrower
guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse to a Borrower) any obligation of any other Person. 


    "Indemnified Liabilities" has the meaning set forth in Section 11.3. 



    "Indemnified Person" has the meaning set forth in Section 11.3. 


    "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief. 



    "Intercompany Subordination Agreement" means a subordination agreement executed and delivered by Borrowers, Agent, and Borrowers'
Affiliates party thereto, the form and substance of which is satisfactory to Agent. 


    "Intercreditor Agreement" means an intercreditor agreement executed by Bank of America and Agent, the form and substance of which is
satisfactory to Agent. 


    "Interest Period" means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan,
or designation thereof as a LIBOR Rate Loan, as the case may be, and ending 1, 2, or 3 months thereafter; provided, however, that (a) if
any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest
shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which will end after the
Maturity Date. 


10







 
    "Inventory" means all Borrowers' now owned or hereafter acquired right, title, and interest with respect to inventory, including goods
(and any software embedded therein or otherwise included therewith and all rights to such software) held for sale or lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of service, and raw materials, work in process, or materials used or consumed in a Borrower's business, in each case to the
extent that any of the foregoing is located anywhere in the United States. 


    "Investment" means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of
loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, relocation, and similar advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide Accounts arising from the sale of goods or rendition of services in the ordinary course of business consistent with past practice), purchases or other acquisitions
for consideration of Indebtedness or Stock, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. 


    "Investment Property" means all of Borrowers' now owned or hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting obligations in respect thereof. 


    "IRC" means the Internal Revenue Code of 1986, as in effect from time to time. 


    "Issuing Lender" means Foothill or any other Lender that, at the request of Administrative Borrower and with the consent of Agent
agrees, in such Lender's sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to  Section 2.12. 


    "L/C" has the meaning set forth in Section 2.12(a). 


    "L/C Disbursement" means a payment made by the Issuing Lender pursuant to a Letter of Credit. 



    "L/C Undertaking" has the meaning set forth in Section 2.12(a). 


    "Lender" and "Lenders" have the respective meanings set forth in the preamble to this
Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions of Section 14.1. 


    "Lender Group" means, individually and collectively, any and all of the Lenders (including the Issuing Lender), Agent and Documentation
Agent. 


    "Lender Group Bank Products" means any one or more of the following types of services or facilities extended to any Borrower by any
member of the Lender Group or any Affiliate of the Lender Group in reliance on the Borrower's agreement to indemnify such member of the Lender Group or such Affiliate: (i) credit cards;
(ii) cash management or related services, including the automatic clearing house transfer of funds for the account of any Borrower pursuant to agreement or overdrafts; (iii) foreign
exchange contracts; and (iv) interest rate protection agreements. 


    "Lender Group Expenses" means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a
Borrower under any of the Loan Documents that are paid or incurred by the Lender Group, (b) fees or charges reasonably paid or incurred by Agent in connection with the Lender Group's
transactions with Borrowers, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC
searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) authorized in this Agreement, (c) costs and expenses incurred by
Agent in the disbursement of funds to or for the account of Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks,
(e) reasonable costs and expenses 


11





 


paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Agent related to audit
examinations of the Books to the extent of the fees and charges (and up to the amount of any limitation) authorized in this Agreement, (g) reasonable costs and expenses of third party claims or
any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Borrower arising under the Loan Documents, (h) Agent's and each Lender's reasonable fees and expenses (including attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i) Agent's and each Lender's reasonable fees and expenses (including attorneys fees) incurred in terminating, enforcing
(including attorneys fees and expenses incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning any Borrower or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral. 


    "Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender. 


    "Letter of Credit" means an L/C or an L/C Undertaking, as the context requires. 


    "Letter of Credit Usage" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus
100% of the amount of outstanding time drafts accepted by an Underlying Issuer as a result of drawings under Underlying Letters of Credit. 


    "LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i). 


    "LIBOR Notice" means a written notice in the form of Exhibit L-1. 



    "LIBOR Option" has the meaning set forth in Section 2.13. 


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



    "LIBOR Rate Loan" means each portion of Advances that bears interest at a rate determined by reference to the LIBOR Rate for an
Interest Period common to such portion. 


    "LIBOR Rate Margin" means the following margin based upon the Average Daily Balance, to be effective as of the first day of the
calendar month immediately following the end of the applicable calendar month for which the Average Daily Balance is determined: 



	Average Daily Balance
	 	Applicable LIBOR Rate Margin

	Less than $30,000,000	 	2.25 percentage points
	

Greater than or equal to $30,000,000 and less than or equal to $60,000,000	
 	

3.00 percentage points
	

Greater than $60,000,000	
 	

3.75 percentage points






    "Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset,
whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of
some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of 


12





 


trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property. 


    "Loan Account" has the meaning set forth in Section 2.10. 


    "Loan Documents" means this Agreement, the Cash Management Agreements, the Disbursement Letter, the Fee Letter, the Letters of Credit,
the Intercompany Subordination Agreement, the Intercreditor Agreement, the Officers' Certificate, any note or notes executed by a Borrower in connection with this Agreement and payable to a member of
the Lender Group, and any other agreement entered into, now or in the future, by any Borrower and the Lender Group in connection with this Agreement. 


    "Material Adverse Change" means (a) a material adverse change in the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of Borrowers taken as a whole, (b) a material impairment of a Borrower's ability to perform its obligations under the Loan Documents to
which it is a party or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent's
Liens with respect to the Collateral as a result of an action or failure to act on the part of a Borrower. 


    "Maturity Date" has the meaning set forth in Section 3.4. 


    "Maximum Revolver Amount" means $75,000,000. 


    "Multiemployer Plan" means a "multiemployer plan" (as defined in Section 3(37) of ERISA) to which a Borrower or any of its
Subsidiaries organized under the laws of the United States or any state thereof or any ERISA Affiliate is making, is obligated to make, has made or has been obligated to make, contributions on behalf
of participants who are or were employed by any of them. 


    "Negotiable Property" means all of Borrowers' now owned and hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes, drafts, documents, and chattel paper (including electronic chattel paper and tangible chattel paper), and any and all supporting
obligations in respect thereof. 


    "Negotiable Property Collateral" means that portion of the Negotiable Property which is included in the Collateral as proceeds of other
Collateral. 


    "Obligations" means all loans, Advances, debts, principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities (including all amounts charged to Borrowers' Loan
Account pursuant hereto or arising pursuant to Lender Group Bank Products), obligations (including indemnity obligations arising pursuant to the Loan Documents or in connection with Lender Group Bank
Products), fees (including fees provided in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all
Lender Group Expenses that Borrowers are required to pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals replacements, substitutions, and supplements, thereto and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding. 


13





 


    "Officers' Certificate" means the representations and warranties of officers form submitted by Agent to Administrative Borrower,
together with Borrowers' completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent. 



    "Originating Lender" has the meaning set forth in Section 14.1(e). 


    "Overadvance" has the meaning set forth in Section 2.5. 


    "PBGC" means Pension Benefit Guaranty Corporation or any successor entity. 


    "Parent" has the meaning set forth in the preamble to this Agreement. 


    "Participant" has the meaning set forth in Section 14.1(e). 


    "Permitted Discretion" means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment. 


    "Permitted Dispositions" means (a) sales or other dispositions by Borrowers of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of the applicable Borrower's business, (b) sales by Borrowers of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by Borrowers in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing by Borrowers, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of the applicable Borrower's business, (e) sales and other dispositions reflected in the
Closing Date Business Plan, (f) sales and other dispositions of assets no longer material to Borrower's business, (g) sales and other dispositions contemplated by Parent and disclosed in
a side letter relating thereto delivered by Parent to Agent and dated the date of this Agreement, (h) dispositions pursuant to or in connection with any full or partial termination, unwinding
or settlement, whether or not at the option of Parent, of the Structured Stock Repurchase, and (i) other sales and other dispositions in an amount not greater than $12,000,000 in the aggregate
in any fiscal year ending after the Closing Date; provided, however, that no Permitted Dispositions described in clauses (e) through
(i) hereof may be made if immediately prior to making any such Permitted Disposition, or giving effect thereto: (x) there shall occur an Event of Default which is continuing; or
(y) Borrower and its Subsidiaries, as determined on a consolidated basis, shall have Excess Availability in an aggregate amount of less than $50,000,000. 


    "Permitted Investments" means (a) investments in Cash Equivalents, (b) investments in negotiable instruments for
collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments in the Stock of any Subsidiary of Parent,
(e) intercompany
advances, guaranties, capital contributions and other Investments made in the ordinary course of business consistent with the written intercompany financing policy of Parent and its Subsidiaries
submitted to Agent prior to the Closing Date, (f) investments made pursuant to participation in the Intel 64 Fund in an amount not greater than the greater of the following in the aggregate in
any fiscal year ending after the Closing Date: (A) $5,000,000; and (B) the minimum amount required to be invested by Parent during such fiscal year in the Intel 64 Fund, as certified by
the chief financial officer of Parent, (g) loans to employees made pursuant to a written employee relocation program duly adopted by Parent or any of its Subsidiaries and submitted to Agent
prior to the Closing Date, (h) Investments reflected in the Closing Date Business Plan, (i) Investments pursuant to or in connection with any full or partial termination, unwinding or
settlement, whether or not at the option of Parent, of the Structured Stock Repurchase, and (j) other Investments in an amount no greater than $12,000,000 in the aggregate in any fiscal year
ending after the Closing Date; provided, however, that no Permitted Investments described in clauses (d) through (j) hereof may be made if
immediately prior to making any such Permitted Investment, or giving effect thereto: (x) there shall occur an Event of Default which is continuing; or (y) Borrower and its Subsidiaries,
as determined on a consolidated basis, shall have Excess Availability in an aggregate amount of less than $50,000,000. 


14





 


    "Permitted Liens" means (a) Liens held by Agent for the benefit of Agent and the Lenders, (b) Liens for unpaid taxes that
either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on  Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrowers'
business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or other unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of Borrowers' business and not in connection with the borrowing of money, (i) Liens granted as security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of Borrowers' business, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, and (k) any Lien with respect to any Real
Property. 


    "Permitted Protest" means the right of the applicable Borrower to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation
is established on the Books in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by the applicable Borrower in good faith, and
(c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent's Liens. 


    "Permitted Purchase Money Indebtedness" means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing
Date in an aggregate amount outstanding at any one time not in excess of $50,000,000. 


    "Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political
subdivisions thereof. 


    "Projections" means Parent's forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with Parent's historical financial statements, in reasonable detail and accompanied by a statement of underlying assumptions. 


    "Pro Rata Share" means: 



    (a) with
respect to a Lender's obligation to make Advances and receive payments of principal, interest, fees, costs, and expenses with respect thereto, the percentage
obtained by dividing (i) such Lender's Commitment, by (ii) the aggregate Commitments of all Lenders, 



    (b) with
respect to a Lender's obligation to participate in Letters of Credit, to reimburse the Issuing Lender, and to receive payments of fees with respect thereto,
the percentage obtained by dividing (i) such Lender's Commitment, by (ii) the aggregate Commitments of all Lenders, and 


    (c) with
respect to all other matters (including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Commitment, by (ii) the aggregate amount of Commitments of all Lenders; 




provided, however, that, in each case, in the event all Commitments have been terminated, Pro Rata Share shall be determined according to the
Commitments in effect immediately prior to such termination. 


15





 


    "Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at
the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof. 



    "Real Property" means any estates or interests in real property now owned or hereafter acquired by any Borrower and the improvements
thereto. 


    "Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form. 


    "Remedial Action" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in
any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedial operation and
maintenance activities, or (d) conduct any other actions authorized by 42 USC § 9601. 


    "Replacement Lender" has the meaning set forth in Section 15.2(a). 


    "Report" has the meaning set forth in Section 16.17. 


    "Required Availability" means Excess Availability of not less than $125,000,000. 



    "Required Lenders" means, at any time, (a) Agent, and (b) Lenders whose Pro Rata Shares aggregate at least 51% of the
Commitments, or if the Commitments have been terminated irrevocably, at least 51% of the Obligations then outstanding. 


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


    "Revolver Usage" means, as of any date of determination, the sum of (a) the then extant amount of outstanding Advances,  plus (b) the then extant amount of the
Letter of Credit Usage. 


    "Risk Participation Liability" means, as to each Letter of Credit, all reimbursement obligations of Borrowers to the Issuing Lender
with respect to an L/C Undertaking, consisting of (a) the amount available to be drawn or which may become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable
with respect thereto. 


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


    "Security Clearance" has the meaning set forth in Section 16.20. 



    "Settlement" has the meaning set forth in Section 2.3(f)(i). 


    "Settlement Date" has the meaning set forth in Section 2.3(f)(i). 


    "Solvent" means, with respect to any Person on a particular date, that such Person is not insolvent (as such term is defined in the
Uniform Fraudulent Transfer Act). 


    "Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act). 


16





 


    "Structured Stock Repurchase" means the structured stock repurchases entered into by Parent pursuant to the Structured Stock Repurchase
Documents. 


