exv10w1






EXHIBIT 10.1



NOTE: Portions of this Exhibit are the subject of a Confidential Treatment Request by the
Registrant to the Securities and Exchange Commission (the “Commission”). Such portions have been
redacted and are marked with a “[***]” in the place of the redacted language. The redacted
information has been filed separately with the Commission.




 

 






CREDIT AGREEMENT




by and among




ACTUATE CORPORATION




as Borrower,




THE LENDERS THAT ARE SIGNATORIES HERETO




as the Lenders,




and




WELLS FARGO FOOTHILL, LLC




as the Arranger and Administrative Agent




Dated as of November 3, 2008




 

 








 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS AND CONSTRUCTION	 	 	1	 
	 
	 	1.1	 	Definitions	 	 	1	 
	 
	 	1.2	 	Accounting Terms	 	 	1	 
	 
	 	1.3	 	Code	 	 	1	 
	 
	 	1.4	 	Construction	 	 	1	 
	 
	 	1.5	 	Schedules and Exhibits	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	2.	 	LOAN AND TERMS OF PAYMENT	 	 	2	 
	 
	 	2.1	 	Revolver Advances	 	 	2	 
	 
	 	2.2	 	[Intentionally Omitted]	 	 	2	 
	 
	 	2.3	 	Borrowing Procedures and Settlements	 	 	3	 
	 
	 	2.4	 	Payments; Reductions of Commitments; Prepayments	 	 	7	 
	 
	 	2.5	 	Overadvances	 	 	11	 
	 
	 	2.6	 	Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations	 	 	11	 
	 
	 	2.7	 	Crediting Payments; Clearance Charge	 	 	12	 
	 
	 	2.8	 	Designated Account	 	 	13	 
	 
	 	2.9	 	Maintenance of Loan Account; Statements of Obligations	 	 	13	 
	 
	 	2.10	 	Fees	 	 	13	 
	 
	 	2.11	 	Letters of Credit	 	 	13	 
	 
	 	2.12	 	LIBOR Option	 	 	16	 
	 
	 	2.13	 	Capital Requirements	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	3.	 	CONDITIONS; TERM OF AGREEMENT	 	 	19	 
	 
	 	3.1	 	Conditions Precedent to the Initial Extension of Credit	 	 	19	 
	 
	 	3.2	 	Conditions Precedent to all Extensions of Credit	 	 	19	 
	 
	 	3.3	 	Term	 	 	19	 
	 
	 	3.4	 	Effect of Termination	 	 	19	 
	 
	 	3.5	 	Early Termination by Borrower	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	4.	 	REPRESENTATIONS AND WARRANTIES	 	 	19	 
	 
	 	4.1	 	Due Organization and Qualification; Subsidiaries	 	 	20	 
	 
	 	4.2	 	Due Authorization; No Conflict	 	 	20	 
	 
	 	4.3	 	Governmental Consents	 	 	21	 
	 
	 	4.4	 	Binding Obligations; Perfected Liens	 	 	21	 
	 
	 	4.5	 	Title to Assets; No Encumbrances	 	 	21	 






 









 







TABLE OF CONTENTS
(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 
	 	4.6	 	Jurisdiction of Organization; Location of
Chief Executive Office;
Organizational Identification Number;
Commercial Tort Claims	 	 	21	 
	 
	 	4.7	 	Litigation	 	 	21	 
	 
	 	4.8	 	Compliance with Laws	 	 	22	 
	 
	 	4.9	 	No Material Adverse Change	 	 	22	 
	 
	 	4.10	 	Fraudulent Transfer	 	 	22	 
	 
	 	4.11	 	Employee Benefits	 	 	22	 
	 
	 	4.12	 	Environmental Condition	 	 	22	 
	 
	 	4.13	 	Intellectual Property	 	 	23	 
	 
	 	4.14	 	Leases	 	 	23	 
	 
	 	4.15	 	Deposit Accounts and Securities Accounts	 	 	23	 
	 
	 	4.16	 	Complete Disclosure	 	 	23	 
	 
	 	4.17	 	Material Contracts	 	 	23	 
	 
	 	4.18	 	Patriot Act	 	 	23	 
	 
	 	4.19	 	Indebtedness	 	 	24	 
	 
	 	4.20	 	Payment of Taxes	 	 	24	 
	 
	 	4.21	 	Margin Stock	 	 	24	 
	 
	 	4.22	 	Governmental Regulation	 	 	24	 
	 
	 	4.23	 	OFAC	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS	 	 	26	 
	 
	 	5.1	 	Financial Statements, Reports, Certificates	 	 	26	 
	 
	 	5.2	 	Collateral Reporting	 	 	26	 
	 
	 	5.3	 	Existence	 	 	26	 
	 
	 	5.4	 	Maintenance of Properties	 	 	26	 
	 
	 	5.5	 	Taxes	 	 	27	 
	 
	 	5.6	 	Insurance	 	 	27	 
	 
	 	5.7	 	Inspection	 	 	27	 
	 
	 	5.8	 	Compliance with Laws	 	 	27	 
	 
	 	5.9	 	Environmental	 	 	27	 
	 
	 	5.10	 	Disclosure Updates	 	 	28	 
	 
	 	5.11	 	Formation of Subsidiaries	 	 	28	 
	 
	 	5.12	 	Further Assurances	 	 	29	 
	 
	 	5.13	 	Lender Meetings	 	 	29	 






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(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 
	 	5.14	 	Material Contracts	 	 	29	 
	 
	 	5.15	 	Location of Inventory and Equipment	 	 	29	 
	 
	 	5.16	 	Assignable Material Contracts	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	6.	 	NEGATIVE COVENANTS	 	 	30	 
	 
	 	6.1	 	Indebtedness	 	 	30	 
	 
	 	6.2	 	Liens	 	 	30	 
	 
	 	6.3	 	Restrictions on Fundamental Changes	 	 	30	 
	 
	 	6.4	 	Disposal of Assets	 	 	30	 
	 
	 	6.5	 	Change Name	 	 	30	 
	 
	 	6.6	 	Nature of Business	 	 	31	 
	 
	 	6.7	 	Prepayments and Amendments	 	 	31	 
	 
	 	6.8	 	Change of Control	 	 	31	 
	 
	 	6.9	 	Distributions	 	 	31	 
	 
	 	6.10	 	Accounting Methods	 	 	32	 
	 
	 	6.11	 	Investments	 	 	32	 
	 
	 	6.12	 	Transactions with Affiliates	 	 	32	 
	 
	 	6.13	 	Use of Proceeds	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	7.	 	FINANCIAL COVENANTS	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	9.	 	RIGHTS AND REMEDIES	 	 	36	 
	 
	 	9.1	 	Rights and Remedies	 	 	36	 
	 
	 	9.2	 	Remedies Cumulative	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	10.	 	WAIVERS; INDEMNIFICATION	 	 	37	 
	 
	 	10.1	 	Demand; Protest; etc.	 	 	37	 
	 
	 	10.2	 	The Lender Group’s Liability for Collateral	 	 	37	 
	 
	 	10.3	 	Indemnification	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	11.	 	NOTICES	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	12.	 	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	13.	 	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS	 	 	39	 
	 
	 	13.1	 	Assignments and Participations	 	 	39	 
	 
	 	13.2	 	Successors	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	14.	 	AMENDMENTS; WAIVERS	 	 	42	 
	 
	 	14.1	 	Amendments and Waivers	 	 	42	 






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(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 
	 	14.2	 	Replacement of Holdout Lender	 	 	43	 
	 
	 	14.3	 	No Waivers; Cumulative Remedies	 	 	44	 
	 
	 	 	 	 	 	 	 	 
	15.	 	AGENT; THE LENDER GROUP	 	 	44	 
	 
	 	15.1	 	Appointment and Authorization of Agent	 	 	44	 
	 
	 	15.2	 	Delegation of Duties	 	 	45	 
	 
	 	15.3	 	Liability of Agent	 	 	45	 
	 
	 	15.4	 	Reliance by Agent	 	 	45	 
	 
	 	15.5	 	Notice of Default or Event of Default	 	 	45	 
	 
	 	15.6	 	Credit Decision	 	 	46	 
	 
	 	15.7	 	Costs and Expenses; Indemnification	 	 	46	 
	 
	 	15.8	 	Agent in Individual Capacity	 	 	46	 
	 
	 	15.9	 	Successor Agent	 	 	47	 
	 
	 	15.10	 	Lender in Individual Capacity	 	 	47	 
	 
	 	15.11	 	Collateral Matters	 	 	47	 
	 
	 	15.12	 	Restrictions on Actions by Lenders; Sharing of Payments	 	 	48	 
	 
	 	15.13	 	Agency for Perfection	 	 	48	 
	 
	 	15.14	 	Payments by Agent to the Lenders	 	 	49	 
	 
	 	15.15	 	Concerning the Collateral and Related Loan Documents	 	 	49	 
	 
	 	15.16	 	Audits and Examination Reports;
Confidentiality; Disclaimers by
Lenders; Other Reports and Information	 	 	49	 
	 
	 	15.17	 	Several Obligations; No Liability	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	16.	 	WITHHOLDING TAXES	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	17.	 	GENERAL PROVISIONS	 	 	52	 
	 
	 	17.1	 	Effectiveness	 	 	52	 
	 
	 	17.2	 	Section Headings	 	 	52	 
	 
	 	17.3	 	Interpretation	 	 	52	 
	 
	 	17.4	 	Severability of Provisions	 	 	52	 
	 
	 	17.5	 	Bank Product Providers	 	 	53	 
	 
	 	17.6	 	Debtor-Creditor Relationship	 	 	53	 
	 
	 	17.7	 	Counterparts; Electronic Execution	 	 	53	 
	 
	 	17.8	 	Revival and Reinstatement of Obligations	 	 	53	 
	 
	 	17.9	 	Confidentiality	 	 	53	 
	 
	 	17.10	 	Lender Group Expenses	 	 	54	 






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(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 
	 	17.11	 	USA PATRIOT Act	 	 	54	 
	 
	 	17.12	 	Integration	 	 	54	 







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TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	EXHIBITS AND SCHEDULES

	 
	 	 	 	 
	Exhibit A-1

	 	Form of Assignment and Acceptance	 	 
	Exhibit C-1

	 	Form of Compliance Certificate	 	 
	Exhibit C-2

	 	Form of Credit Amount Certificate	 	 
	Exhibit L-1

	 	Form of LIBOR Notice	 	 
	 
	 	 	 	 
	Schedule A-1

	 	Agent’s Account	 	 
	Schedule A-2

	 	Authorized Persons	 	 
	Schedule C-1

	 	Commitments	 	 
	Schedule D-1

	 	Designated Account	 	 
	Schedule E-1

	 	EBITDA — Transaction Expenses	 	 
	Schedule P-2

	 	Permitted Investments	 	 
	Schedule P-3

	 	Permitted Liens	 	 
	Schedule 1.1

	 	Definitions	 	 
	Schedule 3.1

	 	Conditions Precedent	 	 
	Schedule 3.6

	 	Conditions Subsequent	 	 
	Schedule 4.1(b)

	 	Capitalization of Borrower	 	 
	Schedule 4.1(c)

	 	Capitalization of Borrower’s Subsidiaries	 	 
	Schedule 4.6(a)

	 	States of Organization	 	 
	Schedule 4.6(b)

	 	Chief Executive Offices	 	 
	Schedule 4.6(c)

	 	Organizational Identification Numbers	 	 
	Schedule 4.6(d)

	 	Commercial Tort Claims	 	 
	Schedule 4.7

	 	Litigation	 	 
	Schedule 4.12

	 	Environmental Matters	 	 
	Schedule 4.13

	 	Intellectual Property	 	 
	Schedule 4.15

	 	Deposit Accounts and Securities Accounts	 	 
	Schedule 4.17

	 	Material Contracts	 	 
	Schedule 4.19

	 	Permitted Indebtedness	 	 
	Schedule 5.1

	 	Financial Statements, Reports, Certificates	 	 
	Schedule 5.2

	 	Collateral Reporting	 	 
	Schedule 6.6

	 	Nature of Business	 	 



















 












CREDIT AGREEMENT




          THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of November 3, 2008, by
and among the lenders identified on the signature pages hereof (such lenders, together with their
respective successors and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, LLC, a Delaware
limited liability company, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”), and ACTUATE
CORPORATION, a Delaware corporation (“Borrower”).




          The parties agree as follows:




1. DEFINITIONS AND CONSTRUCTION.




     1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings
specified therefor on Schedule 1.1.



     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 “Borrower” is used in respect of a financial
covenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis, unless the context clearly requires otherwise. If there occurs after the date
of this Agreement any Accounting Change that affects in any respect a representation, warranty, or
covenant that is predicated on GAAP, Agent and Borrower shall negotiate in good faith amendments to
such representation, warranty, or covenant, as applicable, with the intent of having the respective
positions of the Lenders, on the one hand, and Borrower, on the other hand, after such Accounting
Change conform as nearly as possible to their respective positions as of the date of this Agreement
(and so long as Agent and Borrower are so negotiating in good faith (but in any event there will
not be any obligation to negotiate longer than 12 months after the date of such Accounting
Change)), such representation, warranty, or covenant shall be in full force and effect as if no
Accounting Change had occurred).



     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; provided,
however, that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.



     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 terms “includes” and “including” are not limiting, and the term
“or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
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 any other Loan
Document 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). The words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, including cash,
securities, accounts, and contract rights. Any reference herein or in any other Loan Document to
the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash
(or, in the case of Letters of Credit or Bank Products, providing Letter of



 









 







Credit Collateralization) of all Obligations other than unasserted contingent indemnification Obligations
and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the provisions of this
Agreement to be repaid or cash collateralized. 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 any other Loan Document shall be satisfied by the transmission of a Record.



     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 (other than on the Closing Date), each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances (“Advances”) to Borrower
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 at such time
and (ii) the Credit Amount at such time less the Letter of Credit Usage at such time.




          (b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.
The outstanding principal amount of the Advances, together with interest accrued thereon, shall be
due and payable on the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.




          (c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the
right to establish the Bank Product Reserve against the Maximum Revolver Amount.




     2.2 [Intentionally Omitted.]



     2.3 Borrowing Procedures and Settlements.



          (a) Procedure for Borrowing. Each Borrowing shall be made by a written request by an
Authorized Person delivered to Agent. Unless Swing Lender is not obligated to make a Swing Loan
pursuant to Section 2.3(b) below, such notice must be 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;
provided, however, that if Swing Lender is not obligated to make a Swing Loan as to
a requested Borrowing, such 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. 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. In such circumstances, Borrower
agrees that any such telephonic notice will be confirmed in writing within 24 hours of the giving
of such telephonic notice, but the failure to provide such written confirmation shall not affect
the validity of the request.




          (b) Making of Swing Loans. In the case of a request for an Advance and so long as either (i)
the aggregate amount of Swing Loans made since the last Settlement Date, minus the amount of
Collections or payments applied to Swing Loans since the last Settlement Date, plus the amount of
the requested Advance does not exceed $5,000,000, or (ii) Swing Lender, in its sole discretion,
shall agree to make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make
an Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender pursuant
to this Section 2.3(b) being referred to as a “Swing Loan” and such Advances being
referred to collectively as “Swing Loans”) available to




2









 







Borrower on the Funding Date applicable thereto by transferring immediately available funds to Borrower’s Designated Account.
Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that all payments on any Swing Loan shall be
payable to Swing Lender solely for its own account. Subject to the provisions of Section
2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if
Swing Lender 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 in accordance with the terms of this Agreement, or
(ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing 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 any
Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to Advances that are Base
Rate Loans.




          (c) Making of Loans.




               (i) In the event that Swing Lender is not obligated to make a Swing Loan, 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, Agent shall make the proceeds thereof available to
Borrower on the applicable Funding Date by transferring immediately available funds equal to such
proceeds received by Agent to the Designated Account; provided, however, that,
subject to the provisions of Section 2.3(d)(ii), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if (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 prior to 9:00 a.m. (California time) on the
date of a Borrowing, that such Lender will not make available as and when required hereunder to
Agent for the account of Borrower 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 Borrower on such date a corresponding amount. If
any Lender shall not have made its full amount available to Agent in immediately available funds
and if Agent in such circumstances has made available to Borrower 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 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
Borrower of such failure to fund and, upon demand by Agent, Borrower 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 and, further, the remedies relating to Defaulting Lenders set forth in
sub-clause (iii) below shall apply. The failure of any Lender to make any Advance on any Funding
Date shall not relieve any other Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the
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
Borrower to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the



3









 







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 Borrower and if no Default or Event of Default has occurred and is continuing (and
to the extent such Defaulting Lender’s Advance was not funded by the Lender Group), retain same to
be re-advanced to Borrower as if such Defaulting Lender had made Advances to Borrower. Subject to
the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower for the account
of such Defaulting Lender the amount of all such payments received and retained by Agent 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 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 Borrower of its duties and obligations hereunder to Agent or to the Lenders other
than with respect to such Defaulting Lender. Any such failure to fund by any Defaulting Lender (as
further described in sub-clause (c)(ii) above) shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle 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 reasonably 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 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 (other than Bank Product Obligations, but including an assumption of its Pro Rata Share
of the Risk Participation Liability) without any premium or penalty of any kind whatsoever;
provided, 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
Borrower’s rights or remedies against any such Defaulting Lender arising out of or in relation
to such failure to fund.



          (d) Protective Advances and Optional Overadvances.




               (i) Agent hereby is authorized by Borrower and the Lenders, from time to time in Agent’s sole
discretion, (A) upon the occurrence of a Default or an Event of Default and for so long thereafter
as such Default or Event of Default shall be continuing, or (B) at any time that any of the other
applicable conditions precedent set forth in Section 3 are not satisfied, to make Advances
to Borrower on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (1) to preserve or protect the Collateral, or any portion thereof, or (2) to enhance the
likelihood of repayment of the Obligations (other than the Bank Product Obligations) (any of the
Advances described in this Section 2.3(d)(i) shall be referred to as “Protective
Advances”).



               (ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize
Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is
not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to
Borrower notwithstanding that an Overadvance exists or thereby would be created, so long as (A)
after giving effect to such Advances, the outstanding Revolver Usage does not exceed the Credit
Amount by more than $5,000,000, and (B) after giving effect to such Advances, 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. In the event Agent obtains
actual knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing
provisions, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders
as soon as practicable (and prior to making any (or any



4









 







additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group
Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral
or its value), and the Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with Borrower intended to
reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrower to
an amount permitted by the preceding sentence. In such circumstances, if any Lender with a
Revolver Commitment objects to the proposed 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. Each Lender with a Revolver Commitment shall be obligated to settle with Agent
as provided in Section 2.3(e) 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(d)(ii), and any Overadvances resulting from the charging
to the Loan Account of interest, fees, or Lender Group Expenses.



               (iii) Each Protective Advance and each Overadvance shall be deemed to be an Advance hereunder,
except that no Protective Advance or Overadvance shall be eligible to be a LIBOR Rate Loan and,
prior to Settlement therefor, all payments on the Protective Advances shall be payable to Agent
solely for its own account. The Protective Advances and Overadvances shall be repayable on demand,
secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans. The provisions of this
Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and
are not intended to benefit Borrower in any way.



          (e) 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 Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the Advances, the Swing
Loans, and the Protective 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 the outstanding Swing Loans, (2) for itself, with respect to the outstanding Protective
Advances, and (3) with respect to Borrower’s or its Subsidiaries’ Collections or payments 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 Protective 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 (including
Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances
(including Swing Loans and Protective 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 a Deposit 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 (including Swing Loans and Protective Advances), and (z) if a Lender’s balance of
the Advances (including Swing Loans and Protective Advances) is less than such Lender’s Pro Rata
Share of the Advances (including Swing Loans and Protective 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 amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective 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 Loans or Protective Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender’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



5









 







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 Protective
Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances,
Swing Loans, and Protective 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, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral.



