EXHIBIT 10.35


 


CREDIT
AGREEMENT




by
and among




INFOCUS CORPORATION




as Borrower,




THE LENDERS THAT ARE SIGNATORIES HERETO




as the Lenders,


 


and


 


WELLS FARGO FOOTHILL, INC.


 


as the Arranger and Administrative Agent


 


 


Dated as
of October 25, 2004























 


CREDIT AGREEMENT


 


THIS
CREDIT AGREEMENT (this “Agreement”), is entered into as of October 25,
2004, 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, INC.,
a California corporation, as the arranger and administrative agent for the
Lenders (in such capacity, together with its successors and assigns in such
capacity, “Agent”), and INFOCUS CORPORATION,
an Oregon 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.


 


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 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 the other Loan Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein).  Any reference herein to the satisfaction or
repayment in full of the Obligations shall mean the repayment in full in cash
(or cash collateralization in accordance with the terms hereof) of all
Obligations other than 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 are not required to be repaid
or cash collateralized pursuant to the provisions of this Agreement.  Any reference herein to any Person shall be
construed to include such Person’s successors and assigns.  Any requirement of a writing contained herein
or in the other Loan Documents shall be satisfied by the transmission of a
Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.


 


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


 


2.                                      LOAN AND TERMS OF PAYMENT.


 


2.1                                 Revolver Advances.


 


(a)                                  Subject to the terms and conditions of
this Agreement, and during the term of this Agreement, each Lender 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, or (ii) the
Borrowing Base less the Letter of Credit Usage.


 


(b)                                 Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves (i) with respect to (A) sums that Borrower is required to pay by any Section of
this Agreement or any other Loan Document (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay, and (B) amounts owing by
Borrower or its Domestic Subsidiaries to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than a Permitted Lien),
which Lien or trust, in the Permitted Discretion of Agent likely would have a
priority superior to the Agent’s Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem,
excise, sales, or other taxes where given priority under applicable law) in and
to such item of the Collateral, and (ii) after the occurrence and during the
continuance of an Event of Default, with respect to such other matters, as
Agent in its Permitted Discretion shall deem necessary or appropriate.


 


(c)                                  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.


 


2.2                                 [INTENTIONALLY
OMITTED]


 


2.3                                 Borrowing Procedures and
Settlements.


 


(a)                                  Procedure for Borrowing. 
Each Borrowing shall be made by an irrevocable written request by an Authorized
Person delivered to Agent.  Unless Swing
Lender is not obligated to make a Swing Loan pursuant to Section 2.3(b)
below, such notice, subject to Schedule 5.2, must be received by Agent no
later than 11:00 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 11:00 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 and outstanding since the last Settlement
Date plus the amount of the requested Advance does not exceed $4,000,000, or
(ii) Swing Lender, in its sole discretion, shall agree to make a Swing Loan
notwithstanding the foregoing limitation, Swing Lender, as


 


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a Lender, shall make an Advance in the amount of such Borrowing (any
such Advance made solely by Swing Lender as a Lender pursuant to this Section 2.3(b)
being referred to as a “Swing Loan” and such Advances being referred to
collectively as “Swing Loans”) available to 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 as a Lender solely for its own
account.  Subject to the provisions of Section 2.3(d)(ii),
Swing Lender as a 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, or (ii)
the requested Borrowing would exceed the Availability on such Funding
Date.  Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions precedent
set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making 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 Borrower’s 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
Agent shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.


 


(ii)                                  Unless Agent receives notice from a
Lender 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 and to the extent any Lender shall not
have made its full amount available to Agent in immediately available funds and
Agent in such circumstances has made available to 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.  The


 


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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
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with
their Revolver 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 had 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 Revolver 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
Revolver 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 such Defaulting
Lender.  Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement and shall entitle Borrower at its option, upon written notice
to Agent, to arrange for a substitute Lender to assume the Revolver Commitment
of such Defaulting Lender, such substitute Lender to be acceptable to
Agent.  In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance 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 Revolver 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) after the
occurrence and during the continuance of a Default or an Event of Default, 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,
(2) to enhance the likelihood of repayment of the Obligations (other than the
Bank Product Obligations), or (3) to pay any other amount chargeable to
Borrower pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10
(any of the Advances described in this Section 2.3(d)(i) shall be
referred to as “Protective Advances”).


 


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(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 Borrowing Base by more than $4,000,000,
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 amount 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 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 paragraph.  In such circumstances, if any Lender with a
Revolver Commitment disagrees over 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
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 Domestic Subsidiaries’
Collections received, as to each by notifying the Lenders by telecopy,
telephone, or other similar form of transmission, of such requested Settlement,
no later than 2:00 p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such requested Settlement
being the “Settlement Date”). 
Such notice of a Settlement Date shall include a summary statement of
the amount of outstanding Advances, Swing 
Loans, and 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


 


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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 for
its account such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate. 
Upon the occurrence of a Settlement in accordance with this Section 2.3(e)(i),
previous Swing Loans will be treated as general revolving Advances as if made
under Section 2.1(a).


 


(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.  To the extent that a net
amount is owed to any such Lender after such application, such net amount shall
be distributed by Agent to that Lender as part of such next Settlement.


 


(iii)                               Between Settlement Dates, Agent, to the
extent no Protective Advances or Swing Loans are outstanding, may pay over to
Swing Lender any payments received by Agent, that in accordance with the terms
of this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender’s Pro Rata Share of the Advances.  If, as of any Settlement Date, Collections of
Borrower or its Domestic 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 shall record on its books 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.


 


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(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 Revolver 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.


 


(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 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)                                     Except as otherwise provided with respect
to Defaulting Lenders and except as otherwise provided in the Loan Documents
(including agreements between Agent and individual Lenders), aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and payments of fees and expenses (other
than fees or expenses that are for Agent’s separate account, after giving
effect to any agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
Revolver Commitment or Obligation to which a particular fee relates.  All payments shall be remitted to Agent and
all such payments, and all proceeds of Collateral received by Agent, shall be
applied as follows:


 


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


 


(B)                                second, ratably to pay any fees or premiums then due to
Agent (for its separate account, after giving effect to any agreements between
Agent and individual Lenders) or any of the Lenders under the Loan Documents
until paid in full,


 


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


 


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


 


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


 


(F)                                 sixth, to pay
the principal of all Swing Loans until paid in full,


 


(G)                                seventh, so long
as no Event of Default has occurred and is continuing, and at Agent’s election
(which election Agent agrees will not be made if an Overadvance would be
created thereby), to pay amounts then due and owing by Borrower or its Domestic
Subsidiaries in respect of Bank Products until paid in full,


 


(H)                               eighth, so long
as no Event of Default has occurred and is continuing, to pay the principal of
all Advances until paid in full,


 


(I)                                    ninth, if an
Event of Default has occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in full, (ii) 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 until paid in full, and (iii) to Agent, to be held by Agent,
for the benefit of the Bank Product Providers, as cash collateral in an amount
up to the amount of the Bank Product Reserve until Borrower’s and its Domestic
Subsidiaries’ obligations in respect of Bank Products have been paid in full or
the cash collateral amount has been exhausted,


 


(J)                                   tenth, if an
Event of Default has occurred and is continuing, to pay any other Obligations
(including the provision of amounts to Agent, to be held by Agent, for the
benefit of the Bank Product Providers, as cash collateral in an amount up to
the amount determined by Agent in its Permitted Discretion as the amount
necessary to secure Borrower’s and its Domestic Subsidiaries’ obligations in
respect of Bank Products), and


 


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


 


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


 


(iii)                               In each instance, so long as no Event of
Default has occurred and is continuing, this Section 2.4(b) 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.  Unless an Event
of Default has occurred and is continuing, Agent shall not apply any payments
it receives to LIBOR Rate Loans, except (i) on the last day of the Interest
Period for the LIBOR Rate Loan, in which case Agent shall be entitled to hold
such received funds as cash collateral for the Obligations pursuant to the
Security Agreement until so applied, or (ii) if there are no outstanding Base
Rate Loans.


 


(iv)                              For purposes of the foregoing, “paid in
full” means payment of all amounts owing under the Loan Documents according to
the terms thereof, 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


 


8





















 


not any of the foregoing would be or is allowed or disallowed in whole or
in part in any Insolvency Proceeding.


 


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


 


2.5                                 Overadvances.  If, at any time or for any reason, the amount
of Obligations owed by Borrower to the Lender Group pursuant to Section 2.1
or Section 2.12 is greater than any of the limitations set forth in
Section 2.1 or Section 2.12, as applicable (an “Overadvance”),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b).  In addition, Borrower hereby promises to pay
the Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full as and when due and payable under the terms of this Agreement
and the other Loan Documents.


 


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


 


(a)                                  Interest Rates. 
Except as provided in clause (c) below, all Obligations (except for
undrawn Letters of Credit and 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 an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal
to the Base Rate plus the Base Rate Margin.


 


The foregoing notwithstanding, at no time
shall any portion of the Obligations (other than Bank Product Obligations) bear
interest on the Daily Balance thereof at a per annum rate less than 4.0%.  To the extent that interest accrued hereunder
at the rate set forth herein would be less than the foregoing minimum daily
rate, the interest rate chargeable hereunder for such day automatically shall
be deemed increased to the minimum rate.


 


(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 2.12(e)) which shall accrue at
a rate equal to 1.25% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.


 


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


 


(i)                                     all Obligations (except for undrawn
Letters of Credit 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
above 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 2.11 or Section 2.13(a),
interest, Letter of Credit fees, and all other fees payable hereunder shall be
due and payable, in arrears, on the first Business Day of each month at any
time that Obligations or Revolver 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 2.12(e)
(as and when accrued or incurred), all fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including any amounts due and payable to the
Bank Product Providers in respect of Bank Products up to the amount of the Bank
Product Reserve) to Borrower’s Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder.  Any
interest not paid when due shall be compounded by being charged to Borrower’s
Loan Account and shall thereafter constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances that are Base Rate
Loans hereunder.


 


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


 


(f)                                    Intent to Limit Charges to
Maximum Lawful Rate.  In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.  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                                 Cash Management.


 


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


 


(b)                                 Each Cash Management Bank shall establish
and maintain Cash Management Agreements with Agent and Borrower (or each
Domestic Subsidiary, as applicable), in form and substance acceptable to
Agent.  Each such Cash Management
Agreement shall provide, among other things, that (i) the Cash Management Bank
will comply with any instructions originated by Agent directing the disposition
of the funds in such Cash Management Account without further consent by
Borrower or its Domestic Subsidiaries, as applicable, (ii) the Cash Management
Bank has no rights of setoff or recoupment or any other claim against the applicable
Cash Management Account other than for


 


10





















 


payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) it will, upon notice from Agent, forward, by daily
sweep, all amounts in the applicable Cash Management Account to the Agent’s
Account.  Notwithstanding the foregoing,
Agent agrees not to send any notices or instructions to the Cash Management
Bank which would restrict Borrower’s or a Domestic Subsidiary’s, as applicable,
access to their respective Cash Management Accounts or cause amounts in the
Cash Management Accounts to be swept to Agent’s Account unless a Triggering
Event has occurred.


 


(c)                                  So long as no Default or Event of Default
has occurred and is continuing, Borrower may amend Schedule 2.7(a)
to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective
Cash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior
to the time of the opening of such Cash Management Account, Borrower (or its Domestic
Subsidiary, as applicable) and such prospective Cash Management Bank shall have
executed and delivered to Agent a Cash Management Agreement.  Borrower (or its Domestic Subsidiaries, as
applicable) shall close any of its Cash Management Accounts (and establish
replacement cash management accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent’s
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent’s liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent’s
reasonable judgment.


 


(d)                                 The Cash Management Accounts shall be
cash collateral accounts subject to Control Agreements.


 


2.8                                 Crediting Payments.  The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent’s Account or unless and until such payment item
is honored when presented for payment. 
Should any payment item not be honored when presented for payment, then
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.


 


2.9                                 Designated Account.  Agent is authorized to make the Advances and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d).  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 in writing, any Advance, Protective
Advance, or Swing Loan requested by Borrower and made by Agent or the Lenders
hereunder shall be made to the Designated Account.


 


2.10                           Maintenance
of Loan Account; Statements of Obligations.  Agent shall maintain an account on its books
in the name of 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


 


11





















 


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 2.8,
the Loan Account will be credited with all payments received by Agent from
Borrower or for Borrower’s account, including all amounts received in the Agent’s
Account from any Cash Management Bank. 
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 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 30 days after receipt thereof by Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.


 


2.11                           Fees.  Borrower shall pay to Agent, as and when due
and payable under the terms of the Fee Letter, the fees set forth in the Fee
Letter.


 


2.12                           Letters of Credit.


 


(a)                                  Subject to the terms and conditions of
this Agreement, the Issuing Lender agrees to issue letters of credit for the
account of Borrower (each, an “L/C”) or to purchase participations or
execute indemnities or reimbursement obligations (each such undertaking, an “L/C
Undertaking”) with respect to letters of credit issued by an Underlying
Issuer (as of the Closing Date, the prospective Underlying Issuer is to be
Wells Fargo) 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 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 Borrowing Base less the outstanding amount of Advances, or


 


(ii)                                  the Letter of Credit Usage would exceed
$25,000,000, or


 


(iii)                               the Letter of Credit Usage would exceed
the Maximum Revolver Amount less 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 immediately shall reimburse
such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to
such L/C Disbursement not later than 11:00 a.m.,


 


12





















 


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, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6.  To the extent an L/C Disbursement is deemed
to be an Advance hereunder, 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 2.12(c) 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 2.12(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 clause (a) of this Section, 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 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3
hereof.  If any such Lender fails to make
available to Agent the amount of such Lender’s Pro Rata Share of 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.


 


(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 default under this Agreement of a Defaulting Lender or 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


 


13





















 


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 immediately shall be reimbursable 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 .25% per annum times the face 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 on demand 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 demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. 
The determination by Agent of any amount due pursuant to this Section,
as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.


 


14





















 


2.13                           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 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 (provided, however,
that, subject to the following clauses (ii) and (iii), in the case of any
Interest Period greater than 3 months in duration, interest shall be payable at
3 month intervals after the commencement of the applicable Interest Period and
on the last day of such Interest Period), (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof have
elected to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement 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 and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.


 


(b)                                 LIBOR Election.


 


(i)                                     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 Lenders having a
Revolver Commitment.


 


(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 incurred by Agent or
any Lender as a result of (a) the payment of any principal of any LIBOR Rate
Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any LIBOR
Rate Loan other than on the last day of the Interest Period applicable thereto,
or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan
on the date specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, “Funding Losses”).  Funding Losses shall, with respect to Agent
or any Lender, be deemed to equal the amount determined by Agent or such Lender
to be the excess, if any, of (i) the amount of interest that would have accrued
on the principal amount of such LIBOR Rate Loan had such event not occurred, at
the LIBOR Rate that would have been applicable thereto, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert, or continue, for the period
that would have been the Interest Period therefor), minus
(ii) the amount of interest that would accrue on such principal amount for such
period at the interest rate which Agent or such Lender would be offered were it
to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market.  A certificate of Agent or a Lender delivered
to Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section 2.13 shall be conclusive
absent manifest error.


 


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(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 and integral multiples of $500,000 in excess thereof.


 


(c)                                  Prepayments. 
Borrower may prepay LIBOR Rate Loans at any time; provided, however, that in the event that LIBOR Rate Loans are
prepaid on any date that is not the last day of the Interest Period applicable
thereto, including as a result of any automatic prepayment through the required
application by Agent of proceeds of Borrower’s and its Domestic 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 clause  (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 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 clause (b)(ii) above).


 


(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 of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to continue
such funding or maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed circumstances to
Agent and 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. 
The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing
at the LIBOR Rate by acquiring Eurodollar deposits for each Interest Period in
the amount of the LIBOR Rate Loans.


 


2.14                           Capital Requirements.  If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or


 


16





















 


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 Revolver Commitments hereunder to a level
below that which such Lender or such holding company could have achieved but
for such adoption, change, or compliance (taking into consideration such Lender’s
or such holding company’s then existing policies with respect to capital
adequacy and assuming the full utilization of such entity’s capital) by any
amount deemed by such Lender to be material, then such Lender may notify
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 90 days after presentation by such Lender of a
statement in the amount and setting forth in reasonable detail such Lender’s
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error).  In determining such amount, such Lender may
use any reasonable averaging and attribution methods.


 


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, 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 ).


 


3.2


 


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


 


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


 


(ii)                                  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;


 


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


 


(iv)                              no Material Adverse Change shall have
occurred.


 


(b)                                 Conditions
Subsequent to the Initial Extension of Credit.  The obligation of the Lender Group (or any
member thereof) to continue to make any Advances hereunder at any time (or to
extend any other credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of each of the conditions subsequent set forth
below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):


 


17





















 


(i)                                     Within 30 days of the Closing Date,
deliver to Agent certified copies of the policies of insurance, together with
the endorsements thereto, as are required by Section 5.8, the form and
substance of which shall be satisfactory to Agent and its counsel;


 


(ii)                                  Within 10 days of the Closing Date,
deliver to Agent the list of Intellectual Property Licenses (as such term is
defined in the Security Agreement) to be attached as Schedule 2 of the
Security Agreement; and


 


(iii)                               Within 15 days of the Closing Date, deliver
to Agent a Collateral Access Agreement with respect to the location at UPS -
SCS Logistics, 2200 Outer Loop Bldg., Louisville, Kentucky 40219-3565, in form
and substance satisfactory to Agent.


 


3.3                                 Term.  This Agreement shall continue in full force
and effect for a term ending on October 25, 2006 (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 and during the continuation of an Event of Default.


 


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 (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the Letter of Credit Usage, or (ii) causing the original Letters of Credit
to be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations).  No termination of this Agreement, however,
shall relieve or discharge Borrower or its Domestic 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, 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 90 days prior written notice to Agent, to
terminate this Agreement by paying to Agent, in cash, the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the Letter of Credit Usage, or (ii) causing the original Letters of Credit
to be returned to the Issuing Lender, and (b) providing cash collateral (in an
amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full.  If Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Revolver Commitments shall
terminate and Borrower shall be obligated to repay the Obligations (including
(a) either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders with a Revolver Commitment in an amount equal to 105% of the
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held


 


18





















 


by Agent for the benefit of the Bank Product Providers with respect to
the Bank Product Obligations), in full, on the date set forth as the date of
termination of this Agreement in such notice.


 


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 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                                 No Encumbrances.  Borrower and its Domestic Subsidiaries have
good and indefeasible title to, or a valid leasehold interest in, their
personal property assets and good and marketable title to, or a valid leasehold
interest in, their Real Property, in each case, free and clear of Liens except
for Permitted Liens.


 


4.2                                 Eligible Accounts.  As to each Account that is identified by
Borrower as an Eligible Account in a borrowing base report submitted to Agent,
such Account is (a) a bona fide existing payment obligation of the applicable
Account Debtor created by the sale and delivery of Inventory or the rendition
of services to such Account Debtor in the ordinary course of Borrower’s
business, (b) owed to Borrower without any known defenses, disputes, offsets,
counterclaims, or rights of return or cancellation, and (c) not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.


 


4.3                                 [INTENTIONALLY
OMITTED]


 


4.4                                 Equipment.  Each material item of Equipment of Borrower
and its Domestic Subsidiaries is used or held for use in their business and is
in good working order, ordinary wear and tear and damage by casualty excepted.


 


4.5                                 Location
of Inventory and Equipment. 
The Inventory and Equipment (other than vehicles or Equipment out for
repair) of Borrower and its Domestic Subsidiaries are not stored with a bailee,
warehouseman, or similar party and are located only at, or in-transit between,
the locations identified on Schedule 4.5 (as such Schedule may
be updated pursuant to Section 5.9).


