Document:

Exhibit 10.1

 

LOAN AND
SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT
(this “Agreement”) dated as of the Effective
Date between SILICON VALLEY BANK, a California
corporation (“Bank”), and INTERNET BRANDS, INC.,
a Delaware corporation (“Parent”), AUTODATA,
INC., a Delaware corporation, AUTODATA SOLUTIONS, INC., a Delaware corporation,
CARSDIRECT MORTGAGE SERVICES, INC., a Delaware corporation, CD1FINANCIAL.COM,
LLC, a Delaware limited liability company, INTERNET MEDIA SOLUTIONS, INC., a
California corporation, and LOANAPP, INC., a Delaware corporation (each a “Borrower” and, collectively, “Borrowers”),
provides the terms on which Bank shall lend to Borrowers and Borrowers shall
repay Bank.  The parties agree as
follows:

 

1                                         ACCOUNTING
AND OTHER TERMS

 

Accounting terms not defined in this Agreement shall
be construed following GAAP. 
Calculations and determinations must be made following GAAP.  Capitalized terms not otherwise defined in
this Agreement shall have the meanings set forth in Section 13.  All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.

 

2                                         LOAN
AND TERMS OF PAYMENT

 

2.1                               Promise
to Pay.  Borrowers hereby
unconditionally promise to pay Bank the outstanding principal amount of all
Credit Extensions and accrued and unpaid interest thereon as and when due in
accordance with this Agreement.

 

2.1.1                     Revolving
Advances.

 

(a)                                  Availability.  Subject to the terms and conditions of this
Agreement, Bank shall make Advances not exceeding the Availability Amount.  Amounts borrowed hereunder may be repaid and,
prior to the Revolving Line Maturity Date, reborrowed, subject to the
applicable terms and conditions precedent herein.

 

(b)                                 Termination;
Repayment.  The Revolving Line
terminates on the Revolving Line Maturity Date, when the principal amount of
all Advances, the unpaid interest thereon, and all other Obligations relating
to the Revolving Line shall be immediately due and payable.  Borrower may at any time and from time to
time prepay all or any portion of Advances, together with related unpaid
interest thereon.  With regards to Prime
Rate Advances, such prepayments may be made without premium or penalty.  With regards to LIBOR Advances, such prepayments
shall be made subject to the provisions of Sections 3.6 and 3.7 hereof.

 

2.1.2                     Letters of
Credit Sublimit.

 

(a)                                  As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit
for Borrowers’ account.  Such aggregate
amounts utilized hereunder shall at all times reduce the amount otherwise
available for Advances under the Revolving Line.  The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed the lesser of (I) Ten Million Dollars
($10,000,000) minus any amounts used for Cash Management Services and minus the
FX Reserve or (II) the Revolving Line, minus the outstanding
principal amount of any Advances (including any amounts used for Cash Management
Services and the face amount of any outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve) and
minus the FX Reserve.  If, on the
Revolving Line Maturity Date, there are any outstanding Letters of Credit, then
on such date Borrowers shall provide to Bank cash collateral in an amount equal
to one hundred percent (100%) of the face amount of all such Letters of Credit
plus all interest, fees, and costs due or to become due in connection therewith
(as estimated by Bank in its good faith business judgment), to secure all of
the Obligations relating to said Letters of Credit.  All Letters of Credit shall be in form and
substance acceptable to Bank in its sole discretion and shall be subject to the
terms and conditions of Bank’s standard Application and Letter of Credit
Agreement (the “Letter of Credit Application”).  Borrowers agree to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.  

 

 

Borrowers
further agree to be bound by the regulations and interpretations of the issuer
of any Letters of Credit guaranteed by Bank and opened for Borrowers’ account
or by Bank’s interpretations of any Letter of Credit issued by Bank for
Borrowers’ account, and Borrowers understand and agree that Bank shall not be
liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrowers’ instructions or those contained in the
Letters of Credit or any modifications, amendments, or supplements thereto.

 

(b)                                 The
obligation of Borrowers to immediately reimburse Bank for drawings made under
Letters of Credit shall be absolute, unconditional, and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement, such
Letters of Credit, and the Letter of Credit Application.