               (iii) Between Settlement Dates, Agent, to the extent Protective Advances or Swing Loans are
outstanding, may pay over to Agent or Swing Lender, as applicable, any Collections or 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 the Protective Advances or Swing Loans. Between
Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are outstanding, may
pay over to Swing Lender any Collections or 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 or payments of
Borrower or its Subsidiaries 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 Protective Advances, and each
Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Protective 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.



          (f) Notation. Agent, as a non-fiduciary agent for Borrower, shall maintain a register showing
the principal amount of the Advances, owing to each Lender, including the Swing Loans owing to
Swing Lender, and Protective Advances owing to Agent, and the interests therein of each Lender,
from time to time and such records shall, absent manifest error, conclusively be presumed to be
correct and accurate.




          (g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and Protective
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.




     2.4 Payments; Reductions of Commitments; Prepayments.



          (a) Payments by Borrower.




               (i) Except as otherwise expressly provided herein, all payments by Borrower shall be made 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 Borrower prior to the date on which any payment is due
to the Lenders that Borrower will not make such payment in full as and when required, Agent



6









 







may assume that Borrower has 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 Borrower does 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.



          (b) Apportionment and Application.




               (i) So long as no Application Event has occurred and is continuing and except as otherwise
provided with respect to Defaulting Lenders, all 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 all payments of fees and expenses (other
than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee
or expense relates. All payments to be made hereunder by Borrower shall be remitted to Agent and
all (subject to Section 2.4(b)(iv)) such payments, and all proceeds of Collateral received
by Agent, shall be promptly applied, so long as no Application Event has occurred and is
continuing, to reduce the balance of the Advances outstanding and, thereafter, to Borrower (to be
wired to the Designated Account) or such other Person entitled thereto under applicable law.



               (ii) Upon the occurrence of an Application Event and for so long thereafter as such
Application Event shall be continuing and except as otherwise provided with respect to Defaulting
Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall be
applied as follows:



                    (A) first, to pay any Lender Group Expenses (including cost or expense reimbursements)
or indemnities then due to Agent under the Loan Documents, until paid in full,



                    (B) second, to pay any fees or premiums then due to Agent under the Loan Documents
until paid in full,



                    (C) third, to pay interest due in respect of all Protective Advances until paid in
full,



                    (D) fourth, to pay the principal of all Protective Advances until paid in full,



                    (E) fifth, ratably to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid
in full,



                    (F) sixth, ratably to pay any fees or premiums then due to any of the Lenders under
the Loan Documents until paid in full,



                    (G) seventh, ratably to pay interest due in respect of the Advances (other than
Protective Advances) and the Swing Loans until paid in full,



                    (H) eighth, ratably (i) to pay the principal of all Swing Loans until paid in full,
(ii) to pay the principal of all Advances until paid in full, (iii) to Agent, to be held by Agent,
for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the Letter of Credit Usage, and (iv) to Agent, to be held by
Agent, for the benefit of the



7









 







Bank Product Providers, as cash collateral in an amount up to the
Bank Product Reserve established by Agent under Section 2.1(c), until paid in full,



                    (I) ninth, to pay any other Obligations, and



                    (J) tenth, to Borrower (to be wired to the Designated Account) or such other Person
entitled thereto under applicable law.



               (iii) 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(e).



               (iv) In each instance, so long as no Application Event has occurred and is continuing,
Section 2.4(b)(ii) shall not apply to any payment made by Borrower to Agent and specified
by Borrower to be for the payment of specific Obligations then due and payable (or prepayable)
under any provision of this Agreement or any other Loan Document.



               (v) For purposes of Section 2.4(b)(ii), “paid in full” means payment in cash of all
amounts owing under the Loan Documents, including 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, whether or not any of the foregoing would be
or is allowed or disallowed in whole or in part in any Insolvency Proceeding.



               (vi) In the event of a direct conflict between the priority provisions of this Section
2.4 and any other provision contained in any other Loan Document, it is the intention of the
parties hereto that such provisions 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.



          (c) Reduction of Commitments. The Revolver Commitments shall terminate on the Maturity Date.
Borrower may reduce the Revolver Commitments to an amount not less than the greater of (i) the sum
of (A) the Revolver Usage as of such date, plus (B) the principal amount of all Advances not yet
made as to which a request has been given by Borrower under Section 2.3(a), plus (C) the
amount of all Letters of Credit not yet issued as to which a request has been given by Borrower
pursuant to Section 2.11(a); and (ii) $10,000,000. Each such reduction shall be in an
amount which is an integral multiple of $2,500,000, shall be made by providing not less than 10
Business Days prior written notice to Agent, and shall be irrevocable. Once reduced, the Revolver
Commitments may not be increased. Each such reduction of the Revolver Commitments shall reduce the
Revolver Commitments of each Lender proportionately in accordance with its Pro Rata Share thereof.




          (d) Optional Prepayments.




               (i) Advances. Borrower may prepay the principal of any Advance at any time in whole or in
part, and so long as such prepayment (x) is not accompanied by a corresponding reduction in the
Revolver Commitment or (y) a prepayment in full of the Obligations, a termination of this Agreement
or a termination of the Commitments hereunder, such prepayment shall be without premium or penalty.



               (ii) [Intentionally Omitted.]



8









 





          (e) Mandatory Prepayments. If, at any time, (A) the Revolver Usage on such date exceeds (B)
the Credit Amount (such excess being referred to as the “Credit Amount Excess”), then
Borrower shall immediately prepay the Obligations in accordance with Section 2.4(f)(i) in
an aggregate amount equal to the Credit Amount Excess.




          (f) Application of Payments.




               (i) Each prepayment pursuant to Section 2.4(e) shall, (A) so long as no Application
Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount
of the Advances until paid in full and second, to cash collateralize the Letters of Credit in an
amount equal to 105% of the then extant Letter of Credit Usage, and (B) if an Application Event
shall have occurred and for so long thereafter as such Application Event shall be continuing, be
applied in the manner set forth in Section 2.4(b)(ii).



               (ii) [Intentionally Omitted.].



     2.5 Overadvances. If, at any time or for any reason, the amount of Obligations owed
by Borrower to the Lender Group pursuant to Section 2.1 or Section 2.11 is greater
than any of the limitations set forth in Section 2.1 or Section 2.11, as applicable
(an “Overadvance”), Borrower shall, within 1 Business Day of the date of occurrence of such
Overadvance, 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).
Borrower promises to pay the Obligations (including principal, interest, fees, costs, and expenses)
in Dollars in full on the Maturity Date or, if earlier, on the date on which the Obligations are
declared due and payable pursuant to the terms of this Agreement.



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



          (a) Interest Rates. Except as provided in Section 2.6(c), all Obligations (except for
undrawn Letters of Credit and except for Bank Product Obligations) 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 a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the Applicable Margin, and



               (ii) otherwise, at a per annum rate equal to the Base Rate plus the Applicable Margin.



          (b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of the Lenders
with a Revolver Commitment, subject to any agreements between Agent and individual Lenders), a
Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in
Section 2.11(e)) which shall accrue at a per annum rate equal to the Applicable Margin
times the Daily Balance of the undrawn amount of all outstanding Letters of Credit.




          (c) Default Rate. Upon the occurrence of an Event of Default and for so long thereafter as
such Event of Default shall be continuing and at the election of the Required Lenders,




               (i) all Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) 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 2 percentage points above the
per annum rate otherwise applicable hereunder, and



               (ii) the Letter of Credit fee provided for in Section 2.6(b) shall be increased to 2
percentage points above the per annum rate otherwise applicable hereunder.



9









 





          (d) Payment. Except as provided to the contrary in Section 2.10 or Section
2.12(a) (which addresses when LIBOR Rate Loans are payable), 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. Borrower hereby authorizes
Agent, from time to time without prior notice to Borrower, to charge all interest and fees (when
due and payable), all Lender Group Expenses (as and when incurred), all charges, commissions, fees,
and costs provided for in Section 2.11(e) (as and when accrued or incurred), all fees and
costs provided for in Section 2.10 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including any amounts due and payable
to the Bank Product Providers in respect of Bank Products) to the Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans.




          (e) Computation. All interest and fees chargeable under the Loan Documents shall be computed
on the basis of a 360 day year, in each case, for the actual number of days elapsed in the period
during which the interest or fees accrue. 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. Borrower 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, Borrower is and
shall be liable only for the payment of such maximum as allowed by law, and payment received from
Borrower 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 Crediting Payments.



          (a) The receipt of any payment item by Agent 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 Borrower 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.




          (b) [intentionally omitted].




     2.8 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). 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 Borrower and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent
and Borrower, any Advance, Protective Advance, or



10









 







Swing Loan requested by Borrower and made by
Agent or the Lenders hereunder shall be made to the Designated Account.



     2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an
account on its books in the name of Borrower (the “Loan Account”) on which Borrower will be
charged with all Advances (including Protective Advances and Swing Loans) made by Agent, Swing
Lender, or the Lenders to Borrower or for Borrower’s account, the Letters of Credit issued by
Issuing Lender for Borrower’s account, and with all other payment Obligations hereunder or under
the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.7, the Loan Account
will be credited with all payments received by Agent from Borrower or for Borrower’s account.
Agent shall render statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and upon the request of Borrower, provide invoices received by Agent with respect
to Lender Group Expenses that are charged to the Loan Account. Such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute an account stated
between Borrower and the Lender Group unless, within 60 days after receipt thereof by Borrower,
Borrower shall deliver to Agent written objection thereto describing the error or errors contained
in any such statements.



     2.10 Fees. Borrower shall pay to Agent,



               (a) for the account of Agent, as and when due and payable under the terms of the Fee Letter,
the fees set forth in the Fee Letter.



               (b) for the ratable account of those Lenders with Revolver Commitments, on the first day of
each month from and after the Closing Date up to the first day of the month prior to the Payoff
Date and on the Payoff Date, an unused line fee in an amount equal to 0.50% per annum times the
result of (i) the Maximum Revolver Amount, less (ii) the average Daily Balance of the Revolver
Usage during the immediately preceding month (or portion thereof).



     2.11 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 Borrower (each, an “L/C”) or to purchase
participations or execute indemnities, guarantees, 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)
for the account of Borrower. Each request for the issuance of a Letter of Credit, or the
amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by
an Authorized Person and delivered to the Issuing Lender and Agent via hand delivery,
telefacsimile, or other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be in form and
substance reasonably satisfactory to the Issuing Lender in its Permitted Discretion and shall
specify (i) the amount of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the
name and address of the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit,
as applicable), and (v) such other information (including, in the case of an amendment, renewal, or
extension, identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit. If
requested by the Issuing Lender, Borrower 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 issuance of such requested Letter of Credit:




               (i) the Letter of Credit Usage would exceed the Credit Amount less the outstanding amount of
Advances, or



11









 





               (ii) the Letter of Credit Usage would exceed $5,000,000, or



               (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the sum of (A)
the aggregate amount of Bank Product Reserves imposed under Section 2.1(c), and (B) the
outstanding amount of Advances.



          Borrower and the Lender Group acknowledge and agree that certain Underlying Letters of Credit
may be issued to support letters of credit that already are outstanding as of the Closing Date.
Each Letter 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, Borrower 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 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 Borrower prior to such
time on such date, then not later than 11:00 a.m., California time, on the Business Day that
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, initially, shall bear interest at
the rate then applicable to Advances that are Base Rate Loans. To the extent an L/C Disbursement is deemed to be an Advance hereunder,
Borrower’s 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 Borrower 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 2.11(b) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.




          (b) Promptly following receipt of a notice of L/C Disbursement pursuant to Section
2.11(a), each Lender with a Revolver 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
Borrower 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 Revolver Commitments, the Issuing Lender shall be deemed to have
granted to each Lender with a Revolver Commitment, and each Lender with a Revolver 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 Revolver 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 Borrower on
the date due as provided in Section 2.11(a), or of any reimbursement payment required to be
refunded to Borrower for any reason. Each Lender with a Revolver 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 of each L/C Disbursement made by the Issuing Lender pursuant
to this Section 2.11(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. If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made by the
Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall
be deemed to be a Defaulting Lender and 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.




12









 








          (c) 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
Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or
any other member of the Lender Group. 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 Borrower’s account, even though this
interpretation may be different from Borrower’s own, and 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 Borrower’s instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. 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 Borrower against such Underlying Issuer. 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 Borrower shall not be obligated hereunder to indemnify for
any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or
willful misconduct of the Issuing Lender or any other member of the Lender Group. Borrower hereby
acknowledges and agrees that neither the Lender Group nor the Issuing Lender shall be responsible
for delays, errors, or omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.




          (d) 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) Any and all issuance charges, commissions, fees, and costs incurred by the Issuing Lender
relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this
Agreement and shall be reimbursable immediately by Borrower to Agent for the account of the Issuing
Lender; it being acknowledged and agreed by Borrower that, as of the Closing Date, the issuance
charge imposed by the prospective Underlying Issuer is .375% per annum times the undrawn amount of
each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and
that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings,
and renewals.




          (f) If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule,
or regulation or any change 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) of any Governmental
Authority or monetary authority including, 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 be imposed or modified in respect
of any Letter of Credit issued hereunder, or



               (ii) there shall 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 Borrower, and Borrower shall pay within 30 days after demand therefor, such amounts
as Agent may 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


13









 






demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder; provided that
Borrower shall not be required to compensate a Lender pursuant to this Section for any such amounts
incurred more than 180 days prior to the date that such Lender first demands payment from Borrower
of such amounts; provided further that if an event or circumstance giving rise to
such amounts is retroactive, then the 180-day period referred to above shall be extended to include
the period of retroactive effect thereof. 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.




     2.12 LIBOR Option.



          (a) Interest and Interest Payment Dates. In lieu of having interest charged at the rate based
upon the Base Rate, Borrower shall have the option (the “LIBOR Option”) to have interest on
all or a portion of the Advances be charged (whether at the time when made (unless otherwise
provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation
of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon 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 date on which all or any portion of the Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement is terminated
pursuant to the terms hereof. On the last day of each applicable Interest Period, unless 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, Borrower no longer shall have the option to request that Advances bear interest at a
rate based upon the LIBOR Rate.




          (b) LIBOR Election.




               (i) 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 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 affected
Lenders.



               (ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In connection with each
LIBOR Rate Loan, Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against
any loss, cost, or expense actually 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, or expenses, “Funding Losses”). A certificate of
Agent or a Lender delivered to Borrower setting forth in reasonable detail any amount or amounts
that Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be
conclusive absent manifest error. Borrower shall pay such amount to Agent or the Lender, as
applicable, within 30 days of the date of its receipt of such certificate.



               (iii) Borrower shall have not more than 5 LIBOR Rate Loans in effect at any given time.
Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000.



          (c) Conversion. Borrower may convert LIBOR Rate Loans to Base Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are converted or prepaid
on any date that is




14









 







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
Borrower’s and its Subsidiaries’ 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 all or
any portion of the Obligations pursuant to the terms hereof, Borrower shall indemnify, defend, and
hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in
accordance with Section 2.12 (b)(ii) 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, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period, including changes
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 or maintaining loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give 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, Borrower may, by notice to such affected Lender (y) require such Lender to furnish to 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 Section 2.12(b)(ii)).



               (ii) In the event that any change in market conditions or any law, regulation, treaty, or
directive, or any change therein or in the interpretation or application thereof, shall at any time
after the date hereof, in the opinion of any Lender in its Permitted Discretion, make it unlawful
or impractical for such Lender to fund or maintain LIBOR Rate Loans 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 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) Borrower
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 the LIBOR Rate.




     2.13 Capital Requirements.



          (a) If, after the date hereof, any Lender determines, in its Permitted Discretion, that (i)
the adoption of or change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change 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), 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, in its




15









 







Permitted Discretion, to be material, then such Lender may notify Borrower and Agent thereof.
Following receipt of such notice, Borrower agrees to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable within 30 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. Failure or delay on
the part of any Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender’s right to demand such compensation; provided that Borrower shall not
be required to compensate a Lender pursuant to this Section for any reductions in return incurred
more than 180 days prior to the date that such Lender notifies Borrower of such law, rule,
regulation or guideline giving rise to such reductions and of such Lender’s intention to claim
compensation therefor; provided further that if such claim arises by reason of the
adoption of or change in any law, rule, regulation or guideline that is retroactive, then the
180-day period referred to above shall be extended to include the period of retroactive effect
thereof.




          (b) If any Lender (i) requests additional or increased costs referred to in Section
2.12(d)(i), (ii) requests amounts under Section 2.13(a) or (ii) causes the cost to the
Lender Group of issuing, making, guaranteeing or maintaining any Letter of Credit to be increased
or reduces the amount receivable in respect thereof to the Lender Group, as described in
Section 2.11(f) (any such Lender, a “Affected Lender”), then such Affected Lender shall use reasonable efforts to promptly designate a different one
of its lending offices or to assign its rights and obligations hereunder to another of its offices
or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or
assignment would eliminate or reduce amounts payable pursuant to Section 2.12(d)(i) or
Section 2.13(a) or decrease the cost to the Lender Group of Letters of Credit under
Section 2.11(f), as applicable, and (ii) in the reasonable judgment of such Affected
Lender, such designation or assignment would not subject it to any material unreimbursed cost or
expense and would not otherwise be materially disadvantageous to it. Borrower agrees to pay all
reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any
such designation or assignment. If, after such reasonable efforts, such Affected Lender does not
so designate a different one of its lending offices or assign its rights to another of its offices
or branches so as to eliminate Borrower’s obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.12(d)(i) or Section 2.13(a) or to the Lender Group
pursuant to Section 2.11(f), as applicable, then Borrower (without prejudice to any amounts
then due to such Affected Lender under Section 2.12(d)(i), Section 2.13(a) or
Section 2.11(f), as applicable) may, unless prior to the effective date of any such
assignment the Affected Lender withdraws its request for such additional amounts under Section
2.12(d)(i) or Section 2.13(a) or the Agent has made no demand under Section
2.11(f), as applicable, designate another Lender reasonably acceptable to Agent to purchase the
Obligations owed to such Affected Lender and such Affected Lender’s Commitments hereunder (a
“Replacement Lender”), such Affected Lender shall assign to the Replacement Lender its
Obligations and Commitments, pursuant to an Assignment and Acceptance Agreement, and upon such
purchase by the Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for
purposes of this Agreement and such Affected Lender shall cease to be a “Lender” for purposes of
this Agreement.




3. CONDITIONS; TERM OF AGREEMENT.




     3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of each
Lender to make its initial extension of credit provided for hereunder, is subject to the
fulfillment (or written waiver by any such Lender), to the satisfaction of Agent and each Lender of
each of the conditions precedent set forth on Schedule 3.1 (the making of such initial
extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the
conditions precedent ).




16











 





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



          (a) the representations and warranties of Borrower or its Subsidiaries contained in this
Agreement or in the other Loan Documents shall be true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) 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); and




          (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.




     3.3 Term. This Agreement shall continue in full force and effect for a term ending on
November 3, 2012 (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 immediately and without notice upon the occurrence of an Event of Default and for so
long thereafter as such Event of Default shall be continuing.



     3.4 Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrower with respect to outstanding
Letters of Credit and including all Bank Product Obligations) immediately shall become due and
payable without notice or demand (including the requirement that Borrower provide (a) Letter of
Credit Collateralization, and (b) Bank Product Collateralization). No termination of this
Agreement, however, shall relieve or discharge Borrower or its Subsidiaries of their duties,
Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the
Collateral shall remain in effect until all Obligations have been paid in full 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 paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrower’s sole expense, execute and deliver any termination statements
(or alternatively authorize Borrower in writing to file 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.



     3.5 Early Termination by Borrower. Borrower has the option, at any time upon 10
Business Days prior written notice to Agent, to terminate this Agreement and terminate the
Commitments hereunder by paying to Agent the Obligations (including (a) providing Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage, and (b) providing Bank
Product Collateralization with respect to the then existing Bank Products), in full.