 


4.6                                 Inventory Records.  Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its Domestic
Subsidiaries’ Inventory and the book value thereof.


 


4.7                                 State of
Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.


 


(a)                                  The jurisdiction of organization of
Borrower and each of its Domestic Subsidiaries is set forth on Schedule 4.7(a).


 


(b)                                 The chief executive office of Borrower
and each of its Domestic Subsidiaries is located at the address indicated on Schedule 4.7(b)
(as such Schedule may be updated pursuant to Section 5.9).


 


19





















 


(c)                                  Borrower’s and each of its Domestic
Subsidiaries’ organizational identification numbers, if any, are identified on Schedule 4.7(c).


 


(d)                                 As of the Closing Date, Borrower and its Domestic
Subsidiaries do not hold any commercial tort claims, except as set forth on Schedule 4.7(d).


 


4.8                                 Due
Organization and Qualification; Domestic Subsidiaries.


 


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


 


(b)                                 Set forth on Schedule 4.8(b)
as of the date specified therein, 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 4.8(b)
as of the date specified therein, 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.


 


(c)                                  Set forth on Schedule 4.8(c),
is a complete and accurate list of Borrower’s direct and indirect Domestic
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the
number of shares of each class of common and preferred Stock authorized for
each of such Domestic Subsidiaries, and (iii) 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 Domestic Subsidiary has been validly issued and is fully
paid and non-assessable.


 


(d)                                 Except as set forth on Schedule 4.8(d),
there are no subscriptions, options, warrants, or calls relating to any shares
of Borrower’s Domestic Subsidiaries’ capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.  Neither Borrower nor any of its Domestic
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower’s Domestic
Subsidiaries’ capital Stock or any security convertible into or exchangeable
for any such capital Stock.


 


4.9                                 Due Authorization; No
Conflict.


 


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


 


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


 


20





















 


(c)                                  Other than the filing of financing
statements and the recordation of the Mortgages, to the extent applicable, the
execution, delivery, and performance by Borrower of this Agreement and the
other Loan Documents to which Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority, other than consents or approvals that
have been obtained and that are still in force and effect.


 


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


 


(e)                                  The Agent’s Liens are validly created,
perfected, and first priority Liens, subject only to Permitted Liens.


 


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


 


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


 


(h)                                 Other than the filing of financing
statements and the recordation of the Mortgages, to the extent applicable, the
execution, delivery, and performance by each Guarantor of the Loan Documents to
which such Guarantor is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been
obtained and that are still in force and effect.


 


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


 


4.10                           Litigation.  Other than those matters disclosed on Schedule 4.10
and other than matters arising after the Closing Date that reasonably could not
be expected to result in a Material Adverse Change, there are no actions,
suits, or proceedings pending or, to the best knowledge of Borrower, threatened
against Borrower or any of its Domestic Subsidiaries.


 


4.11                           No Material Adverse Change.  All financial statements relating to Borrower
and its Domestic Subsidiaries or Guarantor that have been delivered by Borrower
to the Lender Group have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of


 


21





















 


footnotes and being subject to year-end audit adjustments) and present
fairly in all material respects, Borrower’s and its Domestic Subsidiaries’ (or
any Guarantor’s, as applicable) financial condition as of the date thereof and
results of operations for the period then ended.  There has not been a Material Adverse Change
with respect to Borrower and its Domestic Subsidiaries (or any Guarantor, as
applicable) since the date of the latest financial statements submitted to
Agent on or before the Closing Date.


 


4.12                           Fraudulent Transfer.


 


(a)                                  Each of Borrower and each of its
Subsidiaries, other than InFocus Shanghai and ASK Proxima AB, is Solvent.


 


(b)                                 No transfer of property is being made by
Borrower or its Domestic Subsidiaries and no obligation is being incurred by Borrower
or its Domestic Subsidiaries 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 Borrower or its Domestic
Subsidiaries.


 


4.13                           Employee Benefits.  None of Borrower, any of its Domestic Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.


 


4.14                           Environmental Condition.  Except as set forth on Schedule 4.14,
(a) to Borrower’s knowledge, none of Borrower’s or its Domestic Subsidiaries’
properties or assets has ever been used by Borrower, its Domestic 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 use,
production, storage, handling, treatment, release or transport was in
violation, in any material respect, of any applicable Environmental Law, (b) to
Borrower’s knowledge, none of Borrower’s or its Domestic 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) neither Borrower nor any of its Domestic 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 Borrower or its Domestic
Subsidiaries, and (d) neither Borrower nor its 
Domestic Subsidiaries has received a summons, citation, notice, or
directive from the United States Environmental Protection Agency or any other
federal or state governmental agency concerning any action or omission by
Borrower or its Domestic Subsidiaries resulting in the releasing or disposing
of Hazardous Materials into the environment.


 


4.15                           Intellectual Property.  Borrower and its Domestic Subsidiaries own,
or hold licenses in, all trademarks, trade names, copyrights, patents, patent
rights, and licenses that are necessary to the conduct of its business as
currently conducted.


 


4.16                           Leases.  Borrower and its Domestic Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating, and all of
such material leases are valid and subsisting and no material default by
Borrower or its Domestic Subsidiaries exists under any of them.


 


4.17                           Deposit
Accounts and Securities Accounts.  Set forth on Schedule 4.17 is a
listing of all of Borrower’s and its Domestic Subsidiaries’ Deposit Accounts
and Securities Accounts in the United States, 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.


 


4.18                           Complete Disclosure.  All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Domestic Subsidiaries in writing
to Agent or any Lender (including all


 


22





















 


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 Borrower or its Domestic 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 Closing Date Projections 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 its and its Domestic Subsidiaries
future performance for the periods covered thereby.


 


4.19                           Indebtedness.  Set forth on Schedule 4.19 is a
true and complete list of all Indebtedness of Borrower and its Domestic Subsidiaries
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects the aggregate
principal amount of such Indebtedness and describes the principal terms thereof,
provided, that, such Schedule shall not include Indebtedness
constituting trade payables of the Borrower or any of the Domestic Subsidiaries
if such trade payables were incurred in the ordinary course of business.


 


4.20                           Contractual Obligations.  Set forth on Schedule 4.20 is a
complete and accurate list of the Material Contracts, showing as of the date
hereof the parties, subject matter and term thereof.  Each Material Contract  has been duly authorized, executed and
delivered by Borrower or such Domestic Subsidiary, has not been amended or
otherwise modified except as disclosed on Schedule 4.20, is in full
force and effect, and is binding upon and enforceable against Borrower or such Domestic
Subsidiary in accordance with its terms, and, except as disclosed on Schedule 4.20,
there exists no material default of which Borrower is aware under any such
Material Contract by any party thereto.


 


5.                                       AFFIRMATIVE COVENANTS.


 


Borrower
covenants and agrees that, until termination of all of the Revolver Commitments
and payment in full of the Obligations, Borrower shall and shall cause each of
its Domestic Subsidiaries to do all of the following:


 


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


 


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


 


5.3                                 Financial
Statements, Reports, Certificates.  Deliver to Agent, with copies to each Lender,
each of the financial statements, reports, or other items set forth on Schedule 5.3
at the times specified therein.  In
addition, Borrower agrees that no Domestic Subsidiary of Borrower will have a
fiscal year different from that of Borrower.


 


5.4                                 Guarantor Reports.  Cause each Guarantor, if any, to deliver its
annual financial statements at the time when Borrower provides its audited financial
statements to Agent, but only to the extent such Guarantor’s financial
statements are not consolidated with Borrower’s financial statements.


 


23





















 


5.5                                 Inspection.  Permit Agent, each Lender, and each of their
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 or any such Lender may designate and,
so long as no Default or Event of Default exists, with reasonable prior notice
to Borrower.


 


5.6                                 Maintenance of Properties.  Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear, tear, and casualty excepted (and
except where the failure to do so could not be expected to result in a Material
Adverse Change), and comply at all times with the provisions of all material
leases to which it is a party as lessee, so as to prevent any loss or
forfeiture thereof or thereunder.


 


5.7                                 Taxes.  Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against Borrower, its Domestic Subsidiaries, or any of their
respective assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest.  Borrower will and will cause its Domestic
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 satisfactory to
Agent indicating that Borrower and its Domestic Subsidiaries have made such
payments or deposits.


 


5.8                                 Insurance.


 


(a)                                  At Borrower’s expense, maintain insurance
respecting its and its Domestic 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 business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation.  All such policies of insurance shall be in
such amounts and with such insurance companies as are reasonably satisfactory
to Agent. Borrower shall deliver copies of all such policies to Agent, and the
policies that insure against loss or damage to tangible personal property, with
an endorsement naming Agent as the loss payee, as its interest may appear
(under a satisfactory lender’s loss payable endorsement) or additional insured,
as appropriate, except for those policies of insurance for which insurance
companies do not typically provide additional insured endorsements.  Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.


 


(b)                                 Borrower shall give Agent prompt notice
of any tangible personal property loss exceeding $500,000 covered by such
insurance.  So long as no Event of
Default has occurred and is continuing, Borrower shall have the exclusive right
to adjust any losses payable under any such casualty insurance which are less
than $500,000.  Following the occurrence
and during the continuation of an Event of Default, or in the case of any
losses payable under any such casualty insurance exceeding $500,000, Agent
shall have the exclusive right to adjust any losses payable under any such
insurance policies, without any liability to Borrower whatsoever in respect of
such adjustments.  Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Borrower under staged payment terms
reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations;


 


24





















 


provided,  however,
that, with respect to any such monies in an aggregate amount during any 12
consecutive month period not in excess of $1,000,000, so long as (A) no Default
or Event of Default shall have occurred and is continuing, (B) Borrower’s
Excess Availability plus Qualified Cash is greater than $10,000,000, (C)
Borrower shall have given Agent prior written notice of its or its Domestic
Subsidiary’s intention to apply such monies to the costs of repairs,
replacement, or restoration of the property which is the subject of the loss,
destruction, or taking by condemnation, (D) the monies are held in a cash
collateral account in which Agent has a perfected first priority security
interest, and (E) Borrower or its Domestic Subsidiary completes such repairs,
replacements, or restoration within 180 days after the initial receipt of such
monies, Borrower shall have the option to apply such monies to the costs of
repairs, replacement, or restoration of the property which is the subject of
the loss, destruction, or taking by condemnation unless and to the extent that
such applicable period shall have expired without such repairs, replacements,
or restoration being made, in which case, any amounts remaining in the cash
collateral account shall be paid to Agent and applied as set forth above.


 


(c)                                  ANYTHING IN THE LOAN
DOCUMENTS TO THE CONTRARY NOTWITHSTANDING, UNLESS THE BORROWER OR A DOMESTIC
SUBSIDIARY PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE AS
REQUIRED PURSUANT TO THIS SECTION 5.8, AGENT MAY PURCHASE INSURANCE
AT THE BORROWER’S OR APPLICABLE DOMESTIC SUBSIDIARY’S EXPENSE TO PROTECT THE
INTERESTS OF THE AGENT AND THE LENDER GROUP. 
THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT THE INTEREST OF THE
BORROWER OR THE APPLICABLE DOMESTIC SUBSIDIARY. 
IF THE ASSETS OF THE BORROWER OR ANY DOMESTIC SUBSIDIARY BECOMES
DAMAGED, THE COVERAGE AGENT PURCHASES MAY NOT PAY ANY CLAIM BORROWER OR ANY
DOMESTIC SUBSIDIARY MAKES OR ANY CLAIM MADE AGAINST BORROWER OR SUCH DOMESTIC
SUBSIDIARY.  BORROWER OR ANY DOMESTIC
SUBSIDIARY MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT BORROWER
OR SUCH DOMESTIC SUBSIDIARY HAS OBTAINED PROPERTY COVERAGE ELSEWHERE.  BORROWER AND THE DOMESTIC SUBSIDIARYS ARE
RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY AGENT.  THE COST OF THIS INSURANCE SHALL CONSTITUTE
AN OBLIGATION AND SHALL ACCRUE INTEREST AS PROVIDED HEREIN.  THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE
THE BORROWER’S OR APPLICABLE DOMESTIC SUBSIDIARY’S PRIOR COVERAGE LAPSED OR THE
DATE BORROWER OR THE APPLICABLE DOMESTIC SUBSIDIARY FAILED TO PROVIDE PROOF OF
COVERAGE.  THE COVERAGE AGENT PURCHASES
MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE BORROWER OR THE APPLICABLE
DOMESTIC SUBSIDIARY CAN OBTAIN ON ITS OWN AND MAY NOT SATISFY ANY NEED FOR
PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS
IMPOSED BY APPLICABLE LAW.


 


5.9                                 Location
of Inventory and Equipment, Chief Executive Office.


 


(a)                                  Keep Borrower’s and its Domestic Subsidiaries’
Inventory and Equipment only at the locations identified on Schedule 4.5;
provided, however, (i) the provisions of this Section 5.9(a)
shall not apply to (A) vehicles and Equipment out for repair, (B) goods
in-transit, (C) tooling located at manufacturing sites or (D) goods on
consignment, (ii) the provisions of this Section 5.9(a) shall not
apply to goods at locations other than those identified on Schedule 4.5
to the extent Borrower provides written notice thereof to Agent and the value
of such Inventory does not exceed either (A) $2,000,000 at any one location or
(B) $3,000,000 in the aggregate and (iii) Borrower may amend Schedule 4.5
so long as (A) such amendment occurs by written notice to Agent not less than
30 days prior to the date on which such Inventory or Equipment is moved to such
new location, (B) such new location is within the continental


 


25





















 


United States, and (C) at the time of such written notification,
Borrower provides Agent a Collateral Access Agreement with respect thereto.


 


(b)                                 Keep Borrower’s and its Domestic Subsidiaries’
chief executive offices only at the locations identified on Schedule 4.7(b);
provided, however, that Borrower may amend Schedule 4.7(b)
so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date on which such chief executive office is relocated, so
long as such new location is within the continental United States, and so long
as, at the time of such written notification, Borrower provides Agent a
Collateral Access Agreement with respect thereto.


 


5.10                           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.


 


5.11                           Leases.  Pay when due all rents and other amounts
payable under any material leases to which Borrower or any of its Domestic
Subsidiaries is a party or by which Borrower’s or any such Domestic Subsidiaries’
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.


 


5.12                           Existence.  At all times preserve and keep in full force
and effect Borrower’s and its Domestic Subsidiaries valid existence and good
standing and any rights and franchises material to their businesses.


 


5.13                           Environmental.


 


(a)                                  Keep any property either owned or
operated by Borrower or its Domestic 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 Domestic Subsidiaries
and take any Remedial Actions required to abate said release or otherwise to
come into compliance with applicable Environmental Law, and (d) promptly, but
in any event within 5 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 Domestic Subsidiaries, (ii) commencement
of any Environmental Action or notice that an Environmental Action will be
filed against Borrower or its Domestic Subsidiaries, and (iii) notice of a
violation, citation, or other administrative order which reasonably could be
expected to result in a Material Adverse Change.


 


5.14                           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 affect
of amending or modifying this Agreement or any of the Schedules hereto.


 


5.15                           Control Agreements.  Except with respect to the Securities Accounts
and Deposit Accounts set forth on Schedule 5.15, take all
reasonable steps in order for Agent to obtain control in


 


26





















 


accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 6.12)
all of its Securities Accounts, Deposit Accounts, electronic chattel paper,
investment property, and letter-of-credit rights in the United States; provided,
however, that, upon a Triggering Event, Borrower shall comply with the
provisions of this Section 5.15 with respect to the Securities
Accounts set forth on Schedule 5.15; provided, further,
in no event shall the Securities Account at Wells Capital Management, account number
15256000, as identified on Schedule 5.15, be required to be subject
to a Control Agreement so long as (a) such Securities Account does not hold assets
valued at more than $25,000,000 or (b) the letter of credit provided by Wells
Fargo for the benefit of Funai Electric Co., Ltd. on behalf of Borrower is
outstanding, or Borrower owes any actual or contingent obligation to Wells
Fargo with respect thereto that is secured by the foregoing account at Wells
Capital Management.


 


The foregoing notwithstanding, in the event that:


 


(a)                                  the Securities
Accounts set forth on Schedule 5.15, other than the Securities
Account at Wells Capital Management, account number 15256000, are transferred
to a different bank or securities intermediary, or


 


(b)                                 (i)                                     any of the
Securities Accounts subject to clause (a) hold cash assets in an aggregate
amount in excess of $100,000 at any one time that are not, within 5 Business
Days, reinvested as a Permitted Investments or transferred or deposited
into a Cash Management Account, or


 


(ii)                                  the assets held in
any of the Securities Accounts subject to clause (a) exceed $9,000,000 in the
aggregate at any one time, and the excess is not transferred to a Cash
Management Account within 5 Business Days,


 


Borrower and each of its Domestic Subsidiaries, as applicable, shall
take all reasonable steps in order for Agent to obtain control in accordance
with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to
such newly transferred Securities Accounts in the case of clause (a) or such
existing Securities Accounts in the case of clause (b).


 


5.16                           Formation of Subsidiaries.  At the time that Borrower or any Guarantor
forms any direct or indirect Domestic Subsidiary, forms any direct Subsidiary,
acquires any direct or indirect Domestic Subsidiary or acquires any direct
Subsidiary after the Closing Date, Borrower or such Guarantor shall (a) if such
Subsidiary is a Domestic Subsidiary, cause such new Subsidiary to provide to
Agent a Guaranty or joinder to the Guaranty, the Intercompany Subordination
Agreement or a joinder thereto and a joinder to the Security Agreement, as well
as appropriate financing statements, all in form and substance 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 that satisfy the definition of Collateral in the Security Agreement),
(b) if such Subsidiary is not a joint venture, provide to Agent a pledge
agreement and appropriate certificates and powers or financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Agent; provided, however,
with respect to any such Subsidiary that is a CFC, such stock pledge shall be
limited to 65% of the voting Stock of such CFC, and (c) provide to Agent all
other documentation, including one or more opinions of counsel satisfactory to
Agent, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above (including policies
of title insurance or other documentation with respect to all property subject
to a Mortgage).  Any document, agreement,
or instrument executed or issued pursuant to this Section 5.16
shall be a Loan Document.


 


27





















 


5.17                           Performance
of Material Contracts. 
Perform and observe all the terms and provisions of each Material
Contract to be performed or observed by Borrower and its Domestic Subsidiaries,
maintain each such Material Contract in full force and effect, enforce each
such Material Contract in accordance with its terms, take all such action to
such end as may be from time to time requested by the Agent and, upon request
of the Agent, make to each other party to each such Material Contract such
demands and requests for information and reports or for action as Borrower or
any of its Domestic Subsidiaries is entitled to make under such Material
Contract.


 


6.                                       NEGATIVE COVENANTS.


 


Borrower
covenants and agrees that, until termination of all of the Revolver Commitments
and payment in full of the Obligations, Borrower will not and will not permit
any of its Domestic 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:


 


(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,


 


(c)                                  Permitted Purchase Money Indebtedness,


 


(d)                                 refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b), (c), (f), (g) and (h) of this Section 6.1
(and continuance or renewal of any Permitted Liens associated therewith) so
long as:  (i) the terms and conditions of
such refinancings, renewals, or extensions do not, in Agent’s reasonable
judgment, materially impair the prospects of repayment of the Obligations by
Borrower or materially impair Borrower’s creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) 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, (iv) if the Indebtedness that is refinanced, renewed,
or extended was subordinated in right of payment to the Obligations, then the
terms and conditions of the refinancing, renewal, or extension Indebtedness
must 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 (v) 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,


 


(e)                                  endorsement of instruments or other
payment items for deposit,


 


(f)                                    Indebtedness composing Permitted Investments
or other investments permitted under Section 6.12,


 


(g)                                 unsecured obligations owing under non-speculative
Hedge Agreements entered into in the ordinary course of the Borrower’s and the
applicable Domestic Subsidiary’s business not exceeding $30,000,000 in the
aggregate at any one time outstanding, and


 


28





















 


(h)                                 unsecured Indebtedness not exceeding
$5,000,000 in the aggregate at any one time outstanding.