    "Structured Stock Repurchase Documents" means, collectively: 



     (i) the
ISDA Master Agreement dated as of September 1, 1998 (the "BofA Master Agreement") between Parent and Bank of America, as amended by the First Amendment
thereto dated as of March 4, 1999; 


    (ii) that
certain confirmation dated September 1, 1998 between Parent and Bank of America relating to the BofA Master Agreement together with any supplemental
letters in the form of Appendix 1 thereto sent by Bank of America to Parent in connection therewith and the Security Agreement entered into as of September 1, 1998 relating thereto; 



    (iii) that
certain confirmation dated March 8, 1999 between Parent and Bank of America relating to the BofA Master Agreement together with any supplemental
letters in the form of Appendix 1 thereto sent by Bank of America to Parent in connection therewith and the Security Agreement entered into as of March 8, 1999 relating thereto; 


    (iv) the
ISDA Master Agreement dated as of November 20, 1998 (the "1st Chicago Master Agreement") between Parent and First National Bank of Chicago ("1st
Chicago"), together with the ISDA Credit Support Annex relating thereto and dated the date thereof, each as amended by that certain letter agreement dated October 26, 1999 (the "Bank One
Amendment") between Parent and Bank One NA (as successor to 1st Chicago); 


    (v) that
certain confirmation dated November 20, 1998 between Parent and 1st Chicago relating to the 1st Chicago Master Agreement together with any supplemental
letters in the form of Appendix 1 thereto sent by 1st Chicago to Parent in connection therewith, each as amended by the Bank One Amendment; 


    (vi) that
certain confirmation dated February 26, 1999 between Parent and 1st Chicago relating to the 1st Chicago Master Agreement together with any supplemental
letters in the form of Appendix 1 thereto sent by 1st Chicago to Parent in connection therewith, each as amended by the Bank One Amendment; and 


   (vii) that
certain Amendment of Confirmation dated as of April 10, 2001 between Parent and Bank of America. 




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


    "Swing Lender" means Foothill or any other Lender that, at the request of Administrative Borrower and with the consent of Agent agrees,
in such Lender's sole discretion, to become the Swing Lender hereunder. 


    "Swing Loan" has the meaning set forth in Section 2.3(d)(i). 


    "Taxes" has the meaning set forth in Section 2.2. 



    "Tax Lender" has the meaning set forth in Section 16.11(g). 


    "Tax Replacement Lender" has the meaning set forth in Section 16.11(g). 


    "Threshold Equipment" means, as of the date of determination, no less than 75% of Borrowers' Equipment, as measured by book value,
other than demonstration systems. 


17





 


    "Threshold Inventory" means, as of the date of determination, no less than 75% of Borrowers' Inventory, as measured by book value,
other than demonstration systems. 


    "Total Commitment" means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 attached
hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of  Section 14.1. 


    "Underlying Issuer" means a third Person which is the beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers. 


    "Underlying Letter of Credit" means a letter of credit that has been issued by an Underlying Issuer. 


    "Voidable Transfer" has the meaning set forth in Section 17.7. 



    "Wells Fargo" means Wells Fargo Bank, National Association, a national banking association. 


    1.2  Accounting Terms.  All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be understood to mean Parent and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise. 



    1.3  Code.  Any terms used in this Agreement that are defined in the Code shall be construed and defined
as set forth in the Code unless otherwise defined herein. 


    1.4  Construction.  Unless the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or," and any provision that is set forth herein as part of a list or series is to be construed in a manner that does not result in duplication of any
other provision in such list or series. The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed
to include such Person's successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein. 


    1.5  Schedules and Exhibits.  All of the schedules and exhibits attached to this Agreement shall be
deemed incorporated herein by reference. 


2.  LOAN AND TERMS OF PAYMENT.  


    2.1  Revolver Advances.  


    (a) Subject
to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender with a Commitment agrees (severally, not jointly or
jointly and severally) to 


18





 


make advances to Borrowers in an amount at any one time outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the lesser of
(i) the Maximum Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage. For purposes
of this Agreement, "Borrowing Base," as of any date of determination, shall mean the result of: 



    (y) 85%
of the amount of Eligible Accounts, less the amount, if any, of the Dilution Reserve, minus


    (z) the
aggregate amount of reserves, if any, established by Agent under Section 2.1(b). 




    (b) Anything
to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish
reserves in such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate, against the Borrowing Base, including reserves with respect to
(i) sums that Borrowers are required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed
to pay under any Section of this Agreement or any other Loan Document, and (ii) amounts owing by Borrowers to any Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent's Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item
of the Collateral. 


    (c) The
Lenders with Commitments shall have no obligation to make additional Advances hereunder to the extent such additional Advances would cause the Revolver Usage to
exceed the Maximum Revolver Amount. 


    (d) Amounts
borrowed pursuant to this Section may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this
Agreement. 


    2.2  [INTENTIONALLY OMITTED.]  


    2.3  Borrowing Procedures and Settlements.  


    (a)  Procedure for Borrowing.  Each Borrowing shall be made by an irrevocable written request by an
Authorized Person delivered to Agent (which notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date
in the case of a request for an Advance specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of $5,000,000, or less, such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding Date) specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall
be a Business Day. At Agent's election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time, with
such telephonic notice to be confirmed in writing within 24 hours of the giving of such notice. 


    (b)  Agent's Election.  Promptly after receipt of a request for a Borrowing pursuant to  Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c)  apply to such requested Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan pursuant to the terms
of  Section 2.3(d) in the amount of the requested Borrowing; provided, however, that if Swing Lender
declines in its sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the terms of  Section 2.3(c) apply to
such requested Borrowing. 


19





 


    (c)  Making of Advances.  



     (i) In
the event that Agent shall elect to have the terms of this Section 2.3(c) apply to a requested Borrowing
as described in Section 2.3(b), then promptly after receipt of a request for a Borrowing pursuant to  Section 2.3(a), Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available funds, to Agent's Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances, upon satisfaction of the applicable conditions precedent set forth in Section 3 hereof, Agent shall
make the proceeds thereof available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Administrative
Borrower's Designated Account; provided, however, that, subject to the provisions of  Section 2.3(i), Agent shall not request any Lender to make, and
no Lender shall have the obligation to make, any Advance if Agent shall have
actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date. 


    (ii) Unless
Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least 1 Business Day prior
to the date of such Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender's portion of the requested Advance on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make its portion of any Advance on any Funding Date shall not relieve any other Lender of any obligation
hereunder to make available its portion of the requested Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make available its portion of the
requested Advance to be made by such other Lender on any Funding Date. 


    (iii) Agent
shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender's benefit, and, in the absence
of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their
Commitments (but only to the extent that such Defaulting Lender's Advance was funded by the other members of the Lender Group) or, if so directed by Administrative Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent such Defaulting Lender's Advance was not funded by 



20





 


the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by it for the account of such Defaulting Lender. Solely for
the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero.
This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable,
(y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender's default in writing, or
(z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute
Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall
have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance Agreement in favor of the substitute Lender (and agrees that it shall
be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided further, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups' or Borrowers' rights or remedies against any such Defaulting Lender arising out of or in
relation to such failure to fund. 




    (d)  Making of Swing Loans.  



     (i) In
the event Agent shall elect, with the consent of Swing Lender, as a Lender, to have the terms of this  Section 2.3(d) apply to a requested Borrowing as described in Section 2.3(b), Swing Lender
as a Lender shall make an advance in the amount of such Borrowing (any such advance made solely by Swing Lender as a Lender pursuant to this  Section 2.3(d) being referred to as a "Swing Loan" and such advances being referred to
collectively as "Swing Loans") available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds to
Administrative Borrower's Designated Account. Each Swing Loan is an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent shall not request Swing Lender as a
Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan if Agent has actual knowledge that (i) one or more of the applicable conditions precedent set forth in  Section 3
will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or
(ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making, in its sole discretion, any Swing
Loan. 



21





 


    (ii) The Swing Loans shall be secured by the Agent's Liens, shall constitute Advances and Obligations hereunder, and shall bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans. 




    (e)  Agent Advances.  



     (i) Agent
hereby is authorized by Borrowers and the Lenders, from time to time in Agent's sole discretion, (1) after the occurrence and during the continuance of
a Default or an Event of Default, or (2) at any time that any of the other applicable conditions precedent set forth in Section 3 have not
been satisfied, to make advances to Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of repayment of the Obligations, or (C) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement, including
Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances described in this  Section 2.3(e) shall be
referred to as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that no such Agent Advance shall be eligible for the LIBOR Option and all payments thereon shall be
payable to Agent solely for its own account (and for the account of the holder of any participation interest with respect to such Agent Advance). 


    (ii) The
Agent Advances shall be repayable on demand and secured by the Agent's Liens granted to Agent under the Loan Documents, shall constitute Advances and
Obligations hereunder, and shall bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. 




    (f)  Settlement.  It is agreed that each Lender's funded portion of the Advances is intended by the
Lenders to equal, at all times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Advances, the Swing
Loans, and the Agent Advances shall take place on a periodic basis in accordance with the following provisions: 



     (i) Agent
shall request settlement ("Settlement") with the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect to
Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time)
on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the "Settlement Date"). Such
notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Agent Advances for the period since the prior Settlement Date. Subject to the
terms and conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing Loans, and Agent
Advances exceeds such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the
Settlement Date, transfer in immediately available funds to the account of such Lender as such Lender may designate, an amount such that each such Lender shall, upon receipt of such amount, have as of
the Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and (z) if a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than such
Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent's Account,
an amount such that each such Lender shall, upon transfer of such 



22





 


amount, have as of the Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such amounts made available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable Swing Loan or Agent Advance and, together with the portion of such Swing Loan or Agent Advance representing Swing Lender's or Agent's
Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate. 



    (ii) In
determining whether a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than, equal to, or greater than such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by
Agent with respect to principal, interest and fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender
after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement. 


    (iii) Between
Settlement Dates, Agent, to the extent no Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that
in accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections received since the then immediately preceding Settlement Date have been applied to Swing Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Agent Advances, and each Lender (subject to the effect of letter agreements between Agent and individual Lenders) with respect to the Advances other than Swing Loans and Agent
Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable. 




    (g)  Notation.  Agent shall record on its books the principal amount of the Advances owing to each
Lender, including the Swing Loans owing to Swing Lender, and Agent Advances owing to Agent, and the interests therein of each Lender, from time to time. In addition, each Lender is authorized to, at
such Lender's option, and Agent shall, note the date and amount of each payment or prepayment of principal of such Lender's Advances (or in the case of Agent, all Advances, including Swing Loans and
Agent Advances) in its books and records, including computer records, such books and records constituting conclusive evidence, absent manifest error, of the accuracy of the information contained
therein. In the event of any inconsistency between the books and records of any Lender of the books and records of Agent, the books and records of Agent shall control. 


    (h)  Lenders' Failure to Perform.  All Advances (other than Swing Loans and Agent Advances) shall be made
by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its
obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder. 


23





 


    (i)  Optional Overadvances.  Any contrary provision of this Agreement notwithstanding, the Lenders hereby
authorize Agent or Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans)
to Borrowers notwithstanding that an Overadvance exists or thereby would be created, so long as (i) after giving effect to such Advances (including a Swing Loan), the Revolver Usage does not
exceed the Borrowing Base by more than $1,500,000, (ii) after giving effect to such Advances (including a Swing Loan) the outstanding Revolver Usage (except for and excluding amounts charged to
the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the time of the making of any such Advance (including a Swing Loan),
Agent does not believe, in good faith, that the Overadvance created by such Advance will be outstanding for more than 90 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrowers in any way. The Advances and Swing Loans, as applicable, that are made pursuant to this  Section 2.3(i) shall be subject
to the same terms and conditions as any other Advance or Swing Loan, as applicable, except that they shall
not be eligible for the LIBOR Option and the rate of interest applicable thereto shall be the rate applicable to Advances that are Base Rate Loans under Section 2.6(c)  hereof without regard to the
presence or absence of a Default or Event of Default. 



     (i) In
the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the preceding paragraph, regardless of the amount of, or reason
for, such excess, Agent shall notify Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account
for interest, fees, or Lender Group Expenses)), and the Lenders with Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with
Borrowers and intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrowers to an amount permitted by the preceding paragraph. In the event Agent or any
Lender disagrees over the terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. 


    (ii) Each
Lender with a Commitment shall be obligated to settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this  Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses. 




    2.4  Payments.  


    (a)  Payments by Borrowers.  



     (i) Except
as otherwise expressly provided herein, all payments by Borrowers shall be made in Dollars to Agent's Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time),
shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day. 



    (ii) Unless
Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in
full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in
full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender until the date repaid. 



24







 
    (b)  Apportionment and Application of Payments.  



     (i) Except
as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including letter agreements between Agent
and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments
relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent's separate account, after giving effect to any letter agreements between Agent and
individual Lenders) shall be apportioned ratably among the Lenders. All payments shall be remitted to Agent and all such payments, including all proceeds of Accounts or other Collateral, received by
Agent (other than payments, including proceeds of Accounts or other Collateral, received while no Default or Event of Default has occurred or is continuing and which relate to the payment of principal
or interest of specific Obligations or which relate to the payment of specific fees), shall be applied as follows: 



    (A) first,
to pay any Lender Group Expenses then due to Agent under the Loan Documents, until paid in full, 


    (B) second,
to pay any Lender Group Expenses then due to the Lenders under the Loan Documents, on a ratable basis, until paid in full, 


    (C) third,
to pay any fees then due to Agent (for its separate accounts, after giving effect to any letter agreements between Agent and the individual Lenders) under
the Loan Documents until paid in full, 


    (D) fourth,
to pay any fees then due to any or all of the Lenders (after giving effect to any letter agreements between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full, 


    (E) fifth,
to pay interest due in respect of all Agent Advances, until paid in full, 


    (F) sixth,
ratably to pay interest due in respect of the Advances (other than Agent Advances) and the Swing Loans until paid in full, 


    (G) seventh,
to pay the principal of all Agent Advances until paid in full, 


    (H) eighth,
to pay the principal of all Swing Loans until paid in full, 


    (I) ninth,
to pay the principal of all other Advances until paid in full, 


    (J) tenth,
if an Event of Default has occurred and is continuing, to Agent, to be held by Agent, for the ratable benefit of Issuing Lender and those Lenders having a
Commitment, as cash collateral in an amount up to 105% of the then extant Letter of Credit Usage until paid in full, 


    (K) eleventh,
to pay any other Obligations until paid in full, and 


    (L) twelfth,
to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law. 