 

2.1.3                     Foreign
Exchange Sublimit.  As part of the
Revolving Line, Borrowers may enter into foreign exchange contracts with Bank
under which Borrowers commit to purchase from or sell to Bank a specific amount
of Foreign Currency (each, a “FX Forward Contract”)
on a specified date (the “Settlement Date”).  FX Forward Contracts shall have a Settlement
Date of at least one (1) FX Business Day after the contract date and shall
be subject to a reserve of ten percent (10%) of each outstanding FX Forward
Contract in a maximum aggregate amount equal to Ten Million Dollars
($10,000,000) minus the face amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit) and any amounts used for Cash
Management Services (the “FX Reserve”).  The aggregate amount of FX Forward Contracts
at any one time may not exceed ten (10) times the amount of the FX
Reserve.  The amount otherwise available
for Credit Extensions under the Revolving Line shall be reduced by an amount
equal to ten percent (10%) of each outstanding FX Forward Contract (the “FX Reduction Amount”).  Any amounts needed to fully
reimburse Bank will be treated as Advances under the Revolving Line and will
accrue interest at the interest rate applicable to Advances.

 

2.1.4                     Cash
Management Services Sublimit. 
Borrowers may use up to Ten Million Dollars ($10,000,000), minus the
face amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) and the FX Reserve, of the Revolving Line for Bank’s cash
management services which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in Bank’s
various cash management services agreements (collectively, the “Cash Management Services”). 
Any amounts Bank pays on behalf of Borrowers for any Cash Management
Services will be treated as Advances under the Revolving Line and will accrue
interest at the interest rate applicable to Advances.

 

2.2                               General
Provisions Relating to the Advances. 
Each Advance shall, at Parent’s option in accordance with the terms of
this Agreement, be either in the form of a Prime Rate Advance or a LIBOR
Advance; provided that in no event shall
Borrowers maintain at any time LIBOR Advances having more than five (5) different
Interest Periods.  Borrowers shall pay
interest accrued on the Advances at the rates and in the manner set forth in Section 2.3(b).

 

2.3                               Payment
of Interest on the Credit Extensions.

 

(a)                                  Computation
of Interest.  Interest on the Credit
Extensions and all fees payable hereunder shall be computed on the basis of a
three hundred sixty 360-day year and the actual number of days elapsed in the
period during which such interest accrues. 
In computing interest on any Credit Extension, the date of the making of
such Credit Extension shall be included and the date of payment shall be
excluded; provided, however, that if any Credit
Extension is repaid on the same day on which it is made, such day shall be
included in computing interest on such Credit Extension.

 

(b)                                 Advances.  Each
Advance shall bear interest on the outstanding principal amount thereof from
the date when made, continued or converted until paid in full at a rate per annum equal to the Prime Rate plus the Prime Rate Margin
or the LIBOR Rate plus the LIBOR Rate Margin, as the case may be.  On and after the expiration of any Interest
Period applicable to any LIBOR Advance outstanding on the date of occurrence of
an Event of Default or acceleration of the Obligations, the Effective Amount of
such LIBOR Advance shall, during the continuance of such Event of Default or
after acceleration, bear interest at a rate per annum equal to the Prime Rate
plus two percent (2.00%).  Pursuant to
the terms hereof, interest on each Advance shall be paid in arrears on each
Interest Payment Date.  Interest shall
also be paid on the date of any prepayment of any Advance pursuant to this
Agreement for the portion of any Advance so prepaid and upon payment (including
prepayment) in full thereof.  All accrued
but unpaid interest on the Advances shall be due and payable on the Revolving
Line Maturity Date.

 

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(c)                                  Default
Interest.  Except as otherwise
provided in Section 2.3(b), after an Event of Default, Obligations shall
bear interest two percent (2.00%) above the rate that is otherwise applicable
thereto (the “Default Rate”).  Payment or acceptance of the increased
interest provided in this Section 2.3(c) is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank.