     3.6 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 subsequent set forth on Schedule 3.6 (the failure by Borrower to so perform or
cause to be performed constituting an Event of Default).



4. REPRESENTATIONS AND WARRANTIES.




          In order to induce the Lender Group to enter into this Agreement, 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



17









 







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:



     4.1 Due Organization and Qualification; Subsidiaries.



          (a) Each Loan Party (i) duly organized, formed, or incorporated, as the case may be, and
existing and in good standing under the laws of the jurisdiction of its organization, formation, or
incorporation, as the case may be, (ii) qualified to do business in any state where the failure to
be so qualified reasonably could be expected to result in a Material Adverse Change, and (iii) has
all requisite power and authority to own and operate its properties, to carry on its business as
now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.




          (b) Set forth on Schedule 4.1(b) is a complete and accurate description of the
authorized capital Stock of 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 4.1(b), there are no subscriptions, options, warrants, or calls relating to any
shares of Borrower’s capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not 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 (other than the Permitted
Stock Repurchases).




          (c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to time to
reflect changes permitted to be made under Section 5.11), is a complete and accurate list
of the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of shares of each
class of common and preferred Stock authorized for each of such Subsidiaries, and (ii) the number
and the percentage of the outstanding shares of each such class owned directly or indirectly by
Borrower. All of the outstanding capital Stock of each such Subsidiary has been validly issued and
is fully paid and non-assessable.




          (d) Except as set forth on Schedule 4.1(c) (as such Schedule may be updated from time
to time to reflect changes permitted to be made under Section 5.11), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower’s Subsidiaries’
capital Stock, including any right of conversion or exchange under any outstanding security or
other instrument. Neither Borrower nor any of its Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any shares of Borrower’s
Subsidiaries’ capital Stock or any security convertible into or exchangeable for any such capital
Stock.




     4.2 Due Authorization; No Conflict.



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




          (b) As to each Loan Party, the execution, delivery, and performance by such Loan Party of the
Loan Documents to which it is a party do not and will not (i) violate any material provision of
federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the
Governing Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Loan Party or its Subsidiaries, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of any Loan Party or its Subsidiaries except to the extent that any
such conflict, breach or default could not individually or in the aggregate reasonably be expected
to have a Material Adverse Change, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted



18









 






Liens, or (iv) require any approval of any Loan Party’s interestholders or any approval
or consent of any Person under any Material Contract of any Loan Party, other than consents or
approvals that have been obtained and that are still in force and effect and except, in the case of
Material Contracts, for consents or approvals, the failure to obtain such approval or consent could
not individually or in the aggregate reasonably be expected to cause a Material Adverse Change.




     4.3 Governmental Consents. The execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the consummation of the
transactions contemplated by the Loan Documents 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, the
failure of which to receive could not reasonably be expected to cause a Material Adverse Change,
other than consents or approvals that have been obtained and that are still in force and effect and
except for filings and recordings with respect to the Collateral to be made, or otherwise delivered
to the Agent for filing or recordation, as of the Closing Date.



     4.4 Binding Obligations; Perfected Liens.



          (a) Each Loan Document has been duly executed and delivered by each Loan Party that is a party
thereto and is the legally valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its 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.




          (b) The Agent’s Liens are validly created, perfected (other than (i) in respect of motor
vehicles and (ii) any Deposit Accounts and Securities Accounts not subject to a Control Agreement
as permitted by Section 6.11, and subject only to the (x) filing of financing statements
and (y) the filing of Copyright Security Agreements with the U.S. Copyright Office), and first
priority Liens, subject only to Permitted Liens.




     4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its Subsidiaries
has (i) good, sufficient and legal title to (in the case of fee interests in Real Property), (ii)
valid leasehold interests in (in the case of leasehold interests in real or personal property), and
(iii) good and marketable title to (in the case of all other personal property), all of their
respective assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, except for (A) in each case, assets disposed of since the date of such
financial statements to the extent permitted hereby; (B) in the case of sub-clause (i), assets the
aggregate value of which does not exceed $250,000, (C) in the case of sub-clause (ii), where the
failure to have such leasehold interests could not reasonably be expected to cause a Material
Adverse Change, and (D) in the case of sub-clause (iii), assets the aggregate value of which does
not exceed $100,000. All of the assets of each of the Loan Parties and its Subsidiaries that are
reflected in their most recent financial statements delivered pursuant to Section 5.1 are
free and clear of Liens except for Permitted Liens.



     4.6 Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.



          (a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction of
organization of each Loan Party and each of its Subsidiaries is set forth on Schedule
4.6(a) (as such Schedule may be updated from time to time to reflect changes permitted to be
made under Section 6.5).




          (b) The chief executive office of each Loan Party and each of its Subsidiaries is located at
the address indicated on Schedule 4.6(b) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 5.15).




19









 








          (c) Each Loan Party’s and each of its Subsidiaries’ tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 4.6(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be made under Section
6.5).




          (d) As of the Closing Date, no Loan Party and no Subsidiary of a Loan Party holds any
commercial tort claims except as set forth on Schedule 4.6(d).




     4.7 Litigation.



          (a) There are no actions, suits, or proceedings pending or, to the best knowledge of Borrower,
threatened against a Loan Party or any of its Subsidiaries that either individually or in the
aggregate could reasonably be expected to result in a Material Adverse Change.




          (b) Schedule 4.7(b) sets forth a complete and accurate description, with respect to
each of the actions, suits, or proceedings that, as of the Closing Date, is pending or, to the best
knowledge of Borrower, threatened in writing against a Loan Party or any of its Subsidiaries (other
than routine employment actions in which the maximum amount of liability of the Loan Parties and
their Subsidiaries in connection with all such actions does not exceed $50,000 per action or
$250,000 for all such actions), of (i) the parties to such actions, suits, or proceedings, (ii) the
nature of the dispute that is the subject of such actions, suits, or proceedings, (iii) the maximum
amount of the liability of Loan Parties and their Subsidiaries in connection with such actions,
suits, or proceedings, (iv) the status, as of the Closing Date, with respect to such actions,
suits, or proceedings, and (v) whether any liability of the Loan Parties’ and their Subsidiaries in
connection with such actions, suits, or proceedings is covered by insurance.




     4.8 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes (including
Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Change, or (b) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to have a Material
Adverse Change. Each Permitted Stock Repurchase is permitted under the laws of Delaware and any
other applicable laws.



     4.9 No Material Adverse Change. All financial statements (other than the Projections)
relating to the Loan Parties and their Subsidiaries that have been delivered by Borrower to Agent
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, the Loan Parties’ and their Subsidiaries’ consolidated financial condition
as of the date thereof and results of operations for the period then ended. Since June 30, 2008,
no event, circumstance, or change has occurred that has or could reasonably be expected to result
in a Material Adverse Change with respect to the Loan Parties and their Subsidiaries.



     4.10 Fraudulent Transfer.



          (a) The Loan Parties, taken as a whole, are Solvent.




          (b) No transfer of property (including in connection with each Permitted Stock Repurchase) is
being made by any Loan Party and no obligation is being incurred by any Loan Party 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 such Loan Party.




     4.11 Employee Benefits. No Loan Party, none of their Subsidiaries, nor any of their
ERISA Affiliates maintains or contributes to any Benefit Plan.



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     4.12 Environmental Condition. Except as set forth on Schedule 4.14, (a) to
Borrower’s knowledge, no Loan Party’s or its Subsidiaries’ properties or assets has ever been used
by a Loan Party, its Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal,
production, storage, handling, treatment, release or transport was in violation, in any material
respect, of any applicable Environmental Law, (b) to Borrower’s knowledge, no Loan Party’s or its
Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to
any environmental protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by a Loan Party or its
Subsidiaries, and (d) no Loan Party nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding written order, consent decree, or settlement
agreement with any Person relating to any Environmental Law or Environmental Liability that, in the
case of each of sub-clauses (a) through (d) above could reasonably be expected to result in a
Material Adverse Change.



     4.13 Intellectual Property. Each Loan Party and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, and licenses that are necessary to
the conduct of its business as currently conducted, and attached hereto as Schedule 4.13
(as updated from time to time) is a true, correct, and complete listing of all material trademarks,
trade names, copyrights, patents, and licenses as to which Borrower or one of its Subsidiaries is
the owner or is an exclusive licensee; provided, however, that Borrower may amend
Schedule 4.13 to add additional intellectual property in accordance with Section
6(g) of the Security Agreement.



     4.14 Leases. Each Loan Party and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all leases material to its respective business and to which it is a
party or under which it is operating, and, subject to Permitted Protests, all of such material
leases are valid and subsisting and no material default by the applicable Loan Party or its
Subsidiaries exists under any of them.



     4.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.15 (as
updated pursuant to the provisions of the Security Agreement from time to time) is a listing of all
of the Loan Parties’ and their Subsidiaries’ Deposit Accounts and Securities Accounts, including,
with respect to each bank or securities intermediary (a) the name and address of such Person, and
(b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.



     4.16 Complete Disclosure. All factual information (taken as a whole) furnished by or
on behalf of a Loan Party or its Subsidiaries 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 a Loan Party or its Subsidiaries in writing to 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 Projections delivered to Agent
represent, and as of the date on which any other Projections are delivered to Agent, such
additional Projections represent Borrower’s good faith estimate of the Loan Parties’ and their
Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by
Borrower to be reasonable at the time of the delivery thereof to Agent (it being understood that
such projections and forecasts are subject to uncertainties and contingencies, many of which are
beyond the control of the Loan Parties and their Subsidiaries and subject to the assumptions,
qualifications and limitations contained therein (however, it is understood that no
assurances can be given that any particular projections will be realized and that actual
results may vary and that such variances may be material).



     4.17 Material Contracts. Set forth on Schedule 4.17 (as updated from time to
time) is a reasonably detailed description of the Material Contracts of each Loan Party and its
Subsidiaries; provided,



21









 







however, that Borrower may amend Schedule 4.17 to
add additional Material Contracts so long as such amendment occurs by written notice to Agent at
the time that Borrower provides its quarterly financial statements pursuant to Section 5.1.
Except for matters which, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change, each Material Contract (other than those that have
expired at the end of their normal terms) (a) is in full force and effect and is binding upon and
enforceable against the applicable Loan Party or its Subsidiary and, to the best of Borrower’s
knowledge, each other Person that is a party thereto in accordance with its terms, (b) has not been
otherwise amended or modified (other than amendments or modifications permitted by Section
6.7(b)), and (c) is not in default due to the action or inaction of the applicable Loan Party
or its Subsidiary.



     4.18 Patriot Act. To the extent applicable, each Loan Party is in compliance, in all
material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the Untied States Treasury Department (31 CFR, Subtitle B, Chapter V,
as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the proceeds of the
loans made hereunder will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate for political
office, or anyone else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.



     4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately
sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.



     4.20 Payment of Taxes. Except as otherwise permitted under Section 5.5, all
tax returns and reports of each Loan Party and its Subsidiaries required to be filed by any of them
have been timely filed, and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon a Loan Party and its Subsidiaries and upon
their respective assets, income, businesses and franchises that are due and payable have been paid
when due and payable. Each Loan Party and each of its Subsidiaries have made adequate provision in
accordance with GAAP for all taxes not yet due and payable. Borrower knows of no proposed tax
assessment against a Loan Party or any of its Subsidiaries that is not being actively contested by
such Loan Party or such Subsidiary diligently, in good faith, and by appropriate proceedings;
provided such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor. No Loan Party nor any of its
Subsidiaries has ever been a party to any understanding or arrangement constituting a “tax shelter”
within the meaning of Section 6662(d)(2)(C)(iii) of the IRC or within the meaning of Section
6111(c) or Section 6111(d) of the IRC as in effect immediately prior to the enactment of the
American Jobs Creation Act of 2004, or has ever “participated” in a “reportable transaction” within
the meaning of Treasury Regulation Section 1.6011-4, except as would not be reasonably expected to,
individually or in the aggregate, result in a Material Adverse Change.



     4.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No part of the proceeds of the loans made to Borrower
will be used for any purpose that violates, or is inconsistent with, the provisions of Regulation
T, U or X of said Board of Governors.



     4.22 Governmental Regulation. No Loan Party nor any of its Subsidiaries is subject to
regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur Indebtedness or which
may otherwise render all or any portion of the Obligations unenforceable. No Loan Party nor any of
its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered
investment company” or a “principal



22









 







underwriter” of a “registered investment company” as such terms
are defined in the Investment Company Act of 1940.



     4.23 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of the
country or list based economic and trade sanctions administered and enforced by OFAC. No Loan
Party nor any of its Subsidiaries (a) is a Sanctioned Person or a Sanctioned Entity, (b) has more
than 10% of its assets located in Sanctioned Entities, or (c) derives more than 10% of its revenues
from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. The proceeds
of any Advance will not be used to fund any operations in, finance any investments or activities
in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.



5. AFFIRMATIVE COVENANTS.




          Borrower covenants and agrees that, until termination of all of the Commitments and payment in
full of the Obligations, the Loan Parties shall and shall cause each of their Subsidiaries to
comply with each of the following:




     5.1 Financial Statements, Reports, Certificates. Deliver to Agent, with copies to
each Lender, each of the financial statements, reports, and other items set forth on Schedule
5.1 at the times specified therein. In addition, Borrower agrees that no Subsidiary of a Loan
Party will have a fiscal year different from that of Borrower. In addition, Borrower agrees to
maintain a system of accounting that enables Borrower to produce financial statements in accordance
with GAAP.



     5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with copies
for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified
therein.



     5.3 Existence. Except as otherwise permitted under Section 6.3 (including
clause (b)(i) of such Section), each Loan Party to, and cause each of its Subsidiaries to, (a) at
all times preserve and keep in full force and effect its existence (including being in good
standing in its jurisdiction of organization), and (b) at all times preserve and keep in full force
and effect all rights and franchises, licenses and permits other than those rights, franchise,
licenses, or permits under this subsection (b) the failure to so preserve or keep could not
reasonably be expected to result in a Material Adverse Change.



     5.4 Maintenance of Properties. Maintain and preserve all of its assets that are
necessary in the proper conduct of its business in good working order and condition, in the
ordinary course of business and consistent with past practice, ordinary wear, tear, and casualty
excepted and Permitted Dispositions excepted, and except where the failure to do so could not
reasonably be expected to result in a Material Adverse Change, and comply with the material
provisions of all material leases to which it is a party as lessee, so as to prevent the loss or
forfeiture thereof, unless such provisions are the subject of a Permitted Protest.



     5.5 Taxes. Cause all assessments and taxes imposed, levied, or assessed against any
Loan Party or its Subsidiaries, or any of their respective assets or in respect of any of its
income, businesses, or franchises 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. Borrower will and will cause each of its Subsidiaries to make
timely payment or deposit of all tax payments and withholding taxes required of it and them 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 Borrower and its Subsidiaries have made such
payments or deposits. Notwithstanding anything this Section 5.5 to the contrary, the Loan
Parties may have an aggregate amount of unpaid or delinquent taxes, assessments, or other
governmental fees or charges outstanding in an aggregate amount not to exceed $200,000 at any one
time.



23









 





     5.6 Insurance. At Borrower’s expense, maintain insurance respecting each of the Loan
Parties’ and their Subsidiaries’ 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. Borrower also shall maintain (with respect to each of
the Loan Parties and their Subsidiaries) 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 with responsible and reputable insurance
companies and in such amounts as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and located and in any event in amount, adequacy
and scope reasonably satisfactory to Agent. All property insurance policies covering the Collateral
are to be made payable to Agent for the benefit of Agent and the Lenders, as their interests may
appear, in case of loss, pursuant to a standard loss payable endorsement with a standard non
contributory “lender” or “secured party” clause and are to contain such other provisions as Agent
may reasonably require to fully protect the Lenders’ interest in the Collateral and to any payments
to be made under such policies. All certificates of insurance are to be delivered to Agent, with
the loss payable and additional insured endorsement in favor of Agent and shall provide for not
less than 30 days (10 days in the case of non-payment) prior written notice to Agent of the
exercise of any right of cancellation. If Borrower fails to maintain such insurance, Agent may
arrange for such insurance, but at Borrower’s expense and without any responsibility on Agent’s
part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Borrower shall give Agent prompt notice of any loss
exceeding $250,000 covered by its casualty or business interruption insurance. Upon the occurrence
of an Event of Default and for so long thereafter as such Event of Default shall be continuing,
Agent shall have the sole right to file claims under any insurance policies, to receive, receipt
and give acquittance for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any claims under any such insurance
policies.



     5.7 Inspection. Permit Agent and each of its duly authorized representatives or
agents to visit any of its properties and inspect any of its assets or books and records, to
examine and make copies of its books and records, and to discuss its affairs, finances, and
accounts with, and to be advised as to the same by, its officers and employees at such reasonable
times and intervals as Agent may designate; provided, however, that (i) so long as
no Default or Event of Default has occurred and is continuing, Agent has provided Borrower with
reasonable prior notice of such visit, and (ii) so long as no Default or Event of Default has
occurred and is continuing, such visits shall not exceed more than 3 in any calendar year.



     5.8 Compliance with Laws. Comply with the requirements of all applicable laws, rules,
regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change.



     5.9 Environmental.



          (a) Keep any property either owned or operated by Borrower or its Subsidiaries free of any
Environmental Liens or post bonds or other financial assurances sufficient to satisfy the
obligations or liability evidenced by such Environmental Liens,




          (b) comply, in all material respects, with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably requests,




          (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity
from or onto property owned or operated by Borrower or its Subsidiaries and take any Remedial
Actions required to abate said release or otherwise to come into compliance with applicable
Environmental Law, and




24









 





          (d) promptly, but in any event within 5 Business Days of its receipt thereof, provide Agent
with written notice of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Borrower or its Subsidiaries, (ii) commencement of
any Environmental Action or notice that an Environmental Action will be filed against Borrower or
its Subsidiaries, in the case of (ii), which could reasonably be expected to result in a Material
Adverse Change, and (iii) notice of a violation, citation, or other administrative order which
could reasonably be expected to result in a Material Adverse Change.




     5.10 Disclosure Updates. Promptly and in no event later than 5 Business Days after
obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished
to the Lender Group contained, at the time it was furnished, 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 circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any material fact nor shall
any such notification have the effect of amending or modifying this Agreement or any of the
Schedules hereto.