    (ii) Agent
promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled
to receive, subject to a Settlement delay as provided in Section 2.3(f). 


    (iii) In
each instance, so long as no Default or Event of Default has occurred and is continuing, Section 2.4(b)
shall not be deemed to apply to any payment by Borrowers specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this
Agreement. 



25





 


    (iv) For purposes of the foregoing, "paid in full" in respect of any amount means payment of such amount owing under the Loan Documents according to the terms thereof,
whether or not constituting loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, and whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. 



    (v) In
the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to
be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4  shall control and govern.





    2.5  Overadvances.  If, at any time or for any reason, the aggregate amount of outstanding principal of
the Advances, Letter of Credit Usage and other Obligations accrued and payable by Borrowers to the Lender Group pursuant to this Agreement is greater than permitted in Sections
2.1 or 2.12 (an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of such excess, which amount shall
be used by Agent to reduce the Obligations in accordance with the priorities set forth in Section 2.4(b). In addition, Borrowers hereby promise
to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full to the Lender Group as and when due and payable under the terms of this Agreement and the other
Loan Documents. 


    2.6  Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.  


    (a)  Interest Rates.  Except as provided in clause (c) below, all Obligations (except for undrawn
Letters of Credit and other amounts that have accrued but are not yet due and payable pursuant to Section 2.6(d)) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows: (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin. 


    (b)  Letter of Credit Fee.  Borrowers shall pay Agent (for the ratable benefit of the Lenders with a
Commitment, subject to any letter agreement between Agent and individual Lenders), a Letter of Credit fee (inclusive of all charges, commissions, fees, and costs associated with the issuance of L/C's)
which shall accrue at a rate equal to 3.25% (of which 3.00% shall be apportioned ratably among the Lenders and 0.25% shall be for the separate account of Agent) per annum times the daily balance of
the undrawn amount of all outstanding Letters of Credit. 


    (c)  Default Rate.  Upon the occurrence and during the continuation of an Event of Default (and at the
election of Agent or the Required Lenders), 



     (i) all
Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 3 percentage points above the per annum rate otherwise applicable hereunder, and 



    (ii) the
Letter of Credit fee provided for above shall be increased to 3 percentage points above the per annum rate otherwise applicable hereunder. 




    (d)  Payment.  Interest, Letter of Credit fees, and all other fees payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Borrowers hereby authorize Agent, from time to time, without prior notice to Borrowers,
to charge such interest and fees, all Lender Group Expenses (as and when incurred), the charges, commissions, fees, and costs provided for in Section 2.12(e)  (as and when accrued or incurred),



26





 


the fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any
Loan Document to Borrowers' Loan Account, which amounts thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when
due shall be compounded by being charged to Borrowers' Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder. 


    (e)  Computation.  All interest and fees chargeable under the Loan Documents shall be computed on the
basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate. 


    (f)  Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated
within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations
to the extent of such excess. 


    2.7  Cash Management.  


    (a) Borrowers
shall (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at one or more of the banks set forth on  Schedule 2.7(a) (each a "Cash Management Bank"), and shall request in writing and otherwise take
such reasonable steps to ensure that all of its Account Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all Collections (including those
sent directly by Account Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash Management Account") at one of the Cash Management Banks. 


    (b) Each
Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and Borrowers, in form and substance reasonably acceptable to Agent.
Each such Cash Management Agreement shall provide, among other things, that (i) all items of payment deposited in such Cash Management Account and proceeds thereof are held by such Cash
Management Bank as agent or bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable
Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of
payment, and (iii) it immediately will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent's Account. 


    (c) So
long as no Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a)  to add or replace a Cash Management Account Bank or Cash Management Account;
provided, however, that (i) such prospective
Cash Management Bank shall be reasonably satisfactory to Agent and Agent shall have consented in writing in advance to the opening of such Cash Management Account with the prospective Cash Management
Bank, and (ii) prior to the time of the opening of such Cash Management Account, Borrowers and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers shall close any 


27





 


of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of written notice from
Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from
Agent that the operating performance, funds transfer, availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent's liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in Agent's reasonable judgment. 


    (d) The
Cash Management Accounts shall be cash collateral accounts, with all cash, checks and similar items of payment in such accounts securing payment of the
Obligations, and in which Borrowers are hereby deemed to have granted a Lien to Agent. 


    2.8  Crediting Payments.  The receipt of any payment item by Agent (whether from transfers to Agent by
the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent's Account on a Business Day on or before
11:00 a.m. (California time). If any payment item is received into the Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall
be deemed to have been received by Agent as of the opening of business on the immediately following Business Day. The parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent. 


    2.9  Designated Account.  Agent is authorized to make the Advances, and Issuing Lender is authorized to
issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person, or without instructions if pursuant to  Section 2.6(d)
. Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Advance, Agent Advance,
or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account. 


    2.10  Maintenance of Loan Account; Statements of Obligations.  Agent shall maintain an account on its
books in the name of Borrowers (the "Loan Account") on which Borrowers will be charged with all Advances (including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, with the amounts charged pursuant to Section 2.12 in respect of the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest,
fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements shall be conclusively presumed to be correct and accurate and constitute an
account stated between Borrowers and the Lender Group unless, within 30 days after receipt thereof by Administrative Borrower, Administrative Borrower shall deliver to Agent written objection
thereto describing the error or errors contained in any such statements. 


28





 


    2.11  Fees.  Borrowers shall pay to Agent the following fees and charges, which fees and charges shall be
non-refundable when paid (irrespective of whether this Agreement is terminated thereafter) and shall be apportioned among the Lenders (unless otherwise expressly indicated): 


    (a)  Closing Fee.  Borrowers shall pay to Agent, for the ratable benefit of the Lenders, a closing fee of
one percent (1.00%) of the Maximum Revolver Amount, which fee shall be due and payable in full on the Closing Date, 


    (b)  Unused Line Fee.  On the first day of each month during the term of this Agreement, an unused line
fee in an amount equal to 0.375% per annum times the result of (a) the Maximum Revolver Amount,  less (b) the sum of (i) the average Daily
Balance of Advances that were outstanding during the immediately preceding month,  plus (ii) the average daily balance of the Letter of Credit Usage during the immediately preceding month,



    (c)  Fee Letter Fees.  As and when due and payable under the terms of the Fee Letter, Borrower shall pay
to Agent the fees set forth in the Fee Letter, and 


    (d)  Audit, Appraisal, and Valuation Charges.  For the separate account of Agent, audit, appraisal, and
valuation fees and charges as follows, (i) a fee of $750 per day, per auditor, plus out-of-pocket expenses for each financial audit of a Borrower performed by personnel
employed by Agent, such financial audits not to occur more than 4 times per calendar year so long as there has not occurred any Event of Default which is continuing, (ii) no later than six
months following the Closing Date, a one time charge of $5,000 plus out-of-pocket expenses for expenses for the establishment of electronic collateral reporting systems, and
(iii) the actual charges paid or incurred by Agent if it elects to employ the services of one or more third Persons to perform financial audits of Borrowers, to appraise the Collateral, or any
portion thereof, or to assess a Borrower's business valuation. 


    2.12  Letters of Credit  


    (a) Subject
to the terms and conditions of this Agreement, the Issuing Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo Bank of
Minnesota, N.A.) for the account of Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal, or extension) a notice requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to
be amended, renewed, or extended, the date of issuance, amendment, renewal, or extension, the date on which such L/C or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the
name and address of the beneficiary thereof (or of the Underlying Letter of Credit, as applicable), and such other information as shall be necessary to prepare, amend, renew, or extend such L/C or L/C
Undertaking. If requested by the Issuing Lender, Borrowers also shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject
of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested Letter of Credit: 



     (i) The
Letter of Credit Usage would exceed the Borrowing Base less the then extant amount of outstanding Advances, or 


    (ii) the
Letter of Credit Usage would exceed $50,000,000, or 


    (iii) the
Letter of Credit Usage would exceed the Maximum Revolver Amount less the then extant amount of outstanding Advances. 



29





 

    Borrowers
and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may, at Administrative Borrower's request, be issued to support letters of credit for
the account of any Borrower that already are outstanding as of the Closing Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall have an expiry date no later than
30 days prior to the Maturity Date and all such Letters of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the
exercise of its Permitted Discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on
the date that such L/C Disbursement is made, if Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the Business Day that
Administrative Borrower receives such notice, if such notice is received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances that are Base Rate Loans under  Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers' obligation to reimburse such L/C Disbursement
shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interest may appear. 


    (b) Promptly
following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender with a
Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrowers had requested such Advance and Agent shall
promptly pay to Issuing Lender the amounts so received by it from the Lenders. By
the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders with
Commitment, the Issuing Lender shall be deemed to have granted to each Lender with a Commitment, and each Lender with a Commitment shall be deemed to have purchased, a participation in each Letter of
Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender with a Commitment hereby absolutely
and unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on
the date due as provided in clause (a) of this Section, or of any reimbursement payment required to be refunded to Borrowers for any reason. Each Lender with a Commitment acknowledges and
agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b)  shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy
any condition set forth in Section 3 hereof. If any such Lender fails to make available to Agent the amount of such Lender's Pro Rata Share of
any payments made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full. 


    (c) Each
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees
incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided, however, that no Borrower 


30





 


shall be obligated hereunder to indemnify for any loss, cost, expense, or liability that is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender
Group. Each Borrower agrees to be bound by the Underlying Issuer's regulations and interpretations of any Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this interpretation may be different from such Borrower's own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission, in following Borrowers' instructions or those contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group's indemnification of any Underlying Issuer; provided,
however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability that is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group. 


    (d) Each
Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application. 


    (e) [INTENTIONALLY OMITTED] 


    (f)  If
by reason of (i) any change in any applicable law, treaty, rule, or regulation or any change after the date hereof in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of
law) imposed after the date hereof of any Governmental Authority or monetary authority, including any change after the date hereof in the application of Regulation D of the Federal Reserve
Board as from time to time in effect (and any successor thereto): 



     (i) any
reserve, deposit, or similar requirement is or shall, after the date hereof, be imposed or modified in respect of any Letter of Credit issued hereunder, or 


    (ii) there
shall, after the date hereof, be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto, 




and
the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is
reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent may reasonably specify to be necessary to compensate the Lender Group for such additional cost or
reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent
of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final
and conclusive and binding on all of the parties hereto. 


31





 


    2.13  LIBOR Option.  


    (a)  Interest and Interest Payment Dates.  In lieu of having interest charged at the rate determined by
reference to the Base Rate, Borrowers shall have the option (the "LIBOR Option") to have interest on all or a portion of the Advances (either upon the
Borrowing of any such portion or thereafter as provided herein) be charged at a rate of interest determined by reference to the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the
earliest of (i) the last day of the Interest Period applicable thereto, (ii) the occurrence of an Event of Default in consequence of which the Required Lenders or Agent on behalf thereof
elect to accelerate the maturity of the Obligations, or (iii) termination of this Agreement pursuant to the terms hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Advances bear
interest at the LIBOR Rate and Agent shall have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder. 


    (b)  LIBOR Election.  



     (i) Administrative
Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the "LIBOR
Deadline"). Notice of Administrative Borrower's election of the LIBOR Option for a permitted portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a
LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day. Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the
Lenders having a Commitment. 


    (ii) Each
LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and
the Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would
have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for
the period that would have been the Interest Period therefor), minus (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or
such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a
Lender delivered to Administrative Borrower setting forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section shall be conclusive absent manifest error. 



32





 


    (iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least
$1,000,000 and integral multiples of $500,000 in excess thereof. 




    (c)  Prepayments.  Borrowers may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any
automatic prepayment through the required application by Agent of proceeds of Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or acceleration of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders
and their Participants harmless against any and all Funding Losses in accordance with clause (b) above. 


    (d)  Special Provisions Applicable to LIBOR Rate.  



     (i) The
LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased costs due to changes after the date hereof in applicable law occurring subsequent to the commencement of the then applicable Interest
Period, including changes after the date hereof in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at a rate
determined by reference to the LIBOR Rate. In any such event, the affected Lender shall give Administrative Borrower and Agent notice of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Administrative Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any amounts due under clause (b)(ii) above). 


    (ii) In
the event that any change after the date hereof in market conditions or the adoption after the date hereof of any law, regulation, treaty, or directive, or any
change after the date hereof therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical
for such Lender to fund or maintain LIBOR Advances or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable
to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so. 




    (e)  No Requirement of Matched Funding.  Anything to the contrary contained herein notwithstanding,
neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at a rate
determined by reference to the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at a rate
determined by reference to the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans. 


33







 
    2.14  Capital Requirements.  If, after the date hereof, any Lender determines that (i) the
adoption of or change after the date hereof in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change after the date hereof in the
interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), imposed after the date hereof, has the effect of reducing the return on such
Lender's or such holding company's capital as a consequence of such Lender's Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such holding company's then existing policies with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to pay
such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods. 


    2.15  Joint and Several Liability of Borrowers.  


    (a) Each
of Borrowers is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be
provided by the Agent and the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each of Borrowers and in consideration of the undertakings of the other Borrowers to
accept joint and several liability for the Obligations. 


    (b) Each
of Borrowers, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and
several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this  Section 2.15),
it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Person
composing Borrowers without preferences or distinction among them. 


    (c) If
and to the extent that any of Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the other Persons composing Borrowers will make such payment with respect to, or perform, such Obligation. 