 


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 (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 6.1(d) and so long as the
replacement Liens only encumber those assets that secured the refinanced,
renewed, or extended Indebtedness).


 


6.3                                 Restrictions
on Fundamental Changes.


 


(a)                                  Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock,


 


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


 


(c)                                  Except for Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
assets, or


 


(d)                                 Suspend or go out of a substantial
portion of its or their business.


 


6.4                                 Disposal of Assets.  Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of Borrower’s
or its Domestic Subsidiaries assets.


 


6.5                                 Change Name.  Change Borrower’s or any of its Domestic
Subsidiaries’ name, organizational identification number, state of organization
or organizational identity; provided, however,
that Borrower or any of its Domestic Subsidiaries may change their names upon
at least 30 days prior written notice to Agent of such change and so long as,
at the time of such written notification, Borrower or its Domestic Subsidiary
provides any financing statements necessary to perfect and continue perfected
the Agent’s Liens.


 


6.6                                 Nature of Business.  Make any change in the principal nature of
its or their business.


 


6.7                                 Prepayments and Amendments.  Except in connection with (a) a refinancing
permitted by Section 6.1(d), or (b) with respect to Indebtedness
permitted under Section 6.1(h) ((subject to limitations set forth
in Section 6.1(h)),


 


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


 


(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


 


(iii)                               directly or indirectly, amend, modify,
alter, increase, or change any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 6.1(b), or  6.1(c).


 


29





















 


The foregoing notwithstanding, Borrower and
its Domestic Subsidiaries may prepay or amend the terms or conditions of any
agreement concerning Indebtedness permitted under Sections 6.1(f) and (g),
so long as no Triggering Event shall have occurred before and after giving
effect to such prepayment or amendment.


 


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


 


6.9                                 Consignments.  Without prior notice to Agent and except with
respect to consigned Inventory which does not exceed $10,000,000 in the
aggregate or 10% of all finished goods Inventory of Borrower, consign any of
its or their Inventory or sell any of its or their Inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale.


 


6.10                           Distributions.  Except for Permitted 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.


 


6.11                           Accounting Methods.
 Modify or change its fiscal year or
its method of accounting (other than as may be required to conform to GAAP) or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower’s or its Domestic Subsidiaries’
accounting records without said accounting firm or service bureau agreeing to
provide Agent information regarding Borrower’s and its Domestic Subsidiaries’
financial condition.


 


6.12                           Investments.  Except for Permitted Investments and existing
Investments made with respect to existing Domestic Subsidiaries, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, except as otherwise set forth in Section 5.15, Borrower
and its Domestic Subsidiaries shall not have Permitted Investments (other than
in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in
an aggregate amount in excess of $100,000 at any one time unless Borrower or
its Domestic Subsidiary, as applicable, and the applicable securities
intermediary or bank have entered into Control Agreements governing such
Permitted Investments in order to perfect (and further establish) the Agent’s
Liens in such Permitted Investments. Subject to the foregoing proviso or exept
as otherwise set forth in Section 5.15, Borrower shall not and
shall not permit its Domestic Subsidiaries to establish or maintain any Deposit
Account or Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities Account.


 


6.13                           Transactions with
Affiliates.  Directly
or indirectly enter into or permit to exist any transaction with any Affiliate
of Borrower except for Permitted Distributions and transactions that (a) are in
the ordinary course of Borrower’s business, (b) are upon fair and reasonable
terms, and (c) are no less favorable to Borrower or its Subsidiaries, as applicable,
than would be obtained in an arm’s length transaction with a non-Affiliate.


 


6.14                           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.


 


6.15                           Inventory
and Equipment with Bailees. 
Store the Inventory or Equipment of Borrower or its Domestic Subsidiaries
at any time now or hereafter with a bailee, warehouseman, or similar party
other than as permitted under Section 5.9.


 


30





















 


6.16                           Financial Covenants.


 


(a)                                  Fail to maintain or achieve:


 


(i)                                     Minimum EBITDA. 
EBITDA, measured on a month-end basis, of at least the required amount
set forth in the following table for the applicable period set forth opposite
thereto:


 




	
  Applicable Amount

  	
   

  	
  Applicable Period

  	
   

  
	
  $

  	
  1,200,000

  	
   

  	
  For the 3
  month period

  ending December 31, 2004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  2,100,000

  	
   

  	
  For the 6
  month period

  ending March 31, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  5,500,000

  	
   

  	
  For the 9
  month period

  ending June 30, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  9,000,000

  	
   

  	
  For the 12
  month period

  ending September 30, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  11,700,000

  	
   

  	
  For the 12
  month period

  ending December 31, 2005 and each month thereafter

  	
   

  






 


(b)           Make:


 


(i)                                     Capital Expenditures. 
Capital Expenditures in any fiscal year in excess of 120% of the
projected amount of Capital Expenditures as set forth in the Projections delivered
by Borrower to Agent pursuant to Schedule 5.3, which amount shall
not exceed $12,000,000 in the aggregate as of any date of determination.


 


7.                                       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:


 


7.1                                 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;


 


7.2                                 If Borrower or any of its Domestic
Subsidiaries, as applicable:


 


(a)                                  fails to perform or observe any covenant
or other agreement contained in any of Sections
2.7, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.14, 5.16, and 6.1 through 6.16
of this Agreement;


 


31





















 


(b)                                 fails to perform or observe any covenant
or other agreement contained in any of Sections
5.6, 5.7, 5.9, 5.10, 5.11 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)
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 7 (in which event such
other provision of this Section 7 shall govern), and such failure
continues for a period of 20 days after the earlier of (i) the date on which
such failure shall first become known to any officer of Borrower or (ii)
written notice thereof is given to Borrower by Agent;


 


7.3                                 If any material portion of Borrower’s or
any of its Domestic Subsidiaries’ assets is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes into the possession of
any third Person and the same is not discharged before the earlier of 30 days
after the date it first arises or 5 days prior to the date on which such
property or asset is subject to forfeiture by Borrower or the applicable Domestic
Subsidiary;


 


7.4                                 If an Insolvency Proceeding is commenced
by Borrower or any of its Domestic Subsidiaries;


 


7.5                                 If an Insolvency Proceeding is commenced
against Borrower or any of its Domestic Subsidiaries and any of the following
events occur: (a) Borrower or such Domestic 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, Borrower or any of its Domestic Subsidiaries, or (e) an order for
relief shall have been issued or entered therein;


 


7.6                                 If Borrower or any of its Domestic
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;


 


7.7                                 If a judgment or other claim for the
payment of money (including pursuant to any notice of Lien, levy, assessment or
other asserted claim with respect to taxes or debts owing to the United States,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency) in excess of $3,000,000 (not including any
amount covered by insurance) becomes a Lien (other than a Permitted Lien),
distress, execution, attachment or sequestration upon or against any material
portion of Borrower’s or any of its Domestic Subsidiaries’ properties or assets
and the same is not dismissed, restrained, released, discharged, bonded
against, or stayed pending appeal before the earlier of 30 days after the date
it first arises or 5 days prior to the date on which such asset is subject to
being forfeited by such Person;


 


7.8                                 If there is a default in one or more
agreements to which Borrower or any of its Domestic Subsidiaries is a party
with one or more third Persons relative to Borrower’s or any of its Domestic
Subsidiaries’ Indebtedness involving an aggregate amount of $3,000,000 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(s), irrespective of
whether exercised, to accelerate the maturity of Borrower’s or the applicable Domestic
Subsidiary’s obligations thereunder;


 


7.9                                 If any warranty, representation,
statement, or Record made herein or in any other Loan Document or delivered to
Agent or any Lender in connection with this Agreement or any other Loan


 


32





















 


Document proves to be untrue in any material respect
as of the date of issuance or making or deemed making thereof;


 


7.10                           If the obligation of any Guarantor under
the Guaranty is limited or terminated by operation of law or by such Guarantor,
or any such Guarantor becomes the subject of an Insolvency Proceeding;


 


7.11                           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, except to the extent permitted by the terms hereof
or thereof, perfected and first priority Lien on or security interest in the
Collateral covered hereby or thereby, except as a result of a disposition of
the applicable Collateral in a transaction permitted under this Agreement; or


 


7.12                           Any provision of any Loan Document shall
at any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by Borrower or its Domestic Subsidiaries,
or a proceeding shall be commenced by Borrower or its Domestic Subsidiaries, or
by any Governmental Authority having jurisdiction over Borrower or its Domestic
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or Borrower or its Domestic Subsidiaries shall deny that Borrower or its Domestic
Subsidiaries has any liability or obligation purported to be created under any
Loan Document; or


 


7.13                           Any of the Material Contracts shall be
(i) materially amended in a manner that is adverse to the Borrower or its Domestic
Subsidiary, as applicable ; (ii) breached by any party to it and that breach
has or could reasonably be expected to have a Material Adverse Change on
Borrower; or (iii) revoked or terminated or ceases to be in full force and
effect without the prior consent of Agent, which consent shall not be
unreasonably withheld, or performance of any of the material obligations under
any such Material Contract becomes unlawful or any such Material Contract shall
be declared to be void or shall be repudiated or its validity or enforceability
at any time shall be challenged by any party to it.


 


8.                                       THE LENDER GROUP’S RIGHTS AND
REMEDIES.


 


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


 


(a)                                  Declare all or any portion of the
Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable;


 


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


 


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


 


(d)                                 The Lender Group shall have all other
rights and remedies available at law or in equity or pursuant to any other Loan
Document.


 


33





















 


The foregoing to
the contrary notwithstanding, upon the occurrence of any Event of Default
described in Section 7.4 or Section 7.5, 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 Revolver 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.


 


8.2                                 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.


 


9.                                       TAXES AND EXPENSES.


 


If Borrower fails to pay
any monies (whether taxes, assessments, insurance premiums, or, in the case of
leased properties or assets, rents or other amounts payable under such leases)
due to third Persons, or fails to make any deposits or furnish any required
proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to Borrower, may
do any or all of the following:  (a) make
payment of the same or any part thereof, (b) set up such reserves against the
Borrowing Base or the Maximum Revolver Amount as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 5.8 hereof, obtain
and maintain insurance policies of the type described in Section 5.8
and take any action with respect to such policies as Agent deems prudent.  Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a
waiver by the Lender Group of any Event of Default under this Agreement.  Agent need not inquire as to, or contest the validity
of, any such expense, tax, or Lien and the receipt of the usual official notice
for the payment thereof shall be conclusive evidence that the same was validly
due and owing.


 


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 Borrower Collateral.  Borrower
hereby agrees that:  (a) so long as Agent
complies with its obligations, if any, under the Code and Section 12 of
the Security Agreement, the Lender Group shall not in any way or manner be
liable or responsible for:  (i) the
safekeeping of the Borrower 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 Borrower 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, and damages, and all
reasonable attorneys fees and disbursements and other


 


34





















 


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, delivery, 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 Domestic Subsidiaries’
compliance with the terms of the Loan Documents, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any
act, omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the “Indemnified Liabilities”).  The foregoing to the contrary
notwithstanding, 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 or illegal misconduct of such Indemnified
Person.  This provision shall survive the
termination of this Agreement and the repayment of the Obligations.  If any Indemnified Person makes any payment
to any other Indemnified Person with respect to an Indemnified Liability as to
which 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 by Borrower or Agent to the other
relating to this Agreement or any other Loan Document shall be in writing and
(except for financial statements and other informational documents which may be
sent by first-class mail, postage prepaid) shall be personally delivered or
sent by registered or certified mail (postage prepaid, return receipt
requested), overnight courier, electronic mail (at such email addresses as
Borrower or Agent, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Borrower or Agent, as the case may be, at its
address set forth below:


 


	
   

  	
  If to Borrower:

  	
  INFOCUS CORPORATION

  
	
   

  	
  27700 SW Parkway

  
	
   

  	
  Wilsonville, OR 97070

  
	
   

  	
  Attn:

  	
  Michael D. Yonker,

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
  Jennifer E. Yruegas, Esq.,

  
	
   

  	
   

  	
  Director Worldwide Legal Affairs

  
	
   

  	
  Fax No. (503) 685-8838

  



 


	
   

  	
  If to Agent:

  	
  WELLS FARGO FOOTHILL, INC.

  
	
   

  	
  2450 Colorado Avenue

  
	
   

  	
  Suite 3000 West

  
	
   

  	
  Santa Monica, CA 90404

  
	
   

  	
  Attn: Business Finance Division Manager

  
	
   

  	
  Fax No.: (310) 453-7413

  



 


	
   

  	
  with copies to:

  	
  MORRISON & FOERSTER LLP

  
	
   

  	
  555 West Fifth Street

  



 


 


35





















 


	
   

  	
  Los Angeles, California 90013

  
	
   

  	
  Attn: Sandra Lee Montgomery, Esq.

  
	
   

  	
  Fax No.: (213) 892-5454

  



 


Agent and Borrower 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 11, other than notices by Agent in connection
with enforcement rights against the Borrower Collateral under the provisions of
the Code, shall be deemed received on the earlier of the date of actual receipt
or 3 Business Days after the deposit thereof in the mail.  Borrower acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.


 


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 NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.


 


(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 BOROUGH OF MANHATTAN
IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; 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.


 


36





















 


13.                                 ASSIGNMENTS AND PARTICIPATIONS;
SUCCESSORS.


 


13.1                           Assignments and
Participations.


 


(a)                                  Any Lender may assign and delegate to one
or more assignees (each an “Assignee”) that are Eligible Transferees
all, or any ratable part of all, of the Obligations, the Revolver Commitments
and the other rights and obligations of such Lender hereunder and under the
other Loan Documents, in a minimum amount of $5,000,000; provided, however, that 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 (iii) the assigning Lender or Assignee
has paid to Agent for Agent’s separate account a processing fee in the amount
of $3,500.  Anything contained herein to
the contrary notwithstanding, the payment of any fees shall not be required and
the Assignee need not be an Eligible Transferee if such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition
of all or any substantial portion of the business or loan portfolio of the
assigning Lender.


 


(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 payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the 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 between Borrower 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 Article 16
and Section 16.7 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:  (1) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document furnished pursuant hereto,
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms
hereof, together with such powers as are reasonably incidental thereto, and (6)
such Assignee agrees that it will perform all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.


 


37





















 


(d)                                 Immediately upon Agent’s receipt of the
required processing fee payment and the fully executed Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Revolver Commitments arising therefrom.  The Revolver Commitment allocated to each
Assignee shall reduce such Revolver 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 its Obligations, the Revolver 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 Revolver
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 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, and (v) 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 Domestic 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 16.7, disclose all documents and
information which it now or hereafter may have relating to Borrower and its Domestic
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.


 


38





















 


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.  No amendment
or waiver of any provision of this Agreement or any other Loan Document (other
than Bank Product Agreements and Letters of Credit), 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
affected thereby and Borrower, do any of the following:


 


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


 


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


 


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


 


(d)                                 change the Pro Rata Share that is
required to take any action hereunder,


 


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


 


(f)                                    other than as permitted by Section 15.12,
release Agent’s Lien in and to any of the Collateral,


 


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


 


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


 


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


 


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


 


(k)                                  amend any of the provisions of Section 15.


 


39





















 


and, provided
further,  however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document.  The foregoing notwithstanding, any amendment,
modification, waiver, consent, termination, or release of, or with respect to,
any provision of this Agreement or any other Loan Document that relates only to
the relationship of the Lender Group among themselves, and that does not affect
the rights or obligations of 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 a Lender (“Holdout Lender”) fails to give
its consent, authorization, or agreement, then Agent, upon at least 5 Business
Days prior irrevocable notice to the Holdout Lender, may permanently replace
the Holdout Lender with one or more substitute Lenders (each, a “Replacement
Lender”), and the Holdout Lender shall have no right to refuse to be
replaced hereunder.  Such notice to
replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.


 


(b)                                 Prior to the effective date of such
replacement, the Holdout Lender and each Replacement Lender shall execute and
deliver an Assignment and Acceptance, 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 Revolver 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
(other than the proviso to Section 15.11(a))are solely for the
benefit of


 


40





















 


Agent,
and the Lenders, and Borrower and its Domestic 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, 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 Domestic
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 Domestic 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 Domestic Subsidiaries, (f) perform,
exercise, and enforce any and all other rights and remedies of the Lender Group
with respect to Borrower, the Obligations, the Collateral, the Collections of
Borrower and its Domestic 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 Domestic Subsidiary or Affiliate of Borrower, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of Borrower or any other party to any Loan Document to perform
its obligations hereunder or thereunder. 
No Agent-Related Person shall be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Borrower or the
books or records or properties of any of Borrower’s Domestic Subsidiaries or
Affiliates.


 


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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 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 Domestic 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 and 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 and 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 and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.


 


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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 Domestic 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 from
the Collections of Borrower and its Domestic Subsidiaries received by Agent,
each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender’s Pro Rata Share thereof.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation 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 Domestic 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 and 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 45 days notice to the Lenders.  If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders.  If no successor Agent is appointed prior to
the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders, a successor Agent. 
If Agent has materially breached or failed to perform any material
provision of this Agreement or of applicable law, the Required Lenders may
agree in writing to remove and replace Agent with a successor Agent from among
the Lenders.  In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent
and the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be


 


43





















 


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 45 days
following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.


 


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 Domestic 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 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 and 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.  With
respect to the Swing Loans and Protective Advances, Swing Lender shall have the
same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the sub-agent of Agent.


 


15.11                     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
penultimate sentence of this Section 15.11(a).  “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 (but excluding any
tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein measured by or based on the net income or net
profits of any Lender) and all interest, penalties or similar liabilities with
respect thereto.  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 15.11(a) after 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)                                 If a Lender claims an exemption from
United States withholding tax, Lender agrees with and in favor of Agent and
Borrower, to deliver to Agent:


 


(i)                                     if such Lender claims an exemption from
United States withholding tax pursuant to its portfolio interest exception, (A)
a statement of the Lender, signed under penalty of perjury, that it is not a
(I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the
IRC), or (III) a controlled foreign corporation related to Borrower within the
meaning of Section 864(d)(4) of the IRC, and (B) a properly


 


44





















 


completed
and executed IRS Form W-8BEN, before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or Borrower;


 


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


 


(iii)                               if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender,
two properly completed and executed copies of IRS Form W-8ECI before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Borrower; or;


 


(iv)                              such 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 before receiving its first payment under this Agreement
and at any other time reasonably requested by Agent or Borrower.


 


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


 


(c)                                  If a Lender claims an exemption from
withholding tax in a jurisdiction other than the United States, Lender agrees
with and in favor of Agent and Borrower, to deliver to Agent 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 and at any other time
reasonably requested by Agent or Borrower.


 


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


 


(d)                                 If any Lender claims exemption from, or
reduction of, withholding tax and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender, such Lender agrees to notify Agent and Borrower of the
percentage amount in which it is no longer the beneficial owner of Obligations
of Borrower to such Lender.  To the
extent of such percentage amount, Agent and Borrower will treat such Lender’s
documentation provided pursuant to Sections 15.11(b) or 15.11(c)
as no longer valid.  With respect to such
percentage amount, Lender may provide new documentation, pursuant to Sections
15.11(b) or 15.11(c), if applicable.


 


(e)                                  If any Lender is entitled to a reduction
in the applicable withholding tax, Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction.  If
the forms or other documentation required by Sections 15.11(b) or 15.11(c)
are not delivered to Agent, then Agent may withhold from any interest payment
to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.


 


(f)                                    If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender due to a failure on the part of the Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any


 


45





















 


other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent, as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Agent under this Section 15.11, together
with all costs and expenses (including attorneys fees and expenses).  The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.