     5.11 Formation of Subsidiaries. At the time that any Loan Party forms any direct or
indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Loan
Party shall (a) within 10 days of such formation or acquisition cause any such new Subsidiary to
provide to Agent a joinder to the Guaranty and the Security Agreement, together with such other
security documents, as well as appropriate financing statements, all in form and substance
reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien
(subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary);
provided that the joinder to the Guaranty, the Security Agreement, and such other security
documents shall not be required to be provided to Agent with respect to (i) any Subsidiary of
Borrower that is a CFC, (ii) any Foreign Subsidiary of Borrower for which the cost to the Loan
Parties of requiring such Subsidiary to execute such joinder or security documents or perfecting
the security interests created thereby are unreasonably excessive (as determined by Agent in
consultation with Borrower) in relation to the benefits of Agent and the Lenders of the security or
guarantee afforded thereby, or (iii) the Immaterial Subsidiaries, (b) within 10 days of such
formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide
to Agent a pledge agreement and appropriate certificates and powers or financing statements,
pledging or hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in each case in a form reasonably satisfactory to Agent; provided that (i) only
65% of the total outstanding voting Stock of any first tier Subsidiary of Borrower that is a CFC
and none of the total outstanding voting Stock of any other Subsidiary of such CFC shall be
required to be pledged (which pledge, if reasonably requested by Agent, shall be governed by the
laws of the jurisdiction of such Subsidiary); (ii) such pledge agreement shall not be required to
be provided to Agent with respect to any Foreign Subsidiary of Borrower in which the cost to the
Loan Parties of requiring such Subsidiary to execute such pledge agreement are unreasonably
excessive (as determined by Agent in consultation with Borrower) in relation to the benefits to
Agent and the Lenders of the pledge or hypothecation afforded thereby, and (iii) such pledge
agreement shall not be required for the Immaterial Subsidiaries; and (c) within 10 days of such
formation or acquisition (or such later date as permitted by Agent in its sole discretion) provide
to Agent all other documentation, including one or more opinions of counsel reasonably satisfactory
to Agent, which in its opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above, and (d) with respect to any Real Property that is
acquired or owned by such Subsidiary, within 30 days of such formation or acquisition (or such
later date as permitted by Agent in its sole discretion) provide to Agent all security documents
relating to Real Property (including mortgages with respect to any Real Property owned in fee with
a fair market value of at least $250,000), fixture filings, and all other documentation which
in Agent’s opinion is necessary with respect to the execution and delivery of the applicable
documentation referred to in this subsection (d) (including policies of title insurance or other
documentation with respect to all Real Property owned in fee and subject to a mortgage), all in
form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a
first priority Lien (subject to Permitted Liens) in and to such Real Property); provided
that such mortgages and related documentation shall not be required to be provided to Agent with



25









 







respect to (i) any Subsidiary of Borrower that is a CFC, (ii) any Foreign Subsidiary of Borrower
for which the cost to the Loan Parties of requiring such Subsidiary to execute such mortgages and
related documentation or perfecting the security interests created thereby are unreasonably
excessive (as determined by Agent in consultation with Borrower) in relation to the benefits of
Agent and the Lenders of the mortgages and related documentation afforded thereby, or (iii) the
Immaterial Subsidiaries. Any document, agreement, or instrument executed or issued pursuant to
this Section 5.11 shall be a Loan Document.



     5.12 Further Assurances. At any time upon the reasonable request of Agent, execute or
deliver to Agent any and all financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel,
and all other documents (collectively, the “Additional Documents”) that Agent may
reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect the Agent’s Liens in all of the assets of Borrower and its
Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or
personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Borrower
or its Subsidiaries after the Closing Date with a fair market value in excess of $250,000, and in
order to fully consummate all of the transactions contemplated hereby and under the other Loan
Documents); provided that (a) the foregoing shall not apply to any Subsidiary of Borrower
that is (i) a CFC (other than with respect to the pledge of 65% of the total outstanding voting
Stock of such CFC has been pledged to Agent pursuant to Section 5.11), (ii) a Foreign
Subsidiary of Borrower for which the costs to the Loan Parties of providing such documents are
unreasonably excessive (as determined by Agent in consultation with Borrower) in relation to the
benefits to the Agent and the Lenders, or (iii) an Immaterial Subsidiary; and (b) the Loan Parties
shall have 30 days from the date of the request of Agent to execute any mortgages or deeds of trust
(subject to the proviso in the first sentence of this Section 5.12). To the maximum extent
permitted by applicable law, Borrower authorizes Agent to execute any such Additional Documents in
the applicable Loan Party’s or its Subsidiary’s name (subject to the proviso in the first sentence
of this Section 5.12), as applicable, and authorizes Agent to file such executed Additional
Documents in any appropriate filing office. In furtherance and not in limitation of the foregoing,
each Loan Party shall take such actions as Agent may reasonably request from time to time to ensure
that the Obligations are guarantied by the Guarantors and are secured by substantially all of the
assets of Borrower and its Subsidiaries (subject to the limitations contained in Section
5.11 and this Section 5.12 with respect to Subsidiaries that are CFCs and the proviso
in the first sentence of this Section 5.12) and all of the outstanding Stock of Borrower’s
Subsidiaries (subject to limitations contained in the Loan Documents with respect to Subsidiaries
that are CFCs and in the proviso in the first sentence of this Section 5.12).



     5.13 Lender Meetings. Within 90 days after the close of each fiscal year of Borrower,
at the request of Agent or of the Required Lenders and upon reasonable prior notice, hold a meeting
(at a mutually agreeable location and time or, at the option of Agent or Borrower, by conference
call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the
financial results of the previous fiscal year and the financial condition of Borrower and its
Subsidiaries and the projections presented for the current fiscal year of Borrower.



     5.14 Material Contracts.



          (a) Contemporaneously with the delivery of each Compliance Certificate pursuant hereto,
provide Agent with copies of (i) each Material Contract entered into since the delivery of the
previous
Compliance Certificate, and (ii) each material amendment or modification of any Material Contract
entered into since the delivery of the previous Compliance Certificate.




          (b) Promptly upon the termination, cancellation, or the failure of any Material Contract to be
in full force and effect, provide notice to Agent of such termination, cancellation, or failure.




     5.15 Chief Executive Office. Keep the chief executive offices of each Loan Party,
each Loan Party’s Domestic Subsidiaries, and each Loan Party’s Foreign Subsidiaries for which the
Stock thereof has



26









 







been pledged to Agent only at the locations identified on Schedule
4.6(b); provided, however, that Borrower may amend Schedule 4.6(b) so
long as such amendment occurs by written notice to Agent not less than 10 days prior to the date on
which such chief executive office is relocated and so long as such new location is within the
continental United States for the Borrower and its Domestic Subsidiaries (and for the Foreign
Subsidiaries, within the country in which such Foreign Subsidiary is organized), and so long as
with respect to any Loan Party, at the time of such written notification, Borrower provides Agent
with (i) a Collateral Access Agreement with respect thereto, or (ii) a certificate signed by an
officer of the Borrower certifying that Borrower used commercially reasonable efforts to obtain
such Collateral Access Agreement and despite such commercially reasonable efforts, the lessor
refused to provide such Collateral Access Agreement.



     5.16 Assignable Material Contracts. Ensure that the initial draft of each license
agreement that is a Material Contract when presented to a prospective licensee either (a) is silent
with respect to the assignment of such agreement; or (b) contains the following provision therein
(it being understood that all bracketed terms shall be conformed to the appropriate defined terms
in such agreement): “Anything in this agreement or any agreement related to this agreement (a
“Related Agreement”) to the contrary notwithstanding, the [licensor] shall have the right (without
the prior written consent of the [licensee], at any time, and in its sole discretion, to assign for
security interest purposes any or all of its rights under this agreement and any Related Agreement
to any lender providing financing to the [licensor] and any of such lender’s permitted assigns,
and, upon the occurrence and during the continuance of any event of default under the financing
agreements between any such lender (or its permitted assigns) and the [licensor], such lender (or
its permitted assigns) may exercise any or all of the rights, interests, and remedies of the
[licensor] under this agreement or any Related Agreement.”



     5.17 UBS Credit Documents. Provide written notice to Agent immediately upon the
occurrence of any of the following: (a) any default or event of default shall have occurred under
any of the UBS Credit Documents, (b) UBS demands payment of any Indebtedness owing by Borrower or
any of its Subsidiaries to UBS, or (c) UBS exercises any remedies in respect of any Indebtedness
owing by Borrower or any of its Subsidiaries to UBS.



     5.18 Closing Date Covenants. By 1 p.m. (California time) on November 3, 2008,



          (a) Agent shall have received from Borrower payment of all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement; and




          (b) Agent shall have received from Borrower payment of all the fees set forth in the Fee
Letter that are due and payable on the Closing Date.



If the amounts set forth in Section 5.18(b) or (c) are not received by Agent on or before 1
p.m. (California time) on November 3, 2008, Agent hereby is expressly authorized by Borrower to (i)
charge such amounts to the Loan Account, and (ii) designate such amounts as an Advance under the
Credit Agreement.




6. NEGATIVE COVENANTS.




          Borrower covenants and agrees that, until termination of all of the Commitments and payment in
full of the Obligations, the Loan Parties will not and will not permit any of their Subsidiaries to
do any of the following:




     6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any Indebtedness, except for
Permitted Indebtedness.



     6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired,
or any income or profits therefrom, except for Permitted Liens.



27









 





     6.3 Restrictions on Fundamental Changes.



          (a) Other than Permitted Acquisitions, enter into any merger, consolidation, reorganization,
or recapitalization, or reclassify its Stock, except for (i) any merger between Loan Parties,
provided that Borrower must be the surviving entity of any such merger to which it is a
party, (ii) any merger between Loan Parties and Subsidiaries of Borrower that are not Loan Parties
so long as such Loan Party is the surviving entity of any such merger, and (iii) any merger between
Subsidiaries of Borrower that are not Loan Parties,




          (b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except
for (i) the liquidation or dissolution of non-operating Subsidiaries of Borrower with nominal
assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than
Borrower) or any of its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Stock) of such liquidating or dissolving Loan Party or Subsidiary are transferred
to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a
Subsidiary of Borrower that is not a Loan Party (other than any such Subsidiary the Stock of which
(or any portion thereof) is subject to a Lien in favor of Agent) so long as all of the assets of
such liquidating or dissolving Subsidiary are transferred to a Subsidiary of Borrower that is not
liquidating or dissolving; or




          (c) Suspend or go out of a substantial portion of its or their business, except as permitted
pursuant to clauses (a) or (b) above or in connection with the transactions permitted pursuant to
Section 6.4.




     6.4 Disposal of Assets. Other than Permitted Dispositions, Permitted Investments, or
transactions expressly permitted by Sections 6.3 and 6.11, convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license, assign, transfer, or otherwise dispose of) any of Borrower’s or its Subsidiaries
assets.



     6.5 Change Name. Change the name, organizational identification number, state of
organization or organizational identity of (a) any Loan Party or (b) any Subsidiary of Borrower
that is not a Loan Party if all or any portion of the Stock of such Subsidiary has been pledged to
Agent; provided, however, that Borrower or any of the Subsidiaries described in
clause (b) above may change their names upon at least 10 days prior written notice to Agent of such
change.



     6.6 Nature of Business. Make any change in the nature of its or their business as
described in Schedule 6.6 or acquire any properties or assets that are not reasonably
related to the conduct of such business activities; provided that Borrower and its
Subsidiaries may engage in any business that is reasonably related or ancillary to its or their
business.



     6.7 Prepayments and Amendments.



          (a) Except in connection with Refinancing Indebtedness permitted by Section 6.1,




               (i) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of
Borrower or its Subsidiaries, other than (i) the Obligations in accordance with this Agreement, and
(ii) Permitted Intercompany Advances,



               (ii) make any payment on account of Indebtedness that has been contractually subordinated in
right of payment if such payment is not permitted at such time under the subordination terms and
conditions, or



          (b) Directly or indirectly, amend, modify, or change any of the terms or provisions of




28









 








               (i) any agreement, instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 6.1 other than (A) the Obligations in accordance with
this Agreement, (B) Permitted Intercompany Advances, and (C) Indebtedness permitted under
clauses (c), (e), (g) and (h) of the definition of Permitted Indebtedness,



               (ii) any Material Contract except to the extent that such amendment, modification, alteration,
increase, or change could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the interests of the Lenders, or



               (iii) the Governing Documents of any Loan Party or any of its Subsidiaries if the effect
thereof could reasonably be expected to result in a Material Adverse Change.



     6.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any Change
of Control (other than any Change of Control that results in the payment in full in cash of the
Obligations).



     6.9 Distributions. 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 of
Borrower’s Stock, of any class, whether now or hereafter outstanding; provided,
however, that Borrower may consummate the Permitted Stock Repurchases.



     6.10 Accounting Methods. Modify or change its fiscal year or its method of accounting
(other than as may be required to conform to GAAP).



     6.11 Investments.



          (a) Except for Permitted Investments, directly or indirectly, make or acquire any Investment
or incur any liabilities (including contingent obligations) for or in connection with any
Investment; provided, however, that (other than (i) an aggregate amount of not more
than $25,000 at any one time, in the case of Borrower and its Domestic Subsidiaries, (ii) amounts
deposited into Deposit Accounts specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for Borrower’s or its Subsidiaries’ employees, and (iii)
Investments by Foreign Subsidiaries) from and after the date that is 30 days after the Closing
Date, Borrower and its Domestic Subsidiaries shall not have Permitted Investments consisting of
cash, Cash Equivalents, Foreign Cash Equivalents, Permitted Debt Securities, or amounts credited to
Deposit Accounts or Securities Accounts unless Borrower or its Subsidiary, as applicable, and the
applicable securities intermediary or bank have entered into Control Agreements with Agent
governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens
in such Permitted Investments. Subject to the foregoing proviso, Borrower shall not and shall not
permit its Domestic Subsidiaries to establish or maintain any Deposit Account, Securities Account,
or any account in which the Permitted Debt Securities are held unless Agent shall have received a
Control Agreement in respect of such Deposit Account, Securities Account, or account.




          (b) Anything in this Agreement to the contrary notwithstanding, if, at any time, a Foreign
Cash Triggering Event occurs (a “Foreign Cash Trigger Date”), then from the Foreign Cash
Trigger Date through the Foreign Cash Release Date (such period, the “Foreign Cash Block
Period”), the Foreign Subsidiaries, in the aggregate, shall not have any cash, Cash
Equivalents, or Foreign Cash Equivalents (calculated at current exchange rates) that exceeds the
aggregate amount of cash, Cash Equivalents, and Foreign Cash Equivalents (calculated at current
exchange rates) of such Foreign Subsidiaries, in the aggregate, on the Foreign Cash Trigger Date
(any such excess, the “Foreign Cash Excess”). During the Foreign Cash Block Period, such
Foreign Subsidiaries shall transfer on a weekly basis any and all Foreign Cash Excess to a Deposit
Account or Securities Account of Borrower located in the United States that is subject to a Control
Agreement.




29









 








     6.12 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any transaction with any Affiliate of Borrower or any of its Subsidiaries except for:



          (a) transactions (other than the payment of management, consulting, monitoring, or advisory
fees) between Borrower or its Subsidiaries, on the one hand, and any Affiliate of Borrower or its
Subsidiaries, on the other hand, so long as such transactions (i) are upon fair and reasonable
terms, (ii) are fully disclosed to Agent within 5 days of the consummation thereof, if they involve
one or more payments by Borrower or its Subsidiaries in excess of $500,000 for any single
transaction or series of related transactions, and (iii) are no less favorable, taken as a whole,
to Borrower or its Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate,




          (b) so long as it has been approved by the Board of Directors in accordance with applicable
law, any indemnity provided for the benefit of directors of Borrower,




          (c) so long as it has been approved by the Board of Directors, the payment of reasonable fees,
compensation, or employee benefit arrangements to employees, officers, and outside directors of
Borrower in the ordinary course of business and consistent with past practice of Borrower, and




          (d) Permitted Intercompany Advances or transactions between Borrower or its Subsidiaries, on
the one hand, and any Affiliate of Borrower or its Subsidiaries, on the other hand so long as
permitted by Section 6.3 or Section 6.9.




     6.13 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. FINANCIAL COVENANTS.




          Borrower covenants and agrees that, until termination of all of the Commitments and payment in
full of the Obligations, Borrower will comply with each of the following financial covenants:




          (a) Minimum EBITDA.




               (i) If, at any time, a Financial Covenant Triggering Event occurs, then Borrower shall achieve
EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the table in
Section 7(a)(iii) for both (A) the period ended on the last day of the fiscal quarter (for
which financial statements are required to be delivered) immediately preceding the occurrence of
such Financial Covenant Triggering Event (the “Antecedent Period”) and (B) the period ended
on the last day of the fiscal quarter (for which financial statements are required to be delivered)
immediately following the Antecedent Quarter (the “Current Period”). If Borrower shall
have at least the required amount set forth in the table in
Section 7(a)(iii) for the applicable period for both the Antecedent Period and the
Current Period, then Borrower shall not be required to achieve EBITDA of at least the required
amount set forth in the table in Section 7(a)(iii) until such date (if any) after the
Current Period on which a Financial Covenant Triggering Event occurs (a “Subsequent Financial
Covenant Triggering Event”).



               (ii) Upon the occurrence of such Subsequent Financial Covenant Triggering Event and any
additional Subsequent Financial Covenant Triggering Events, then Borrower shall be required to
comply with the provisions of Section 7(a)(i).



               (iii) Table:



30









 





	 	 	 
	Applicable Amount	 	Applicable Period
	 
	 	 
	$***

	 	For the 4 quarter period
ending December 31, 2008
	 
	 	 
	$***

	 	For the 4 quarter period
ending March 31, 2009
	 
	 	 
	$***

	 	For the 4 quarter period
ending June 30, 2009
	 
	 	 
	$***

	 	For the 4 quarter period
ending September 30, 2009
	 
	 	 
	$***

	 	For the 4 quarter period
ending December 31, 2009
	 
	 	 
	$***

	 	For the 4 quarter period
ending March 31, 2010
	 
	 	 
	$***

	 	For the 4 quarter period
ending June 30, 2010
	 
	 	 
	$***

	 	For the 4 quarter period
ending September 30, 2010
	 
	 	 
	$***

	 	For the 4 quarter period
ending December 31, 2010
	 
	 	 
	$***

	 	For the 4 quarter period
ending March 31, 2011
	 
	 	 
	$***

	 	For the 4 quarter period
ending June 30, 2011
	 
	 	 
	$***

	 	For the 4 quarter period
ending September 30, 2011
	 
	 	 
	$***

	 	For the 4 quarter period
ending December 31, 2011
	 
	 	 
	$***

	 	For the 4 quarter period
ending March 31, 2012
	 
	 	 
	$***

	 	For the 4 quarter period
ending June 30, 2012
	 
	 	 
	$***

	 	For the 4 quarter period
ending September 30, 2012








 




			
	***	 	CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION




31









 










          (b) Capital Expenditures.




               (i) If, at any time during any fiscal year of Borrower, a Financial Covenant Triggering Event
occurs, then Borrower shall not make Capital Expenditures in the fiscal year in which such
Financial Covenant Triggering Event occurred in an amount that exceeds the amount set forth in the
table in Section 7(b)(ii).



               (ii) Table:



	 	 	 	 	 
	Fiscal Year 2008	 	Fiscal Year 2009	 	Fiscal Year 2010
	$2,524,000

	 	$3,348,000
	 	$3,859,000






	 	 	 	 	 
	Fiscal Year 2011	 	Fiscal Year 2012	 	 
	$3,955,000

	 	$4,200,000	 	 






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 Borrower fails to pay when due and payable, or when declared due and payable, (a) all
or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group,
reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof that accrues after
the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period
of 3 Business Days, or (b) all or any portion of the principal of the Obligations;



     8.2 If any Loan Party or any of its Subsidiaries:



          (a) fails to perform or observe any covenant or other agreement contained in any of (i)
Sections 5.1, 5.2, 5.3, 5.6, 5.7, 5.10,
5.11, 5.13, or 5.14 of this Agreement, (ii) Sections 6.1 through
6.13 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 6 of the
Security Agreement;




          (b) fails to perform or observe any covenant or other agreement contained in any of
Sections 5.4, 5.5, 5.8, 5.12, and 5.15 of this Agreement
and such failure continues for a period of 10 days after
the earlier of (i) the date on which such failure shall first become known to any officer of
Borrower or (ii) the date on which written notice thereof is given to Borrower by Agent; or




          (c) fails to perform or observe any covenant or other agreement contained in this Agreement,
or in any of the other Loan Documents, in each case, other than any such covenant or agreement that
is the subject of another provision of this Section 8 (in which event such other provision
of this Section 8 shall govern), and such failure continues for a period of 30 days after
the earlier of (i) the date on which such failure shall first become known to any officer of
Borrower or (ii) the date on which written notice thereof is given to Borrower by Agent;







			
			






32











 





     8.3 If one or more judgments, orders, or awards for the payment of money involving an
aggregate amount of $1,000,000, or more (except to the extent fully covered by insurance pursuant
to which the insurer has accepted liability therefor in writing) is entered or filed against a Loan
Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a)
there is a period of 30 consecutive days at any time after the entry of any such judgment, order,
or award during which a stay of enforcement thereof is not in effect, or (b) enforcement
proceedings are commenced upon such judgment, order, or award;



     8.4 If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries;



     8.5 If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries
and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the
institution of such 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 60 calendar days of the date of the filing thereof, (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, such Loan Party or its Subsidiary, or
(e) an order for relief shall have been issued or entered therein;



     8.6 If a Loan Party or any of its Subsidiaries 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) there is a default, an event of default, or an “Event” (as defined in the UBS
credit agreement) in any of the UBS Credit Documents; or (b) there is a default in any one or more
agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third
Persons relative to a Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate
amount of $500,000 or more, and such default (i) occurs at the final maturity of the obligations
thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to
accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder;



     8.8 If any warranty, representation, statement, or Record made herein or in any other Loan
Document or delivered in writing to Agent or any Lender in connection with this Agreement or any
other Loan Document proves to be untrue in any material respect (except that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;



     8.9 If the obligation of any Guarantor under the Guaranty is limited or terminated by
operation of law or by such Guarantor;



     8.10 If the Security 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 and, except to the extent
permitted by the terms hereof (including Permitted Liens) or thereof, first priority Lien on the
Collateral covered thereby, except (i) as a result of a disposition of the applicable Collateral in
a transaction permitted under this Agreement, (ii) with respect to Collateral the aggregate value
of which, for all such Collateral in the aggregate, does not exceed at any time, $100,000; or (iii)
solely as the result of an action or failure to act on the part of any member of the Lender Group.