    (d) The
Obligations of each Person composing Borrowers under the provisions of this Section 2.15 constitute the
absolute and unconditional, full recourse Obligations of each Person composing Borrowers enforceable against each such Borrower to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Agreement or any other circumstances whatsoever. 


    (e) Except
as otherwise expressly provided in this Agreement, each Person composing Borrowers hereby waives notice of acceptance of its joint and several liability,
notice of any Advances or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to
the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Person
composing Borrowers hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, 


34





 


the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in
respect of any default by any Person composing Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by
Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Person composing Borrowers. Without limiting the generality of the foregoing, each of Borrowers assents to any other action or delay in
acting or failure to act on the part of any Agent or Lender with respect to the failure by any Person composing Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of
this Section 2.15 afford grounds for terminating, discharging or relieving any Person composing Borrowers, in whole or in part, from any of its
Obligations under this Section 2.15, it being the intention of each Person composing Borrowers that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of such Person composing Borrowers under this Section 2.15 shall not be discharged except by performance and
then only to the extent of such performance. The Obligations of each Person composing Borrowers under this Section 2.15 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Person composing Borrowers or any Agent or Lender. The
joint and several liability of the Persons composing Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in
the name, constitution or place of formation of any of the Persons composing Borrowers or any Agent or Lender. 


    (f)  Each
Person composing Borrowers represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.
Each Person composing Borrowers further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Person composing
Borrowers hereby covenants that such Borrower will continue to keep informed of Borrowers' financial condition, the financial condition of other guarantors, if any, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the Obligations. 


    (g) Each
of the Persons composing Borrowers waives all rights and defenses arising out of an election of remedies by the Agent or any Lender, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Person's rights of subrogation and reimbursement against other Borrowers by the
operation of Section 580(d) of the California Code of Civil Procedure or otherwise. 


    (h) Each
of the Persons composing Borrowers waives all rights and defenses that such Borrower may have because the Obligations are secured by collateral that may
include Real Property proceeds. This means, among other things: 



     (i) Agent
and Lenders may collect from such Borrower without first foreclosing on any Real or Personal Property Collateral pledged by Borrowers. 


    (ii) If
Agent or any Lender forecloses on any Real Property Collateral pledged by Borrowers: 



    (A) The
amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than
the sale price. 




35





 



    (B) Agent and Lenders may collect from such Borrower even if Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed any right such Borrower may
have to collect from the other Borrowers. 





This
is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by Real Property. These rights and defenses include, but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. 


    (i)  The
provisions of this Section 2.15 are made for the benefit of the Agent, the Lenders and their respective
successors and assigns, and may be enforced by it or them from time to time against any or all of the Persons composing Borrowers as often as occasion therefor may arise and without requirement on the
part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any of the other Persons composing Borrowers or to
exhaust any remedies available to it or them against any of the other Persons composing Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or
to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender
upon the insolvency, bankruptcy or reorganization of any of the Persons composing Borrowers, or otherwise, the provisions of this Section 2.15  will forthwith be reinstated in effect, as though such
payment had not been made. 


    (j)  Each
of the Persons composing Borrowers hereby agrees that it will not enforce any of its rights of contribution or subrogation against the other Persons composing
Borrowers with respect to any liability incurred by it hereunder or under any of the other Loan Documents or any payments made by it to the Agent or the Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any
payments to any Agent or Lender hereunder or under any other Loan Documents is hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any
payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor. 


    (k) Each
of the Persons composing Borrowers hereby agrees that, after the occurrence and during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations. Each Borrower hereby agrees
that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower
owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of
such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for the Lender Group, and such Borrower shall deliver any such amounts to Agent for application to
the Obligations in accordance with Section 2.4(b). 


    2.16  Interpretation of Certain Aspects of Advances.  Notwithstanding anything to the contrary provided
herein: 



    (a) A
Swing Loan may be made only if Administrative Borrower has requested that the applicable Advance be a Base Rate Loan; and 



36





 


    (b) Although Swing Loan and Agent Advances are considered to be "Advances" under the Loan Documents, no Lender is required to make an Advance under  Section 2.1(a) if a
Swing Loan or Agent Advance is made, but each Lender is required to make Settlement pursuant to  Section 2.1(f). 




3.  CONDITIONS; TERM OF AGREEMENT.  


    3.1  Conditions Precedent to the Initial Extension of Credit.  The obligation of the Lender Group (or any
member thereof) to make the initial Advance (or otherwise to extend any credit provided for hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below: 



    (a) the
Closing Date shall occur on or before April 13, 2001; 


    (b) Agent
shall have received all financing statements required by Agent, duly executed by the applicable Borrowers, and Agent shall have received searches reflecting
the filing of all such financing statements; 



    (c) Agent
shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force
and effect: 



     (i) the
Disbursement Letter, 


    (ii) the
Intercreditor Agreement, 


    (iii) the
Fee Letter, 


    (iv) the
Officers' Certificate; 




    (d) Agent
shall have received a certificate from the Secretary of each Borrower attesting to the resolutions of such Borrower's Board of Directors authorizing its
execution, delivery, and performance of this Agreement and the other Loan Documents to which such Borrower is a party and authorizing specific officers of such Borrower to execute the same; 


    (e) Agent
shall have received copies of each Borrower's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of
such Borrower; 


    (f)  Agent
shall have received a certificate of status with respect to each Borrower, dated within 10 days of the Closing Date, such certificate to be issued by
the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction; 



    (g) Agent
shall have received certificates of status with respect to each Borrower, each dated within 30 days of the Closing Date, such certificates to be issued
by the appropriate officer of the following jurisdictions, which certificates shall indicate that such Borrower is in good standing in such jurisdictions: for each Borrower, California, Wisconsin, and
Minnesota, and for Silicon Graphics Federal, Inc., Maryland; 


    (h) Agent
shall have received confirmation from Bank of America that Parent has secured, to Bank of America's satisfaction, by cash or one or more letters of credit,
Parent's obligation to cover: (i) the mark-to-market exposure on foreign exchange contracts (said collateral to be released as the contracts expire); and (ii) the
extension of credit from Bank of America's New Delhi, India branch; 


    (i)  [INTENTIONALLY
OMITTED]; 


    (j)  [INTENTIONALLY
OMITTED]; 



37





 


    (k) Agent shall have received an executed copy of that certain Amendment of Confirmation entered into between Parent and Bank of America as part of the Structured Stock
Repurchase Documents; 


    (l)  Agent
shall have received a certificate of insurance, together with the endorsements thereto, as are required by  Section 6.8, the form and substance of which shall be satisfactory to Agent; 


    (m) [INTENTIONALLY
OMITTED]; 


    (n) Agent
shall have received opinions of Borrowers' counsel in form and substance satisfactory to Agent; 


    (o) Agent
shall have received satisfactory evidence (including a certificate of the chief financial officer of Parent) that all tax returns required to be filed by
Borrowers have been timely filed and all taxes upon Borrowers or their properties, assets, income, and franchises (including Real Property taxes and payroll taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest; 


    (p) Borrowers
shall have the Required Availability after giving effect to the initial extensions of credit hereunder; 


    (q) Agent
shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Borrowers' books and records and
verification of Borrowers' representations and warranties to the Lender Group, the results of which shall be satisfactory to Agent, and (ii) an inspection of each of the locations where
Inventory is located, the results of which shall be satisfactory to Agent; 


    (r) Agent
shall have received completed reference checks with respect to Borrowers' senior management, the results of which are satisfactory to Agent in its sole
discretion; 


    (s) [INTENTIONALLY
OMITTED]; 


    (t)  Agent
shall have received Parent's Closing Date Business Plan; 


    (u) Administrative
Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement; 


    (v) [INTENTIONALLY
OMITTED]; 


    (w) [INTENTIONALLY
OMITTED]; 


    (x) Agent
shall have received copies of the listing of United States registered patents, trademarks and copyrights, in each case together with a certified of the
secretary of Administrative Borrower certifying each such document as being a true, correct, and complete copy thereof; 


    (y) Borrowers
shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and
delivery by Borrowers of this Agreement or any other Loan Document or with the consummation of the transactions contemplated hereby and thereby; and 



    (z) all
other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall
be in form and substance satisfactory to Agent. 




    3.2  Conditions Subsequent to the Initial Extension of Credit.  The obligation of the Lender Group (or
any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions 


38





 


subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default): 



    (a) within
30 days of the Closing Date, deliver to Agent certified copies of the policies of insurance, together with the endorsements thereto, as are required
by Section 6.8, the form and substance of which shall be satisfactory to Agent and its counsel; 


    (b) within
60 days of the Closing Date, deliver to Agent executed copies of the Cash Management Agreements; 



    (c) within
30 days of the Closing Date, deliver to Agent Collateral Access Agreement with respect to the following locations: (i) 2081 N. Shoreline Blvd.,
Bldg. 11, Mountain View, California, (ii) 1600 Amphitheatre Parkway, Bldgs. 30, 31, 40, 41, 42, and 43, (iii) Riverside Systems Building, 100 N. Cashman Drive, Chippewa Falls, Wisconsin,
(iv) Warehouse of Wisconsin, 2313 Olson Drive, Chippewa
Falls, Wisconsin, (v) Sonic Air, 2200 Outer Loop Drive, Louisville, Kentucky, (vi) 12200-G Plum Orchard Drive, Silver Spring, Maryland, and (vii) North American Van
Lines, 1710 Little Orchard Street, San Jose, California; 


    (d) within
30 days of the Closing Date, deliver to Agent an executed copy of the Intercompany Subordination Agreement; and 



    (e) within
5 Business Days of the Closing Date, deliver to Agent an executed UCC-1 financing statement describing the Collateral for filing in the State of
Kentucky. 




    3.3  Conditions Precedent to all Extensions of Credit.  The obligation of the Lender Group (or any member
thereof) to make all Advances (or to extend any other credit hereunder) shall be subject to the following conditions precedent: 



    (a) the
representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date
of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); 


    (b) no
Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; 


    (c) no
injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the extending of such credit shall have been issued and
remain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any of their Affiliates; 



    (d) no
Material Adverse Change shall have occurred with respect to Borrowers from the financial condition of Borrowers on March 31, 2001 reflected in the Closing
Date Business Plan; 


    (e) no
Material Adverse Change (other than a Material Adverse Change described in Section 3.3(d)) shall have
occurred; and 


    (f)  Administrative
Borrower shall have delivered to Agent a completed and executed Borrowing Base Certificate, dated as of the Business Day on which the request for
the Borrowing is made. 




    3.4  Term.  This Agreement shall become effective upon the execution and delivery hereof by Borrowers,
Agent, and the Lenders and shall continue in full force and effect for a term ending on April 13, 2003 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement pursuant to  Section 9.1. 


    3.5  Effect of Termination.  On the date of termination of this Agreement, all Obligations (including
contingent reimbursement obligations of Borrowers with respect to any outstanding Letters 


39





 


of Credit) immediately shall become due and payable without notice or demand. No termination of this Agreement, however, shall relieve or discharge Borrowers of their duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall remain in effect until all Obligations have been fully and finally discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been fully and finally discharged and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to
release, as of record, the Agent's Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations. 


    3.6  Early Termination by Borrowers.  Borrowers have the option, at any time upon 90 days prior
written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the Obligations (including either (i) providing
cash collateral to be held by Agent for the benefit of those Lenders with a Commitment in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender), in full, together with the Applicable Prepayment Premium (to be allocated based upon letter agreements between Agent and individual Lenders). If
Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Commitments shall terminate and Borrowers shall be obligated to repay the Obligations
(including either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Commitment in an amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Issuing Lender), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of termination of
this Agreement in such notice. In the event of the termination of this Agreement and repayment of the Obligations at any time prior to the Maturity Date, for any other reason, including
(a) termination upon the election of the Required Lenders to terminate after the occurrence of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the
Collateral in any Insolvency Proceeding, or (d) restructure, reorganization or compromise of the Obligations by the confirmation of a plan of reorganization, or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lender Group or profits lost
by the Lender Group as a result of such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender Group,
Borrowers shall pay the Applicable Prepayment Premium to Agent (to be allocated based upon letter agreements between Agent and
individual Lenders), measured as of the date of such termination. Notwithstanding any provision to the contrary herein provided, Borrowers shall not be liable for an Applicable Prepayment Premium if
this Agreement is terminated as a direct result of Borrowers refinancing the Obligations through a commercial banking unit of Wells Fargo as a provider, arranger or agent of such refinancing. 



4.  CREATION OF SECURITY INTEREST.  


    4.1  Grant of Security Interest.  Each Borrower hereby grants to Agent, for the benefit of the Lender
Group, a continuing security interest in all of its right, title, and interest in all currently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all
of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Agent's Liens in and to the Collateral shall attach to all Collateral without further act on the part of Agent or Borrowers. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, except for Permitted Dispositions, Borrowers have no authority, express or implied, to dispose of any item or portion of the Collateral. 


40





 


    4.2  Negotiable Property.  In the event that any Collateral, including proceeds, is evidenced by or
consists of Negotiable Property, and if and to the extent that perfection or priority of Agent's security interest is dependent on or enhanced by possession, the applicable Borrower, immediately upon
the request of Agent, shall endorse and deliver physical possession of such Negotiable Property to Agent. 


    4.3  Collection of Accounts, General Intangibles Collateral, and Negotiable Property Collateral.  At any
time after the occurrence and during the continuation of an Event of Default, Agent or Agent's designee may (a) notify Account Debtors of Borrowers that the Accounts, Negotiable Property
Collateral and General Intangibles Collateral have been assigned to Agent or that Agent has a security interest therein, or (b) collect the Accounts, Negotiable Property Collateral and General
Intangibles Collateral directly and charge the collection costs and expenses to the Loan Account. Each Borrower agrees that it will hold in trust for the Lender Group, as the Lender Group's trustee,
any Collections that it receives and immediately will deliver said Collections to Agent or a Cash Management Bank in their original form as received by the applicable Borrower. 