 


15.12                     Collateral Matters.


 


(a)                                  The Lenders hereby irrevocably authorize
Agent, at its option and in its sole discretion, to release any Lien on any
Collateral (i) upon the termination of the Revolver 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 Domestic
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 Domestic
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 15.12; provided, however, that (1) Agent shall not be required to execute
any document necessary to evidence such release on terms that, in Agent’s
opinion, would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of 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 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.


 


15.13                     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
any deposit accounts of Borrower 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 foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.


 


46





















 


(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
ratable portion of all such distributions by Agent, such Lender promptly shall
(1) turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however,
that 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.


 


15.14                     Agency for Perfection.  Agent hereby
appoints each other Lender as its agent (and each Lender hereby accepts such
appointment) for the purpose of perfecting the Agent’s Liens in assets which,
in accordance with Article 8 or Article 9, as applicable, of the Code
can be perfected only 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.


 


15.15                     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.


 


15.16                     Concerning the Collateral and Related Loan Documents. 
Each member of the Lender Group authorizes and directs Agent to enter
into this Agreement and the other Loan Documents.  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.


 


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


 


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


 


47





















 


information regarding Borrower and will rely
significantly upon Borrower’s and its Domestic Subsidiaries’ books and records,
as well as on representations of Borrower’s personnel,


 


(d)                                 agrees to keep all Reports and other
material, non-public information regarding Borrower and its Domestic Subsidiaries
and their operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 16.7, 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 to Agent that has not been
contemporaneously provided by Borrower 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, 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, 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.


 


15.18                     Several Obligations; No Liability. 
Notwithstanding that certain of the Loan Documents now or hereafter may
have been or will be executed only by or in favor of Agent in its capacity as
such, and not by or in favor of the Lenders, any and all obligations on the
part of Agent (if any) to make any credit available hereunder shall constitute
the several (and not joint) obligations of the respective Lenders on a ratable
basis, according to their respective Revolver Commitments, to make an amount of
such credit not to exceed, in principal amount, at any one time outstanding,
the amount of their respective Revolver 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 Revolver
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.


 


15.19                     Bank Product Providers. 
Each Bank Product Provider shall be deemed a party hereto 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


 


48





















 


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.


 


16.                                 GENERAL PROVISIONS.


 


16.1                           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.


 


16.2                           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.


 


16.3                           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.


 


16.4                           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.


 


16.5                           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.


 


16.6                           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 declared to be void or voidable under any state or federal law relating to
creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a “Voidable Transfer”),
and if the Lender Group is required to repay or restore, in whole or in part,
any such Voidable Transfer, or elects to do so upon the reasonable advice of
its counsel, then, as to any such Voidable Transfer, or the amount thereof that
the Lender Group is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender Group related
thereto, the liability of Borrower or Guarantor automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.


 


16.7                           Confidentiality.  Agent and
Lenders each individually (and not jointly or jointly and severally) agree that
material, non-public information regarding Borrower and its Domestic Subsidiaries,
their operations, assets, and existing and contemplated business plans 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


 


49





















 


not
parties to this Agreement, except:  (a)
to attorneys for and other advisors, accountants, auditors, and consultants to
any member of the Lender Group, (b) to Domestic Subsidiaries and Affiliates of
any member of the Lender Group (including the Bank Product Providers), provided
that any such Domestic Subsidiary or Affiliate shall have agreed to receive
such information hereunder subject to the terms of this Section 16.7,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by Borrower or
its Domestic Subsidiaries or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (e) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders), (f) in connection
with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
any Lender’s interest under this Agreement, provided that any such assignee,
prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any 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.  The provisions of this Section 16.7
shall survive for 2 years after the payment in full of the Obligations.


 


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


 


[Signature
pages to follow.]


 


50





















 


NOTICE:  UNDER OREGON LAW,
WITHOUT LIMITATION OF THE TERMS SET FORTH IN SECTION 12, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY LENDER AFTER OCTOBER 3, 1989, CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.


 


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


 


	
   

  	
  INFOCUS CORPORATION,

  
	
   

  	
  an Oregon corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Yonker

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  
	
   

  	
  a California corporation, as Agent and as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  



 


51





















 


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.


 


“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 its Domestic Subsidiaries.


 


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


 


“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
the definition of Eligible Accounts and Section 6.13 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 or joint venture in which a Person is a
partner or joint venturer shall be deemed an Affiliate of such Person.


 


“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 its Domestic Subsidiaries to Agent under
the Loan Documents.


 


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


 


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


 


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


 


“Authorized Person”
means any officer or employee of Borrower.


 


1





















 


“Availability”
means, as of any date of determination, the amount that Borrower is entitled to
borrow as Advances hereunder (after giving effect to all then outstanding
Obligations (other than Bank Product Obligations) and all sublimits and
reserves then applicable hereunder).


 


“Bank Product”
means any financial accommodation extended to Borrower or its Domestic 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 its Domestic Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.


 


“Bank Product
Obligations” means all obligations, liabilities, contingent reimbursement
obligations, fees, and expenses owing by Borrower or its Domestic Subsidiaries
to any Bank Product Provider pursuant to or evidenced by the Bank Product
Agreements 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 such amounts that Borrower or its Domestic
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 indemnities or reimbursement obligations to, a Bank Product
Provider with respect to the Bank Products provided by such Bank Product
Provider to Borrower or its Domestic 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 Domestic 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, determined by Agent in accordance with its customary
procedures, and utilizing such electronic or other quotation sources as it
considers appropriate (rounded upwards, if necessary, to the next 1/100%), to
be the rate at which Dollar deposits (for delivery on the first day of the
requested Interest Period) are offered to major banks in the London interbank
market 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 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 


 


2





















 


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.


 


“Base Rate Margin”
means 0.25 percentage points.


 


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


 


“Board of Directors”
means the board of directors (or comparable managers) of 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.


 


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


 


“Borrowing Base”
means, as of any date of determination, the result of:


 


(a)                                  the lesser of:


 


(i)                                     the sum of:


 


(A)                              80% of the amount of Eligible Accounts,
less the amount, if any, of the Dilution Reserve with respect to Eligible
Accounts, and


 


(B)                                the lesser of (1) 70% of the amount of
Eligible Thomson RCA France Accounts, less the amount, if any of the Dilution
Reserve with respect to Eligible Thomson RCA France Accounts, and (2) $5,000,000,
and


 


(ii)                                  an amount equal to Borrower’s Collections
with respect to Accounts for the immediately preceding 55 day period, minus


 


(b)                                 the sum of (1) the Bank Product Reserve,
and (2) the aggregate amount of reserves, if any, established by Agent under Section 2.1(b).


 


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


 


“Business Day”
means any day that is not a Saturday, Sunday, or other day on which 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 Domestic Subsidiaries during such period
that are 


 


3





















 


capital
expenditures as determined in accordance with GAAP, whether such expenditures
are paid in cash or financed.


 


“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 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 creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
S&P or at least P-1 from Moody’s, (d) certificates of deposit 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
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
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (e) above.


 


“Cash Management
Account” has the meaning specified therefor in Section 2.7(a).


 


“Cash Management Agreements”
means those certain cash management agreements, in form and substance
satisfactory to Agent, each of which is among Borrower or one of its Domestic
Subsidiaries, Agent, and one of the Cash Management Banks.


 


“Cash Management Bank”
has the meaning specified therefor in Section 2.7(a).


 


“CFC” means, with
respect to any Person, any Person that is (i) a direct subsidiary of such
Person, (ii) organized under the laws of a jurisdiction outside of the United
States and (iii) a “controlled foreign corporation” as that term is defined in Section 957(a)
of 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) becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 45%, or more, of the
Stock of Borrower having the right to vote for the election of members of the
Board of Directors, or (b) a majority of the members of the Board of Directors
do not constitute Continuing Directors.


 


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


 


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


 


4





















 


“Collateral” means
all assets and interests in assets and proceeds thereof now owned or hereafter
acquired by Borrower or any Guarantor in or upon which a Lien is granted 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 Domestic Subsidiaries’ premises, books and records, Equipment, or
Inventory, in each case, in form and substance satisfactory to Agent.


 


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


 


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


 


“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 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 satisfactory to Agent,
executed and delivered by Borrower or one of its Domestic Subsidiaries, Agent,
and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account).


 


“Credit Card
Acknowledgements” means agreements, in form and substance satisfactory to
Agent, from each Credit Card Processor of Borrower in favor of Agent pursuant
to which, among other things, such Credit Card Processor agrees to remit all
amounts due to Borrower from time to time to the Cash Management Account or to
such other account as Agent may direct.


 


“Credit Card Processor”
means any servicing or processing agent or any other Person who facilitates,
services, processes or manages the authorization, billing, transfer, payment
and/or other procedure from any issuer of a credit card, charge card or bank
card, consumer payment facilitator, bank or other such Person with respect to
any sales transactions of Borrower involving credit, charge or debit card
purchases, check purchases or other method of consumer payment.


 


“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.


 


5





















 


“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 Base Rate
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.


 


“Dilution” means:
(a) with respect to Accounts other than Thomson RCA France Accounts, as of any
date of determination, a percentage, based upon the experience of the
immediately prior 180 consecutive days, that is the result of dividing the
Dollar amount of (i) bad debt write-downs, discounts, advertising allowances,
credits, or other dilutive items with respect to Borrower’s Accounts other than
Thomson RCA France Accounts during such period, by (i) Borrower’s billings with
respect to such Accounts during such period; or (b) with respect to Thomson RCA
France Accounts, as of any date of determination, a percentage, based upon the
experience of the immediately prior 180 consecutive days, that is the result of
dividing the Dollar amount of (i) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Thomson RCA France
Accounts during such period, by (i) Borrower’s billings with respect to such
Accounts during such period.


 


“Dilution Reserve”
means: (a) with respect to Eligible Accounts, an amount sufficient to reduce
the advance rate against Eligible Accounts by 1 percentage point for each
percentage point by which Dilution with respect to Accounts other than Thomson
RCA France Accounts is in excess of 10% or (b) with respect to Eligible Thomson
RCA France Accounts, an amount sufficient to reduce the advance rate against
Eligible Thomson RCA France Accounts by 1 percentage point for each percentage
point by which Dilution with respect to Thomson RCA France Accounts is in
excess of 10%.


 


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


 


“Domestic Subsidiary”
means any Subsidiary which is not a Foreign Subsidiary.


 


“EBITDA” means,
with respect to any fiscal period, Borrower’s and its Subsidiaries’
consolidated net earnings (or loss), minus extraordinary gains, other
income, interest income, and non recurring charges of the Borrower and its
Subsidiaries to the extent the amount accrued in a prior period was actually
paid in cash as of such period (other than charges of the Borrower and its
Subsidiaries relating to or arising from the InFocus Shanghai Matter in an
amount up to $15,000,000 in the aggregate), plus interest expense,
income taxes, non recurring
charges of the Borrower and its Subsidiaries to the extent accrued but not yet
paid in cash as of such period (provided, however, that, any non
recurring charges of the Borrower and its Subsidiaries relating to or arising
from the InFocus Shanghai Matter shall not exceed $15,000,000 in the aggregate
at any time), and depreciation and amortization for such period, in each
case, as determined in accordance with GAAP.


 


“Eligible Accounts”
means those Accounts created by Borrower in the ordinary course of its
business, that arise out of Borrower’s sale of goods or rendition of services,
that comply with each of the representations and warranties respecting Eligible
Accounts made in the Loan Documents, and that are not excluded as ineligible by
virtue of one or more of the excluding 


 


6





















 


criteria set forth
below; provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date.  In
determining the amount to be included, Eligible Accounts shall be calculated
net of customer deposits and unapplied cash. 
Eligible Accounts shall not include the following:


 


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


 


(b)                                 Accounts owed by an Account Debtor (or
its Affiliates) where 50% or more of all Accounts owed by that Account Debtor
(or its Affiliates) are deemed ineligible under clause (a) above,


 


(c)                                  Accounts with respect to which the
Account Debtor is an Affiliate of Borrower or an employee or agent of Borrower
or any Affiliate of Borrower,


 


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


 


(e)                                  Accounts that are not payable in Dollars,


 


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


 


(g)                                 Accounts with respect to which the
Account Debtor is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Accounts with
respect to which Borrower has complied, to the reasonable satisfaction of
Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of
the United States,


 


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


 


(i)                                     Accounts with respect to (1) an Account
Debtor (other than Account Debtors that are Ingram Micro, Thomson RCA U.S.,
Thomson RCA France or Tech Data) whose total obligations owing to Borrower
exceed 10% (such percentage, as applied to a particular Account Debtor, being
subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage, (2) an Account Debtor that is Ingram Micro whose total obligations
owing to Borrower exceed 25% (such percentage being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such Account
Debtor deteriorates) of all Eligible Accounts, to the extent of the obligations
owing by such Account Debtor in excess of such percentage, (3) an Account
Debtor that is Tech Data whose total 


 


7





















 


obligations owing to
Borrower exceed 20% (such percentage, as applied to a particular Account
Debtor, being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage, or (4) Account Debtors that are Thomson RCA U.S. and Thomson RCA
France to the extent that their combined total obligations owing to Borrower
exceed 25% (such percentage, as applied to a particular Account Debtor, being
subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts
and Eligible Thomson RCA France Accounts, in the aggregate and without
duplication of the amounts deemed ineligble pursuant to the definition of “Eligible
Thomson RCA France Accounts”, to the extent of the obligations owing by such
Account Debtors in excess of the percentage attributed to them; provided,
however, that, in each case, the amount of Eligible Accounts that are
excluded because they exceed the foregoing percentages shall be determined by
Agent based on all of the otherwise Eligible Accounts prior to giving effect to
any eliminations based upon the foregoing concentration limit,


 


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


 


(k)                                  Accounts with respect to which the
Account Debtor is located in a state or jurisdiction (e.g., New Jersey,
Minnesota, and West Virginia) that requires, as a condition to access to the
courts of such jurisdiction, that a creditor qualify to transact business, file
a business activities report or other report or form, or take one or more other
actions, unless Borrower has so qualified, filed such reports or forms, or
taken such actions (and, in each case, paid any required fees or other
charges), except to the extent that Borrower may qualify subsequently as a
foreign entity authorized to transact business in such state or jurisdiction
and gain access to such courts, without incurring any cost or penalty viewed by
Agent to be significant in amount, and such later qualification cures any
access to such courts to enforce payment of such Account,


 


(l)                                     Accounts, the collection of which, Agent,
in its Permitted Discretion, believes to be doubtful by reason of the Account
Debtor’s financial condition,


 


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


 


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


 


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


 


(p)                                 Accounts that arise out of the use of a
credit or charge card, or


 


(q)                                 Accounts that arise from the Intellectual
Property Licenses (as defined in the Security Agreement) of the Borrower,
including all income, royalties, damages and payments now and hereafter due
and/or payable under and with respect thereto.


 


“Eligible Thomson RCA
France Accounts” means Thomson RCA France Accounts which would constitute
Eligible Accounts but for the provisions of clause (f) of the definition of 


 


8





















 


“Eligible
Accounts.”  Eligible Thomson RCA France
Accounts shall not include Thomson RCA France Accounts to the extent that the
total obligations owing by Thomson RCA France and Thomson RCA U.S. to Borrower
exceed 25% (such percentage, as applied herein, being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of Thomson RCA France
or Thomson RCA U.S. deteriorates) of all Eligible Accounts and Eligible Thomson
RCA France Accounts, in the aggregate and without duplication of the amounts
deemed ineligble pursuant to the definition of “Eligible Accounts”, to the
extent of the obligations owing by Thomson RCA U.S. and Thomson RCA France in
excess of the percentage attributed to them; provided, however,
that, in each case, the amount of Eligible Thomson RCA France Accounts that are
excluded because they exceed the foregoing percentage shall be determined by
Agent based on all of the otherwise Eligible Thomson RCA France Accounts prior
to giving effect to any eliminations based upon the foregoing concentration
limit.


 


“Eligible Transferee”
means (a) a commercial bank organized under the laws of the United States, or
any state thereof, and having total assets in excess of $250,000,000, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country and which has total assets in excess of
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States, (c) a finance company, insurance company, or
other financial institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Borrower (which approval of Borrower shall not be
unreasonably withheld, delayed, or conditioned), and (f) during the
continuation of an Event of Default, any other Person approved by Agent.


 


“Environmental Actions”
means any complaint, summons, citation, notice of violation, directive, order,
claim, litigation, investigation, judicial or administrative proceeding or
judgment 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 Borrower, its Domestic Subsidiaries,
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 Borrower, its Domestic Subsidiaries, 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 Domestic
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.


 


9





















“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.


 


“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 Domestic 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 Domestic
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 Domestic
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 Domestic Subsidiaries
and whose employees are aggregated with the employees of Borrower or its Domestic
Subsidiaries under IRC Section 414(o).


 


“Event of Default” has the meaning specified
therefor in Section 7.


 


“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 Domestic
Subsidiaries aged in excess of historical levels with respect thereto and all
book overdrafts of Borrower and its Domestic 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
satisfactory to Agent.


 


“Foreign Subsidiary”
means any Subsidiary of Borrower which (a) is not organized under the laws of
the United States, any state thereof or the District of Columbia and (b)
conducts substantially all of its business operations outside the United
States.


 


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


 


“Funding Losses” has
the meaning specified therefor in Section 2.13(b)(ii).


 


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


 


“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, 


 


10





















 


administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or
body.


 


“Guarantor” means any
Person at any time providing a guaranty in favor of Agent, for the benefit of
the Lender Group and the Bank Product Providers, with respect to the
Obligations or whose assets are otherwise pledged as security for the repayment
of the Obligations.


 


“Guaranty” means any
guaranty executed and delivered by any Guarantor in favor of Agent, for the
benefit of the Lender Group and the Bank Product Providers, in form and
substance satisfactory to the 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 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 Domestic 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 Domestic
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).


 


“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, interest rate
swaps, 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 Domestic 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, 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.


 


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


 


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


 


“InFocus Shanghai”
means InFocus Systems Shanghai Co., Ltd., a company organized under the laws of
the Republic of China, and a wholly-owned Subsidiary of the Borrower.


 


11





















 


“InFocus Shanghai Matter”
means the investigation described in Schedule 4.10.


 


“Ingram Micro” means Ingram
Micro, Inc. and its Affiliates.


 


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


 


“Intercompany
Subordination Agreement” means a subordination agreement to be executed and
delivered by Borrower, each of its Domestic Subsidiaries, and Agent, in the form
attached hereto as Exhibit I.


 


“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, 3 or
6 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, 3 or 6 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, or 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), purchases or other 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
2.12.


 


“L/C” has the meaning
specified therefor in Section 2.12(a).


 


12





















 


“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 2.12(a).


 


“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.


 


“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 Domestic Subsidiaries under any of the
Loan Documents that are paid, advanced, or incurred by the Lender Group, (b)
fees or charges paid or incurred by Agent in connection with the Lender Group’s
transactions with Borrower or its Domestic Subsidiaries, 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 (not exceeding the amount of
any limitation) contained in the Agreement), real estate surveys, real estate
title policies and endorsements, and environmental audits, (c) costs and
expenses incurred by Agent in the disbursement of funds to Borrower or other
members of the Lender Group (by wire transfer or otherwise), (d) charges paid
or incurred by Agent resulting from the dishonor of checks, (e) reasonable
costs and expenses paid or incurred by the Lender Group to correct any default
or enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to any inspections or audits to the extent of the fees and
charges (not exceeding the amount of any limitation) contained in the
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with Borrower or any its Domestic
Subsidiaries, (h) Agent’s and each Lender’s reasonable costs and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent’s and each Lender’s reasonable costs and expenses (including 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 its Domestic 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 Usage”
means, as of any date of determination, the aggregate undrawn amount of all
outstanding Letters of Credit.