     8.11 (a) Any provision of any Loan Document shall at any time for any reason (other than
solely as the result of an action or failure to act on the part of any member of the Lender Group)
(i) be declared to be null and void, or (ii) shall cease to give the Agent the rights, powers, and
privileges purported to be created thereby with respect to Collateral having an aggregate value in
excess of $100,000, or (b) the validity or enforceability thereof shall be contested by a Loan
Party or its Subsidiaries, or (c) a proceeding shall be commenced by a Loan Party or its
Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or (d) a Loan



33









 







Party or its Subsidiaries shall deny that such Loan Party or its Subsidiaries has any
liability or obligation purported to be created under any Loan Document.



9. RIGHTS AND REMEDIES.




     9.1 Rights and Remedies. Upon the occurrence of an Event of Default and for so long
thereafter as such Event of Default shall be continuing, Agent may, and, at the instruction of the
Required Lenders, shall, in each case by written notice to Borrower and in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do
any one or more of the following on behalf of the Lender Group:



          (a) declare the Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable, whereupon the same shall become and be
immediately due and payable, without presentment, demand, protest, or further notice or other
requirements of any kind, all of which are hereby expressly waived by Borrower; and




          (b) declare the Commitments terminated, whereupon the Revolver Commitments shall immediately
be terminated together with any obligation of any Lender hereunder to make Advances and the
obligation of the Issuing Lender to issue Letters of Credit.



The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default
described in Section 8.4 or Section 8.5, in addition to the remedies set forth
above, without any notice to Borrower or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and
the other Loan Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly waived by 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. WAIVERS; INDEMNIFICATION.




     10.1 Demand; Protest; etc. Borrower waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, 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 Borrower may in any way be liable.



     10.2 The Lender Group’s Liability for Collateral. Borrower hereby agrees that: (a)
so long as Agent 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 the Collateral, (ii) any
loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any
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 Borrower.



     10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and
damages, and all reasonable fees and disbursements of



34









 







attorneys, experts, or consultants and all other costs and expenses actually incurred in
connection therewith or in connection with the enforcement of this indemnification (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 and delivery (provided that Borrower shall not be liable for costs and expenses
(including attorneys fees) of any Lender (other than WFF) incurred in advising, structuring,
drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of this Agreement, any
of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring
of Borrower’s and its Subsidiaries’ compliance with the terms of the Loan Documents (other than
disputes solely between the Lenders), (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, and (c) in connection with
or arising out of any presence or release of Hazardous Materials at, on, under, to or from any
assets or properties owned, leased or operated by Borrower or any of its Subsidiaries or any
Environmental Actions, Environmental Liabilities and Costs or Remedial Actions related in any way
to any such assets or properties of Borrower or any of its Subsidiaries (each and all of the
foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this Section 10.3 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 or its
officers, directors, employees, attorneys, or agents. 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
Borrower was required to indemnify the Indemnified Person receiving such payment, the Indemnified
Person making such payment is entitled to be indemnified and reimbursed by Borrower 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.



11. NOTICES.




          Unless otherwise provided in this Agreement, all notices or demands 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 a party may designate in accordance
herewith), or telefacsimile. In the case of notices or demands to Borrower or Agent, as the case
may be, they shall be sent to the respective address set forth below:




35









 








	 	 	 
	          If to Borrower:

	 	ACTUATE CORPORATION

2207 Bridgepointe Parkway, suite 500

San Mateo, CA 94404

Attn: Chief Financial Officer

Fax No. (650) 827-1568
	 
	 	 
	          with copies to:

	 	ACTUATE CORPORATION

2207 Bridgepointe Parkway, suite 500

San Mateo, CA 94404

Attn: General Counsel

Fax No. (650) 827-1568
	 
	 	 
	 

	 	MORGAN, LEWIS & BOCKIUS LLP

101 Park Avenue

New York, NY

Attn: Richard Petretti, Esq.

Fax No.: (212) 309-6001
	 
	 	 
	          If to Agent:

	 	WELLS FARGO FOOTHILL, LLC

2450 Colorado Avenue, Suite 3000 West

Santa Monica, CA 90404

Attn: Technology Finance Manager

Fax No.: (310) 453-7413
	 
	 	 
	          with copies to:

	 	PAUL, HASTINGS, JANOFSKY & WALKER LLP

515 S. Flower Street

Twenty-fifth Floor

Los Angeles, CA 90071

Attn: John Francis Hilson, Esq.

Fax No.: (213) 627-0705







          Any party hereto 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 10, shall be deemed received on the earlier of the date of
actual receipt or 3 Business Days after the deposit thereof in the mail; provided, that (a)
notices sent by overnight courier service shall be deemed to have been given when received, (b)
notices by facsimile shall be deemed to have been given when sent (except that, if not given during
normal business hours for the recipient, shall be deemed to have been given at the opening on
business on the next Business Day for the recipient) and (c) notices by electronic mail shall be
deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as
by the “return receipt requested” function, as available, return email or other written
acknowledgment).




12. 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.




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(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, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT 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.
BORROWER AND EACH MEMBER OF 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
12(b).




          (c) BORROWER AND EACH MEMBER OF 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. BORROWER AND EACH MEMBER OF 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.




13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.




     13.1 Assignments and Participations.



          (a) With the prior written consent of Borrower, which consent of Borrower shall not be
unreasonably withheld, delayed or conditioned, and shall not be required (1) if an Event of Default
has occurred and is continuing or (2) in connection with an assignment to a Person that is a Lender
or an Affiliate (other than individuals) of a Lender (an “Affiliated Lender”) and with the
prior written consent of Agent, which consent of Agent shall not be unreasonably withheld, delayed
or conditioned, so long as such Affiliated Lender, at the time of assignment, has the credit
worthiness to satisfy its obligations under this Agreement, and shall not be required in connection
with an assignment to a Person that is a Lender or an Affiliated Lender so long as such Affiliated
Lender, at the time of assignment, has the credit worthiness to satisfy its obligations under this
Agreement, any Lender may assign and delegate to one or more assignees (each an “Assignee”;
provided that no Loan Party or Affiliate of a Loan Party shall be permitted to become an Assignee)
all or any portion 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 (unless waived by the
Agent) of $10,000,000 (except such minimum amount shall not apply to (x) an assignment or
delegation by any Lender to any other Lender or an Affiliate of any Lender or (y) a group of new
Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the
extent that the aggregate amount to be assigned to all such new Lenders is at least $10,000,000);
provided, however, that Borrower 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 Borrower and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in accordance with
Section 13.1(b), and (iii) the Assignee delivers to Agent and Borrower certificates,
documents or other evidence required pursuant to Section 16(c), (d) or (e), and (iv) unless waived
by the Agent, the assigning Lender or Assignee has paid to Agent for Agent’s separate account a
processing fee in the amount of $3,500.




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          (b) From and after the date that Agent notifies the assigning Lender (with a copy to Borrower)
that it has received an executed Assignment and Acceptance and, if applicable, payment of the
required 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 assigning 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 10.3 hereof) and be released from any future
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 Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation among Borrower, the assigning Lender, and the Assignee;
provided, however, that nothing contained herein shall release any assigning Lender
from obligations that survive the termination of this Agreement, including such assigning Lender’s
obligations under Section 15 and Section 17.9(a) of this Agreement.




          (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: (i) 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, (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial condition of Borrower or
the performance or observance by Borrower of any of its obligations under this Agreement or any
other Loan Document furnished pursuant hereto, (iii) 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, (iv) 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, (v) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent,
by the terms hereof and thereof, together with such powers as are reasonably incidental thereto,
and (vi) 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 Agent’s receipt of the required processing fee, if applicable, and
delivery of notice to the assigning Lender pursuant to Section 13.1(b), 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 sell to one or more commercial banks, financial institutions,
or other Persons (a “Participant”) participating interests in all or any portion of its
Obligations, its Commitment, and the other rights and interests of that Lender (the
“Originating Lender”) hereunder and under the other Loan Documents; 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) Borrower,
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



38









 






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 substantially all 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 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, (v) the Participant delivers to Agent and Borrower certificates, documents or other
evidence required pursuant to Section 16(c), (d) or (e), and (vi) all amounts payable by Borrower
hereunder shall be determined as if such Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. 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, Borrower, the Collections of Borrower or its Subsidiaries,
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.




          (f) In connection with any such assignment or participation or proposed assignment or
participation, a Lender may, subject to the provisions of Section 17.9, disclose all
documents and information which it now or hereafter may have relating to Borrower and its
Subsidiaries and their respective businesses.




          (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 §203.24, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.




     13.2 Successors. This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower 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 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
13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no
consent or approval by Borrower is required in connection with any such assignment.



14. AMENDMENTS; WAIVERS.




     14.1 Amendments and Waivers.



          (a) No amendment, waiver or other modification of any provision of this Agreement or any other
Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect
to any departure by Borrower 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
Borrower and then any such waiver or consent shall be effective, but 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 directly
affected thereby and Borrower, do any of the following:




               (i) increase the amount of or extend the expiration date of any Commitment of any Lender,



39









 





               (ii) 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,



               (iii) 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 (except (y) in connection with the waiver of applicability of Section 2.6(c)
(which waiver shall be effective with the written consent of the Required Lenders), and (z) that
any amendment or modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of
this clause (iii)),



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



               (v) other than as permitted by Section 15.11, release Agent’s Lien in and to any of
the Collateral,



               (vi) change the definition of “Required Lenders” or “Pro Rata Share”,



               (vii) contractually subordinate any of the Agent’s Liens,



               (viii) other than in connection with a merger, liquidation, dissolution or sale of such Person
expressly permitted by the terms hereof or the other Loan Documents, release Borrower or any
Guarantor from any obligation for the payment of money or consent to the assignment or transfer by
the Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan
Documents,



               (ix) amend any of the provisions of Section 2.4(b)(i) or (ii) or Section
2.4(e) or (f),



               (x) amend Section 13.1(a) to permit a Loan Party or an Affiliate of a Loan Party to be
permitted to become an Assignee, or



               (xi) change the definition of Credit Amount or any of the defined terms (including the
definition of Trailing Recurring Revenue) that are used in such definition to the extent that any
such change results in more credit being made available to Borrower based upon the Credit Amount,
but not otherwise, or the definitions of Maximum Revolver Amount, or change Section 2.1(c).



          (b) No amendment, waiver, modification, or consent shall amend, modify, or waive (i) the
definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of
Agent and Borrower (and shall not require the written consent of any of the Lenders), and (ii) any
provision of Section 15 pertaining to Agent, or any other rights or duties of Agent under this
Agreement or the other Loan Documents, without the written consent of Agent, Borrower, and the
Required Lenders,




          (c) No amendment, waiver, modification, or consent shall amend, modify, or waive any provision
of this Agreement or the other Loan Documents pertaining to Issuing Lender, or any other rights or
duties of Issuing Lender under this Agreement or the other Loan Documents, without the written
consent of Issuing Lender, Agent, Borrower, and the Required Lenders,




          (d) No amendment, waiver, modification, or consent shall amend, modify, or waive any provision
of this Agreement or the other Loan Documents pertaining to Swing Lender, or any other rights or
duties of Swing Lender under this Agreement or the other Loan Documents, without the written
consent of Swing Lender, Agent, Borrower, and the Required Lenders,




40









 








          (e) Anything in this Section 14.1 to the contrary 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 Borrower, shall not require
consent by or the agreement of Borrower.




     14.2 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 if such action has received the consent,
authorization, or agreement of the Required Lenders but not all of the Lenders, then Agent, upon at
least 5 Business Days prior irrevocable notice, may permanently replace any Lender (a “Holdout
Lender”) that failed to give its consent, authorization, or agreement with one or more
Replacement Lenders, 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, 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 prior to the effective date of such replacement, the Holdout Lender shall be deemed to
have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 13.1. 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.




     14.3 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 Borrower 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.



15. AGENT; THE LENDER GROUP.




     15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents
on its behalf and to take such other 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 15. The provisions of this Section 15 are solely for the
benefit of Agent and the Lenders, and Borrower and its Subsidiaries shall have no rights as a third
party beneficiary of any of the provisions contained herein. 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,



41









 







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 WFF 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 of Borrower and its Subsidiaries, 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 of Borrower
and its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts
and cash management arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of
Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower or its Subsidiaries, the Obligations, the
Collateral, the Collections of Borrower and its Subsidiaries, 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.



     15.2 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.



     15.3 Liability of Agent. None of the Agent-Related Persons shall (a) 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 (b) be responsible in any manner to any of the Lenders for
any recital, statement, representation or warranty made by Borrower or any of its Subsidiaries or
Affiliates, 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, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any
other Loan Document, or for any failure of Borrower or its Subsidiaries 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 and records or properties of Borrower or its Subsidiaries.



     15.4 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, telefacsimile or other electronic method of transmission, 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 Borrower 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 the Lenders against any and all liability
and expense that may be



42









 







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 requisite Lenders and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.



     15.5 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 and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or 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 15.4, 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 8; 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.



     15.6 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 Borrower and its 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 Borrower or any other Person 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 Borrower. 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 inform
itself as to the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower or any other Person 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 Borrower or any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.



     15.7 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, attorneys fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Borrower is obligated to reimburse Agent or Lenders for such expenses pursuant to
this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of Borrower and its Subsidiaries 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 by Borrower or its Subsidiaries, each
Lender hereby agrees that it is and shall be obligated to pay to Agent 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
Borrower and without limiting the obligation



43









 







of Borrower 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 Pro Rata Share of any costs or out of pocket
expenses (including attorneys, accountants, advisors, and consultants 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 Borrower. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or replacement of Agent.



     15.8 Agent in Individual Capacity. WFF 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 Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents
as though WFF 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, WFF or its Affiliates may receive information regarding Borrower or
its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower 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 WFF in its individual capacity.



     15.9 Successor Agent. Agent may resign as Agent upon 30 days prior written notice to
the Lenders (unless such notice is waived by the Required Lenders) and Borrower (unless such notice
is waived by Borrower). If Agent resigns under this Agreement, the Required Lenders shall be
entitled, with (so long as no Event of Default has occurred and is continuing) the consent of
Borrower (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a
successor Agent for the Lenders. If, at the time that Agent’s resignation is effective, it is
acting as the Issuing Lender or the Swing Lender, such resignation shall also operate to effectuate
its resignation as the Issuing Lender or the Swing Lender, as applicable, and it shall
automatically be relieved of any further obligation to issue Letters of Credit or make Swing Loans.
If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent
may appoint, after consulting with the Lenders and Borrower, 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 15 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 30 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.



     15.10 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 Borrower and its Subsidiaries and Affiliates and any other Person 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



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members of the Lender Group acknowledge that, pursuant to such activities, such Lender and
its respective Affiliates may receive information regarding Borrower or its Affiliates or any other
Person party to any Loan Documents that is subject to confidentiality obligations in favor of
Borrower 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 shall not be under any obligation to provide such information to them.



     15.11 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 Borrower of all Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if Borrower certifies
to Agent that the sale or disposition is permitted under Section 6.4 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 Borrower or its Subsidiaries owned no interest at
the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property
leased to Borrower or its Subsidiaries 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 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 15.11; 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 Borrower in respect of) all interests retained by
Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of
the Collateral.




          (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by Borrower or its Subsidiaries 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.




     15.12 Restrictions on Actions by Lenders; Sharing of Payments.



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




45









 








          (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, 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 (A) 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 (B) 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 to the
extent that 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.




     15.13 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 8 or Article 9, as applicable, of the Code can be
perfected by possession or control. Should any Lender obtain possession or control of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor
shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s
instructions.



     15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire 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, fees, or interest of the Obligations.



     15.15 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. 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.



     15.16 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 respecting Borrower or its Subsidiaries
(each a “Report” and collectively, “Reports”) prepared by or at the request of
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 Borrower and its Subsidiaries and will rely significantly upon
Borrower’s and its Subsidiaries’ books and records, as well as on representations of Borrower’s
personnel,




46









 





          (d) agrees to keep all Reports and other material, non-public information regarding Borrower
and its Subsidiaries and their operations, assets, and existing and contemplated business plans in
a confidential manner in accordance with Section 17.9, and




          (e) without limiting the generality of any other indemnification provision contained in this
Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report harmless from any
action the indemnifying Lender may take or fail to take or any 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 Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrower, 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.



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 Borrower or its
Subsidiaries to Agent that has not been contemporaneously provided by Borrower or such Subsidiary
to such Lender, and, upon receipt of such request, Agent promptly 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 Borrower or its Subsidiaries, 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 Borrower the additional reports or
information reasonably specified by such Lender, and, upon receipt thereof from Borrower or such
Subsidiary, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent
renders to Borrower a statement regarding the Loan Account, Agent shall send a copy of such
statement to each Lender.




     15.17 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 15.7, 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 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. WITHHOLDING TAXES.




          (a) All payments made by Borrower hereunder or under any note or other Loan Document will be
made without setoff, counterclaim, or other defense. In addition, all such payments will be made
free and clear of, and without deduction or withholding for, any present or future Taxes, and in
the event any deduction or withholding of Taxes is required, Borrower shall comply with the next
sentence of this Section 16(a). If any Taxes are so levied or imposed, 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, any note, or Loan Document, including any amount
paid pursuant to this Section 16(a) after



47









 






withholding or deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required to increase any such
amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful
misconduct or gross negligence (as finally determined by a court of competent jurisdiction).
Borrower will furnish to Agent as promptly as possible after the date the payment of any Tax is due
pursuant to applicable law, certified copies of tax receipts evidencing such payment by Borrower.




          (b) Borrower agrees to pay any present or future stamp, value added or documentary taxes or
any other excise or property taxes, charges, or similar levies that arise from any payment made
hereunder or from the execution, delivery, performance, recordation, or filing of, or otherwise
with respect to this Agreement or any other Loan Document.




          (c) If a Lender or Participant is entitled to claim an exemption or reduction from United
States withholding tax, such Lender or Participant agrees with and in favor of Agent and Borrower,
to deliver to Agent and Borrower (or, in the case of a Participant, to the Lender granting the
participation only) one of the following before receiving its first payment under this Agreement:




               (i) if such Lender or Participant is entitled to claim an exemption from United States
withholding tax for its portfolio interest under Section 881(c) of the IRC, (A) a statement of the
Lender or Participant, 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 percent shareholder of Borrower as described in
Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation related to Borrower as
described in Section 881(c)(3) of the IRC, and (B) a properly completed and executed IRS Form
W-8BEN;



               (ii) if such Lender or Participant is entitled to claim an exemption from, or a reduction of,
withholding tax under a United States tax treaty, a properly completed and executed copy of IRS
Form W-8BEN;



               (iii) if such Lender or Participant is entitled to claim 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, a properly completed and executed copy of IRS Form
W-8ECI;



               (iv) if such Lender or Participant is entitled to claim that interest paid under this
Agreement is exempt from United States withholding tax because such Lender or Participant serves as
an intermediary, a properly completed and executed copy of IRS Form W-8IMY (with proper
attachments) as required in (i), (ii), (iii) or (v) of this Section 16(c); or



               (v) a properly completed and executed copy of any other form or forms, including IRS Form W-9,
as may be required under the IRC or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding or backup withholding tax.