    4.4  Delivery of Additional Documentation Required.  At any time upon the request of Agent, Borrowers
shall execute and deliver to Agent, any and all financing statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional Documents") that Agent may request
in its Permitted Discretion, in form and substance reasonably satisfactory to Agent, to perfect and continue perfected or better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, each
Borrower authorizes Agent to execute any such Additional Documents in the applicable Borrower's name and authorize Agent to file such executed Additional Documents in any appropriate filing office. 


    4.5  Power of Attorney.  Each Borrower hereby irrevocably makes, constitutes, and appoints Agent (and any
of Agent's officers, employees, or agents designated by Agent) as such Borrower's true and lawful attorney, with power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on any of the documents described in  Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign such Borrower's name on any invoice or bill of
lading relating to the Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) send requests for verification of Accounts; provided,
however, that so long as no Event of Default has occurred which is continuing, Agent will coordinate any such verification activities with Administrative Borrower,
(d) endorse such Borrower's name on any Collection item that may come into the Lender Group's possession, (e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Borrower's policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (f) at any time that an Event
of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts, General Intangibles Collateral or Negotiable Property Collateral directly with Account
Debtors, for amounts and upon terms that Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit hereunder are terminated. 


    4.6  Right to Inspect.  Agent and each Lender (through any of their respective officers, employees, or
agents) shall have the right, from time to time hereafter to inspect the Books and to check, test, and appraise the Collateral in order to verify Borrowers' financial condition or the amount, quality,
value, condition of, or any other matter relating to, the Collateral; provided, however, that so long as no Event of Default has occurred which is
continuing, any such inspection, check, test or 


41





 


appraisal shall be conducted during normal business hours in a manner so as not to interfere unreasonably with Borrowers' business operations. 


    4.7  [INTENTIONALLY OMITTED.]  



5.  REPRESENTATIONS AND WARRANTIES.  


    In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 



    5.1  No Encumbrances.  Each Borrower has good and indefeasible title to its Collateral free and clear of
Liens except for Permitted Liens. 


    5.2  Eligible Accounts.  The Eligible Accounts are bona fide existing payment obligations of Account
Debtors created by the sale and delivery of Inventory to such Account Debtors in the ordinary course of Borrowers' business, owed to Borrowers without defenses, disputes, offsets, counterclaims, or
rights of return or cancellation. As to each Eligible Account, such Account is not excluded as ineligible by virtue of one or more of the criteria set forth in clauses (a) through
(o) contained in the definition of "Eligible Accounts" in Section 1.1. 


    5.3  Threshold Inventory.  The Threshold Inventory is of good and merchantable quality, free from
material defects. As to each item of Threshold Inventory, such Inventory is: 



    (a) owned
by a Borrower free and clear of all Liens other than Agent's Liens and Permitted Liens, 


    (b) either
located at one of the locations set forth on Schedule 5.5 or in transit from one such location to
another such location, 


    (c) not
located on real property leased by a Borrower or in a contract warehouse, in each case, unless subject to a Collateral Access Agreement executed by the lessor,
the warehouseman, or other third party, as the case may be (subject to the delivery of certain Collateral Access Agreements as provided in  Section 3.2(c)), and unless segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises, 


    (d) not
goods that have been returned or rejected by Borrowers' customers, and 



    (e) not
goods that are obsolete or slow moving, restrictive or custom items, or that constitute packaging and shipping materials, supplies used or consumed in
Borrowers' business, bill and hold goods, defective goods, "seconds," or Inventory acquired on consignment. 




    5.4  Threshold Equipment.  The Threshold Equipment is used or held for use in Borrowers' business and is
fit for such purposes. 


    5.5  Location of Threshold Inventory and Threshold Equipment.  Except as set forth on  Schedule 5.5, the Threshold Inventory and the Threshold
Equipment are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5 or are in transit from one such location to another. 


    5.6  Inventory Records.  Each Borrower keeps correct and accurate records itemizing and describing the
type, quality, and quantity of its Inventory and the book value thereof. 


42





 


    5.7  Location of Chief Executive Office; FEIN.  The chief executive office of each Borrower is located at
the address indicated in Schedule 5.7 and each Borrower's FEIN is identified in  Schedule 5.7. 


    5.8  Due Organization and Qualification; Subsidiaries.  


    (a) Each
Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state
where the failure to be so qualified reasonably could be expected to have a Material Adverse Change. 


    (b) Set
forth on Schedule 5.8(b), is a complete and accurate description of the authorized capital Stock of each
Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on  Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of any Borrower's capital Stock, including any
right of conversion or exchange under any outstanding security or other instrument. No Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock. 


    (c) Set
forth on Schedule 5.8(c), is a complete and accurate list of each Borrower's direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization; and (ii) where indicated in Schedule 5.8(c), the percentage of
equity ownership of such Subsidiaries. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable. 


    5.9  Due Authorization; No Conflict.  


    (a) As
to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower. 


    (b) As
to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or
other Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material
contractual obligation of any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of any Borrower's interestholders or any approval or consent of any Person under any material contractual obligation of any Borrower. 


    (c) Other
than the filing of financing statements and fixture filings, the execution, delivery, and performance by each Borrower of this Agreement and the Loan
Documents to which such Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority or other
Person. 


    (d) As
to each Borrower, this Agreement and the other Loan Documents to which such Borrower is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. 



    (e) The
Agent's Liens are validly created, perfected (to the extent that perfection can be effected by the measures required to be taken under the Loan Documents for
such purpose), and first priority Liens, subject only to Permitted Liens. 


43





 


    5.10  Litigation.  Other than those matters disclosed on Schedule 5.10, there are no actions,
suits, or proceedings pending or, to the best knowledge of Borrowers, threatened against Borrowers, or any of their Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters arising after the Closing Date that, if decided adversely to Borrowers, or any of their Subsidiaries, as applicable, reasonably
could not be expected to result in a Material Adverse Change. 


    5.11  No Material Adverse Change.  All financial statements relating to Borrowers that have been
delivered by Borrowers to the Lender Group other than the financial statements provided in the Closing Date Business Plan have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrowers' financial condition as of the date
thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Borrowers from the financial condition of Borrowers on March 31, 2001
reflected in the Closing Date Business Plan. 


    5.12  Fraudulent Transfer.  


    (a) Each
Borrower is Solvent. 


    (b) No
transfer of property is being made by any Borrower and no obligation is being incurred by any Borrower in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrowers. 


    5.13  Employee Benefits.  Except as set forth on  Schedule 5.13, none of Borrowers, their Subsidiaries, or any of their ERISA Affiliates
maintains or contributes to any Benefit Plan or
Multiemployer Plan. Each of Borrowers, their Subsidiaries and their ERISA Affiliates have satisfied the minimum funding standards of ERISA and the IRC with respect to each Benefit Plan to which it is
obligated to contribute and has made all contributions required under the terms of each Multiemployer Plan to which it is obligated to contribute. No ERISA Event has occurred nor has any other event
occurred that may result in an ERISA Event that reasonably could be expected to result in a Material Adverse Change. None of Borrowers, their Subsidiaries or any of their ERISA Affiliates is required
to provide security to any Benefit Plan under Section 401(a)(29) of the IRC. 


    5.14  Environmental Condition.  No Borrower has received notice that a Lien arising under any
Environmental Law has attached to any of its revenues or to any Collateral. 


    5.15  Brokerage Fees.  Borrowers have not utilized the services of any broker or finder in connection
with Borrowers' obtaining financing from the Lender Group under this Agreement and no brokerage commission or finders fee is payable by Borrowers in connection herewith. 


    5.16  Intellectual Property.  Each Borrower owns, or holds licenses in, all trademarks, trade names,
copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted. Administrative Borrower has delivered to Agent a true, correct, and complete
listing of all United States registered patents, United States registered trademarks, and United States registered copyrights as to which each Borrower is the owner or is an exclusive licensee. 



    5.17  Leases.  Borrowers enjoy peaceful and undisturbed possession under all leases of Equipment and Real
Property located in the United States material to the business of Borrowers and to which Borrowers are a party or under which Borrowers are operating. All of such leases are valid and subsisting and
no material default by Borrowers exists under any of them. 


    5.18  DDAs.  Set forth on Schedule 5.18 are all of the DDAs of each Borrower, including, with
respect to each depository: (i) the name and address of that depository, and (ii) the account numbers of the accounts maintained with such depository. 


44





 


    5.19  Complete Disclosure.  All factual information (taken as a whole) furnished by or on behalf of
Borrowers in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Borrowers in writing to the Agent
or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date
Business Plan represents, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Borrowers' good faith best estimate of its future performance
for the periods covered thereby. Notwithstanding anything in any Loan Document to the contrary, Borrowers make no representation or warranty for any purpose, including, without limitation,  Section 8.11 hereof, as to any projection or forecast of results or other forward looking statement set forth in any Projection, in the Closing
Date Business Plan or otherwise in any document or statement delivered or made to the Agent or any Lender other than, in the case of any such projection, forecast or forward looking statement, that
Borrowers had a good faith belief at the time of such delivery that such projection, forecast or forward looking statement was reasonably supported based on the assumptions described in connection
therewith at the time of such delivery. 


    5.20  Indebtedness.  Set forth on Schedule 5.20 is
a true and complete list of all Indebtedness of each Borrower outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately
reflects the aggregate principal amount of such Indebtedness and the principal financial terms thereof. 


    5.21  Classified Material.  The Classified Material is not necessary to and will not otherwise prohibit
or impede the Lender Group's enforcement rights related to any Collateral (except for non-material amounts of Books and Equipment which may contain Classified Material). 


6.  AFFIRMATIVE COVENANTS.  


    Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, Borrowers
shall do all of the following (provided, however, that only Administrative Borrower is required to comply with  Section 6.2 and Section 6.3(a)(iii), in each case on behalf of itself and the other
Borrower): 


    6.1  Accounting System.  Maintain a system of accounting that enables Borrowers to produce financial
statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and allowances with respect to the Inventory. 


45





 


    6.2  Collateral Reporting.  Provide Agent (and if so requested by Agent, with copies for each Lender)
with the following documents at the following times in form satisfactory to Agent: 



	Weekly	 	(a) a sales journal, collection journal, and credit register since the last such schedule and a calculation of the Borrowing Base as of such date, and
	

 	
 	

(b) notice of all returns, disputes, or claims.
	

 	
 	

(c) restricted and unrestricted cash of Parent and its Subsidiaries on both a consolidated domestic and worldwide basis,
	

 	
 	

(d) a detailed calculation of the Borrowing Base (including detail regarding those Accounts that are not Eligible Accounts),
	

Monthly (not later than the 10th day of each month)	
 	

(e) a detailed aging, by total, of the Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Agent,
	

 	
 	

(f) a summary aging, by vendor, of Borrowers' accounts payable and any book overdraft, and
	

 	
 	

(g) a calculation of Dilution for the prior month.
	

Quarterly	
 	

(h) a detailed list of each Borrower's customers,
	

 	
 	

(i) a report regarding each Borrower's accrued, but unpaid, ad valorem taxes,
	

Upon request by Agent	
 	

(j) copies of invoices in connection with the Accounts, credit memos, remittance advices, deposit slips, shipping and delivery documents in connection with the Accounts and, for Inventory and Equipment acquired by Borrowers, purchase orders and
invoices, and
	

 	
 	

(k) such other reports as to the Collateral, or the financial condition of Borrowers as Agent may request.





    In
addition, each Borrower agrees to cooperate fully with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of
each of the items set forth above. 


    6.3  Financial Statements, Reports, Certificates.  Deliver to Agent, with copies to each Lender: 



    (a) as
soon as available, but in any event within 30 days (45 days in the case of the a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Parent's fiscal years, 



     (i) a
company prepared consolidated balance sheet, income statement, and statement of cash flow covering Parent's and its Subsidiaries' operations during such period, 


    (ii) a
certificate signed by the chief financial officer of Parent to the effect that: 



    (A) the
financial statements delivered hereunder have been prepared in accordance with GAAP (except for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present in all material respects the financial condition of Parent and its Subsidiaries, 





46





 




    (B) the representations and warranties of Borrowers contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date), and 


    (C) there
does not exist any condition or event that constitutes a Default or Event of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action Borrowers have taken, are taking, or propose to take with respect thereto), and 




    (iii) a
Compliance Certificate demonstrating, in reasonable detail, compliance at the end of such quarter with the applicable financial covenants contained in  Section 7.20, and 




    (b) as
soon as available, but in any event within 90 days after the end of each of Parent's fiscal years, 



     (i) financial
statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent
and certified, without any qualifications, by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and
statement of cash flow and, if prepared, such accountants' letter to management), 


    (ii) a
certificate of such accountants addressed to Agent and the Lenders stating that such accountants do not have knowledge of the existence of any Default or Event
of Default under Section 7.20, 




    (c) as
soon as available, but in any event within 30 days prior to the start of each of Parent's fiscal years, 



     (i) copies
of Parent's Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its reasonable discretion, for
the forthcoming 3 years, year by year, and for the forthcoming fiscal year, quarter by quarter, certified by the chief financial officer of Parent as being such officer's good faith best
estimate of the financial performance of Parent and its Subsidiaries during the period covered thereby, 




    (d) if
and when filed by any Borrower, within 5 days of filing, 



     (i) Form 10-Q
quarterly reports, Form 10-K annual reports, and Form 8-K current reports, 


    (ii) any
other filings made by any Borrower with the SEC, 


    (iii) copies
of Borrowers' federal income tax returns, and any amendments thereto, filed with the Internal Revenue Service, and 


    (iv) any
other information that is provided by Parent to its shareholders generally, 




    (e) if
and when filed by any Borrower and as requested by Agent, satisfactory evidence of payment of applicable excise taxes in each jurisdiction (i) in which
any Borrower conducts business or is required to pay any such excise tax, (ii) where any Borrower's failure to pay any such applicable excise tax would result in a Lien on any of the
Collateral, or (iii) where any Borrower's failure to pay any such applicable excise tax reasonably could be expected to result in a Material Adverse Change, 



    (f)  as
soon as a Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, notice thereof and a statement of the curative
action that Borrowers propose to take with respect thereto, and 



47





 


    (g) upon the request of Agent, any other report reasonably requested relating to the financial condition of Borrowers. 