 


13





















 


“LIBOR Deadline” has
the meaning specified therefor in Section 2.13(b)(i).


 


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


 


“LIBOR Option” has
the meaning specified therefor in Section 2.13(a).


 


“LIBOR Rate” means,
for each Interest Period for each LIBOR Rate Loan, the rate per annum
determined by Agent (rounded upwards, if necessary, to the next 1/100%) 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.


 


“LIBOR Rate Margin”
means 2.25 percentage points.


 


“Lien” means any
interest in an asset securing an obligation owed to, or a claim by, any Person
other than the owner of the asset, irrespective of whether (a) such interest is
based on the common law, statute, or contract, (b) such interest is recorded or
perfected, and (c) such interest is contingent upon the occurrence of some
future event or events or the existence of some future circumstance or
circumstances.  Without limiting the
generality of the foregoing, the term “Lien” includes the lien or security
interest arising from a mortgage, deed of trust, encumbrance, notice of Lien,
levy or assessment, pledge, hypothecation, assignment, deposit arrangement,
security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also includes reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Real Property.


 


“Loan Account” has
the meaning specified therefor in Section 2.10.


 


“Loan Documents”
means the Agreement, the Bank Product Agreements, the Cash Management
Agreements, the Control Agreements, the Credit Card Acknowledgments, the Fee
Letter, any Guaranties, the Intercompany Subordination Agreement, the Letters
of Credit, any Mortgage, the 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 Guarantor and Agent or any member of the Lender Group in connection with
the Agreement.


 


“Material Adverse Change”
means (a) a material adverse change in the business, prospects, operations,
results of operations, assets, liabilities or condition (financial or
otherwise) of Borrower and its Domestic Subsidiaries, taken as a whole, (b) a
material impairment of Borrower’s and its Domestic 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 Domestic Subsidiaries.


 


“Material Contract”
means any of (a) those agreements listed at Schedule 4.20 hereto, and (b)
all other contracts or agreements material to the business prospects,
operations, results of operations, assets, liabilities or financial condition
of Borrower.


 


14





















 


“Maturity Date” has
the meaning specified therefor in Section 3.4.


 


“Maximum Revolver Amount”
means $40,000,000.


 


“Mortgages” means,
individually and collectively, one or more mortgages, deeds of trust, or deeds
to secure debt, executed and delivered by Borrower, any Guarantor or any of
their Domestic Subsidiaries in favor of Agent, in form and substance
satisfactory to Agent, with respect to any Real Property owned by Borrower or
any Guarantor.


 


“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 Borrower’s Loan Account pursuant hereto), obligations (including
indemnification obligations), fees (including the fees provided for in the Fee
Letter), charges, costs, 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), lease payments, 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, by law, or otherwise, and (b) all Bank
Product Obligations.  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.


 


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


 


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


 


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


 


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


 


“Permitted Dispositions”
means (a) sales or other dispositions of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of business, (b) sales of Inventory
to buyers in the ordinary course of business, (c) 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, (d) the licensing of patents,
trademarks, copyrights, and other intellectual property rights in the ordinary
course of business, (e) sales or other dispositions of Stock owned by Borrower
in Phoenix Electric Company, Ltd, a company organized under the laws of Japan,
so long as (i) no Triggering Event shall have occurred before and after giving
effect to such sale or disposition and (ii) the proceeds of such sale or
disposition are immediately transferred to an account set forth in Schedule 4.17
or such other account of the Borrower in a bank or securities intermediary
located in the United States subject to a Control Agreement.


 


“Permitted Distributions”
means distributions of cash made by the Borrower to or for the account of InFocus
Shanghai for the sole purpose of allowing InFocus Shanghai to pay or secure


 


15





















 


the final judgment or
payment under a settlement agreement owed by it with respect to the InFocus
Shanghai Matter, or to procure the release of seized property in connection therewith,
so long as (a) no Triggering Event shall have occurred before and after giving
effect to such distribution, (b) the amount of such distributions do not exceed
$9,000,000 in the aggregate, and (c) Borrower provides evidence to Agent, in
form and substance satisfactory to Agent, that the proceeds of such
distribution have been applied by InFocus Shanghai to pay the final judgment, the
settlement payment owed by it under the InFocus Shanghai Matter, or to procure
the release of seized property in connection therewith.


 


“Permitted Investments”
means (a) Investments in cash and Cash Equivalents, (b) Investments in
negotiable instruments for collection, (c) advances made in connection with
purchases of goods or services in the ordinary course of business, (d)
Investments received in settlement of amounts due to Borrower or any of its Domestic
Subsidiaries effected in the ordinary course of business or owing to Borrower
or any of its Domestic Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of Borrower or its Domestic Subsidiaries, (e) Permitted Distributions,
(f) the existing Investment made into InFocus Shanghai for the sole purpose of
allowing InFocus Shanghai to make a deposit with the applicable governmental
agency in respect to the InFocus Shanghai Matter in the aggregate amount of
$6,000,000, and (g) Investments in an amount not to exceed $15,000,000 in the
aggregate at any one time outstanding (not including Investments made by
Borrower prior to the Closing Date and Permitted Investments set forth in
clauses (a) through (f)) so long as (i) no Default or Event of Default exists
at the time such Investment is made or would occur after giving effect to such
Investment, (ii) Excess Availability plus Qualified Cash is $25,000,000 or more
(y) for the 30 consecutive day period immediately prior to giving effect to
such Investment and (z) immediately after giving effect to such Investment,
(iii) prior to making such Investment Borrower has provided to Agent updated
Projections, in form and substance reasonably satisfactory to Agent giving
effect to such Investment and (iv) prior to making such Investment Borrower has
provided to Agent all documentation and information regarding such Investment
as Agent may reasonably request.


 


“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 the Agent’s Liens and the
underlying taxes, assessments, or charges or levies are the subject of
Permitted Protests, (c) judgment Liens that do not constitute an Event of
Default under Section 7.7 of the Agreement, (d) Liens set forth on Schedule
P-2, (e) the interests of lessors under operating leases, (f) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so
long as such Lien attaches only to the asset purchased or acquired and the
proceeds thereof, (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) liens on goods as
cargo that (i) arise as a matter of law, or arise as a matter of law and are
continued by agreement until the underlying obligation is paid, and (ii) are
for sums not yet delinquent, that are the subject of Permitted Protests, or
that are the subject of 


 


16





















 


insurance maintained by or
for Borrower (but for the application of an insurance deductible or franchise
clause that is customary to Borrower).


 


“Permitted Protest”
means the right of Borrower or any of its Domestic 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 Domestic 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 Domestic
Subsidiary, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent’s Liens.


 


“Permitted Purchase Money
Indebtedness” means, as of any date of determination, Purchase Money
Indebtedness incurred after the Closing Date in an aggregate principal amount
outstanding at any one time not in excess of $10,000,000.


 


“Person” means
natural persons, corporations, limited liability companies, limited
partnerships, general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and Governmental Authorities.


 


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


 


(c)           with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section 15.7),
the percentage obtained by dividing such Lender’s Revolver Commitment, by 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 


 


17





















 


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).


 


“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 that is in Deposit Accounts or Securities
Accounts, or any combination thereof, which are the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.


 


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


 


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


 


“Remedial Action”
means all actions taken to (a) clean up, remove, remediate, contain, treat,
monitor, assess, evaluate, or in any way address Hazardous Materials in the
indoor or outdoor environment, (b) prevent or minimize a release or threatened
release of Hazardous Materials so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment, (c)
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 authorized
by Environmental Laws.


 


“Replacement Lender”
has the meaning specified therefor in Section 14.2(a).


 


“Report” has the
meaning specified therefor in Section 15.17.


 


“Required Availability”
means that the sum of (a) Excess Availability, plus (b) Qualified Cash exceeds
$50,000,000.


 


“Required Lenders”
means, at any time, Lenders whose aggregate Pro Rata Shares (calculated under
clause (c) of the definition of Pro Rata Shares) equal or exceed 50.1%.


 


“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 commitment to make Advances pursuant to
Section 2.1(a), and, with respect to all Lenders, their commitments to
make Advances pursuant to Section 2.1(a), in each case as such Dollar
amounts are set forth beside


 


18





















 


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.


 


“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.


 


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


 


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


 


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


 


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


 


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


 


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


 


“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.


 


“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).


 


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


 


“Swing Lender” means
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).


 


“Swing Loan” has the
meaning specified therefor in Section 2.3(c)(i).


 


“Taxes” has the
meaning specified therefor in Section 15.11.


 


“Tech Data” means Tech
Data Corporation and its Affiliates.


 


19





















 


“Thomson RCA France”
means Thomson Television Angers and its Affiliates, other than Thomson RCA U.S.


 


“Thomson RCA France
Accounts” means Borrower’s Accounts with respect to which the Account
Debtor is Thomson RCA France.


 


“Thomson RCA U.S.”
means Thomson, Inc. and its Affiliates, other than Thomson RCA France.


 


“Triggering Event”
means either (a) a Default or Event of Default shall have occurred and be
continuing or (b) Excess Availability plus Qualified Cash shall at any time be
less than $10,000,000.


 


“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 16.6.


 


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


 


“Wff” means Wells Fargo Foothill, Inc., a California
corporation.


 


20





















 


SCHEDULE 3.1


 


The obligation of each
Lender to make its initial extension of credit provided for in the Agreement is
subject to the fulfillment, to the satisfaction of each Lender (the making of
such initial extension of credit by any Lender being conclusively deemed to be
its satisfaction or waiver of the following), of each of the following
conditions precedent:


 


(a)           Agent shall have received a letter
duly executed by Borrower authorizing Agent to file appropriate financing
statements in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the security interests to be created by the Loan
Documents;


 


(b)           Agent shall have received evidence
that appropriate financing statements have been duly filed in such office or
offices as may be necessary or, in the opinion of Agent, desirable to perfect
the Agent’s Liens in and to the Collateral, and Agent shall have received
searches reflecting the filing of all such financing statements;


 


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


 


(i)            the Cash Management Agreements with Wells Fargo with
respect to the following Borrower’s accounts: 
4159626738, 4990000349, and 4125647248,


 


(ii)           the Security Agreement,


 


(iii)          a disbursement letter executed and delivered by Borrower to
Agent regarding the extensions of credit to be made on the Closing Date, the
form and substance of which is satisfactory to Agent,


 


(iv)          the Fee Letter, and


 


(v)           the Credit Card Acknowledgements,


 


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


 


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


 


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


 


(g)           Agent shall have received
certificates of status with respect to Borrower, each dated within 30 days of
the Closing Date, such certificates to be issued by the appropriate officer of
the jurisdictions (other than the jurisdiction of organization of Borrower) in
which its failure to be duly


 


21





















 


qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;


 


(h)           Agent shall have received a
certificate of insurance, together with the endorsements thereto, as are
required by Section 15.8, the form and substance of which shall be satisfactory
to Agent;


 


(i)            Agent shall have received
Collateral Access Agreements with respect to the following locations: (i) 27500
SW Parkway Avenue, Wilsonville, Oregon 97070, and (ii) 27700 SW Parkway,
Wilsonville, Oregon;


 


(j)            Agent shall have received an opinion
of Borrower’s in-house counsel and of Borrower’s outside counsel, each in form
and substance satisfactory to Agent;


 


(k)           Borrower shall have the Required
Availability after giving effect to the initial extensions of credit hereunder
and the payment of all Lender Group Expenses required to be paid by Borrower on
the Closing Date under this Agreement or the other Loan Documents;


 


(l)            Agent shall have completed its
business, legal, and collateral due diligence, including a collateral audit and
review of Borrower’s and its Domestic Subsidiaries books and records and
verification of Borrower’s representations and warranties to Lender Group, the
results of which shall be satisfactory to Agent;


 


(m)          Agent shall have received completed
reference checks with respect to Borrower’s senior management and evidence of
compliance with the Patriot Act, as amended, the results of which are
satisfactory to Agent in its sole discretion;


 


(n)           Agent shall have received a set of
Projections of Borrower, in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent;


 


(o)           Agent shall have received copies of
each Material Contract, together with a certificate of the Secretary of
Borrower certifying each such document as being a true, correct, and complete
copy thereof;


 


(p)           Borrower and each of its Domestic
Subsidiaries shall have received all licenses, approvals or evidence of other
actions required by any Governmental Authority in connection with the execution
and delivery by Borrower or its Domestic Subsidiaries of the Loan Documents or
with the consummation of the transactions contemplated thereby; and


 


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


 


22





















 


SCHEDULE 5.2


 


Provide Agent (and if so
requested by Agent, with copies for each Lender) with each of the documents set
forth below at the following times in form satisfactory to Agent:


 


	
  So long as any
  Obligations remain outstanding as of any date of determination, weekly; at
  all other times, monthly (no later than the 10th day of each month); provided
  that in the event Borrower requests an Advance pursuant to Section 2.3 and as
  of such date of request, no Obligations remain outstanding, then, prior to
  the Funding Date, weekly



  	
   

  	
  (a) an Account
  roll-forward with supporting details supplied from sales journals, collection
  journals, credit registers and any other records.

  
	
  Monthly (no later than
  the 10th day of each month)

  	
   

  	
  (b) a Borrowing Base
  Certificate, 

  

  (c) a detailed aging, by total, of Borrower’s Accounts, together with a
  reconciliation and supporting documentation for any reconciling items noted
  (delivered electronically in an acceptable format, if Borrower has
  implemented electronic reporting), 

  

  (d) a detailed calculation of those Accounts that are not eligible for the
  Borrowing Base, if Borrower has not implemented electronic reporting,

  

  (e) a summary aging, by vendor, of Borrower’s and its Domestic Subsidiaries’
  accounts payable and any book overdraft (delivered electronically in an
  acceptable format, if Borrower has implemented electronic reporting) and an
  aging, by vendor, of any held checks, 

  

  (f) a detailed report regarding Borrower’s and its Domestic Subsidiaries’
  cash and Cash Equivalents, including an indication of which amounts
  constitute Qualified Cash, 

  

  (g) a monthly Account roll-forward, in a format acceptable to Agent in its
  discretion, tied to the beginning and ending account receivable balances of
  Borrower’s general ledger, and 



  (h) notice of all
  claims, offsets, or disputes asserted by Account Debtors with respect to
  Borrower’s Accounts.



  
	
  Monthly (no
  later than the 30th day of each month)

  	
   

  	
  (i) a
  reconciliation of Accounts, trade accounts payable, and Inventory of
  Borrower’s general ledger accounts to its monthly financial statements
  including any book reserves related to each category.



  
	
  Quarterly

  	
   

  	
  (j) a report
  regarding Borrower’s and its Domestic Subsidiaries’ accrued, but unpaid, ad valorem taxes.



  



 


23





















 


	
  Upon request by
  Agent

  	
   

  	
  (k) copies of
  invoices together with corresponding shipping and delivery documents, and
  credit memos together with corresponding supporting documentation, with
  respect to invoices and credit memos in excess of an amount determined in the
  sole discretion of Agent, from time to time,

  

  (l) a detailed list of Borrower’s and its Domestic Subsidiaries’ customers,
  with address and contact information,

  

  (m) copies of purchase orders and invoices for Inventory and Equipment
  acquired by Borrower or its Domestic Subsidiaries, and

  

  (n) such other reports as to the Collateral, the financial condition of
  Borrower and its Domestic Subsidiaries or any other information as Agent may
  reasonably request.



  



 


24





















 


SCHEDULE 5.3


 


Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, or other
items set forth set forth below at the following times in form satisfactory to
Agent:


 


	
  as soon as
  available, but in any event within 30 days after the end of each month during
  each of Borrower’s fiscal years



  	
   

  	
  (a) an unaudited consolidated balance sheet, income statement, and
  statement of cash flow covering Borrower’s and its Subsidiaries’ operations
  during such period, and

  

  (b) a Compliance Certificate.

  
	
  as soon as
  available, but in any event within 45 days after the end of each fiscal
  quarter during each of Borrower’s fiscal years



  	
   

  	
  (c) an unaudited consolidated and consolidating balance sheet, income
  statement, and statement of cash flow covering Borrower’s and its
  Subsidiaries’ operations during such period, and

  

  (d) a Compliance Certificate.

  
	
  as soon as
  available, but in any event within 90 days after the end of each of
  Borrower’s fiscal years

  	
   

  	
  (e) consolidated and consolidating financial statements of Borrower
  and its Subsidiaries for each such fiscal year, audited by independent
  certified public accountants reasonably acceptable to Agent and certified,
  without any qualifications (including any (A) “going concern” or like
  qualification or exception, (B) qualification or exception as to the scope of
  such audit, or (C) qualification which relates to the treatment or
  classification of any item and which, as a condition to the removal of such
  qualification, would require an adjustment to such item, the effect of which
  would be to cause any noncompliance with the provisions of Section 6.16), by
  such accountants to have been prepared in accordance with GAAP (such audited
  financial statements to include a balance sheet, income statement, and
  statement of cash flow and, if prepared, such accountants’ letter to
  management), and

  

  (f) a Compliance Certificate.



  
	
  as soon as
  available, but in any event within 15 days prior to the start of each of
  Borrower’s fiscal years,

  	
   

  	
  (g) copies of Borrower’s Projections, in form and substance
  (including as to scope and underlying assumptions) satisfactory to Agent, in
  its Permitted Discretion, for the forthcoming 2 years, year by year, and for
  the forthcoming fiscal year, on a quarterly basis, certified by the chief
  financial officer of Borrower as being such officer’s good faith estimate of
  the financial performance of Borrower during the period covered thereby.



  
	
  if and when
  filed by Borrower,

  	
   

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

  

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

  

  (j) any other information that is provided by Borrower to its shareholders
  generally.



  



 


25





















 


	
  promptly, but in
  any event within 5 days after Borrower has knowledge of any event or
  condition that constitutes a Default or an Event of Default,



  	
   

  	
  (k) notice of such event or condition and a statement of the curative
  action that Borrower proposes to take with respect thereto.

  
	
  promptly after
  the commencement thereof, but in any event within 5 days after the service of
  process with respect thereto on Borrower or any of its Subsidiaries,



  	
   

  	
  (l) notice of all actions, suits, or proceedings brought by or
  against Borrower or any of its Subsidiaries before any Governmental Authority
  which reasonably could be expected to result in a Material Adverse Change.

  
	
  upon the request
  of Agent,

  	
   

  	
  (m) any other information reasonably requested relating to the
  financial condition of Borrower or its Subsidiaries.