Each Lender or Participant shall provide new forms (or successor forms) upon the expiration or
obsolescence of any previously delivered forms and to promptly notify Agent (or, in the case of a
Participant, to the Lender granting the participation only) of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.




          (d) If a Lender or Participant claims an exemption from withholding tax in a jurisdiction
other than the United States, such Lender or such Participant agrees with and in favor of Agent and
Borrower, to deliver to Agent and Borrower (or, in the case of a Participant, to the Lender
granting the participation only) any such form or forms, as may be required under the laws of such
jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup
withholding tax before receiving its first payment under this Agreement, but only if such Lender or
such Participant is legally able to deliver such forms, provided, however, that
nothing in this Section 16(d) shall require a Lender or Participant to disclose any information



48









 






that it deems to be confidential (including without limitation, its tax returns) other than
information required to be disclosed in the forms specified in Section 16(c). Each Lender and each
Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any
previously delivered forms and to promptly notify Agent (or, in the case of a Participant, to the
Lender granting the participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.




          (e) If a Lender or Participant claims exemption from, or reduction of, withholding tax and
such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrower to such Lender or Participant, such Lender or Participant
agrees to notify Agent and Borrower (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender or Participant. To the extent of such
percentage amount, Agent and Borrower will treat such Lender’s or such Participant’s documentation
provided pursuant to Section 16(c) or 16(d) as no longer valid. With respect to such percentage
amount, such Participant or Assignee shall provide new documentation, pursuant to Section 16(c),
(d) or (e), if applicable. Borrower agrees that each Participant shall be entitled to the benefits
of this Section 16 with respect to its participation in any portion of the Commitments and the
Obligations so long as such Participant complies with the obligations set forth in this Section 16
with respect thereto.




          (f) If a Lender or a Participant is entitled to a reduction in the applicable withholding tax,
Agent (or, in the case of a Participant, to the Lender granting the participation) may withhold
from any interest payment to such Lender or such Participant an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (c), (d) or (e) of this Section 16 are not delivered to
Agent and Borrower (or, in the case of a Participant, to the Lender granting the participation),
then Agent and Borrower (or, in the case of a Participant, to the Lender granting the
participation) may withhold from any interest payment to such Lender or such Participant not
providing such forms or other documentation an amount equivalent to the applicable withholding tax.




          (g) If the IRS or any other Governmental Authority of the United States or other jurisdiction
asserts a claim that Agent (or, in the case of a Participant, to the Lender granting the
participation) did not properly withhold tax from amounts paid to or for the account of any Lender
or any Participant due to a failure on the part of the Lender or any Participant (because the
appropriate form was not delivered, was not properly executed, or because such Lender failed to
notify Agent (or such Participant failed to notify the Lender granting the participation) 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 (or, in
the case of a Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent (or, in the case of
a Participant, to the Lender granting the participation), as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent
(or, in the case of a Participant, to the Lender granting the participation only) under this
Section 16, together with all costs and expenses (including attorneys fees and expenses).
The obligation of the Lenders and the Participants under this subsection shall survive the payment
of all Obligations and the resignation or replacement of Agent.




          (h) If Agent or a Lender determines, in its sole discretion, that it has received a refund of
any Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has
paid additional amounts pursuant to this Section 16, so long as no Default or Event of Default has
occurred and is continuing, it shall pay over such refund to Borrower (but only to the extent of
payments made, or additional amounts paid, by Borrower under this Section 16 with respect to Taxes
giving rise to such a refund), net of all out-of-pocket expenses of Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental Authority with respect
to such a refund); provided, that Borrower, upon the request of Agent or such Lender, agrees to
repay the amount paid over to Borrower (plus any penalties, interest or other charges, imposed by
the relevant Governmental Authority, other than such penalties, interest or other charges imposed
as a result of the willful misconduct or gross negligence of Agent hereunder) to Agent or such
Lender in the event Agent or such Lender is required to repay such refund to such Governmental
Authority.




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Notwithstanding anything in this Credit Agreement to the contrary, this Section 16 shall not
be construed to require Agent or any Lender to make available its tax returns (or any other
information which it deems confidential) to Borrower or any other Person.




17. GENERAL PROVISIONS.




     17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrower, 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 against the Lender Group or Borrower, 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.



     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 Bank Product Providers. Each Bank Product Provider shall be deemed a third party
beneficiary hereof and of the provisions of the other Loan Documents for purposes of any reference
in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the
rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of
such Bank Product Provider’s right to share in payments and collections out of the Collateral as
more fully set forth herein. In connection with any such distribution of payments and collections,
Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such liability owed to it prior
to such distribution.



     17.6 Debtor-Creditor Relationship. The relationship between the Lenders and Agent, on
the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor. No
member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to
any Loan Party arising out of or in connection with the Loan Documents or the transactions
contemplated thereby, and there is no agency or joint venture relationship between the members of
the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan
Document or any transaction contemplated therein.



     17.7 Counterparts; Electronic 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 or other electronic method of transmission 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 or other electronic method of transmission 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.



     17.8 Revival and Reinstatement of Obligations. If the incurrence or payment of the
Obligations by Borrower or Guarantor or the transfer to the Lender Group of any property should for
any reason subsequently be asserted, or 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,



50









 







or other voidable or recoverable payments of money or transfers of property (each, 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 Borrower or Guarantor automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been
made.



     17.9 Confidentiality. Agent and Lenders each individually (and not jointly or jointly
and severally) agree that material, non-public information regarding Borrower and its Subsidiaries,
their operations, assets, and existing and contemplated business plans (“Confidential
Information”) shall be treated by Agent and the Lenders in a confidential manner, and shall not
be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except:
(i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of
the Lender Group (“WFF Agents”), (ii) to Subsidiaries and Affiliates of any member of the
Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate
shall have agreed to receive such information hereunder subject to the terms of this Section
17.9, (iii) as may be required by regulatory authorities so long as such authorities are
informed of the confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided that (x) prior to any
disclosure under this clause (iv), the disclosing party agrees to provide Borrower with prior
notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing
party is permitted to provide such prior notice to Borrower pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure
under this clause (iv) shall be limited to the portion of the Confidential Information as may be
required by such statute, decision, or judicial or administrative order, rule, or regulation, (v)
as may be agreed to in advance by Borrower or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, provided, that, (x)
prior to any disclosure under this clause (v) the disclosing party agrees to provide Borrower with
prior notice thereof, to the extent that it is practicable to do so and to the extent that the
disclosing party is permitted to provide such prior notice to Borrower pursuant to the terms of the
subpoena or other legal process and (y) any disclosure under this clause (v) shall be limited to
the portion of the Confidential Information as may be required by such governmental authority
pursuant to such subpoena or other legal process, (vi) as to any such information that is or
becomes generally available to the public (other than as a result of prohibited disclosure by Agent
or the Lenders or WFF Agents), (vii) in connection with any assignment, participation or pledge of
any Lender’s interest under this Agreement, provided that any such assignee, participant, or
pledgee shall have agreed in writing to receive such information hereunder subject to the terms of
this Section, and (viii) in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims related to the rights
or duties of such parties under this Agreement or the other Loan Documents; provided,
that, prior to any disclosure to any Person (other than any Loan Party, Agent, any Lender,
any of their respective Affiliates, or their respective counsel) under this clause (viii) with
respect to litigation involving any Person (other than any Loan Party, Agent, any Lender, any of
their respective Affiliates, or their respective counsel), the disclosing party agrees to provide
Borrower with prior notice thereof.



     17.10 Lender Group Expenses. Borrower agrees to pay any and all Lender Group Expenses
promptly after demand therefor by Agent and agrees that its obligations contained in this
Section 17.10 shall survive payment or satisfaction in full of all other Obligations;
provided that this Section 17.10 is not intended, and should not be construed, to vitiate
any limitations set forth in the Fee Letter on the obligation of Borrower or any of its
Subsidiaries to reimburse the Lender Group for costs and expenses in respect of field exams or
business/recurring revenue valuations.



     17.11 USA PATRIOT Act. Each Lender that is subject to the requirements of the Patriot
Act hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Patriot Act.



51









 





     17.12 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.



[Signature pages to follow.]




52









 





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




	 	 	 	 	 
	 	ACTUATE CORPORATION,

a Delaware corporation

 	 
	 	By:  	/s/
Daniel A. Gaudreau	 
	 	 	Name: 	Daniel A. Gaudreau	 
	 	 	Title: 	Chief Financial Officer 	 
	 	 	 	 
	 




 











 





	 	 	 	 	 
	 	WELLS FARGO FOOTHILL, LLC,

a Delaware limited liability company, as Agent

and as a Lender

 	 
	 	By:  	/s/
Jee Hoon Park 	 
	 	 	Name: 	Jee Hoon Park 	 
	 	 	Title: 	Vice President 	 
	 




 











 





Schedule 1.1



As used in the Agreement, the following terms shall have the following definitions:




          “Account” means an account (as that term is defined in the Code).




          “Account Debtor” means any Person who is obligated on an Account, chattel paper, or a
general intangible.




          “Accounting Change” means either (a) a change within GAAP; or (b) a change from GAAP
to another generally accepted accounting principle applicable to Persons organized in states within
the United States, in the case of each of (a) and (b), that is required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the SEC.




          “ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve
Fedline system) provided by a Bank Product Provider for the account of Borrower or any of its
Subsidiaries.




          “Acquisition” means (a) the purchase or other acquisition by a Person or its
Subsidiaries of all or substantially all of the assets of any other Person (or of any division or
business line of such other Person), or (b) the purchase or other acquisition (whether by means of
a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all
of the Stock of any other Person.




          “Additional Documents” has the meaning specified therefor in Section 5.12 of
the Agreement.




          “Advances” has the meaning specified therefor in Section 2.1(a) of the
Agreement.




          “Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.




          “Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more intermediaries, 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, for purposes of Section
6.12 of the Agreement: (a) any Person which owns directly or indirectly 10% or more of the
Stock having ordinary voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of 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 in which a Person is a general partner shall be deemed an Affiliate of such
Person.




          “Affiliated Lender” has the meaning specified therefor in Section 13.1(a) of
the Agreement.




          “Agent” has the meaning specified therefor in the preamble to the Agreement.




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




 









 








          “Agent’s Account” means the Deposit Account of Agent identified on Schedule
A-1.




          “Agent’s Liens” means the Liens granted by Borrower or any of its Subsidiaries (as
applicable) to Agent under the Loan Documents.




          “Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.




          “Antecedent Period” has the meaning specified therefor in Section 7(a)(i) of
this Agreement.




          “Applicable Margin” means, as of any date of determination (with respect to (i) any
portion of the outstanding Advances on such date that is a Base Rate Loan or a LIBOR Rate Loan,
(ii) if applicable, a Letter of Credit fee), the applicable margin set forth in the following table
that corresponds to the Revolver Usage as of such date:




	 	 	 
	Revolver Usage	 	Applicable Margin
	<$10,000,000
	 	3.50 percentage points
	> $10,000,000

and < $30,000,000
	 	3.25 percentage points
	> $30,000,000
	 	3.00 percentage points






          “Application Event” means the occurrence of (a) a failure by Borrower to repay all of
the Obligations on the Maturity Date, or (b) an Event of Default and the election by the Agent or
the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to
Section 2.4(b)(ii) of the Agreement.




          “Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.




          “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially
in the form of Exhibit A-1.




          “Authorized Person” means any one of the individuals identified on Schedule
A-2 (as such Schedule may be updated from time to time in writing by Borrower).




          “Availability” means, as of any date of determination, the amount that Borrower is
entitled to borrow as Advances under Section 2.1 of the Agreement (after giving effect to
all then outstanding Obligations (other than Bank Product Obligations).




          “Bank Product” means any financial accommodation extended to Borrower or any of its
Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement) including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.




          “Bank Product Agreements” means those agreements entered into from time to time by
Borrower or any of its Subsidiaries with a Bank Product Provider in connection with the obtaining
of any of the Bank Products.




2









 








          “Bank Product Collateralization” means providing cash collateral (pursuant to
documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank
Product Providers in an amount determined by Agent as sufficient to satisfy the reasonably
estimated credit exposure with respect to the then existing Bank Products.




          “Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by Borrower or any of its Subsidiaries to any Bank Product
Provider pursuant to or evidenced by a Bank Product Agreement 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 (b) all amounts that Borrower or any of its Subsidiaries are
obligated to reimburse to Agent or any member of the Lender Group as a result of Agent or such
member of the Lender Group purchasing participations from, or executing guarantees or indemnities
or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided
by such Bank Product Provider to Borrower or any of its Subsidiaries.




          “Bank Product Provider” means Wells Fargo or any of its Affiliates.




          “Bank Product Reserve” means, as of any date of determination, the amount of reserves
that Agent has established (based upon the Bank Product Providers’ reasonable determination of the
credit exposure of Borrower and its Subsidiaries in respect of Bank Products) in respect of Bank
Products then provided or outstanding.




          “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to
time.




          “Base LIBOR Rate” means the rate per annum rate appearing on Bloomberg L.P.’s (the
“Service”) Page BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any successor or
substitute page of such Service, or any successor to or substitute for such Service) 2 Business
Days prior to the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate
Loan to a LIBOR Rate Loan) by Borrower in accordance with the Agreement, which determination shall
be conclusive in the absence of manifest error.




          “Base Rate” means the greater of (a) the Federal Funds Rate plus 1/2% and (b) the rate
of interest announced, from time to time, 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 publications as Wells Fargo may
designate.




          “Base Rate Loan” means the portion of the Advances that bears interest at a rate
determined by reference to the Base Rate.




          “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA)
for which Borrower or any of its Subsidiaries or ERISA Affiliates 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 Borrower
or any committee thereof duly authorized to act on behalf of the board of directors (or comparable
managers).




          “Borrower” has the meaning specified therefor in the preamble to the Agreement.




3









 








          “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 a Protective Advance.




          “Business Day” means any day that is not a Saturday, Sunday, or other day on which
banks are authorized or required to close in the state of California, 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 Expenditures” means, with respect to any Person for any period, the aggregate
of all expenditures by such Person and its Subsidiaries during such period that are capital
expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or
financed minus any software development costs to the extent deducted under the definition of EBITDA
for such period.




          “Capitalized Lease Obligation” means that portion of the obligations under a Capital
Lease that is required to be capitalized in accordance with GAAP.




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




          “Cash Equivalents” means (a) marketable direct obligations issued by, 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 or fully guaranteed 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 one of the two highest ratings obtainable from either Standard & Poor’s Rating
Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial paper maturing no more
than 270 days from the date of acquisition thereof and, at the time of acquisition, having a rating
of at least A-1 from S&P, at least P-1 from Moody’s, or at least F-1 from Fitch, (d) certificates
of deposit, time deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof or the District of Columbia or any United States branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of not less than
$250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria
described in clause (d) above, or (ii) any other bank organized under the laws of the United States
or any state thereof so long as the amount maintained with any such other bank is less than or
equal to the amount insured by the Federal Deposit Insurance Corporation, (f) repurchase
obligations of any commercial bank satisfying the requirements of clause (d) of this definition or
recognized securities dealer having combined capital and surplus of not less than $250,000,000,
having a term of not more than seven days, with respect to securities satisfying the criteria in
clauses (a) or (d) above, (g) debt securities with maturities of six months or less from the date
of acquisition backed by standby letters of credit issued by any commercial bank satisfying the
criteria described in clause (d) above, and (h) Investments in money market funds substantially all
of whose assets are invested in the types of assets described in clauses (a) through (g) above.




          “CFC” means a controlled foreign corporation (as that term is defined in the IRC).




          “Change of Control” means that (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act), other than the Permitted Holder, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30%,
or more, of the Stock of Borrower having the right to vote for the election of members of the Board
of Directors (except that such limitation shall not apply to any person who is eligible to file on
SEC




4









 







Schedule 13G with respect to its shareholding in the Borrower), or (b) a majority of the members of
the Board of Directors do not constitute Continuing Directors.




          “Closing Date” means November 3, 2008.




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




          “Collateral” means all assets and interests in assets and proceeds thereof now owned
or hereafter acquired by Borrower or any of its Subsidiaries (as applicable) in or upon which a
Lien is granted by such Person in favor of Agent or the Lenders under any of the Loan Documents.




          “Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in Borrower’s or its Subsidiaries’
(as applicable) books and records, Equipment, or Inventory, in each case, in form and substance
reasonably satisfactory to Agent.




          “Collections” means all cash, checks, notes, instruments, and other items of payment
(including insurance proceeds, cash proceeds of asset sales, rental proceeds, and tax refunds).




          “Commitment” means, with respect to each Lender, its Revolver Commitment as such
Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule
C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 13.1 of the Agreement.




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




          “Confidential Information” has the meaning specified therefore in Section 17.9
of the Agreement.




          “Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower 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 approved,
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 Borrower and whose initial
assumption of office resulted from such contest or the settlement thereof.




          “Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower or one of its Subsidiaries, Agent, and
the applicable securities intermediary (with respect to a Securities Account) or bank (with respect
to a Deposit Account).




          “Controlled Account Agreement” has the meaning specified therefor in the Security
Agreement.




          “Copyright Security Agreement” has the meaning specified therefor in the Security
Agreement.





5









 








          “Credit Amount” means the result of (a) 80% times (b) Trailing Recurring Revenue
calculated as of the last fiscal quarter for which financial statements have most recently been
delivered pursuant to Section 5.1 of the Agreement; provided that Trailing Recurring Revenue
calculated as of the Closing Date shall be calculated based on the financial statements most
recently delivered to Agent on or prior to the Closing Date.




          “Credit Amount Certificate” means a certificate in the form of Exhibit C-2.




          “Credit Amount Excess” has the meaning specified therefor in Section 2.4(e)(i)
of the Agreement.




          “Current Period” has the meaning specified therefore in Section 7(a)(i) of
this Agreement.




          “Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed 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) for the first 3 days from and after the date the
relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to
Advances that are Base Rate Loans (inclusive of the Applicable Margin applicable thereto).




          “Deposit Account” means any deposit account (as that term is defined in the Code).




          “Designated Account” means the Deposit Account of Borrower identified on Schedule
D-1.




          “Designated Account Bank” has the meaning specified therefor in Schedule D-1.




          “Dollars” or “$” means United States dollars.




          “Domestic Subsidiary” means any Subsidiary of Borrower organized under the laws of any
state of the United States or the District of Columbia.




          “EBITDA” means, with respect to any fiscal period, determined on a consolidated basis
in accordance with GAAP:




          (a) Borrower’s consolidated net earnings (or loss), minus




          (b) each of the following, without duplication, during such period: Borrower’s (i)
extraordinary gains, (ii) interest income, and (iii) any software development costs to the extent
capitalized, plus




          (c) each of the following, without duplication, during such period: Borrower’s (i) non-cash
extraordinary losses, (ii) interest expenses, (iii) income taxes, (iv) depreciation and
amortization, (v) non-cash expenses incurred in connection with stock options and Permitted Stock
Repurchases, (vi) “one time” cash restructuring charges incurred for severance costs or the
disposition



6









 






of excess facilities that are incurred and in an aggregate amount not to exceed: (A) for the
fiscal quarter ended March 31, 2008, $142,000, (B) for the fiscal quarter ended June 30, 2008,
$567,000, (C) for the fiscal quarter ended September 30, 2008, $565,000, and (D) for the fiscal
quarter ended December 31, 2008, $600,000, (vii) to the extent not capitalized, expenses incurred in
connection with the Agreement no later than 3 months after the Closing Date, as described in more
detail, and subject to the aggregate Dollar limitations in Schedule E-1, in each case, to the
extent actually incurred, and (viii) professional services fees related to considerations regarding
strategic alternatives in an aggregate amount not to exceed $456,000 for the fiscal quarter ended
September 30, 2008.