    In
addition to the financial statements referred to above, Parent agrees to deliver financial statements prepared on both a consolidated and consolidating basis. Parent agrees that
its independent certified public accountants are authorized to communicate with Agent and to release to Agent whatever financial information concerning Borrowers that Borrowers are obligated to
deliver to Agent pursuant to this Agreement, and agrees that Agent may contact directly any such accounting firm or service bureau in order to obtain such information. 


    6.4  [INTENTIONALLY OMITTED.] 


    6.5  Return.  Cause returns and allowances as between Borrowers and their Account Debtors, to be on the
same basis and in accordance with the usual customary practices of the applicable Borrower, as they exist at the time of the execution and delivery of this Agreement. 


    6.6  Maintenance of Properties.  Maintain and preserve all of its properties which are necessary or
useful in the proper conduct to its business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder. 


    6.7  Taxes.  Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or
imposed, levied, or assessed against Borrowers or any of their assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating
that the applicable Borrower has made such payments or deposits. Borrowers shall deliver satisfactory evidence of payment of applicable excise taxes in each United States jurisdiction in which any
Borrower is required to pay any such excise tax. 


    6.8  Insurance.  


    (a) At
Borrowers' expense, maintain insurance respecting its property and assets wherever located, covering loss or damage by fire, theft, explosion, and all other
hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrowers shall deliver copies of all such policies to Agent with a satisfactory lender's loss payable endorsement naming Agent as a loss payee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever. 


    (b) Administrative
Borrower shall give Agent prompt notice of any loss of the Collateral in an amount in excess of $250,000 covered by such insurance. Agent shall have
the exclusive right to adjust any such losses payable under any such insurance policies in excess of $250,000, without any liability to Borrowers whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent
domain of Collateral, shall be paid over to Agent to be applied at the option of the Required Lenders either to the prepayment of the Obligations or shall be disbursed to Administrative Borrower under
staged payment terms reasonably satisfactory to the Required Lenders for application to the cost of repairs, replacements, or restorations. Any such repairs, replacements, or restorations shall be
effected with reasonable 


48





 


promptness and shall be of a value at least equal to the value of the items of property destroyed prior to such damage or destruction. 


    (c) Borrowers
shall not take out separate insurance concurrent in form or contributing in the event of loss with insurance covering the Collateral required to be
maintained under this Section 6.8, unless Agent is included thereon as named insured with the loss payable to Agent under a lender's loss payable
endorsement or its equivalent. Administrative Borrower immediately shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the
policies evidencing the same, and copies of such policies promptly shall be provided to Agent. 


    6.9  Location of Threshold Inventory and Threshold Equipment.  Keep the Threshold Inventory and Threshold
Equipment only at the locations identified on Schedule 5.5 or in transit from one such location to another; provided,
however, that Administrative Borrower may amend Schedule 5.5 so long as such amendment occurs by written notice to Agent
not less than 30 days prior to the date on which the Inventory or Equipment is moved to such new location, so long as such new location is within the continental United States, and so long as,
at the time of such written notification, the applicable Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens on such assets and
also, if such location is not owned by a Borrower, provides to Agent a Collateral Access Agreement (subject to the time and extent permitted for compliance with  Section 3.2(c)). 


    6.10  Compliance with Laws.  Comply with the requirements of all applicable laws, rules, regulations, and
orders of any Governmental Authority, including the Fair Labor Standards Act and the Americans With Disabilities Act, other than laws, rules, regulations, and orders the non-compliance
with which, individually or in the aggregate, would not result in and reasonably could not be expected to result in a Material Adverse Change. 


    6.11  Leases.  Pay when due all rents and other amounts payable under any leases to which any Borrower is
a party or by which any Borrower's properties and assets are bound, unless the failure to pay such amounts would not, individually or in the aggregate, result in and reasonably could not be expected
to result in a Material Adverse Change or a Lien other than a Permitted Lien. 


    6.12  Brokerage Commissions.  Pay any and all brokerage commission or finders fees incurred in connection
with or as a result of Borrowers' obtaining financing from the Lender Group under this Agreement. Borrowers agree and acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify, defend, and hold Agent and the Lender Group harmless from and against any claim of any broker or finder arising out of
Borrowers' obtaining financing from the Lender Group under this Agreement. 



    6.13  Existence.  At all times preserve and keep in full force and effect each Borrower's valid existence
and good standing and any rights and franchises, in each case material to Borrowers' businesses. 


    6.14  [INTENTIONALLY OMITTED]  


    6.15  Disclosure Updates.  Promptly and in no event later than 5 Business Days after obtaining knowledge
thereof, (a) notify Agent if any written information, exhibit, or report furnished to the Lender Group contained any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of the facts and circumstances in which such statement was made or known by any Borrower to exist at the time such statement
was made, and (b) correct any defect or error that may be discovered therein or in any Loan Document or in the execution, acknowledgment, filing, or recordation thereof. 


49





 

7.  NEGATIVE COVENANTS.  


    Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, it will not do
any of the following: 


    7.1  Indebtedness.  Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or
indirectly, liable with respect to any Indebtedness or permit any Subsidiary to do the same, except: 



    (a) Indebtedness
evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit; 


    (b) Indebtedness
set forth on Schedule 5.20; 


    (c) Permitted
Purchase Money Indebtedness; 


    (d) Indebtedness
reflected in the Closing Date Business Plan, 


    (e) intercompany
advances, guaranties, capital contributions and other Investments made in the ordinary course of business, 



    (f)  Indebtedness
consisting of obligations of Parent under the Structured Stock Repurchase Documents or incurred in connection with any full or partial termination,
unwinding or settlement, whether or not at the option of Parent, of the Structured Stock Repurchase, 


    (g) other
unsecured Indebtedness in an aggregate principal amount at any time outstanding not to exceed $50,000,000, and 


    (h) refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b) through (g) of this Section 7.1  (and continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended, (ii) such refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to the
applicable Borrower, and (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must be include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced,
renewed, or extended Indebtedness. 




    7.2  Liens.  Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with
respect to any of its assets located within the United States, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens
that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 7.1(h)  and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness). 



    7.3  Restrictions on Fundamental Changes.  



    (a) Enter
into any merger or consolidation (other than a merger or consolidation in which Borrower is the surviving entity and that is otherwise permitted in  Section 7.13), reorganization or recapitalization
not otherwise permitted under the Loan Documents, or reclassify its Stock other than pursuant
to the terms of such Stock. 




    (b) Liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution). 


50





 


    (c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its assets. 


    7.4  Disposal of Assets.  Other than Permitted Dispositions, convey, sell, lease, license, assign,
transfer, or otherwise dispose of any of its assets. 


    7.5  Change Name.  Change its name, FEIN, corporate structure or identity, or add any new fictitious
name; provided, however, that a Borrower may change its name upon at least 30 days prior written notice by Administrative Borrower to Agent of such change and so long as, at the time of such
written notification, such Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected Agent's Liens. 


    7.6  Guarantee.  Except where otherwise permitted as a guarantee of Indebtedness under  Section 7.1, guarantee or otherwise become in any way
liable with respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which are transmitted or turned over to Agent. 


    7.7  Nature of Business.  Make any change in the principal nature of its business. 


    7.8  Prepayments and Amendments.  


    (a) Except
in connection with (i) any full or partial termination, unwinding or settlement, whether or not at the option of Parent, of the Structured Stock
Repurchase or otherwise pursuant to the Structured Stock Repurchase Documents or (ii) a refinancing permitted by Section 7.1(h), prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of any Borrower, other than the Obligations in accordance with this Agreement; and 


    (b) Except
in connection with (i) any full or partial termination, unwinding or settlement, whether or not at the option of Parent, of the Structured Stock
Repurchase or otherwise pursuant to the Structured Stock Repurchase Documents or (ii) a refinancing permitted by Section 7.1(h), directly
or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b) through 7.1(g) in a manner materially adverse to the Lender Group. 


    7.9  Change of Control.  Cause, permit, or suffer, directly or indirectly, any Change of Control. 



    7.10  Consignments.  Consign any Inventory or sell any Inventory on bill and hold, sale or return, sale
on approval, or other conditional terms of sale. 


    7.11  Distributions.  Other than (i) any full or partial termination, unwinding or settlement,
whether or not at the option of Parent, of the Structured Stock Repurchase or otherwise pursuant to the Structured Stock Repurchase Documents or (ii) distributions or declaration and payment of
dividends by a Borrower to another Borrower, make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any
Borrower's Stock, of any class, whether now or hereafter outstanding. 


    7.12  Accounting Methods.  Materially modify or change its method of accounting (other than as may be
required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrowers' accounting records in a manner that would result in said accounting firm or service bureau declining to provide Agent information regarding the Collateral or
Borrowers' financial condition. 


    7.13  Investments.  Except for Permitted Investments, directly or indirectly, make or acquire any
Investment, or incur any liabilities (including contingent obligations) other than Indebtedness permitted under Section 7.1 and guarantees
permitted under Section 7.6 for or in connection with any Investment. 


51







 
    7.14  Transactions with Affiliates.  Directly or indirectly enter into or permit to exist any transaction
with any Affiliate of Borrowers except for transactions that are in the ordinary course of Borrowers' business, upon fair and reasonable terms, and that are no less favorable to Borrowers than would
be obtained in an arm's length transaction with a non-Affiliate. 


    7.15  Suspension.  Other than Permitted Dispositions, suspend or go out of a substantial portion of its
business. 


    7.16  [INTENTIONALLY OMITTED].  


    7.17  Use of Proceeds.  Use the proceeds of the Advances for any purpose other than (a) on the
Closing Date to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and
(b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted purposes. 


    7.18  Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.  Relocate its
chief executive office to a new location without Administrative Borrower providing 30 days prior written notification thereof to Agent and so long as, at the time of such written notification,
the applicable Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens and also provides to Agent a Collateral Access Agreement with
respect to such new location if such location is not owned by Borrower. The Threshold Inventory and Threshold Equipment shall not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent. 


    7.19  [INTENTIONALLY OMITTED.] 


    7.20  Financial Covenants.  Fail to maintain: 


    (a)  Minimum EBITDA.  EBITDA, measured on a fiscal quarter-end basis, of not less than the
required amount set forth in the following table for the applicable period set forth opposite thereto; 



	Applicable Amount
	 	Applicable Period

	<$95,000,000>	 	For the 3 month period ending June 30, 2001
	

$9,000,000	
 	

For the 3 month period ending September 30, 2001
	

$21,000,000	
 	

For the 3 month period ending December 31, 2001
	

$35,000,000	
 	

For the 3 month period ending March 31, 2002
	

$43,000,000	
 	

For the 3 month period ending June 30, 2002;






provided, however, that: (x) the required amount of EBITDA for 3 month period ending June 30, 2001 shall be increased by $1 for
each $1 by which Borrowers' restructuring charges during the same 3 month period aggregate less than $80,000,000; (y) if Parent is required under GAAP to make a non-cash
write-down of its remaining investment in WAM!NET after the date hereof, then the required amount of EBITDA for the 3 month period during which said write-down is made
shall be decreased by the amount of said write-down; and (z) the required amount of EBITDA for each 3 month period ending after June 30, 2002 shall be set by Agent at
a discount to projected EBITDA following receipt of and based upon applicable Projections satisfactory to Lenders. 


52





 


    (b)  Minimum Cash and Cash Equivalents.  Cash and Cash Equivalents of Parent and its Subsidiaries,
determined on a consolidated basis, of no less than $50,000,000 at all times during the term of this Agreement. 