  



 


26





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS AND CONSTRUCTION

  	
   

  
	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Accounting
  Terms

  	
   

  
	
   

  	
  1.3

  	
  Code

  	
   

  
	
   

  	
  1.4

  	
  Construction

  	
   

  
	
   

  	
  1.5

  	
  Schedules and Exhibits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOAN AND TERMS OF PAYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Revolver
  Advances

  	
   

  
	
   

  	
  2.2

  	
  [INTENTIONALLY OMITTED]

  	
   

  
	
   

  	
  2.3

  	
  Borrowing Procedures and Settlements

  	
   

  
	
   

  	
  2.4

  	
  Payments

  	
   

  
	
   

  	
  2.5

  	
  Overadvances

  	
   

  
	
   

  	
  2.6

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

  	
   

  
	
   

  	
  2.7

  	
  Cash
  Management

  	
   

  
	
   

  	
  2.8

  	
  Crediting Payments

  	
   

  
	
   

  	
  2.9

  	
  Designated Account

  	
   

  
	
   

  	
  2.10

  	
  Maintenance of Loan Account; Statements of
  Obligations

  	
   

  
	
   

  	
  2.11

  	
  Fees

  	
   

  
	
   

  	
  2.12

  	
  Letters of Credit

  	
   

  
	
   

  	
  2.13

  	
  LIBOR
  Option

  	
   

  
	
   

  	
  2.14

  	
  Capital Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Conditions Precedent to the Initial
  Extension of Credit

  	
   

  
	
   

  	
  3.2

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Term

  	
   

  
	
   

  	
  3.4

  	
  Effect of Termination

  	
   

  
	
   

  	
  3.5

  	
  Early Termination by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  No
  Encumbrances

  	
   

  
	
   

  	
  4.2

  	
  Eligible Accounts

  	
   

  
	
   

  	
  4.3

  	
  [INTENTIONALLY OMITTED]

  	
   

  
	
   

  	
  4.4

  	
  Equipment

  	
   

  



 


i





















 


	
   

  	
  4.5

  	
  Location of Inventory and Equipment

  	
   

  
	
   

  	
  4.6

  	
  Inventory Records

  	
   

  
	
   

  	
  4.7

  	
  State of Incorporation; Location of Chief
  Executive Office; Organizational Identification Number; Commercial Tort
  Claims

  	
   

  
	
   

  	
  4.8

  	
  Due Organization and Qualification;
  Domestic Subsidiaries

  	
   

  
	
   

  	
  4.9

  	
  Due Authorization; No Conflict

  	
   

  
	
   

  	
  4.10

  	
  Litigation

  	
   

  
	
   

  	
  4.11

  	
  No Material Adverse Change

  	
   

  
	
   

  	
  4.12

  	
  Fraudulent Transfer

  	
   

  
	
   

  	
  4.13

  	
  Employee Benefits

  	
   

  
	
   

  	
  4.14

  	
  Environmental Condition

  	
   

  
	
   

  	
  4.15

  	
  Intellectual Property

  	
   

  
	
   

  	
  4.16

  	
  Leases

  	
   

  
	
   

  	
  4.17

  	
  Deposit Accounts and Securities Accounts

  	
   

  
	
   

  	
  4.18

  	
  Complete Disclosure

  	
   

  
	
   

  	
  4.19

  	
  Indebtedness

  	
   

  
	
   

  	
  4.20

  	
  Contractual Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Accounting
  System

  	
   

  
	
   

  	
  5.2

  	
  Collateral Reporting

  	
   

  
	
   

  	
  5.3

  	
  Financial Statements, Reports, Certificates

  	
   

  
	
   

  	
  5.4

  	
  Guarantor
  Reports

  	
   

  
	
   

  	
  5.5

  	
  Inspection

  	
   

  
	
   

  	
  5.6

  	
  Maintenance of Properties

  	
   

  
	
   

  	
  5.7

  	
  Taxes

  	
   

  
	
   

  	
  5.8

  	
  Insurance

  	
   

  
	
   

  	
  5.9

  	
  Location of Inventory and Equipment, Chief
  Executive Office

  	
   

  
	
   

  	
  5.10

  	
  Compliance with Laws

  	
   

  
	
   

  	
  5.11

  	
  Leases

  	
   

  
	
   

  	
  5.12

  	
  Existence

  	
   

  
	
   

  	
  5.13

  	
  Environmental

  	
   

  
	
   

  	
  5.14

  	
  Disclosure Updates

  	
   

  
	
   

  	
  5.15

  	
  Control Agreements

  	
   

  



 


ii





















 


	
   

  	
  5.16

  	
  Formation of Subsidiaries

  	
   

  
	
   

  	
  5.17

  	
  Performance of Material Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Indebtedness

  	
   

  
	
   

  	
  6.2

  	
  Liens

  	
   

  
	
   

  	
  6.3

  	
  Restrictions on Fundamental Changes

  	
   

  
	
   

  	
  6.4

  	
  Disposal of Assets

  	
   

  
	
   

  	
  6.5

  	
  Change
  Name

  	
   

  
	
   

  	
  6.6

  	
  Nature of Business

  	
   

  
	
   

  	
  6.7

  	
  Prepayments and Amendments

  	
   

  
	
   

  	
  6.8

  	
  Change of Control

  	
   

  
	
   

  	
  6.9

  	
  Consignments

  	
   

  
	
   

  	
  6.10

  	
  Distributions

  	
   

  
	
   

  	
  6.11

  	
  Accounting Methods

  	
   

  
	
   

  	
  6.12

  	
  Investments

  	
   

  
	
   

  	
  6.13

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
  6.14

  	
  Use
  of Proceeds

  	
   

  
	
   

  	
  6.15

  	
  Inventory and Equipment with Bailees

  	
   

  
	
   

  	
  6.16

  	
  Financial Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  THE LENDER GROUP’S RIGHTS AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Rights and Remedies

  	
   

  
	
   

  	
  8.2

  	
  Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  TAXES AND EXPENSES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  WAIVERS; INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Demand; Protest; etc

  	
   

  
	
   

  	
  10.2

  	
  The Lender Group’s Liability for Borrower
  Collateral

  	
   

  
	
   

  	
  10.3

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Assignments and Participations

  	
   

  



 


iii





















 


	
   

  	
  13.2

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  AMENDMENTS; WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  14.2

  	
  Replacement of Holdout Lender

  	
   

  
	
   

  	
  14.3

  	
  No Waivers; Cumulative Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  AGENT; THE LENDER GROUP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Appointment and Authorization of Agent

  	
   

  
	
   

  	
  15.2

  	
  Delegation of Duties

  	
   

  
	
   

  	
  15.3

  	
  Liability of Agent

  	
   

  
	
   

  	
  15.4

  	
  Reliance by Agent

  	
   

  
	
   

  	
  15.5

  	
  Notice of Default or Event of Default

  	
   

  
	
   

  	
  15.6

  	
  Credit Decision

  	
   

  
	
   

  	
  15.7

  	
  Costs and Expenses; Indemnification

  	
   

  
	
   

  	
  15.8

  	
  Agent in Individual Capacity

  	
   

  
	
   

  	
  15.9

  	
  Successor Agent

  	
   

  
	
   

  	
  15.10

  	
  Lender in Individual Capacity

  	
   

  
	
   

  	
  15.11

  	
  Withholding Taxes

  	
   

  
	
   

  	
  15.12

  	
  Collateral Matters

  	
   

  
	
   

  	
  15.13

  	
  Restrictions on Actions by Lenders; Sharing
  of Payments

  	
   

  
	
   

  	
  15.14

  	
  Agency for Perfection

  	
   

  
	
   

  	
  15.15

  	
  Payments by Agent to the Lenders

  	
   

  
	
   

  	
  15.16

  	
  Concerning the Collateral and Related Loan
  Documents

  	
   

  
	
   

  	
  15.17

  	
  Field Audits and Examination Reports;
  Confidentiality; Disclaimers by Lenders; Other Reports and Information

  	
   

  
	
   

  	
  15.18

  	
  Several Obligations; No Liability

  	
   

  
	
   

  	
  15.19

  	
  Bank Product Providers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1

  	
  Effectiveness

  	
   

  
	
   

  	
  16.2

  	
  Section Headings

  	
   

  
	
   

  	
  16.3

  	
  Interpretation

  	
   

  
	
   

  	
  16.4

  	
  Severability of Provisions

  	
   

  
	
   

  	
  16.5

  	
  Counterparts; Electronic Execution

  	
   

  
	
   

  	
  16.6

  	
  Revival and Reinstatement of Obligations

  	
   

  



 


iv





















 


	
   

  	
  16.7

  	
  Confidentiality

  	
   

  
	
   

  	
  16.8

  	
  Integration

  	
   

  



 


v





















 


EXHIBITS AND SCHEDULES


 


	
  Exhibit A-1

  	
   

  	
  Form of Assignment and Acceptance

  
	
  Exhibit B-1

  	
   

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit C-1

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit I

  	
   

  	
  Form of Intercompany Subordination Agreement

  
	
  Exhibit L-1

  	
   

  	
  Form of LIBOR Notice

  



 


	
  Schedule A-1

  	
   

  	
  Agent’s Account

  
	
  Schedule C-1

  	
   

  	
  Revolver Commitments

  
	
  Schedule D-1

  	
   

  	
  Designated Account

  
	
  Schedule P-2

  	
   

  	
  Permitted Liens

  
	
  Schedule 1.1

  	
   

  	
  Definitions

  
	
  Schedule 2.7(a)

  	
   

  	
  Cash Management Banks

  
	
  Schedule 3.1

  	
   

  	
  Conditions Precedent

  
	
  Schedule 4.5

  	
   

  	
  Locations of Inventory and Equipment

  
	
  Schedule 4.7(a)

  	
   

  	
  States of Organization

  
	
  Schedule 4.7(b)

  	
   

  	
  Chief Executive Offices

  
	
  Schedule 4.7(c)

  	
   

  	
  Organizational Identification Numbers

  
	
  Schedule 4.7(d)

  	
   

  	
  Commercial Tort Claims

  
	
  Schedule 4.8(b)

  	
   

  	
  Capitalization of Borrower

  
	
  Schedule 4.8(c)

  	
   

  	
  Capitalization of Borrower’s Subsidiaries

  
	
  Schedule 4.8(d)

  	
   

  	
  Subscriptions, Options, Warrants, or Calls for the Purchase of Stock
  of Borrower

  
	
  Schedule 4.10

  	
   

  	
  Litigation

  
	
  Schedule 4.14

  	
   

  	
  Environmental Matters

  
	
  Schedule 4.15

  	
   

  	
  Intellectual Property

  
	
  Schedule 4.17

  	
   

  	
  Deposit Accounts and Securities Accounts

  
	
  Schedule 4.19

  	
   

  	
  Permitted Indebtedness

  
	
  Schedule 4.20

  	
   

  	
  Material Contracts

  
	
  Schedule 5.2

  	
   

  	
  Collateral Reporting

  
	
  Schedule 5.3

  	
   

  	
  Financial Statements, Reports, Certificates

  
	
  Schedule 5.15

  	
   

  	
  Securities Accounts and Deposit Accounts Not Subject to Control
  Agreement

  



 


vi





















 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(this “Agreement”) is made this 25th day of October, 2004, among the
Grantors listed on the signature pages hereof and those additional entities
that hereafter become parties hereto by executing the form of Supplement
attached hereto as Annex 1 (collectively, jointly and severally, “Grantors”
and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., in its
capacity as administrative agent for the Lender Group and the Bank Product
Provider (together with its successors, “Agent”).


 


W
I T N E S S E T H:


 


WHEREAS, pursuant to that
certain Credit Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, including all schedules
thereto, the “Credit Agreement”) among InFocus Corporation, an Oregon
corporation, as borrower (“Borrower”), the lenders party thereto as “Lenders”
(“Lenders”), and Agent, the Lender Group is willing to make certain
financial accommodations available to Borrower from time to time pursuant to
the terms and conditions thereof, and


 


WHEREAS, Agent has agreed to
act as agent for the benefit of the Lender Group and the Bank Product Provider
in connection with the transactions contemplated by this Agreement, and


 


WHEREAS, in order to induce
the Lender Group to enter into the Credit Agreement and the other Loan
Documents and to induce the Lender Group to make financial accommodations to
Borrower as provided for in the Credit Agreement, Grantors have agreed to grant
a continuing security interest in and to the Collateral in order to secure the
prompt and complete payment, observance and performance of, among other things,
(a) the obligations of Grantors arising from this Agreement, the Credit
Agreement, and the other Loan Documents, including, without limitation, under
the Guaranty, (b) all Bank Product Obligations, and (c) all Obligations of
Borrower (including, without limitation, any interest, fees or expenses that
accrue after the filing of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any Insolvency
Proceeding), plus reasonable attorneys fees and expenses if the obligations
represented thereunder are collected by law, through an attorney-at-law, or
under advice therefrom (clauses (a), (b), and (c) being hereinafter referred to
as the “Secured Obligations”), by the granting of the security interests
contemplated by this Agreement, and


 


NOW, THEREFORE, for and in
consideration of the recitals made above and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:


 


1.                                       Defined
Terms.  All capitalized terms used herein (including,
without limitation, in the preamble and recitals hereof) without definition shall
have the meanings ascribed thereto in the Credit Agreement.  In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have
the following meanings:


 


(a)                                  “CFC” means, with respect to any
Grantor, any Person that is (i) a direct subsidiary of such Grantor, (ii)
organized under the laws of a jurisdiction outside of the United States and
(iii) a “controlled foreign corporation” as that term is defined in Section
957(a) of the Internal Revenue Code of 1986.


 


(b)                                 “Code” means the New York Uniform
Commercial Code, as in effect from time to time; provided, however, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority, or remedies with respect to Agent’s Lien on
any Collateral is governed by the


 





















 


Uniform Commercial Code as enacted and in effect in a jurisdiction
other than the State of New York, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies.


 


(c)                                  “Copyrights” means all rights
associated with works of authorship including but not limited to all exclusive
exploitation rights, copyrights and copyright registrations, neighboring
rights, moral rights, and all rights in and to derivative works, including
without limitation, (i) all reissues, continuations, extensions or renewals
thereof, (ii) all income, royalties, damages and payments now and hereafter due
and/or payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and damages
and payments for past or future infringements or dilutions thereof, (iii) the
right to sue for past, present and future infringements and dilutions thereof,
(iv) the goodwill of each Grantor’s business symbolized by the foregoing and
connected therewith, and (v) all of each Grantor’s rights corresponding thereto
throughout the world.


 


(d)                                 “Excluded Assets” means all of
Grantors’ rights, titles, and interest in, to, or under the following property,
whether now owned or hereafter acquired: (i) Intellectual Property (without
limitation of the Secured Party’s rights under Sections 10(f) and 16(b)), and
(ii) all contracts and agreements (and Grantors’ Accounts or other rights,
titles and interests therein, thereto or thereunder) with respect to which the
grant of a security interest pursuant to this Agreement would (w) result
in a breach of the contract or agreement under which such rights arise,
(x) violate any applicable laws, (y) require the consent of any
Person (other than any Grantor) obligated under the contract or agreement under
which such rights arise unless such Person has consented thereto or
(z) render the contract or agreement under which such rights arise void,
forfeit or unenforceable (or voidable or subject to forfeiture or
unenforceability); provided, however, that the foregoing
limitation shall not affect, limit, restrict or impair the grant by any Grantor
of a security interest pursuant to this Agreement in any Accounts, payment
intangibles and other General Intangibles for money due or to become due, or
any other rights, titles or interest of a Grantor under, to or in contracts and
agreements to the extent that any of the terms thereof or any applicable laws
that would otherwise prohibit, restrict, or require the consent of any Person
to the grant by a Grantor of a security interest therein are rendered
ineffective by the Code (including Sections 9-406, 9-407 and 9-408
thereof) or other applicable law.


 


(e)                                  “Intellectual Property” means all
present and future intellectual property rights, tangible or intangible,
throughout the world under statute, common law, equity or contract including
(i) Intellectual Property Licenses, Patents, Copyrights, Trademarks, the
goodwill associated with such Trademarks, trade secrets, know-how, inventions
(whether or not patentable), designs, moral rights, mask works, and customer
lists; (ii) all registrations and any application or right to apply for any of
the foregoing; and (iii) renewals, extensions and restorations of the
foregoing.


 


(f)                                    “Intellectual Property Licenses” means
rights under or interest in any patent, trademark, copyright or other
intellectual property, including software license agreements with any other
party, whether the applicable Grantor is a licensee or licensor under any such
license agreement, including, without limitation, the license agreements to be
listed as Schedule 2 to this Agreement pursuant to Section 3.2(b)(ii) of
the Credit Agreement (once attached, it shall be made a part hereof), and the
right to use the foregoing in connection with the enforcement of the Lender
Group’s rights under the Loan Documents, including, without limitation, the
right to prepare for sale and sell any and all Inventory and Equipment now or
hereafter owned by any Grantor and now or hereafter covered by such licenses.


 


(g)                                 “Investment Related Property” means
(i) investment property (as that term is defined in the Code), and (ii) all of
the following regardless of whether classified as investment property under the
Code:  all Pledged Interests, Pledged
Operating Agreements, and Pledged Partnership Agreements.


 


(h)                                 “Patents” means patents and patent
applications, designs, algorithms and other industrial property rights,
including, without limitation (i) reissues, reexaminations, renewals,
extensions, divisions, continuations-in-part or continuations thereof, (ii) all
income, royalties, damages and payments now


 


2





















 


and hereafter due and/or payable under and with respect thereto,
including, without limitation, payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iii) the right to sue for past, present and future
infringements and dilutions thereof, and (iv) all of each Grantor’s rights
corresponding thereto throughout the world.


 


(i)                                     “Perfected Collateral” means
Collateral for which all filings and other actions necessary or desirable to
perfect and protect Agent’s security interest therein, including Grantors
taking all reasonable steps in order for Agent to obtain control or possession
in accordance with Articles 8 and 9 of the Code, including Sections 8-106,
9-104, 9-105, 9-106, 9-107 and 9-312 of the Code, with respect to all of their
respective Securities Accounts, Deposit Accounts, electronic chattel paper,
investment property, goods subject to documents of title in possession of a
bailee or warehouseman or other such Person, certificated securities,
negotiable documents and goods and documents related thereto, and
letter-of-credit rights, have been duly taken or will have been taken upon the
filing of financing statements listing each applicable Grantor, as a debtor,
and Agent, as secured party, in the jurisdictions listed next to such Grantor’s
name on Schedule 8 attached hereto, including such Collateral for which
Agent’s security interest becomes perfected and protected for the benefit of
Agent pursuant to Section 8(b).


 


(j)                                     “Pledged Companies” means, each Person
listed on Schedule 4 hereto as a “Pledged Company”, together with each
other Person, all or a portion of whose Stock, is acquired or otherwise owned
by a Grantor after the Closing Date.


 


(k)                                  “Pledged Interests” means all of each
Grantor’s right, title and interest in and to all of the Stock now or hereafter
owned by such Grantor, regardless of class or designation, including, without
limitation, in each of the Pledged Companies, and all substitutions therefor
and replacements thereof, all proceeds thereof and all rights relating thereto,
including, without limitation, any certificates representing the Stock, the
right to request after the occurrence and during the continuation of an Event
of Default that such Stock be registered in the name of Agent or any of its
nominees, the right to receive any certificates representing any of the Stock
and the right to require that such certificates be delivered to Agent together
with undated powers or assignments of investment securities with respect
thereto, duly endorsed in blank by such Grantor, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect thereof
and of all dividends, distributions of income, profits, surplus, or other
compensation by way of income or liquidating distributions, in cash or in kind,
and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in
substitution of, on account of, or in exchange for any or all of the foregoing;
provided, however, Pledged Interests shall not include the Stock
of any CFC to the extent such Stock exceeds 65% of the voting Stock of such
CFC.


 


(l)                                     “Pledged Interests Addendum” means a
Pledged Interests Addendum substantially in the form of Exhibit A to
this Agreement.


 


(m)                               “Pledged Operating Agreements” means
all of each Grantor’s rights, powers, and remedies under the limited liability
company operating agreements of the Pledged Companies that are limited
liability companies.


 


(n)                                 “Pledged Partnership Agreements” means
all of each Grantor’s rights, powers, and remedies under the partnership
agreements of each of the Pledged Companies that are partnerships.


 


(o)                                 “Records” means information that is
inscribed on a tangible medium or which is stored in an electronic or other
medium and is retrievable in perceivable form.


 


(p)                                 “Trademarks” means trademarks, trade
names, trade dress, registered trademarks, trademark applications, service
marks, registered service marks and service mark applications, and (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including, without
limitation, payments under all licenses entered into in connection


 


3





















 


therewith and damages and payments for past or future infringements or
dilutions thereof, (iii) the right to sue for past, present and future
infringements and dilutions thereof, (iv) the goodwill of each Grantor’s
business symbolized by the foregoing and connected therewith, and (v) all of
each Grantor’s rights corresponding thereto throughout the world.


 


(q)                                 “URL” means “uniform recourse locator,”
an internet web address.