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




          “Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative proceeding,
judgment, letter, or other written communication from any Governmental Authority, or any third
party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any
assets, properties, or businesses of the Borrower, any Subsidiary of the Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by the Borrower, any Subsidiary of the
Borrower, or any of their predecessors 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, in each case, to the extent binding on Borrower
or its Subsidiaries, relating to the environment, the effect of the environment on employee health,
or Hazardous Materials, in each case as amended from time to time.




          “Environmental Liabilities” means all liabilities, monetary obligations, 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, or Remedial Action required, 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.




          “Equipment” means equipment (as that term is defined in the Code).




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





7









 










          “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as
employed by the same employer as the employees of Borrower or its Subsidiaries 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 Borrower or its Subsidiaries 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 Borrower or any of its Subsidiaries 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 Borrower or any of
its Subsidiaries and whose employees are aggregated with the employees of Borrower or its
Subsidiaries under IRC Section 414(o).




          “Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.




          “Excess Availability” means, as of any date of determination, the amount equal to
Availability minus the aggregate amount, if any, of all trade payables of Borrower and its
Subsidiaries aged in excess of historical levels with respect thereto and all book overdrafts of
Borrower and its Subsidiaries in excess of historical practices with respect thereto, in each case
as determined by Agent in its Permitted Discretion.




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




          “Fee Letter” means that certain fee letter between Borrower and Agent, in form and
substance reasonably satisfactory to Agent.




          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal to, for each day during such period, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Agent from three Federal funds brokers of recognized
standing selected by it.




          “Financial Covenant Triggering Event” means (a) at any time, the outstanding Revolver
Usage exceeds the Credit Amount, or (b) at any time, the sum of Excess Availability plus Qualified
Cash is less than $10,000,000.




          “Foreign Cash Block Period” has the meaning specified therefore in Section
6.11(b) of the Agreement.




          “Foreign Cash Equivalents” means with respect to any Foreign Subsidiary, cash
equivalents which (a) are denominated in any foreign currency, (b) are comparable in credit quality
and tenor as those referred to in the definition of Cash Equivalents, and (c) are commonly used by
corporations for cash management purposes in any jurisdiction outside the United States in which
such Foreign Subsidiary is organized or conducts business.




          “Foreign Cash Excess” has the meaning specified therefore in Section 6.11(b)
of the Agreement.




          “Foreign Cash Release Date” means so long as, for two consecutive fiscal quarters of
Borrower, (a) the sum of Excess Availability plus Qualified Cash is greater than or equal to
$10,000,000 for two consecutive fiscal quarters, and (b) the Revolver Usage does not exceed the




8









 







Credit Amount, the Foreign Cash Release Date shall be the last day of such two consecutive
fiscal quarter period.




          “Foreign Cash Trigger Date” has the meaning specified therefor in Section
6.11(b) of the Agreement.




          “Foreign Cash Triggering Event” means (a) at any time, the outstanding Revolver Usage
exceeds the Credit Amount, or (b) at any time, the sum of Excess Availability plus Qualified Cash
is less than $10,000,000.




          “Foreign Lender” shall mean any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).




          “Foreign Permitted Debt Securities” means, with respect to any Foreign Subsidiary,
instruments equivalent to those referred to in the definition of Permitted Debt Securities which
are denominated in any foreign currency, comparable in credit quality and tenor to those referred
to in the definition of Permitted Debt Securities and commonly used by corporations for cash
management purposes in any jurisdiction outside the United States in which such Foreign Subsidiary
is organized or conducts business.




          “Foreign Subsidiary” means any Subsidiary of Borrower that is not a Domestic
Subsidiary.




          “Funding Date” means the date on which a Borrowing occurs.




          “Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.




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




          “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, board, department, or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.




          “Guarantors” means (a) each Subsidiary of Borrower (other than a Subsidiary that is a
CFC) and (b) each other Person that becomes a guarantor after the Closing Date pursuant to
Section 5.11 of the Agreement, and “Guarantor” means any one of them.




          “Guaranty” means that certain general continuing guaranty executed and delivered by
each Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product
Providers, in form and substance reasonably satisfactory to Agent.




          “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, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and



9









 






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.




          “Hedge Agreement” means any and all agreements or documents now existing or hereafter
entered into by Borrower or any of its Subsidiaries that provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Borrower’s or any of its Subsidiaries’ exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency
valuations or commodity prices.




          “Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.




          “Immaterial Subsidiaries” means all non-operating Subsidiaries of Borrower, in the
aggregate, which do not have assets in excess of $50,000, in the aggregate, at any one time
outstanding and which do not have liabilities in excess of $50,000, in the aggregate, at any one
time outstanding.




          “Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, or other financial products, (c)
all obligations as a lessee under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such
obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of
assets (other than trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under Hedge Agreements (which
amount shall be calculated based on the amount that would be payable by such Person if the Hedge
Agreement were terminated on the date of determination), and (g) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (f) above. For purposes of this definition, (i) the amount of any Indebtedness
represented by a guaranty or other similar instrument shall be the lesser of the principal amount
of the obligations guaranteed and still outstanding and the maximum amount for which the
guaranteeing Person may be liable pursuant to the terms of the instrument embodying such
Indebtedness, and (ii) the amount of any Indebtedness described in clause (d) above shall be the
lower of the amount of the obligation and the fair market value of the assets securing such
obligation.




          “Indemnified Liabilities” has the meaning specified therefor in Section 10.3
of the Agreement.




          “Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.




          “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.




10









 








          “Intercompany Subordination Agreement” means a subordination agreement executed and
delivered by Borrower, each of its Subsidiaries, and Agent, the form and substance of which is
reasonably satisfactory to Agent.




          “Interest Expense” means, for any period, the aggregate of the interest expense of
Borrower for such period, determined on a consolidated basis in accordance with GAAP.




          “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 the continuation of a LIBOR Rate Loan or the
conversion of a Base Rate Loan to a LIBOR Rate Loan) 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)
Borrower may not elect an Interest Period which will end after the Maturity Date.




          “Inventory” means inventory (as that term is defined in the Code).




          “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, capital
contributions (excluding (a) commission, travel, and similar advances to officers and employees of
such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), or acquisitions of Indebtedness, Stock,
or all or substantially all of the assets of such other Person (or of any division or business line
of such other Person), and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.




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




          “Issuing Lender” means WFF or any other Lender that, at the request of 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 2.11 of the
Agreement.




          “L/C” has the meaning specified therefor in Section 2.11(a) of the Agreement.




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




          “L/C Undertaking” has the meaning specified therefor in Section 2.11(a) of the
Agreement.




          “Lender” and “Lenders” have the respective meanings set forth in the preamble
to the Agreement, and shall include any other Person made a party to the Agreement in accordance
with the provisions of Section 13.1 of the Agreement.




11









 








          “Lender Group” means, individually and collectively, each of the Lenders (including
the Issuing Lender) and Agent.




          “Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower or its Subsidiaries under any of the Loan
Documents that are paid, advanced, or incurred by the Lender Group, (b) out-of-pocket fees or
charges paid or incurred by Agent in connection with the Lender Group’s transactions with Borrower
or its Subsidiaries under any of the Loan Documents, 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) contained in the Agreement or the Fee Letter),
real estate surveys, real estate title policies and endorsements, and environmental audits, (c)
out-of-pocket costs and expenses incurred by Agent in the disbursement of funds to Borrowers or
other members of the Lender Group (by wire transfer or otherwise), (d) out-of-pocket charges paid
or incurred by Agent resulting from the dishonor of checks payable by or to any Loan Party, (e)
reasonable out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any
default or enforce any provision of the Loan Documents, or during the continuance of an Event of
Default, 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) reasonable out-of-pocket audit fees and expenses (including
travel, meals, and lodging) of Agent related to any inspections or audits to the extent of the fees
and charges (and up to the amount of any limitation) contained in the Agreement or the Fee Letter,
(g) reasonable out-of-pocket 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 Borrower or
any of its Subsidiaries, (h) Agent’s reasonable costs and expenses (including reasonable attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering (including travel,
meals, and lodging), syndicating, or amending the Loan Documents, and (i) Agent’s and each Lender’s
reasonable costs and expenses (including reasonable attorneys, accountants, consultants, and other
advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a “workout,” a
“restructuring,” or an Insolvency Proceeding concerning Borrower or any of its Subsidiaries 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, officers, directors, employees, attorneys, and agents.




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




          “Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including provisions that specify that
the Letter of Credit fee set forth in the Agreement will continue to accrue while the Letters of
Credit are outstanding) to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then existing Letter of Credit Usage, (b) causing the
Underlying Letters of Credit to be returned to the Issuing Lender, or (c) providing Agent with a
standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial
bank acceptable to the Agent (in its sole discretion) in an amount equal to 105% of the then
existing Letter of Credit Usage (it being understood that the Letter of Credit fee set forth in the
Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fee
that accrues must be an amount that can be drawn under any such standby letter of credit).




12









 








          “Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit.




          “LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of
the Agreement.




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




          “LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the
Agreement.




          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate per
annum determined by Agent 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 an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.




          “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other
security arrangement and any other preference, priority, or preferential arrangement of any kind or
nature whatsoever, including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.




          “Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.




          “Loan Documents” means the Agreement, the Bank Product Agreements, the Controlled
Account Agreements, the Control Agreements, the Copyright Security Agreement, any Credit Amount
Certificate, the Fee Letter, the Guaranty, the Intercompany Subordination Agreement, the Letters of
Credit, the Patent Security Agreement, the Security Agreement, the Trademark Security Agreement,
any note or notes executed by Borrower in connection with the Agreement and payable to a member of
the Lender Group, and any other agreement entered into, now or in the future, by Borrower or any of
its Subsidiaries and the Lender Group in connection with the Agreement.




          “Loan Party” means Borrower or any Guarantor.




          “Margin Stock” as defined in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.




          “Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or financial condition of Borrower and its
Subsidiaries, taken as a whole (other than solely as a result of any adverse development in the
economy in general, but only to the extent that such development does not have a materially
disproportionate effect on the Borrower and its Subsidiaries, taken as a whole, as compared to
other comparable Persons that operate in the industry in which the Borrower and its Subsidiaries
operate), (b) a material impairment of Borrower’s and its Subsidiaries ability to perform their
obligations under the Loan Documents to which they are parties 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 Borrower or its Subsidiaries (and not as the result of an
action or failure to act on the part of any member of the Lender Group).




13









 








          “Material Contract” means (i) for any Account Debtor for which the aggregate amount of
total revenue for the immediately preceding four (4) fiscal quarter period for which total revenue
information is available attributable to such Account Debtor as of the most recent measurement date
is equal to or greater than 10% of the aggregate amount of total revenue for the immediately
preceding four (4) fiscal quarter period for which total revenue information is available
attributable to all Account Debtors of the Loan Parties as of the most recent measurement date,
each contract or agreement entered into between such Account Debtor and any Loan Party; (ii) any
contract or agreement entered into between Borrower or any of its Subsidiaries, on the one hand,
and any other Person, on the other hand, the loss of which could reasonably be expected to result
in a loss of 10% of the total revenues of Borrower and its Subsidiaries for the immediately
succeeding four (4) fiscal quarter period; (iii) the agreements described on Schedule 4.19
to the Agreement; and (iv) each material contract or agreement in respect of any Indebtedness of
Borrower or any of its Subsidiaries the loss of which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change.




          “Maturity Date” has the meaning specified therefor in Section 3.3 of the
Agreement.




          “Maximum Revolver Amount” means $50,000,000, decreased by the amount of reductions in
the Revolver Commitments made in accordance with Section 2.4(c) of the Agreement.




          “Moody’s” has the meaning specified therefor in the definition of Cash Equivalents.




          “Obligations” means (a) all loans, Advances, debts, principal, interest (including any
interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), contingent
reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to the Loan Account pursuant to the Agreement), obligations
(including indemnification obligations), fees (including the fees provided for in the Fee Letter),
Lender Group Expenses (including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in
any such Insolvency Proceeding), guaranties, covenants, and duties of any kind and description
owing by Borrower 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 other expenses or other amounts that Borrower is required to pay or reimburse
by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all
Bank Product Obligations of any Loan Party. Any reference in the Agreement or in the Loan
Documents to the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.




          “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the
Treasury.




          “Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.




          “Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.




          “Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.




          “Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.




14









 








          “Patriot Act” has the meaning specified therefor in Section 4.18 of the
Agreement.




          “Payoff Date” means the first date on which all of the Obligations are paid in full
and the Commitments of the Lenders are terminated.




          “Permitted Acquisition” means (a) a Permitted Loan Proceeds Acquisition, or (b) a
Permitted Excess Cash Acquisition, as the context requires.




          “Permitted Debt Securities” means Investments in debt securities issued by
corporations or issued or fully guaranteed by any state of the United States or any political
subdivision thereof or any public instrumentality thereof, having a rating of at least A-1 or A
from S&P or at least P-1 or A2 from Moody’s or at least F1 or A from Fitch, Inc., maturing no more
than 730 days from the date of acquisition thereof.




          “Permitted Discretion” means a determination made in the exercise of reasonable (from
the perspective of a secured lender) business judgment.




          “Permitted Dispositions” means:




          (a) sales, abandonment, or other dispositions of Equipment that is substantially worn,
damaged, obsolete or no longer useful in the ordinary course of business,




          (b) sales of Inventory to buyers in the ordinary course of business,




          (c) (i) in the case of the Borrower or any Domestic Subsidiary, the use or transfer of money
or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other
Loan Documents, or (ii) in the case of any Foreign Subsidiary, the use or transfer by any Foreign
Subsidiary of money, Cash Equivalents, or Foreign Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents.




          (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other
intellectual property rights (including by and among Borrower’s Subsidiaries and Affiliates) in the
ordinary course of business,




          (e) the granting of Permitted Liens,




          (f) the sale or discount, in each case without recourse, of Accounts arising in the ordinary
course of business, but only in connection with the compromise or collection thereof,




          (g) any involuntary loss, damage or destruction of property,




          (h) any involuntary condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, or confiscation or requisition of use of property,




          (i) the leasing or subleasing of assets of Borrower or its Subsidiaries in the ordinary course
of business,




          (j) the sale or issuance of Stock (other than Prohibited Preferred Stock) of Borrower,




          (k) the lapse or abandonment of registered patents, trademarks and other intellectual property
of Borrower and its Subsidiaries to the extent not economically desirable in the conduct of their
business,




15









 








          (l) sales or other disposition of all or any portion of the auction rate securities in the UBS
Account, so long as (i) no Default or Event of Default has occurred and is continuing or would
result therefrom, (ii) such sale or disposition is made in an arm’s length transaction and at fair
market value, and (iii) the aggregate fair market value of all such assets disposed of (including
the proposed disposition) in all such dispositions since the Closing Date would not exceed
$15,700,000, in the aggregate, and




          (m) dispositions of assets (other than Accounts, intellectual property, licenses, Stock of
Subsidiaries of Borrower, or Material Contracts) not otherwise permitted in clauses (a)
through (l) above so long as made at fair market value and the aggregate fair market value
of all assets disposed of in all such dispositions since the Closing Date (including the proposed
disposition) would not exceed $250,000.




          “Permitted Excess Cash Acquisition” means any Acquisition as to which each of the
following is applicable;




          (a) the consideration payable in respect of the proposed Acquisition shall be composed solely
of (i) cash, Cash Equivalents, or Permitted Debt Securities not to exceed $66,140,000 in the
aggregate for all such Acquisitions during the term of this Agreement (it being understood that the
$66,140,000 amount shall be reduced dollar for dollar by the amount of cash, Cash Equivalents, and
Permitted Debt Securities used pursuant to this clause (i) for a Permitted Excess Cash Acquisition)
(the “Excess Cash Balance Amount”), (ii) the transfer of the auction rate securities in the
UBS ARS Account and related settlement rights, any cash proceeds of auction rate securities in the
UBS ARS Account, or or any proceeds of Permitted UBS Indebtedness, or (iii) common Stock of the
Borrower; provided however that if the net amount of cash plus Cash Equivalents
plus Permitted Debt Securities of Borrower and its Subsidiaries provided by operating activities
for any fiscal quarter of Borrower and its Subsidiaries (as reported in the financial statements
delivered pursuant to Section 5.1 of the Agreement) is a negative number, the Excess Cash Balance
Amount shall be reduced by such deficit,




          (b) no Default or Event of Default shall have occurred and be continuing or would result
from the consummation of the proposed Acquisition,




          (c) the proposed Acquisition shall be consensual and shall have been approved by the board
of directors (or comparable managers) of the applicable counterparties to such Acquisition,




          (d) Borrower shall have Availability plus Qualified Cash in an amount equal to $10,000,000
immediately after giving effect to the consummation of the proposed Acquisition,




          (e) Borrower has provided Agent with (i) copies of all such historical financial
statements of the Person or assets being acquired; and (ii) written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis, created by adding the historical
combined financial statements of Borrower (including the combined financial statements of any other
Person or assets that were the subject of a prior Permitted Acquisition during the relevant period)
to the historical consolidated financial statements of the Person to be acquired (or the historical
financial statements related to the assets to be acquired) pursuant to the proposed Acquisition
(adjusted to eliminate expense items that would not have been incurred and to include income items
that would have been recognized, in each case, if the combination had been accomplished at the
beginning of the relevant period; such eliminations and inclusions to be mutually and reasonably
agreed upon by Borrower and Agent), Borrower and its Subsidiaries shall have satisfied each of the
following regardless of whether (or not) a Financial Covenant Triggering Event has occurred and
regardless of whether (or not) the Borrower or its Subsidiaries are required to be in compliance
with Section 




16









 







7(a)(iii) or Section 7(b)(ii) pursuant to the terms of Section 7(a)(i) and
(ii) or pursuant to the terms of Section 7(b)(i)):




               (A) shall achieve EBITDA, measured on a quarter-end basis, of at least the required amount set
forth in the table in Section 7(a)(iii) for the 12 month period ended immediately prior to
the proposed date of consummation of such proposed Acquisition,



               (B) shall not make Capital Expenditures for the 12 month period ended immediately prior to the
proposed date of consummation of such proposed Acquisition in amounts that exceed the amounts set
forth in the table in Section 7(b)(ii) for the applicable years set forth therein,



               (C) are projected to achieve EBITDA, measured on a quarter-end basis, of at least the required
amount set forth in the table in Section 7(a)(iii) for the 12 month period ending one year
after the proposed date of consummation of such proposed Acquisition, and



               (D) are projected to not make Capital Expenditures for the 12 month period ending one year
after the proposed date of consummation of such proposed Acquisition in amounts that would exceed
the amounts set forth in the table in Section 7(b)(ii) for the applicable years set forth
therein,



          (f) Borrower has provided Agent with written notice of the proposed Acquisition at least
15 Business Days prior to the anticipated closing date of the proposed Acquisition and, not later
than 5 Business Days prior to the anticipated closing date of the proposed Acquisition, copies of
the acquisition agreement and other material documents relative to the proposed Acquisition, and




          (g) the applicable Loan Parties and their Subsidiaries shall have complied with Section
5.11 of the Agreement.




          “Permitted Holder” means Peter I. Cittadini.