 

(d)                                 Prime
Rate Advances.  Each change in the
interest rate of the Prime Rate Advances based on changes in the Prime Rate
shall be effective on the effective date of such change and to the extent of
such change.  Bank shall use its best
efforts to give Parent prompt notice of any such change in the Prime Rate; provided, however, that any failure by Bank to provide
Parent with notice hereunder shall not affect Bank’s right to make changes in
the interest rate of the Prime Rate Advances based on changes in the Prime
Rate.

 

(e)                                  LIBOR
Advances.  The interest rate
applicable to each LIBOR Advance shall be determined in accordance with Section 3.6(a) hereunder.  Subject to Sections 3.6 and 3.7, such rate
shall apply during the entire Interest Period applicable to such LIBOR Advance,
and interest calculated thereon shall be payable on the Interest Payment Date
applicable to such LIBOR Advance.

 

(f)                                    Debit
of Accounts.  Bank may debit any of
Borrowers’ deposit accounts, including the Designated Deposit Account, for
principal and interest payments when due, or any other amounts Borrowers owe
Bank, when due.  Bank shall use its best
efforts to notify Parent as soon as is practical of any debits to a Borrower’s
accounts.  These debits shall not
constitute a set-off.

 

2.4                               Fees.  Borrowers shall pay to Bank:

 

(a)                                  Commitment
Fee.  A fully earned, non-refundable
commitment fee of Fifty Two Thousand Five Hundred Dollars ($52,500), on the
Effective Date;

 

(b)                                 Letter
of Credit Fee.  Bank’s customary fees
and expenses for the issuance or renewal of Letters of Credit, including,
without limitation, a fee equal to the applicable Letter of Credit Fee, per
annum of the face amount of each Letter of Credit issued, upon the issuance,
each anniversary of the issuance, and the renewal of such Letter of Credit by
Bank;

 

(c)                                  Unused
Revolving Line Facility Fee.  A fee
(the “Unused Revolving Line Facility Fee”),
payable quarterly, in arrears, on a calendar year basis, in an amount equal to
three eighths of one percent (0.375%) per annum of the average unused portion
of the Revolving Line, as determined by Bank; provided however that the Unused
Revolving Line Facility Fee shall not be payable for the quarter ending December 31,
2008, unless Borrowers request the first Advance under the Revolving Line on or
prior to that date.  The unused portion of the Revolving Line, for
the purposes of this calculation, shall include amounts reserved under the Cash
Management Services Sublimit for products provided and under the Foreign
Exchange Sublimit for FX Forward Contracts. 
Borrowers shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the Agreement
or the suspension or termination of Bank’s obligation to make loans and
advances hereunder; and

 

(d)                                 Bank
Expenses.  All Bank Expenses (including
reasonable attorneys’ fees and expenses) incurred through and after the
Effective Date, when due. 
Notwithstanding the foregoing, attorney’s fees, photocopy, fax and
delivery charges, incurred on or prior to the Effective Date shall not exceed
Twenty Thousand Dollars ($20,000), provided however (i) such fee cap shall
be conditioned on a normal level of and reasonable approach to the negotiation
of the Loan Documents, satisfactory review of the consolidated and
consolidating financials of Borrowers and their Subsidiaries, Loan Documents
based on the “non-syndicated” forms of documents and a co-borrower structure
consisting of all domestic subsidiaries of Borrowers and (ii) out of
pocket costs for diligence and fees for diligence (including UCC and IP
filings) shall not be subject to such fee cap nor will such fees and costs be
subject to any law firm surcharge.  Bank
hereby acknowledges receipt of a Twenty Five Thousand Dollar ($25,000) deposit
from Borrower which shall be applied to Bank Expenses owing on the Closing
Date.