 


2.                                       Grant
of Security.  Each
Grantor hereby unconditionally grants, assigns and pledges to Agent, for the
benefit of the Lender Group and the Bank Product Provider, a continuing
security interest in all personal property (other than Excluded Assets), of
such Grantor whether now owned or hereafter acquired or arising and wherever
located (hereinafter referred to as the “Security Interest”), including,
without limitation, such Grantor’s right, title, and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever
located (the “Collateral”):


 


(a)                                  all of such Grantor’s Accounts;


 


(b)                                 all of such Grantor’s books and records
(including all of its Records indicating, summarizing, or evidencing its assets
(including the Collateral) or liabilities, all of its Records relating to its
business operations or financial condition, and all of its goods or General
Intangibles related to such information) (“Books”);


 


(c)                                  all of such Grantor’s chattel paper (as that
term is defined in the Code) and, in any event, including, without limitation,
tangible chattel paper and electronic chattel paper (“Chattel Paper”);


 


(d)                                 all of such Grantor’s interest with respect
to any Deposit Account;


 


(e)                                  all of such Grantor’s Equipment and fixtures;


 


(f)                                    Other than Excluded Assets, all of such
Grantor’s general intangibles (as that term is defined in the Code), including,
without limitation, payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill to the extent not associated with Intellectual Property,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, literature, reports, catalogs, pension plan refunds, pension plan
refund claims, insurance premium rebates, tax refunds, and tax refund claims,
uncertificated securities, and any other personal property other than
commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts,
goods, Investment Related Property, Negotiable Collateral, and oil, gas, or
other minerals before extraction (“General Intangibles”);


 


(g)                                 all of such Grantor’s Inventory;


 


(h)                                 all of such Grantor’s Investment Related
Property;


 


(i)                                     all of such Grantor’s letters of credit,
letter of credit rights, instruments, promissory notes, drafts, and documents
(as such terms may be defined in the Code) (“Negotiable Collateral”);


 


(j)                                     all of such Grantor’s rights in respect of
supporting obligations (as such term is defined in the Code), including letters
of credit and guaranties issued in support of Accounts, Chattel Paper,
documents, General Intangibles, instruments, or Investment Related Property (“Supporting
Obligations”);


 


(k)                                  all of such Grantor’s interest with respect
to any commercial tort claims (as that term is defined in the Code), including,
without limitation those commercial tort claims listed on Schedule 6
attached hereto (“Commercial Tort Claims”);


 


4





















 


(l)                                     all of such Grantor’s money, Cash
Equivalents, or other assets of each such Grantor that now or hereafter come
into the possession, custody, or control of Agent or any other member of the
Lender Group;


 


(m)                               all of the proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of
insurance or commercial tort claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Related Property,
Negotiable Collateral, Supporting Obligations, money, or other tangible or
intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any
award in condemnation with respect to any of the property of Grantors, any
rebates or refunds, whether for taxes or otherwise, and all proceeds of any
such proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above,
whether insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing Collateral (the “Proceeds”).  Without limiting the generality of the
foregoing, the term “Proceeds” includes whatever is receivable or received when
Investment Related Property or proceeds are sold, exchanged, collected, or
otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty payable
to any Grantor or Agent from time to time with respect to any of the Investment
Related Property.


 


3.                                       Security
for Obligations.  This
Agreement and the Security Interest created hereby secures the payment and
performance of all the Secured Obligations, whether now existing or arising
hereafter.  Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Obligations and would be owed by Grantors, or any
of them, to Agent, the Lender Group, the Bank Product Provider or any of them,
but for the fact that they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.


 


4.                                       Grantors
Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each of the Grantors shall remain liable under the
contracts and agreements included in the Collateral, including, without
limitation, the Pledged Operating Agreements and the Pledged Partnership
Agreements, to perform all of the duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Agent or
any other member of the Lender Group of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) none of the members of the
Lender Group shall have any obligation or liability under such contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
any of the members of the Lender Group be obligated to perform any of the
obligations or duties of any Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.  Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Credit
Agreement, or other Loan Documents, Grantors shall have the right to possession
and enjoyment of the Collateral for the purpose of conducting the ordinary
course of their respective businesses, subject to and upon the terms hereof and
of the Credit Agreement and the other Loan Documents.  Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including, without limitation, all voting,
consensual, and dividend rights, shall remain in the applicable Grantor until the
occurrence of an Event of Default and until Agent shall notify the applicable
Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with
respect to the Pledged Interests pursuant to Section 15 hereof.


 


5.                                       Representations and Warranties.  Each Grantor hereby represents
and warrants as follows:


 


(a)                                  The exact legal name of each of the Grantors
is set forth on the signature pages of this Agreement or a written notice
provided to Agent pursuant to Section 6.5 of the Credit Agreement.


 


(b)                                 Schedule 7 attached hereto sets forth all Real Property owned by Grantors as of
the Closing Date.


 


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(c)                                  As of the Closing Date, no Grantor has any
interest in, or title to, any Intellectual Property Licenses except as set
forth on Schedule 2 attached hereto.


 


(d)                                 This Agreement creates a valid security
interest in the Collateral of each of Grantors, to the extent a security
interest therein can be created under the Code, securing the payment of the
Secured Obligations.  All filings and
other actions necessary or desirable to perfect and protect the Security
Interest in the Perfected Collateral have been duly taken or will have been
taken upon the filing of financing statements listing each applicable Grantor,
as a debtor, and Agent, as secured party, in the jurisdictions listed next to
such Grantor’s name on Schedule 8 attached hereto.  Upon the making of such filings, Agent shall
have a first priority perfected security interest in the Perfected Collateral of
each Grantor and shall have a first priority perfected security interest in the
other Collateral to the extent such security interest can be perfected by the
filing of a financing statement.


 


(e)                                  Except for the Security Interest created
hereby, each Grantor is and will at all times be the sole holder of record and
the legal and beneficial owner, free and clear of all Liens other than
Permitted Liens, of the Pledged Interests indicated on Schedule 4 as
being owned by such Grantor and, when acquired by such Grantor, any Pledged
Interests acquired after the Closing Date; (ii) all of the Pledged Interests
are duly authorized, validly issued, fully paid and nonassessable and the
Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Equity Interests of the Pledged Companies of such Grantor
identified on Schedule 4 hereto as supplemented or modified by any
Pledged Interests Addendum or any Supplement to this Agreement; (ii) such
Grantor has the right and requisite authority to pledge, the Investment Related
Property pledged by such Grantor to Agent as provided herein; (iii) all actions
necessary or desirable to perfect, establish the first priority of, or
otherwise protect, Agent’s Liens in the Investment Related Collateral, and the
proceeds thereof, have been duly taken, (A) upon the execution and delivery of
this Agreement; (B) upon the taking of possession by Agent of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by
the applicable Grantor; (C) upon the filing of financing statements in the
applicable jurisdiction set forth on Schedule 8 attached hereto for such
Grantor with respect to the Pledged Interests of such Grantor that are not
represented by certificates, and (D) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto; and (iv) each
Grantor has delivered to and deposited with Agent (or, with respect to any
Pledged Interests created after the Closing Date, will deliver and deposit in
accordance with Sections 6(a) and 8 hereof) all certificates
representing the Pledged Interests owned by such Grantor to the extent such
Pledged Interests are represented by certificates, and undated powers endorsed
in blank with respect to such certificates.


 


(f)                                    No consent, approval, authorization, or other
order or other action by, and no notice to or filing with, any Governmental
Authority or any other Person is required (i) for the grant of a Security
Interest by such Grantor in and to the Collateral pursuant to this Agreement or
for the execution, delivery, or performance of this Agreement by such Grantor,
or (ii) for the exercise by Agent of the voting or other rights provided for in
this Agreement with respect to the Investment Related Property or the remedies
in respect of the Collateral pursuant to this Agreement, except as may be
required in connection with such disposition of Investment Related Property by
laws affecting the offering and sale of securities generally.


 


6.                                       Covenants.  Each
Grantor, jointly and severally, covenants and agrees with Agent and the Lender
Group that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section 22 hereof:


 


(a)                                  Possession
of Collateral. 
Subject to the provisions of Section 8(b) hereof, in the event
that any Collateral, including proceeds, is evidenced by or consists of
Negotiable Collateral, Investment Related Property, or Chattel Paper, and if
and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately
upon the request of Agent and in accordance with Section 8 hereof, shall
execute such other documents as shall be requested by Agent or, if applicable,
endorse and deliver physical possession of such Negotiable Collateral,
Investment


 


6





















 


Related Property, or Chattel Paper to Agent, together with such undated
powers endorsed in blank as shall be requested by Agent;


 


(b)                                 Chattel
Paper.


 


(i)                           Subject to the provisions of Section 8(b)
hereof, each Grantor shall take all steps reasonably necessary to grant Agent
control of all electronic Chattel Paper in accordance with the Code and all “transferable
records” as that term is defined in Section 16 of the Uniform Electronic
Transaction Act and Section 201 of the federal Electronic Signatures in Global
and National Commerce Act as in effect in any relevant jurisdiction;


 


(ii)                        Subject to the provisions of Section 8(b)
hereof, if any Grantor retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby
and by the Credit Agreement), promptly upon the request of Agent, such Chattel
Paper and instruments shall be marked with the following legend: “This writing
and the obligations evidenced or secured hereby are subject to the Security
Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender
Group and the Bank Product Provider”;


 


(c)                                  Control
Agreements.


 


(i)                           Subject to the provisions of Section 8(b)
hereof and except to the extent otherwise permitted by the Credit Agreement,
each Grantor shall obtain an authenticated Control Agreement, from each bank
holding a Deposit Account for such Grantor;


 


(ii)                        Subject to the provisions of Section 8(b)
hereof and except to the extent otherwise permitted by the Credit Agreement,
each Grantor shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any Grantor;


 


(d)                                 Letter
of Credit Rights. 
Subject to the provisions of Section 8(b) hereof, each Grantor
that is or becomes the beneficiary of a letter of credit shall promptly (and in
any event within 2 Business Days after becoming a beneficiary), notify Agent
thereof and, upon the request by Agent, enter into a tri-party agreement with
Agent and the issuer and/or confirmation bank with respect to letter-of-credit
rights (as that term is defined in the Code) assigning such letter-of-credit
rights to Agent and directing all payments thereunder to Agent’s Account, all
in form and substance satisfactory to Agent;


 


(e)                                  Commercial
Tort Claims.  Subject to the provisions of Section
8(b) hereof, each Grantor shall promptly (and in any event within 15 days
of becoming aware that a Commercial Tort Claim has been filed or made against
such Grantor, or within 15 days of filing a Commercial Tort Claim), notify
Agent in writing and, upon request of Agent, promptly amend Schedule 6
to this Agreement, authorize the filing of additional or amendments to existing
financing statements and do such other acts or things deemed necessary or
desirable by Agent to give Agent a first priority, perfected security interest
in any such Commercial Tort Claim;


 


(f)                                    Government
Contracts.  Subject to the provisions of Section
8(b) hereof, if any Account or Chattel Paper arises out of a contract or
contracts with the United States of America or any department, agency, or
instrumentality thereof, Grantors shall promptly (and in any event within 15
days of the creation thereof) notify Agent thereof in writing and execute any
instruments or take any steps reasonably required by Agent in order that all
moneys due or to become due under such contract or contracts shall be assigned
to Agent, for the benefit of the Lender Group and the Bank Product Provider,
and notice thereof given under the Assignment of Claims Act or other applicable
law;


 


7





















 


(g)                                 [Intentionally omitted]


 


(h)                                 Investment Related Property.


 


(i)                                     If any Grantor shall receive or become
entitled to receive any Pledged Interests after the Closing Date, it shall
promptly (and in any event within 15 days of receipt thereof) deliver to Agent
a duly executed Pledged Interests Addendum identifying such Pledged Interests;


 


(ii)                                  All sums of money and property paid or distributed
in respect of the Investment Related Property which are received by any Grantor
shall be deposited or caused to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, into one
of the Cash Management Accounts;


 


(iii)                               Each Grantor shall promptly deliver to Agent
a copy of each notice or other communication received by it in respect of any
Pledged Interests after the occurrence of an Event of Default;


 


(iv)                              No Grantor shall make or consent to any
amendment or other modification or waiver with respect to any Pledged
Interests, Pledged Operating Agreement, or Pledged Partnership Agreement to the
extent such Pledged Interests, Pledged Operating Agreement, or Pledged
Partnership Agreement is with respect to a Pledged Company that is a wholly
owned Subsidiary of such Grantor, or enter into any agreement or permit to
exist any restriction with respect to any Pledged Interests other than pursuant
to the Loan Documents;


 


(v)                                 Each Grantor agrees that it will cooperate
with Agent in obtaining all necessary approvals and making all necessary
filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer
thereof;


 


(vi)                              As to all limited liability company or
partnership interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, all limited liability company or partnership interests,
issued each Grantor hereby represents, warrants and covenants that the Pledged
Interests issued pursuant to such agreement (A) are not and shall not be dealt
in or traded on securities exchanges or in securities markets to the extent
that the Pledged Company is a wholly owned Subsidiary of any Grantor, (B) do
not and will not constitute investment company securities, and (C) are not
and will not be held by such Pledgor in a securities account.  In addition, none of the Pledged Operating
Agreements, the Pledged Partnership Agreements, or any other agreements
governing any of the Pledged Interests issued under any Pledged Operating
Agreement or Pledged Partnership Agreement, provide or shall provide that such
Pledged Interests are securities governed by Article 8 of the Code as in effect
in any relevant jurisdiction; provided, however, that to the extent such
Pledged Interests are securities governed by Article 8 of the Code, the
applicable Grantor shall provide original stock certificates and share transfer
forms of such Pledged Company and such other document as may be requested by
Agent.


 


(i)                                     Real
Property; Fixtures.  Each
Grantor covenants and agrees that upon the acquisition of any fee interest in
Real Property it will promptly (and in any event within 2 Business Days of
acquisition) notify Agent of the acquisition of such Real Property and will
grant to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a first priority Mortgage on each fee interest in Real Property now
or hereafter owned by such Grantor and shall deliver such other documentation
and opinions, in form and substance satisfactory to Agent, in connection with
the grant of such Mortgage as Agent shall request in its Permitted Discretion,
including, without limitation, title insurance policies, financing statements,
fixture filings and environmental audits and such Grantor shall pay all
recording costs, intangible taxes and other fees and costs (including
reasonable attorneys fees and expenses) incurred in connection therewith.  Each Grantor acknowledges and agrees that, to
the extent permitted by applicable law, all of the Collateral shall remain
personal property regardless of the manner of its attachment or affixation to
real property.


 


8





















 


(j)                                     Transfers
and Other Liens. 
Grantors shall not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except expressly permitted by the Credit Agreement, or (ii) create
or permit to exist any Lien upon or with respect to any of the Collateral of
any of Grantors, except for Permitted Liens. 
The inclusion of Proceeds in the Collateral shall not be deemed to
constitute Agent’s consent to any sale or other disposition of any of the
Collateral except as expressly permitted in this Agreement or the other Loan
Documents; and


 


(k)                                  Other Actions as to Any and All Collateral.  Each
Grantor shall promptly (and in any event within 2 Business Days of acquiring or
obtaining such Collateral) notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Investment Related
Property, Chattel Paper (electronic, tangible or otherwise), documents (as
defined in the Code), or instruments (as defined in the Code) and, upon the
request of Agent and in accordance with Section 8 hereof, promptly
execute such other documents, or if applicable, deliver such Chattel Paper,
other documents or certificates evidencing any Investment Related Property in
accordance with Section 6 hereof and do such other acts or things deemed
necessary or desirable by Agent to protect Agent’s Security Interest therein.


 


7.                                       Relation to Other Security Documents.  The
provisions of this Agreement shall be read and construed with the other Loan
Documents.  In the event of any conflict
between any provision in this Agreement and a provision in the Credit
Agreement, such provision of the Credit Agreement shall control.


 


8.                                       Further
Assurances.


 


(a)                                  With respect to any Perfected Collateral,
each Grantor agrees that from time to time, at its own expense, such Grantor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or that Agent may reasonably
request, in order to perfect and protect any Security Interest granted or
purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Perfected Collateral.


 


(b)                                 With respect to any other Collateral, in the
event (1) the parties hereto agree that the steps necessary to perfect and
protect Agent’s security interest in such Collateral are reasonable or (2) a
Triggering Event shall have occurred, each Grantor agrees that from time to
time, at its own expense, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or that Agent may request, in order to perfect and protect any
Security Interest granted or purported to be granted hereby or to enable Agent
to exercise and enforce its rights and remedies hereunder with respect to any
of the Collateral.


 


(c)                                  With respect to all Collateral,


 


1)                                      Each Grantor authorizes the filing of such
financing or continuation statements, or amendments thereto.


 


2)                                      Each Grantor authorizes Agent to file,
transmit, or communicate, as applicable, financing statements and amendments
describing the Collateral as “all personal property of debtor” or “all assets
of debtor” or words of similar effect, in order to perfect Agent’s security
interest in the Collateral (to the extent that Agent’s security interest in
such Collateral can be perfected by filing) without such Grantor’s
signature.  Each Grantor also hereby
ratifies its authorization for Agent to have filed in any jurisdiction any
financing statements filed prior to the date hereof.


 


3)                                      Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement filed in connection with this
Agreement without the prior written consent of Agent, subject to such Grantor’s
rights under Section 9-509(d)(2) of the Code.


 


9





















 


9.                                       Agent’s Right to Perform Contracts.  Upon
the occurrence of an Event of Default, Agent (or its designee) may proceed to
perform any and all of the obligations of any Grantor contained in any
contract, lease, or other agreement and exercise any and all rights of any
Grantor therein contained as fully as such Grantor itself could.


 


10.                                 Agent Appointed Attorney-in-Fact.  Each
Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, at such time as an Event of Default has occurred and is
continuing under the Credit Agreement, to take any action and to execute any
instrument which Agent may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation:


 


(a)                                  to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Accounts or any other Collateral of
such Grantor;


 


(b)                                 to receive and open all mail addressed to
such Grantor and to notify postal authorities to change the address for the
delivery of mail to such Grantor to that of Agent; provided Agent provides to
such Grantor a copy of all mail within 15 days of receiving such mail;


 


(c)                                  to receive, indorse, and collect any drafts
or other instruments, documents, Negotiable Collateral or Chattel Paper;
provided Agent provides to such Grantor a copy of all such drafts, instruments,
documents, Negotiable Collateral or Chattel Paper within 15 days of receiving
such documents;


 


(d)                                 to file any claims or take any action or
institute any proceedings which Agent may deem necessary or desirable for the
collection of any of the Collateral of such Grantor or otherwise to enforce the
rights of Agent with respect to any of the Collateral;


 


(e)                                  to repair, alter, or supply goods, if any,
necessary to fulfill in whole or in part the purchase order of any Person
obligated to such Grantor in respect of any Account of such Grantor; and


 


(f)                                    to use any labels, Patents, Trademarks, trade
names, URLs, domain names, industrial designs, Copyrights, advertising matter
or other industrial or intellectual property rights, in advertising for sale
and selling Inventory and other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Grantor.


 


To the extent permitted by
law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully
do or cause to be done by virtue hereof. 
This power of attorney is coupled with an interest and shall be irrevocable
until this Agreement is terminated.


 


11.                                 Agent
May Perform.  If any of Grantors fails to
perform any agreement contained herein, Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Agent incurred
in connection therewith shall be payable, jointly and severally, by Grantors.


 


12.                                 Agent’s
Duties.  The powers conferred on Agent
hereunder are solely to protect Agent’s interest in the Collateral, for the
benefit of the Lender Group and the Bank Product Provider, and shall not impose
any duty upon Agent to exercise any such powers.  Except for the safe custody of any Collateral
in its actual possession and the accounting for moneys actually received by it
hereunder, Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. 
Agent shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its actual possession if such Collateral
is accorded treatment substantially equal to that which Agent accords its own
property.