          “Permitted Indebtedness” means:




          (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 4.19 and any Refinancing Indebtedness in
respect of such Indebtedness,




          (c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such
Indebtedness,




          (d) endorsement of instruments (including checks) or other payment items for deposit,




          (e) Indebtedness incurred in the ordinary course of business under performance, surety,
statutory, and appeal bonds,




          (f) Indebtedness owed to any Person providing property, casualty, liability, or other
insurance to Borrower or any of its Subsidiaries, so long as the amount of such Indebtedness is not
in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of,
such insurance for the year in which such Indebtedness is incurred and such Indebtedness is
outstanding only during such year,




17









 








          (g) the incurrence by Borrower or its Subsidiaries of Indebtedness under Hedge Agreements that
are incurred for the bona fide purpose of hedging the interest rate or foreign currency risk
associated with Borrower’s and its Subsidiaries’ operations and not for speculative purposes,




          (h) unsecured Indebtedness incurred in respect of netting services, overdraft protection, and
other like services, in each case, incurred in the ordinary course of business,




          (i) Indebtedness composing Permitted Investments,




          (j) Indebtedness not exceeding $100,000 at any time outstanding arising from (i) credit cards
or debit cards issued to Borrower or any of its Subsidiaries, or (ii) guarantees by Borrower or any
of its Subsidiaries of Indebtedness incurred by employees of Borrower or any of its Subsidiareis in
connection with the incurrence by such employees of Indebtedness under credit cards or debit cards
issued to such employees,




          (k) unsecured guarantees with respect to Indebtedness of Borrower or one of its Subsidiaries,
to the extent that the Person that is obligated under such guaranty could have incurred such
underlying Indebtedness,




          (l) the Permitted UBS Indebtedness, and




          (m) other unsecured Indebtedness of Borrower or any of its Subsidiaries in an aggregate
principal amount not to exceed $250,000 at any time outstanding.




          “Permitted Intercompany Advances” means loans or other extensions of credit made or
issued by (a) a Loan Party to another Loan Party, (b) a non-Loan Party to another non-Loan Party,
(c) a non-Loan Party to a Loan Party, or (d) so long as (i) no Event of Default has occurred and is
continuing or would result therefrom, and (ii) the Loan Parties have at least $10,000,000 of
Qualified Cash before and after such loan or other extension of credit is made, a Loan Party to a
non-Loan Party in an aggregate amount not to exceed $2,000,000 at any time outstanding, and in the
case of each of (a) through (d), so long as the parties thereto are party to the Intercompany
Subordination Agreement.




          “Permitted Investments” means:




          (a) (i) Investments by Borrower or any Domestic Subsidiary in cash and Cash Equivalents, and
(ii) Investments by Foreign Subsidiaries in cash and Foreign Cash Equivalents,




          (b) Investments in negotiable instruments deposited or to be deposited for collection in the
ordinary course of business,




          (c) advances made in connection with purchases of goods or services in the ordinary course of
business,




          (d) Investments received in settlement of amounts due to any Loan Party or any of its
Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its
Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the
foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries,




          (e) Investments of any Loan Party or any of its Subsidiaries pursuant to the agreements set
forth on Schedule P-2, as in effect on the Closing Date,




          (f) guarantees permitted under the definition of Permitted Indebtedness,




18









 








          (g) Permitted Intercompany Advances,




          (h) Stock or other securities acquired in connection with the satisfaction or enforcement of
Indebtedness or claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of customers
or suppliers or otherwise outside the ordinary course of business) or as security for any such
Indebtedness or claims,




          (i) deposits of cash made in the ordinary course of business to secure performance of
operating leases,




          (j) non-cash loans to employees, officers, and directors of Borrower or any of its
Subsidiaries for the purpose of purchasing Stock in Borrower so long as the proceeds of such loans
are used in their entirety to purchase such stock in Borrower,




          (k) the Permitted Stock Repurchases,




          (l) in the event that Borrower or any of its Subsidiaries forms any Subsidiary in accordance
with the terms of the Agreement (including Section 4.1 and 5.11 of the Agreement),
the issuance by such Subsidiary of Stock to Borrower or such Subsidiary, as applicable;




          (m) the incurrence by Borrower or its Subsidiaries of Indebtedness under Hedge Agreements to
the extent permitted by clause (g) of the definition of Permitted Indebtedness;




          (n) (i) Investments by Borrower or any of its Subsidiaries in Permitted Debt Securities; and
(ii) Investments by Foreign Subsidiaries in Foreign Permitted Debt Securities; and




          (p) so long as no Event of Default has occurred and is continuing or would result therefrom,
any other Investments in an aggregate amount not to exceed $100,000 during the term of the
Agreement.




          “Permitted Liens” means




          (a) Liens held by Agent to secure the Obligations,




          (b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either
(i) are not yet delinquent, or (ii) do not have priority over Agent’s Liens and the underlying
taxes, assessments, or charges or levies are the subject of Permitted Protests,




          (c) judgment Liens arising solely as a result of the existence of judgments, orders, or awards
that do not constitute an Event of Default under Section 8.3 of the Agreement,




          (d) Liens set forth on Schedule P-3, provided that any such Lien only secures the
Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect
thereof,




          (e) the interests of lessors under operating leases and non-exclusive licensors under license
agreements,




          (f) purchase money Liens or the interests of lessors under Capital Leases (including
precautionary UCC financing statements) to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as (i) such Lien attaches only to the asset purchased or
acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was
incurred to acquire the asset purchased or acquired or any Refinancing Indebtedness in respect
thereof,




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          (g) Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of 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,




          (h) Liens on amounts deposited in connection with obtaining worker’s compensation or other
unemployment insurance,




          (i) Liens on amounts deposited in connection with the making or entering into of bids,
tenders, or leases in the ordinary course of business and not in connection with the borrowing of
money,




          (j) Liens on amounts deposited as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of business,




          (k) with respect to any Real Property, easements, rights of way, and zoning restrictions that
do not materially interfere with or impair the use or operation thereof,




          (l) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business,




          (m) Liens that are replacements of Permitted Liens to the extent that the original
Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement
Liens only encumber those assets that secured the original Indebtedness,




          (n) rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other
depository institutions, solely to the extent incurred in connection with the maintenance of such
deposit accounts in the ordinary course of business,




          (o) Liens granted in the ordinary course of business on the unearned portion of insurance
premiums securing the financing of insurance premiums to the extent the financing is permitted
under the definition of Permitted Indebtedness,




          (p) Liens granted to UBS on the Permitted UBS Collateral to secure the Permitted UBS
Indebtedness, and




          (q) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods.




          “Permitted Loan Proceeds Acquisition” means any Acquisition as to which each of the
following is applicable;




          (a) such Acquisition qualifies as a Permitted Excess Cash Acquisition except that the
consideration payable in respect of the proposed Acquisition shall be composed solely or partially
of Advances;




          (b) the Person whose Stock is being acquired or the assets being acquired, as applicable,
are useful in or engaged in, as applicable, the business of Borrower and its Subsidiaries or a
business reasonably related thereto;




          (c) the assets being acquired (other than a de minimis amount of assets in relation to the
assets being acquired) are located within the United States, Canada, or the United Kingdom or



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the Person whose Stock is being acquired is organized in a jurisdiction located within the
United States, Canada, or the United Kingdom, and




          (d) the purchase consideration payable in respect of all Permitted Loan Proceeds
Acquisitions, in the aggregate (including the proposed Acquisition and including deferred payment
obligations) shall not exceed $40,000,000 in the aggregate; provided, however, that the portion of
the purchase consideration of any single Permitted Loan Proceeds Acquisition or series of related
Permitted Loan Proceeds Acquisitions shall not exceed $10,000,000 in the aggregate.




          “Permitted Preferred Stock” means and refers to any Preferred Stock issued by Borrower
(and not by one or more of its Subsidiaries) that is not Prohibited Preferred Stock.




          “Permitted Protest” means the right of Borrower or any of its Subsidiaries to protest
any Lien (other than any 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 Borrower’s or its Subsidiaries’
books and records in such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or its Subsidiary, as applicable, in good faith, and
(c) 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 principal amount
outstanding at any one time not in excess of $2,500,000.




          “Permitted Stock Repurchase” means the repurchase by Borrower of the issued and
outstanding Stock of Borrower from any owner of the Stock of Borrower consistent with past practice
and the payment of reasonable fees and expenses related thereto and required to be paid by Borrower
in connection with such repurchase, in each case, to the extent, but only to the extent, that the
amounts paid for such fees and expenses are actually paid or payable to a Person that is not an
Affiliate of Borrower or any of its Subsidiaries and are properly attributable to such transaction
so long as (i) such repurchase is pursuant to a repurchase agreement or similar agreements approved
by the Board of Directors; (ii) no Default or Event of Default has occurred and is continuing or
would result; (iii) Borrower and its Subsidiaries would have Excess Availability plus Qualified
Cash of at least $10,000,000 after taking into account all payments to be made by Borrower in
connection with such repurchase; (iv) such repurchase is permitted under the laws of Delaware and
any other applicable laws; and (v) if Borrower receives a fairness or analogous opinion in respect
of such repurchase, Borrower delivers a copy of such opinion to Agent.




          “Permitted UBS Collateral” means (a) the UBS ARS Account, (b) any and all supporting
obligations and other rights ancillary or attributable to, or arising in any way in connection
with, any of the foregoing, and (c) any and all interest, dividends, distributions, and other
proceeds of any of the foregoing, including proceeds of proceeds.




          “Permitted UBS Indebtedness” means Indebtedness of Borrower that is incurred by
Borrower pursuant to the “No Net Cost Loans” that are described in more detail on pages 38 through
41 of that certain Prospectus of UBS, dated as of October 7, 2008, so long as (i) Borrower shall
have provided notice to Agent promptly after Borrower elects (if at all) to participate in such “No
Net Cost Loans”, (ii) Borrower shall have provided Agent with written notice of Borrower’s decision
to incur such Indebtedness at least 10 days prior to the date on which Borrower will incur such
Indebtedness; (iii) at the time of incurrence of such Indebtedness, no Event of Default has
occurred and is continuing or would result from the incurrence of such Indebtedness, (iv) such
Indebtedness is incurred pursuant to a credit line agreement that is in form and substance
substantially similar to that certain “Credit




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Lien Agreement — Demand Facility” that is attached as Exhibit 10.5 to such Prospectus, (v)
such credit line agreement, executed by the parties thereto, and all other documents related
thereto (such executed credit line agreement and such documents related thereto, collectively, the
“UBS Credit Documents”) shall have been delivered to Agent prior to the incurrence of such
Indebtedness, (vi) Borrower shall have provided evidence satisfactory to Agent that Borrower has
closed any and all of its Deposit Accounts, Securities Accounts, and any and all other accounts
(other than the UBS ARS Account) at UBS and moved any and all cash or Cash Equivalents in such
Deposit Accounts, Securities Accounts, and any and all other accounts to a Deposit Account or
Securities Accounts at a bank or securities intermediary (other than UBS) which shall have entered
into Control Agreements in accordance with Section 6.11(a) of the Agreement, and (vii)
Borrower shall have delivered to Agent a certificate signed by an officer of the Borrower notifying
Agent that Borrower incurred such Indebtedness and certifying to Agent that the conditions in this
definition of Permitted UBS Indebtedness have been satisfied.




          “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.




          “Preferred Stock” means, as applied to the Stock of any Person, the Stock of any class
or classes (however designated) that is preferred with respect to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Stock of any other class of such Person.




          “Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any obligation to pay
dividends, other than dividends of shares of Preferred Stock of the same class and series payable
in kind or dividends of shares of common stock) on or before a date that is less than 1 year after
the Maturity Date, or, on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities (other than
distributions in kind of shares of Preferred Stock of the same class and series or of shares of
common stock).




          “Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent with Borrower’s
historical financial statements, together with appropriate supporting details and a statement of
underlying assumptions.




          “Pro Rata Share” means, as of any date of determination:




          (a) with respect to a Lender’s obligation to make Advances and right to receive payments of
principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (y) the outstanding principal amount of such Lender’s Advances by
(z) the outstanding principal amount of all Advances,




          (b) with respect to a Lender’s obligation to participate in Letters of Credit, to reimburse
the Issuing Lender, and right to receive payments of fees with respect thereto, (i) prior to the
Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y)
such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitments have been terminated or reduced to



22









 






zero, the percentage obtained by dividing (y) the outstanding principal amount of such
Lender’s Advances by (z) the outstanding principal amount of all Advances, and




          (c) with respect to all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.7 of the Agreement), the percentage obtained by
dividing (i) such Lender’s Revolver Commitment by (ii) the aggregate amount of Revolver Commitments
of all Lenders; provided, however, that in the event the Revolver Commitments have
been terminated or reduced to zero, Pro Rata Share under this clause shall be the percentage
obtained by dividing (A) the outstanding principal amount of such Lender’s Advances plus such
Lender’s ratable portion of the Risk Participation Liability with respect to outstanding Letters of
Credit, by (B) the outstanding principal amount of all Advances plus the aggregate amount of the
Risk Participation Liability with respect to outstanding Letters of Credit.




          “Protective Advances” has the meaning specified therefor in Section 2.3(d)(i)
of the Agreement.




          “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.




          “Qualified Cash” means, as of any date of determination, the amount of unrestricted
cash and Cash Equivalents of Borrower and its Subsidiaries that is in Deposit Accounts or in
Securities Accounts, or any combination thereof, and which such Deposit Account or Securities
Account is the subject of a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States; provided, however, that
notwithstanding anything in this Agreement or any other Loan Document to the contrary, the
following shall be excluded from Qualified Cash: (i) the UBS ARS Account, (ii) any and all property
or assets now or hereafter in the UBS ARS Account and any and all proceeds and products thereof,
and (iii) any and all auction rate securities.




          “Real Property” means any estates or interests in real property now owned or hereafter
acquired by Borrower or the other Loan Parties and the improvements thereto.




          “Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired by Borrower or the other Loan Parties.




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




          “Recurring Revenues” means, with respect to any period, all recurring maintenance
revenues attributable to software licensed or sold by Borrower and its Subsidiaries, on a
consolidated basis, which recurring revenues are earned during such period, calculated on a basis
consistent with the financial statements delivered to Agent prior to the Closing Date.




          “Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness
so long as:




          (a) [intentionally omitted],




          (b) such refinancings, renewals, or extensions do not result in an increase in the principal
amount of the Indebtedness so refinanced, renewed, or extended,




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          (c) (i) to the extent that such refinancings, renewals, or extensions are in respect of
Indebtedness for borrowed money, such refinancings, renewals, or extensions do not result in an
increase in the interest rate with respect to the Indebtedness so refinanced, renewed, or extended
in an amount that exceeds 2 percentage points above the then applicable interest rate margin on
such Indebtedness; and (ii) with respect to all other Indebtedness, such refinancings, renewals, or
extensions result in an interest rate that is commercially reasonable;




          (d) 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 Borrower,




          (e) 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
must 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, and




          (f) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person
that is liable on account of the Obligations other than those Persons which were obligated with
respect to the Indebtedness that was refinanced, renewed, or extended.




          “Related Fund” means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.




          “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) restore or reclaim natural resources or the environment, (d) perform
any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or
(e) conduct any other actions with respect to Hazardous Materials required by Environmental Laws.




          “Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.




          “Report” has the meaning specified therefor in Section 15.16 of the Agreement.




          “Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (c) of the definition of Pro Rata Shares) exceed 50%; provided,
however, that at any time there are 2 or more Lenders, “Required Lenders” must include at
least 2 Lenders.




          “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 Commitment” means, with respect to each Lender, its Revolver Commitment,
and, with respect to all Lenders, their Revolver 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 in
the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as



24









 






such amounts may be reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of the Agreement.




          “Revolver Usage” means, as of any date of determination, the sum of (a) the amount of
outstanding Advances, plus (b) the amount of the Letter of Credit Usage, plus (c) the Bank Product
Reserve, if any, established by Agent under Section 2.1(c) of the Agreement.




          “Risk Participation Liability” means, as to each Letter of Credit, all obligations of
Borrower to the Issuing Lender with respect to such Letter of Credit, including (a) the contingent
reimbursement obligations of Borrower with respect to the amounts available to be drawn or which
may become available to be drawn thereunder, (b) the reimbursement obligations of Borrower with
respect to amounts that have been paid by the Issuing Lender to the Underlying Issuer, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.




          “Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of
the government of a country, (c) an organization directly or indirectly controlled by a country or
its government, (d) a Person resident in or determined to be resident in a country, in each case,
that is subject to a country sanctions program administered and enforced by OFAC.




          “Sanctioned Person” means a person named on the list of Specially Designated Nationals
maintained by OFAC.




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




          “Securities Account” means a securities account (as that term is defined in the Code).




          “Securities Act” means the Securities Act of 1933, as amended from time to time, and
any successor statute.




          “Security Agreement” means a security agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Borrower and Guarantors to Agent.




          “Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.




          “Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of
the Agreement.




          “Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s debts.




          “Source Code Escrow Agreement” means that certain Source Code Escrow Agreement, among
Agent, certain of the Loan Parties and an escrow agent reasonably satisfactory to Agent, in form
and substance satisfactory to the Agent.




          “S&P” has the meaning specified therefor in the definition of Cash Equivalents.




          “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).




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          “Subsequent Financial Covenant Triggering Event” has the meaning specified therefore
in Section 7(a)(i) of the Agreement.




          “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
(other than any Immaterial Subsidiary).




          “Swing Lender” means WFF or any other Lender that, at the request of Borrower and with
the consent of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under
Section 2.3(b) of the Agreement.




          “Swing Loan” has the meaning specified therefor in Section 2.3(b) of the
Agreement.




          “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments and all interest,
penalties or similar liabilities with respect thereto; provided that Taxes shall exclude
(i) any tax imposed on the net income or net profits of any Lender or any Participant (including
any branch profits taxes), in each case imposed by the jurisdiction (or by any political
subdivision or taxing authority thereof) in which such Lender or such Participant is organized or
the jurisdiction (or by any political subdivision or taxing authority thereof) in which such
Lender’s or such Participant’s principal office is located or, in the case of any Lender, in which
its applicable lending office is located, or the jurisdiction through which it is entering into
this Credit Agreement, in each case as a result of a present or former connection between such
Lender or such Participant and the jurisdiction or taxing authority imposing the tax (other than
any such connection arising solely from such Lender or such Participant having executed, delivered
or performed its obligations or received payment under, or enforced its rights or remedies under
the Agreement or any other Loan Document); (ii) taxes resulting from a Lender’s or a Participant’s
failure to comply with the requirements of Section 16(c), (d) or (e) of the
Agreement, and (iii) any United States federal withholding taxes that would be imposed on amounts
payable to a Foreign Lender based upon the applicable withholding rate in effect at the time such
Foreign Lender becomes a party to the Agreement (or designates a new lending office),
except that Taxes shall include (A) any amount that such Foreign Lender (or its assignor,
if any) was previously entitled to receive pursuant to Section 16(a) of the Agreement, if
any, with respect to such withholding tax at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office), and (B) additional United States federal
withholding taxes that may be imposed after the time such Foreign Lender becomes a party to the
Agreement (or designates a new lending office), as a result of a change in law, rule, regulation,
order or other decision with respect to any of the foregoing by any Governmental Authority.




          “Trademark Security Agreement” has the meaning specified therefor in the Security
Agreement.




          “Trailing Recurring Revenue” means, as of any date of determination, Recurring
Revenues, on a consolidated basis, for the trailing 4 quarter period of Borrower most recently
ended.




          “UBS” means UBS Bank USA or one of its Affiliates.




          “UBS ARS Account” means that certain Account No CP 12067 DE of Borrower maintained at
UBS, which contains auction rate securities.




26









 








          “UBS Credit Documents” has the meaning specified therefor in the definition of
Permitted UBS Indebtedness.




          “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 Borrower.




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




          “United States” means the United States of America.




          “Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.




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




          “WFF” means Wells Fargo Foothill, LLC, a Delaware limited liability company.




          “WFF Agents” has the meaning specified therefor in Section 17.9 of the
Agreement.





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