8.  EVENTS OF DEFAULT.  


    Any one or more of the following events shall constitute an event of default (each, an "Event of Default")
under this Agreement: 


    8.1   If Borrowers fail to pay when due and payable or when declared due and payable, all or any portion
of the Obligations (whether of principal, interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations); 


    8.2   (a) If Borrowers fail or neglect to perform, keep, or observe any covenant or other provision
contained in Sections 6.2 or 6.3 hereof and such failure or neglect continues for a period of 5 Business Days after the date on which such failure or
neglect first occurs, or (b) if Borrowers fail or neglect to perform, keep, or observe any covenant or other provision contained in Sections 4.2, 6.1, 6.6, 6.7 or 6.11  hereof and such failure or
neglect is not cured within 15 days after the date on which such failure or neglect first occurs, or (c) if Borrowers fail or neglect
to perform, keep, or observe any other covenant or other provision contained in any Section of this Agreement (other than a Section that is expressly addressed elsewhere in this  Section 8) or the
Loan Documents (other than a Section of such other Loan Document addressed elsewhere in this  Section 8); 


    8.3   If any material portion of any Borrower's assets is attached, seized, subjected to a writ or
distress warrant, levied upon, or comes into the possession of any third Person; 


    8.4   If an Insolvency Proceeding is commenced by any Borrower; 


    8.5   If an Insolvency Proceeding is commenced against any Borrower and any of the following events
occurs: (a) the applicable Borrower consents to the institution of the Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted,
(c) the petition commencing the Insolvency Proceeding is not dismissed within 45 calendar days of the date of the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group shall be relieved of their obligation to extend credit hereunder, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, any Borrower, or (e) an order for relief shall have
been entered therein; 


    8.6   If any Borrower is enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs; 


    8.7   If a notice of Lien, levy, or assessment is filed of record with respect to any Collateral (or any
portion thereof) by the United States, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or otherwise, upon any Collateral (or any portion thereof) and the same is not paid before such payment is delinquent; 


    8.8   If a judgment or other claim becomes a Lien or encumbrance upon any material portion of the
Collateral; 


    8.9   If there is a default in any material agreement to which any Borrower or any of its Subsidiaries is
a party, including any agreement evidencing, securing or otherwise relating to Indebtedness in an amount in excess of $5,000,000, and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by the other party thereto, irrespective of whether exercised, to accelerate the maturity of the applicable Borrower's or its Subsidiaries'
obligations 


53





 


thereunder, to terminate such agreement, or to refuse to renew such agreement pursuant to an automatic renewal right therein; 


    8.10   If any Borrower makes any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Indebtedness; 


    8.11   If any material misstatement or misrepresentation exists now or hereafter in any warranty,
representation, statement, or Record made to the Lender Group in connection with the transactions contemplated by the Loan Documents by any Borrower, or any officer, employee, or director of any
Borrower proves to have been untrue in any material respect when made; 


    8.12   [INTENTIONALLY OMITTED]; 


    8.13   If this Agreement or any other Loan Document that purports to create a Lien, shall, for any
reason, fail or cease to create a valid and perfected (to the extent that perfection can be effected by the measures required to be taken under the Loan Documents for such purpose) and, except to the
extent permitted by the terms hereof or thereof and otherwise subject to Permitted Liens, first priority Lien on or security interest in the Collateral covered hereby or thereby; or 


    8.14   Any material provision of any Loan Document shall at any time for any reason be declared to be
null and void, or the validity or enforceability thereof shall be contested by any Borrower in a proceeding shall be commenced by any Borrower, or by any Governmental Authority having jurisdiction
over any Borrower, seeking to establish the invalidity or unenforceability thereof. 


9.  THE LENDER GROUP'S RIGHTS AND REMEDIES.  


    9.1  Rights and Remedies.  Upon the occurrence, and during the continuation, of an Event of Default, the
Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and
Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers: 



    (a) Declare
all Obligations (including the Dollar amount of contingent unreimbursed liabilities under L/C's and L/C Undertakings) whether evidenced by this Agreement,
by any of the other Loan Documents, or otherwise, immediately due and payable; 


    (b) Cease
advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement
between Borrowers and the Lender Group; 


    (c) Terminate
this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent's
Liens in the Collateral and without affecting the Obligations; 


    (d) Settle
or adjust disputes and claims directly with Account Debtors for amounts and upon terms which Agent considers reasonably advisable, and in such cases, Agent
will credit the Loan Account with only the net amounts received by Agent in payment of such disputed Accounts after deducting all Lender Group Expenses incurred or expended in connection therewith; 



    (e) Cause
Borrowers to hold all returned Inventory in trust for the Lender Group, segregate all returned Inventory from all other assets of Borrowers or in Borrowers'
possession and conspicuously label said returned Inventory as the property of the Lender Group; 


    (f)  Without
notice to or demand upon any Borrower, make such payments and do such acts as Agent considers necessary or reasonable to protect its security interests in
the Collateral. Each Borrower agrees to assemble the Collateral if Agent so requires, and to make the Collateral 



54





 


available to Agent at a place that Agent may designate which is reasonably convenient to both parties. Each Borrower authorizes Agent to enter the premises where the Collateral is located, to take and
maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account therefor. With respect to any of Borrowers' owned or leased premises, each Borrower hereby grants Agent a license to
enter into possession of such premises and to occupy the same, without charge, in order to exercise any of the Lender Group's rights or remedies provided herein, at law, in equity, or otherwise; 



    (g) Without
notice to any Borrower (such notice being expressly waived), and without constituting a retention of any Collateral in satisfaction of an obligation (within
the meaning of the Code), set off and apply to the Obligations any and all (i) balances and deposits of any Borrower held by the Lender Group (including any amounts received in the Cash
Management Accounts), or (ii) Indebtedness at any time owing to or for the credit or the account of any Borrower held by the Lender Group; 


    (h) Agent
or Agent's designee may (a) notify Account Debtors of Borrowers that the Accounts, General Intangibles Collateral and Negotiable Property Collateral of
Borrower have been assigned to Agent or that Agent has a security interest therein, or (b) collect such Accounts, General Intangibles Collateral and Negotiable Property Collateral directly and
charge the collection costs and expenses to the Loan Account. Borrowers agree that each will hold in trust for Agent, as Agent's trustee, any Collections that it receives and immediately will deliver
said Collections to Agent in their original form as received by such Borrower; 


    (i)  Hold,
as cash collateral, any and all balances and deposits of any Borrower held by the Lender Group, and any amounts received in the Cash Management Accounts, to
secure the full and final repayment of all of the Obligations; 


    (j)  Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Each
Borrower hereby grants to Agent a license or other right to use, without charge, such Borrower's software (including all rights thereto as owner or licensee thereof), labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and such Borrower's rights under all licenses and all franchise agreements shall inure to the Lender Group's benefit; 


    (k) Sell
the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such
places (including Borrowers' premises) as Agent determines is commercially reasonable. It is not necessary that the Collateral be present at any such sale; 


    (l)  Agent
shall give notice of the disposition of the Collateral as follows: 



     (i) Agent
shall give Administrative Borrower (for the benefit of the applicable Borrower) a notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made; and 


    (ii) The
notice shall be personally delivered or mailed, postage prepaid, to Administrative Borrower as provided in  Section 12, at least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market; 




55






 




    (m) Agent,
on behalf of the Lender Group may credit bid and purchase at any public sale; 


    (n) Agent
may seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent
permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing; 


    (o) The
Lender Group shall have all other rights and remedies available to it at law or in equity pursuant to any other Loan Documents; and 



    (p) Any
deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrowers. Any excess will be returned, without
interest and subject to the rights of third Persons, by Agent to Administrative Borrower (for the benefit of the applicable Borrower). 




    9.2  Remedies Cumulative.  The rights and remedies of the Lender Group under this Agreement, the other
Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it. 


10. TAXES AND EXPENSES.  


    If any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then Agent, in
its sole discretion, and without prior notice to any Borrower, may do any or all of the following; provided, however, that if any failure by any
Borrower described above in this Section 10 does not constitute an Event of Default and occurs when there has not occurred any Event of Default
which is continuing, then Agent may do any or all of the following only if Agent shall have given notice of such failure to Administrative Borrower and such failure is not cured within 5 Business Days
after the date of such notice: (a) make payment of the same or any part thereof, (b) set up such reserves in Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to comply with Section 6.8 hereof, obtain and maintain
insurance policies of the type described in Section 6.8 and take any action with respect to such policies as Agent deems prudent. Any such
amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the
Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and owing. 


11. WAIVERS; INDEMNIFICATION.  


    11.1  Demand; Protest; etc.  Each Borrower waives demand, protest, notice of protest, notice of default
or dishonor (other than any notice required under this Agreement), notice of payment and nonpayment (other than any notice required under this Agreement), nonpayment at maturity, release, compromise,
settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which each such Borrower may in any way be liable. 


    11.2  The Lender Group's Liability for Collateral.  Each Borrower hereby agrees that: (a) so long
as the Lender Group complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of any of the
Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any 


56





 


diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of
the Collateral shall be borne by Borrowers. 


    11.3  Indemnification.  Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons,
the Lender-Related Persons with respect to each Lender, each Participant, and each of their respective officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any
act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to
the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall
survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as
to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with
respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.


12. NOTICES.  


    Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to the other relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered
or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as the Administrative Borrower or Agent, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below: 



	Administrative Borrower:	 	Silicon Graphics, Inc.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn: Jean Furter, Vice President and Treasurer

Fax No.: (650) 932-0660

Email address: jean@sgi.com



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with copies to:	
 	

Brobeck Phleger & Harrison, LLP

Spear Street Tower

One Market

San Francisco, California 94105

Attn: Douglas Young, Esq.

Fax No.: (415) 442-1010

Email address: dyoung@brobeck.com
	

and copies to:	
 	

Silicon Graphics, Inc.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn: Barry Weinert, Esq., Associate General Counsel

Fax No.: (650) 933-0096

Email address: barryw@sgi.com
	

If to Lenders:	
 	

c/o Foothill Capital Corporation

2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404

Attn: Business Finance Division Manager

Fax No.: (310) 478-9788
	

with copies to:	
 	

Jeffer, Mangels, Butler & Marmaro LLP

2121 Avenue of the Stars

Tenth Floor

Los Angeles, California 90067

Attn: Joel J. Berman, Esq.

Fax: (310) 203-0567

Email address: jjb@jmbm.com





    Agent
and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or
demands sent in accordance with this Section 12, other than notices by Agent in connection with enforcement rights against the Collateral under
the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above. 


13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  


    (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  



    (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT  


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 SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).  


     (c) BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND THE LENDER
GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.  


 14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.  


    14.1  Assignments and Participations.  


    (a) Any
Lender may, with the written consent of Agent and, so long as no Event of Default has occurred and is continuing, upon 5 Business Days' notice to and with the
written consent of Administrative Borrower (not to be unreasonably withheld) (provided that no written consent of Agent or Borrowers shall be required in connection with any assignment and delegation
by a Lender to an Eligible Transferee), assign and delegate to one or more assignees (each an "Assignee") all, or any ratable part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000; provided, however, that Borrowers and Agent
may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance in form and substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's separate account a processing fee in the amount of $5,000 and (iv) such Assignee has delivered any applicable documentation relating to exemption from withholding taxes
provided for in Section 16.11. Anything contained herein to the contrary notwithstanding, the consent of Agent or Borrowers shall not be required
(and payment of any fees shall not be required) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender. 


    (b) From
and after the date that Agent notifies the assignor Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to  Section 11.3 hereof) and
be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this Agreement and the other Loan Documents, such 


59





 


Lender shall cease to be a party hereto and thereto), and such assignment shall affect a novation between Borrowers and the Assignee. 


    (c) By
executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial
condition of Borrowers or the performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee
confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (6) such Assignee
agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. 


    (d) Immediately
upon each Assignee's making its processing fee payment under the Assignment and Acceptance and receipt and acknowledgment by Agent of such fully
executed Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto. 


    (e) Any
Lender may at any time, with the written consent of Agent, sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of such
Lender (a "Participant") participating interests in its Obligations, the Commitment, and the other rights and interests of that Lender (the
"Originating Lender") hereunder and under the other Loan Documents (provided that no written consent of Agent shall be required in connection with any
sale of any such participating interests by a Lender to an Eligible Transferee); provided, however, that (i) the Originating Lender shall remain
a "Lender" for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and
interests of the Originating Lender hereunder shall not constitute a "Lender" hereunder or under the other Loan Documents and the Originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would
(A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which
such Participant is participating, (C) release all or a material portion of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents)
supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the 


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amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums; and
(v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders,
Agent, Borrowers, the Collections, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders
among themselves. The provisions of this Section 14.1(e) are solely for the benefit of the Lender Group, and no Borrower shall have any rights as
third party of any such provisions. 


    (f)  In
connection with any such assignment or participation or proposed assignment or participation, a Lender may disclose all documents and information which it now
or hereafter may have relating to Borrowers or Borrowers' business. 


    (g) Any
other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.14,
and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 



    14.2  Successors.  This Agreement shall bind and inure to the benefit of the respective successors and
assigns of each of the parties; provided, however, that Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders'
prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as
expressly required pursuant to Section 14.1 hereof, no consent or approval by any Borrower is required in connection with any such assignment. 


15. AMENDMENTS; WAIVERS.  


    15.1  Amendments and Waivers.  No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by Borrowers therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders affected thereby and Administrative Borrower (on behalf of all Borrowers) and acknowledged by Agent, do any of the following: 



    (a) increase
or extend any Commitment of any Lender, 


    (b) postpone
or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under
any other Loan Document, 


    (c) reduce
the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under
any other Loan Document, 


    (d) change
the percentage of the Commitments that is required to take any action hereunder, 


    (e) amend
this Section or any provision of the Agreement providing for consent or other action by all Lenders, 



61







  




    (f)  release
Collateral other than as permitted by Section 16.12, 


    (g) change
the definition of "Required Lenders," 


    (h) contractually
subordinate any of the Agent's Liens, 


    (i)  release
any Borrower from any obligation for the payment of money, or 


    (j)  change
the definition of Borrowing Base or the definitions of Eligible Accounts, or Maximum Revolver Amount, or change  Section 2.1, or 


    (k) amend
any of the provisions of Section 16, 




and,
provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing Lender,
affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification,
waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves,
and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers. 


    15.2  Replacement of Holdout Lender.  


    (a) If
any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender ("Holdout
Lender") fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender
with one or more substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. 


    (b) Prior
to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance Agreement,
subject only to the Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance Agreement prior to the effective date of such replacement, the
Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance Agreement. The replacement of any Holdout Lender shall be made in accordance with the terms of  Section 14.1. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and
obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit. 



    15.3  No Waivers; Cumulative Remedies.  No failure by Agent or any Lender to exercise any right, remedy,
or option under this Agreement or, any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective
unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent's and each Lender's rights thereafter to
require strict performance by Borrowers of any provision of this Agreement. Agent's and each Lender's rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have. 