 


10





















 


13.                                 Collection of Accounts, General Intangibles and Negotiable Collateral.  At
any time upon the occurrence and during the continuation of an Event of
Default, Agent or Agent’s designee may (a) notify Account Debtors of any
Grantor that the Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to Agent, for the benefit of the Lender Group and
the Bank Product Provider, or that Agent has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of such
Grantor’s Secured Obligations under the Loan Documents.  So long as no Event of Default shall have
occurred and be continuing, Agent hereby agrees (a) in respect to any bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor, or
consignee, not to send any notices or instructions to any Person (other than
the Borrower or the applicable Domestic Subsidiary) party to such bailee letter
or such acknowledgement agreement which would restrict Borrower’s or a Domestic
Subsidiary’s, as applicable, access to their respective Equipment or Inventory,
and (b) in respect to any Credit Card Acknowledgment, not to send any notices
or instructions to any Credit Card Processor which would cause the amounts
payable by such Credit Card Processor to be swept to Agent’s Account.


 


14.                                 Disposition of Pledged Interests by Agent.  In the event the applicable
Pledged Company is a wholly owned Subsidiary of a Grantor, none of the Pledged
Interests existing as of the date of this Agreement are, and none of the
Pledged Interests hereafter acquired on the date of acquisition thereof will
be, registered or qualified under the various federal or state securities laws
of the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration.  Each Grantor
understands that in connection with such disposition, Agent may approach only a
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Pledged Interests than
if the Pledged Interests were registered and qualified pursuant to federal and
state securities laws and sold on the open market.  Each Grantor, therefore, agrees that:  (a) if Agent shall, pursuant to the terms of
this Agreement, sell or cause the Pledged Interests or any portion thereof to
be sold at a private sale, Agent shall have the right to rely upon the advice
and opinion of any nationally recognized brokerage or investment firm (but
shall not be obligated to seek such advice and the failure to do so shall not
be considered in determining the commercial reasonableness of such action) as
to the best manner in which to offer the Pledged Interest for sale and as to
the best price reasonably obtainable at the private sale thereof; and (b) such
reliance shall be conclusive evidence that Agent has handled the disposition in
a commercially reasonable manner.


 


15.                                 Voting
Rights.


 


(a)                                  Upon the occurrence and during the
continuation of an Event of Default, (i) Agent may, at its option, and with 2
Business Days prior notice to any Grantor, and in addition to all rights and
remedies available to Agent under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual
rights in respect of the Pledged Interests owned by such Grantor, but under no
circumstances is Agent obligated by the terms of this Agreement to exercise
such rights, and (ii) if Agent duly exercises its right to vote any of such
Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and
lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in
any manner Agent deems advisable for or against all matters submitted or which
may be submitted to a vote of shareholders, partners or members, as the case
may be.  The power-of-attorney granted
hereby is coupled with an interest and shall be irrevocable.


 


(b)                                 For so long as any Grantor shall have the
right to vote the Pledged Interests owned by it, such Grantor covenants and
agrees that it will not, without the prior written consent of Agent, vote or
take any consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of Agent and the other members of the
Lender Group or the value of the Pledged Interests.


 


11





















 


16.                                 Remedies.  Upon
the occurrence and during the continuance of an Event of Default:


 


(a)                                  Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein, in
the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable
law.  Without limiting the generality of
the foregoing, each Grantor expressly agrees that, in any such event, Agent
without demand of performance or other demand, advertisement or notice of any
kind (except a notice specified below of time and place of public or private
sale) to or upon any of Grantors or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Agent forthwith, assemble all or part of the Collateral as directed by Agent
and make it available to Agent at one or more locations where such Grantor regularly
maintains Inventory, and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any of Agent’s offices or elsewhere, for cash, on credit, and upon
such other terms as Agent may deem commercially reasonable.  Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least 10 days notice to any of
Grantors of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification and
specifically such notice shall constitute a reasonable “authenticated
notification of disposition” within the meaning of Section 9-611 of the
Code.  Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given.  Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.


 


(b)                                 Agent is hereby granted a license or other
right to use, without liability for royalties or any other charge, each Grantor’s
labels, Patents, Copyrights, rights of use of any name, trade secrets, trade
names, Trademarks, service marks and advertising matter, URLs, domain names,
industrial designs, other industrial or intellectual property or any property
of a similar nature, whether owned by any of Grantors or with respect to which
any of Grantors have rights under license, sublicense, or other agreements, as
it pertains to the Collateral, in preparing for sale, advertising for sale and
selling any Collateral, and each Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of Agent.


 


(c)                                  Any cash held by Agent as Collateral and all
cash proceeds received by Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied
against the Secured Obligations in the order set forth in the Credit Agreement.  In the event the proceeds of Collateral are
insufficient to satisfy all of the Secured Obligations in full, each Grantor
shall remain jointly and severally liable for any such deficiency.


 


(d)                                 Each Grantor hereby acknowledges that the
Secured Obligations arose out of a commercial transaction, and agrees that if
an Event of Default shall occur Agent shall have the right to an immediate writ
of possession without notice of a hearing. 
Agent shall have the right to the appointment of a receiver for the
properties and assets of each of Grantors, and each Grantor hereby consents to
such rights and such appointment and hereby waives any objection such Grantors
may have thereto or the right to have a bond or other security posted by Agent.


 


17.                                 Remedies
Cumulative.  Each
right, power, and remedy of Agent as provided for in this Agreement or in the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power, or remedy provided for in this Agreement
or in the other Loan Documents or now or hereafter existing at law or in equity
or by statute or otherwise, and the exercise or beginning of the exercise by
Agent, of any one or more of such rights, powers, or remedies shall not
preclude the simultaneous or later exercise by Agent of any or all such other
rights, powers, or remedies.


 


12





















 


18.                                 Marshaling.  Agent shall not be required to
marshal any present or future collateral security (including but not limited to
the Collateral) for, or other assurances of payment of, the Secured Obligations
or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment
shall be cumulative and in addition to all other rights and remedies, however
existing or arising.  To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Agent’s rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Secured Obligations or
under which any of the Secured Obligations is outstanding or by which any of
the Secured Obligations is secured or payment thereof is otherwise assured,
and, to the extent that it lawfully may, each Grantor hereby irrevocably waives
the benefits of all such laws.


 


19.                                 Indemnity
and Expenses.


 


(a)                                  Each Grantor agrees to indemnify Agent and
the other members of the Lender Group from and against all claims, lawsuits and
liabilities (including reasonable attorneys fees) growing out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement) or any other Loan Document to which such Grantor is a party, except
claims, losses or liabilities resulting from the gross negligence or willful
misconduct of the party seeking indemnification as determined by a final
non-appealable order of a court of competent jurisdiction.  This provision shall survive the termination
of this Agreement and the Credit Agreement and the repayment of the Secured Obligations.


 


(b)                                 Grantors, jointly and severally, shall, upon
demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender
Group Expenses which Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or,
upon an Event of Default, the sale of, collection from, or other realization
upon, any of the Collateral in accordance with this Agreement and the other
Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent
hereunder or (iv) the failure by any of Grantors to perform or observe any of
the provisions hereof.


 


20.                                 Merger,
Amendments; Etc.  THIS
WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.  No waiver of any provision of
this Agreement, and no consent to any departure by any of Grantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.  No amendment of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
Agent and each of Grantors to which such amendment applies.


 


21.                                 Addresses
for Notices.  All notices and other
communications provided for hereunder shall be given in the form and manner and
delivered to Agent at its address specified in the Credit Agreement, and to any
of the Grantors at their respective addresses specified in the Credit Agreement
or Guaranty, as applicable, or, as to any party, at such other address as shall
be designated by such party in a written notice to the other party.


 


22.                                 Continuing Security Interest: Assignments under Credit Agreement.  This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the Obligations have been paid in full in cash in
accordance with the provisions of the Credit Agreement and the Commitments have
expired or have been terminated, (b) be binding upon each of Grantors, and
their respective successors and assigns, and (c) inure to the benefit of, and
be enforceable by, Agent, and its successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any the Lender may, in accordance with the provisions of the
Credit Agreement, assign or otherwise transfer all or any portion


 


13





















 


of its rights and obligations under the Credit Agreement to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such the Lender herein or
otherwise.  Upon payment in full in cash
of the Obligations in accordance with the provisions of the Credit Agreement
and the expiration or termination of the Commitments, the Security Interest
granted hereby shall terminate and this Agreement all rights to the Collateral
shall revert to Grantors or any other Person entitled thereto.  At such time, Agent will authorize the filing
of appropriate termination statements to terminate such Security
Interests.  No transfer or renewal,
extension, assignment, or termination of this Agreement or of the Credit
Agreement, any other Loan Document, or any other instrument or document
executed and delivered by any Grantor to Agent nor any additional Advances or
other loans made by any the Lender to Borrower, nor the taking of further
security, nor the retaking or re-delivery of the Collateral to Grantors, or any
of them, by Agent, nor any other act of the Lender Group or the Bank Product
Provider, or any of them, shall release any of Grantors from any obligation,
except a release or discharge executed in writing by Agent in accordance with
the provisions of the Credit Agreement. 
Agent shall not by any act, delay, omission or otherwise, be deemed to have
waived any of its rights or remedies hereunder, unless such waiver is in
writing and signed by Agent and then only to the extent therein set forth.  A waiver by Agent of any right or remedy on
any occasion shall not be construed as a bar to the exercise of any such right
or remedy which Agent would otherwise have had on any other occasion.


 


23.                                 Governing Law.


 


(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 NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.


 


(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 BOROUGH OF MANHATTAN
IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; 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 23(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.


 


14





















 


24.                                 New
Subsidiaries. 
Pursuant to Section 5.16 of the Credit Agreement, any new direct
or indirect Domestic Subsidiary (whether by acquisition or creation) of
Borrower is required to enter into this Agreement by executing and delivering
in favor of Agent an instrument in the form of Annex 1 attached
hereto.  Upon the execution and delivery
of Annex 1 by such new Domestic Subsidiary, such Domestic Subsidiary
shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. 
The execution and delivery of any instrument adding an additional
Grantor as a party to this Agreement shall not require the consent of any
Grantor hereunder.  The rights and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor hereunder.


 


25.                                 Agent.  Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the “Agent” shall be a
reference to Agent, for the benefit of the Lender Group and the Bank Product
Provider.


 


26.                                 Miscellaneous.


 


(a)                                  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.


 


(b)                                 Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.


 


(c)                                  Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.


 


(d)                                 The pronouns used herein shall include, when
appropriate, either gender and both singular and plural, and the grammatical
construction of sentences shall conform thereto.


 


15





















 


IN WITNESS WHEREOF, the
undersigned parties hereto have executed this Agreement by and through their
duly authorized officers, as of the day and year first above written.


 


 


	
  GRANTOR:

  	
  INFOCUS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT:

  	
  WELLS
  FARGO FOOTHILL, INC.,

  
	
   

  	
  as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								



 





















 


SCHEDULE 1


 


[INTENTIONALLY
LEFT BLANK]


 





















 


SCHEDULE 2


 


INTELLECTUAL
PROPERTY LICENSES


 


[TO
BE DELIVERED PURSUANT TO SECTION 3.2(b)(ii) OF THE CREDIT AGREEMENT]


 





















 


SCHEDULE 3


 


[INTENTIONALLY
LEFT BLANK]


 





















 


SCHEDULE 4


 


PLEDGED
COMPANIES


 


	
  Name of Pledgor

  	
   

  	
  Name of
  Pledged

  Company

  	
   

  	
  Number of

  Shares/Units

  	
   

  	
  Class of

  Interests

  	
   

  	
  Percentage
  of

  Class Owned

  	
   

  	
  Certificate

  Nos.

  	
   

  
	
  InFocus Corporation

  	
   

  	
  InFocus Systems Shanghai Co.,
  Ltd

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  InFocus International BV

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  InFocus Brasil Ltda

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  Motif, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50

  	
  %

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  Phoenix Electric Company,
  Ltd.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  9

  	
  %

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  Skytron Inc.

  	
   

  	
  848,896

  	
   

  	
  Series
  B Preferred

  	
   

  	
  18.8

  	
  %

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  Pixelworks, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  Reflectivity Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  InFocus Corporation

  	
   

  	
  VST

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 





















 


SCHEDULE 5


 


[INTENTIONALLY
LEFT BLANK]


 





















 


SCHEDULE 6


 


COMMERCIAL
TORT CLAIMS


 


1.                                       Case
title: InFocus Corporation vs. BenQ
Corporation, pending in Oregon District Court, cause no.
SACV04.  InFocus has filed litigation
against BenQ Corporation to protect its Intellectual Property.  InFocus is currently in licensing negotiations
with this company.


 


2.                                       Case
title: InFocus vs 3M Company
pending in Oregon District Court cause no. CV04 1192.  InFocus has filed litigation against 3M to
protect its Intellectual Property. 
InFocus is currently in licensing negotiations with this company.


 


3.                                       All
tort claims arising out of the misappropriation of InFocus’ trademark and
copyrighted material by certain distributors in Italy.


 





















 


SCHEDULE 7


 


OWNED
REAL PROPERTY


 


NONE


 





















 


SCHEDULE 8


 


LIST
OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS


 


Grantor                                                                                                                                                        Jurisdictions


 


InFocus
Corporation                                                                                State of Oregon


 





















 


ANNEX
1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT


 


Supplement No.      
(this “Supplement”) dated as of                             ,
20   , to the Security Agreement of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”) by each of the parties listed on the signature pages thereto
and those additional entities that thereafter become parties thereto
(collectively, jointly and severally, “Grantors” and each individually “Grantor”)
and WELLS FARGO FOOTHILL, INC. in its capacity as Agent for the Lender Group
and the Bank Product Provider (together with the successors, “Agent”).


 


W I T N E S S E T H:


 


WHEREAS, pursuant to that
certain Credit Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
among InFocus Corporation, as borrower (“Borrower”), the lenders party thereto
as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to make
certain financial accommodations available to Borrower from time to time
pursuant to the terms and conditions thereof; and


 


WHEREAS, capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Security Agreement and/or the Credit Agreement; and


 


WHEREAS, Grantors have
entered into the Security Agreement in order to induce the Lender Group to make
certain financial accommodations to Borrower; and


 


WHEREAS, pursuant to Section
5.16 of the Credit Agreement, new direct or indirect Domestic Subsidiaries
of Borrower, must execute and deliver certain Loan Documents, including the
Security Agreement, and the execution of the Security Agreement by the
undersigned new Grantor or Grantors (collectively, the “New Grantors”)
may be accomplished by the execution of this Supplement in favor of Agent, for
the benefit of the Lender Group and the Bank Product Provider;


 


NOW, THEREFORE, for and in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each New Grantor
hereby agrees as follows:


 


1.                                       In accordance with Section 24 of the
Security Agreement, each New Grantor, by its signature below, becomes a “Grantor”
under the Security Agreement with the same force and effect as if originally
named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of
the terms and provisions of the Security Agreement applicable to it as a “Grantor”
thereunder and (b) represents and warrants that the representations and
warranties made by it as a “Grantor” thereunder are true and correct on and as
of the date hereof.  In furtherance of
the foregoing, each New Grantor, as security for the payment and performance in
full of the Secured Obligations, does hereby grant, assign, and pledge to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a
security interest in and security title to all assets of such New Grantor
including, without limitation, all property of the type described in Section
2 of the Security Agreement to secure the full and prompt payment of the
Secured Obligations, including, without limitation, any interest thereon, plus
reasonable attorneys’ fees and expenses if the Secured Obligations represented
by the Security Agreement are collected by law, through an attorney-at-law, or
under advice therefrom.  Schedule 2,
“Intellectual Property Licenses”, Schedule 4, “Pledged Companies”, Schedule
6, “Commercial Tort Claims”, Schedule 7, “Owned Real Property,” and Schedule
8, “List of Uniform Commercial Code Filing Jurisdictions” attached hereto
supplement Schedule 2, Schedule 4, Schedule 6, Schedule
7, and Schedule 8, respectively, to the Security Agreement and shall
be deemed a part thereof for all purposes of the Security Agreement.  Each reference to a “Grantor” in the Security
Agreement shall be deemed to include each New Grantor.  The Security Agreement is incorporated herein
by reference.


 


2.                                       Each New Grantor represents and warrants to
Agent, the Lender Group and the Bank Product Provider that this Supplement has
been duly executed and delivered by such New Grantor and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms,


 





















 


except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws affecting creditors’ rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).


 


3.                                       This Supplement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.  Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as
effective as delivery of a manually executed counterpart hereof.


 


4.                                       Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.


 


5.                                       This Supplement shall be construed in
accordance with and governed by the laws of the State of New York, without
regard to the conflict of laws principles thereof.


 


[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]


 





















 


IN WITNESS WHEREOF, each New
Grantor and Agent have duly executed this Supplement to the Security Agreement
as of the day and year first above written.


 


	
  NEW
  GRANTORS:

  	
  [NAME OF
  NEW GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Yonker

  	
   

  
	
   

  	
  Name:

  	
  Michael D. Yonker

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President,
  Finance and CFO

  	
   

  
	
   

  	
   

  
	
  AGENT:

  	
  WELLS
  FARGO FOOTHILL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Todd Nakamoto

  	
   

  
	
   

  	
  Name:

  	
  Todd Nakamoto

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
								



 





















 


EXHIBIT A


 


Annex 1 to Pledge and Security Agreement


 


PLEDGED INTERESTS ADDENDUM


 


This Pledged Interests Addendum,
dated as of October 25, 2004, is delivered pursuant to Section 6 of
the Security Agreement referred to below. 
The undersigned hereby agrees that this Pledged Interests Addendum may
be attached to that certain Security Agreement, dated of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the “Security
Agreement”), made by the undersigned, together with the other Grantors
named therein, to Wells Fargo Foothill, Inc., as Agent.  Initially capitalized terms used but not
defined herein shall have the meaning ascribed to such terms in the Security
Agreement and/or the Credit Agreement. 
The undersigned hereby agrees that the additional interests listed on
this Pledged Interests Addendum as set forth below shall be and become part of
the Pledged Interests pledged by the undersigned to the Agent in the Security
Agreement and any pledged company set forth on this Pledged Interests Addendum
as set forth below shall be and become a “Pledged Company” under the Security
Agreement, each with the same force and effect as if originally named therein.


 


The undersigned hereby
certifies that the representations and warranties set forth in Section 4
of the Security Agreement of the undersigned are true and correct as to the Pledged
Interests listed herein on and as of the date hereof.


 


	
   

  	
  INFOCUS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					



 





















 


	
  Name of Pledgor

  	
   

  	
  Name of Pledged

  Company

  	
   

  	
  Number of

  Shares/Units

  	
   

  	
  Class of

  Interests

  	
   

  	
  Percentage of

  Class Owned

  	
   

  	
  Certificate

  Nos.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  Defined
  Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Grant
  of Security

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Security for Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Grantors Remain Liable

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Possession of Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Chattel
  Paper

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Control Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Letter of Credit Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Commercial Tort Claims

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Government Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Intellectual
  Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Investment Related Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Real Property; Fixtures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Transfers and Other Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Other Actions as to Any and All Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Relation to Other Security Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Agent’s Right to Perform Contracts

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Agent Appointed Attorney-in-Fact

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Agent May Perform

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Agent’s
  Duties

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Collection of Accounts, General Intangibles
  and Negotiable Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Disposition of Pledged Interests by Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Voting
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Marshaling

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Indemnity and Expenses

  	
   

  



 


i





















 


	
  20.

  	
  Merger, Amendments; Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Addresses for Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Continuing Security Interest: Assignments
  under Credit Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Governing
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  New
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Miscellaneous

  	
   

  



 


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