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16. AGENT; THE LENDER GROUP.  


    16.1  Appointment and Authorization of Agent.  Each Lender hereby designates and appoints Agent as its
representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 16. The provisions of this  Section 16 (other than Sections 16.11 and 16.17)
are solely for the benefit of Agent and the Lenders, and Borrowers shall have no rights as a third party beneficiary of any of the provisions contained herein (other than  Sections 16.11 and 16.17). Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word "Agent" is for convenience only, that Agent is merely the
representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree
that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the Collections, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections as provided in the Loan Documents, (e) open and maintain such bank accounts and cash
management accounts as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections, (f) perform,
exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrowers, the Obligations, the Collateral, the Collections, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers
pursuant to the Loan Documents. 


    16.2  Delegation of Duties.  Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. 


    16.3  Liability of Agent.  None of the Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any Subsidiary or Affiliate of any
Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or
received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, 


63





 


effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Books or properties of Borrowers or the books or records or properties of any of Borrowers' Subsidiaries or
Affiliates. 


    16.4  Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent
accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first
receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so
requests, it shall first be indemnified to its reasonable satisfaction by Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any
such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Lenders
and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 


    16.5  Notice of Default or Event of Default.  Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the
Lenders, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this
Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event
of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default.
Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 16.4, Agent shall take such action
with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, however,
that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable. 


    16.6  Credit Decision.  Each Lender acknowledges that none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such
documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group) party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and
made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems necessary to 


64





 


inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person (other than the Lender Group) party to a Loan
Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrowers and any other Person party to a Loan Document
that may come into the possession of any of the Agent-Related Persons. 


    16.7  Costs and Expenses; Indemnification.  Agent may incur and pay Lender Group Expenses to the extent
Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies and auctioneer fees and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not
Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender's Pro
Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender
shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct nor shall any
Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for such Lender's ratable share of any costs or out-of-pocket expenses (including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent. 


    16.8  Agent in Individual Capacity.  Foothill and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though Foothill were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person
and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which
waiver Agent
will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms "Lender" and "Lenders" include Foothill in its individual
capacity. 



    16.9  Successor Agent.  Agent may resign as Agent upon 45 days notice to the Lenders. If Agent
resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. 


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If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or
failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In
any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term "Agent"
shall mean such successor Agent and the retiring Agent's appointment, powers, and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this  Section 16
shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above. 



    16.10  Lender in Individual Capacity.  Any Lender and its respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or
consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such
other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender not shall be under any obligation to provide such information to them. With respect to the Swing
Loans and Agent Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of the
Agent. 


    16.11  Withholding Taxes.  


    (a) If
any Lender is a "foreign corporation, partnership or trust" within the meaning of the IRC and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and Administrative Borrower: 



     (i) if
such Lender claims an exemption from withholding tax pursuant to its portfolio interest exception, (a) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of the IRC), or
(III) a controlled foreign corporation described in Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN, before the first payment of
any interest under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower; 


    (ii) if
such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Form W-8BEN
before the first payment of any interest under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower; 


    (iii) if
such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United
States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before the first 



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payment of any interest is due under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower; 



    (iv) such
other form or forms as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction in full of, United
States withholding tax. 




Such
Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. 


    (b) If
any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations due to such Lender, such Lender agrees to notify Agent of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrowers due such Lender. To the extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer
valid. 


    (c) If
any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. 


    (d) If
the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by
Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section, together with all costs and
expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent. 


    (e) All
payments made by Borrowers hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense, except as required by
applicable law other than for Taxes (as defined below). All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction (other than the United States) or by any political subdivision or taxing authority thereof or
therein (other than of the United States) with respect to such payments (but excluding, any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein
(i) measured by or based on the net income or net profits of a Lender, or (ii) to the extent that such tax results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the Lender, or a change in the branch or lending office of the Lender participating in the transactions set forth herein) and
all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively
as "Taxes"). If any Taxes are so levied or imposed, each Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to this Section 16.11(e) after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein; provided, however, that Borrowers shall not be required to increase any such
amounts payable to Agent or any Lender (i) that is not organized under the laws of the United States, if such Person fails to comply with the other requirements of this  Section 16.11, or
(ii) if the increase in 


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such amount payable results from Agent's or such Lender's own willful misconduct or gross negligence. Borrowers will furnish to Agent as promptly as possible after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such payment by Borrowers. 


    (f)  Each
Lender hereby represents that, as of the date it became a Lender under this Agreement, it was not subject to any Taxes applicable to payments made by the
Borrowers hereunder. 


    (g) (i)
If any Lender becomes subject to any Taxes applicable to payments made by the Borrowers hereunder (a "Taxed Lender"), and so long as there has not occurred any
Event of Default which is continuing, then Administrative Borrower, upon at least 5 Business Days prior irrevocable notice to the Agent and such Taxed Lender, may permanently replace such Taxed Lender
with one or more substitute Lenders which is an Eligible Transferee (each, a "Tax Replacement Lender"), and the Taxed Lender shall have no right to refuse to be replaced hereunder. Such notice to
replace the Taxed Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. 


    (ii) Prior
to the effective date of such replacement, the Taxed Lender and each Tax Replacement Lender shall execute and deliver an Assignment and Acceptance Agreement,
subject only to the Taxed Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Taxed Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance Agreement prior to the effective date of such replacement, the Taxed
Lender shall be deemed to have executed and delivered such Assignment and Acceptance Agreement. The replacement of any Taxed Lender shall be made in accordance with the terms of  Section 14.1. Until
such time as the Tax Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights
and obligations of the Taxed Lender hereunder and under the other Loan Documents, the Taxed Lender shall remain obligated to make the Taxed Lender's Pro Rata Share of Advances and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit. 


    16.12  Collateral Matters.  


    (a) The
Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of
the Commitments and payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection
therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 7.4 of this Agreement or the
other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting property leased to a Borrower under a lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or
substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in
writing Agent's authority to release any such Liens on particular types or items of Collateral pursuant to this Section 16.12;  provided, however, that
(1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent's
opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of
Borrowers in respect of) all interests retained by Borrowers, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. 


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    (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrowers or is cared for, protected, or insured
or has been encumbered, or that the Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any
of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein. 


    16.13  Restrictions on Actions by Lenders; Sharing of Payments.  



    (a) Each
of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the
request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers or any deposit accounts of Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any of the Collateral the purpose of which is, or could be, to give such Lender any preference or priority against the other Lenders with
respect to the Collateral. 


    (b) If,
at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect
to the Obligations arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the
other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase
price paid therefor shall be returned to such purchasing party, but without interest except to
the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. 



    16.14  Agency for Perfection.  Agent hereby appoints each other Lender as its agent (and each Lender
hereby accepts such appointment) for the purpose of perfecting the Agent's Liens in assets which, in accordance with Article 9 of the Code can be perfected only by possession. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's
instructions. 


    16.15  Payments by Agent to the Lenders.  All payments to be made by Agent to the Lenders shall be made
by bank wire transfer or internal transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently
with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest of the Obligations. 


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    16.16  Concerning the Collateral and Related Loan Documents.  Each member of the Lender Group authorizes
and directs Agent to enter into this Agreement and the other Loan Documents relating to the Collateral, for the benefit of the Lender Group. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. 


    16.17  Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information.  By becoming a party to this Agreement, each Lender: 



    (a) is
deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a "Report"
and collectively, "Reports") prepared by Agent, and Agent shall so furnish each Lender with such Reports, 


    (b) expressly
agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be
liable for any information contained in any Report, 


    (c) expressly
agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will
inspect only specific information
regarding Borrowers and will rely significantly upon the Books, as well as on representations of Borrowers' personnel, 


    (d) and
Agent agrees to keep all Reports and other material, non-public information regarding Borrowers and their Subsidiaries and their operations, assets,
and existing and contemplated business plans in a confidential manner; it being understood and agreed by Borrowers that in any event such Lender or Agent may make disclosures (i) to counsel for
and other advisors, accountants, and auditors to such Lender or Agent, (ii) reasonably required by any bona fide potential or actual Assignee or Participant in connection with any contemplated
or actual assignment or transfer by such Lender or Agent of an interest herein or any participation interest in such Lender's rights hereunder, (iii) of information that has become public by
disclosures made by Persons other than such Lender or Agent, its Affiliates, assignees, transferees, or Participants, or (iv) as required or requested by any court, governmental or
administrative agency, pursuant to any subpoena or other legal process, or by any law, statute, regulation, or court order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender or Agent shall: (y) notify Administrative Borrower of any request by any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information concurrent with, or where practicable, prior to the disclosure thereof, and (z) notify all other
Persons described in clause (i) above that they are bound by, and cause all other Persons described in clause (ii) above to be bound by, the provisions of this  Section 16.17(d), and



    (e) without
limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of Borrowers;
and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender. 



70





 

In
addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent
that has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such request, Agent shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional reports or information from Borrowers, any Lender may, from time to time, reasonably request Agent to exercise such right as
specified in such Lender's notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding
the Loan Account, Agent shall send a copy of such statement to each Lender. 


    16.18  Several Obligations; No Liability.  Notwithstanding that certain of the Loan Documents now or
hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make
any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of
such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender
Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on
its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein. 


    16.19  Legal Representation of Agent.  In connection with the negotiation, drafting, and execution of
this Agreement and the other Loan Documents, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or enforcement of remedies, Jeffer,
Mangels, Butler & Marmaro LLP ("JMBM") only has represented and only shall represent Foothill in its capacity as Agent and as a Lender. Each other Lender hereby acknowledges that JMBM does not
represent it in connection with any such matters. 


    16.20  Disclosure of Classified Material.  Borrowers and the Lender Group acknowledge that due to the
nature of Borrowers' business and their customers, certain items comprising the Collateral contain "classified" information and/or data ("Classified Material") which may not be legally disclosed
without proper authorization and/or security clearance (a "Security Clearance"). The Lender Group agrees that to the extent any representation, warranty, or covenant of either Borrower or right or
remedy of the Lender Group contained in this Agreement or the other Loan Documents would otherwise require any Borrower to disclose Classified Material without a proper Security Clearance, such
representation, warranty, covenant, right or remedy shall not apply with respect to obligations which would lead to such illegal disclosure; provided that any time a Borrower refuses, declines or
otherwise fails to fulfill an obligation under this Agreement or the other Loan Documents due to an invocation of this provision or the substance thereof, such Borrower shall promptly provide written
notice to Agent of that fact certifying that it has complied with its obligations hereunder or under the other Loan Documents to the fullest extent possible without illegally disclosing Classified
Material and, upon the reasonable request of Agent, such Borrower shall provide evidence reasonably satisfactory to Agent that the requested items of Collateral or information are in fact
"classified." 


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17. GENERAL PROVISIONS.  



    17.1  Effectiveness.  This Agreement shall be binding and deemed effective when executed by Borrowers,
Agent, and each Lender whose signature is provided for on the signature pages hereof. 


    17.2  Section Headings.  Headings and numbers have been set forth herein for convenience only. Unless the
contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement. 


    17.3  Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed
or resolved against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. Time is of the essence in Borrowers' payment and
performance of the Obligations. 


    17.4  Severability of Provisions.  Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 



    17.5  Amendments in Writing.  This Agreement only can be amended by a writing in accordance with  Section 15.1. 


    17.6  Counterparts; Telefacsimile Execution.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute
but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis. 


    17.7  Revival and Reinstatement of Obligations.  If the incurrence or payment of the Obligations by any
Borrower or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if the Lender Group is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 


    17.8  Integration.  This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. 


    17.9  Parent as Agent for Borrowers.  Each Borrower hereby irrevocably appoints Parent as its borrowing
agent and attorney-in-fact for all actions required to be taken by such Borrower under this Agreement (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed
Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower 


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(i) to provide Agent with all notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and
(ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done
solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall
not incur liability to any Borrower as a result thereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion
since the successful operation of each Borrower is dependent on the continued successful performance of the Parent and the other Borrowers as an integrated group. To induce the Lender Group to do so,
and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all
liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the collective
handling of the Loan Account and Collateral of Borrowers as herein provided, (b) the Lender Group's relying on any instructions of the Administrative Borrower, or (c) any other action
taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this  Section 17.9 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be. 


[Signature page to follow.]  


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



	 	 	SILICON GRAPHICS, INC.

a Delaware corporation
	

 	
 	

By:	
 	

/s/ Harold L. Covert
	 	 	Title:	 	Executive Vice President & Chief Financial Officer
	

 	
 	
SILICON GRAPHICS FEDERAL, INC.

a Delaware corporation
	

 	
 	

By:	
 	

Anthony K. Robbins
	 	 	Title:	 	Chairman of the Board and President
	

 	
 	
FOOTHILL CAPITAL CORPORATION,

a California corporation, as Agent and as a Lender
	

 	
 	

By:	
 	

Caroline Arellano
	 	 	Title:	 	Vice President
	

 	
 	
BANK OF AMERICA, N.A.,

as Documentation Agent and as a Lender
	

 	
 	

By:	
 	

Richard Burke
	 	 	Title:	 	Senior Vice President




74





 
 
 

Schedule C-1
  Commitments    
  



	Lender
	 	Commitment

	Foothill Capital Corporation	 	$	37,500,000
	Bank of America, N.A.	 	$	37,500,000
	 	 	

	All Lenders	 	$	75,000,000
	 	 	





75









QuickLinks



EXHIBIT 10.30


TABLE OF CONTENTS


LOAN AND SECURITY AGREEMENT


Schedule C-1 Commitments