 

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3                                         CONDITIONS
OF LOANS

 

3.1                               Conditions
Precedent to Initial Credit Extension. 
Bank’s obligation to make the initial Credit Extension is subject to the
condition precedent that Borrowers shall consent to or have delivered, in form
and substance satisfactory to Bank, such documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate, including,
without limitation:

 

(a)                                  duly
executed original signatures to the Loan Documents to which they are a party;

 

(b)                                 duly
executed original signatures to the Control Agreements;

 

(c)                                  the
Operating Documents and good standing certificates of each Borrower certified
by the Secretaries of State of the states in which such Borrower is licensed to
do business as of a date no earlier than thirty (30) days prior to the
Effective Date;

 

(d)                                 duly
executed original signatures to the completed Borrowing Resolutions for each
Borrower;

 

(e)                                  certified
copies, dated as of a recent date, of financing statement searches, as Bank
shall request, accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial
Credit Extension, will be terminated or released;

 

(f)                                    the
Perfection Certificate executed by Parent;

 

(g)                                 evidence
satisfactory to Bank that the insurance policies required by Section 6.5
hereof are in full force and effect, together with appropriate evidence showing
lender loss payable and/or additional insured clauses or endorsements in favor
of Bank; and

 

(h)                                 payment
of the fees and Bank Expenses then due as specified in Section 2.4 hereof.

 

3.2                               Conditions
Precedent to all Credit Extensions. 
Bank’s obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

 

(a)                                  except
as otherwise provided in Section 3.4(a), timely receipt of an executed
Payment/Advance Form;

 

(b)                                 the
representations and warranties in Section 5 shall be true in all material
respects on the date of the Payment/Advance Form and on the Funding Date
of each Credit Extension; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of such
date, and no Event of Default shall have occurred and be continuing or result
from the Credit Extension.  Each Credit
Extension is each Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and

 

(c)                                  in
Bank’s sole discretion, there has not been a Material Adverse Change.

 

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3.3                               Covenant
to Deliver. Borrowers agree to deliver to Bank each item required to be
delivered to Bank under this Agreement as a condition to any Credit
Extension.  Borrowers expressly agree
that a Credit Extension made prior to the receipt by Bank of any such item
shall not constitute a waiver by Bank of Borrowers’ obligation to deliver such
item, and any such Credit Extension in the absence of a required item shall be
made in Bank’s sole discretion.

 

3.4                               Procedure
for the Borrowing of Advances.

 

(a)                                  Subject
to the prior satisfaction of all other applicable conditions to the making of
an Advance set forth in this Agreement, each Advance shall be made upon
Borrowers’ irrevocable written notice delivered to Bank in the form of a Notice
of Borrowing, each executed by a Responsible Officer of Parent or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank
may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee. 
Borrowers will indemnify Bank for any loss Bank suffers due to such
reliance.  Such Notice of Borrowing must
be received by Bank prior to 12:00 p.m. Pacific time, (i) at least three (3) Business
Days prior to the requested Funding Date, in the case of LIBOR Advances, and (ii) on the
requested Funding Date, in the case of Prime Rate Advances, specifying:

 

(i)                                     the
amount of the Advance, which, if a LIBOR Advance is requested, shall be in an
aggregate minimum principal amount of One Million Dollars ($1,000,000);

 

(ii)                                  the
requested Funding Date;

 

(iii)                               whether
the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and

 

(iv)                              the
duration of the Interest Period applicable to any such LIBOR Advances included
in such notice which shall be one (1) month, two (2) months or three (3) months;
provided that if the Notice of Borrowing
shall fail to specify the duration of the Interest Period for any Advance
comprised of LIBOR Advances, such Interest Period shall be one (1) month.

 

(b)                                 The
proceeds of all such Advances will then be made available to Borrowers on the
Funding Date by Bank by transfer to the Designated Deposit Account and,
subsequently, by wire transfer to such other account as Parent may instruct in
the Notice of Borrowing.  No Advances
shall be deemed made to Borrowers, and no interest shall accrue on any such
Advance, until the related funds have been deposited in the Designated Deposit
Account.

 

3.5                               Conversion
and Continuation Elections.

 

(a)                                  So
long as (i) no Event of Default or Default exists; (ii) no Borrower
shall have sent any notice of termination of this Agreement; and (iii) Borrowers
shall have complied with such customary procedures as Bank has established from
time to time for Borrowers’ requests for LIBOR Advances, Borrowers may, upon
irrevocable written notice to Bank:

 

(i)                                     elect
to convert on any Business Day, Prime Rate Advances in an amount equal to One
Million Dollars ($1,000,000) or any amount in excess thereof;

 

(ii)                                  elect
to continue on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date (or any part thereof in an amount equal to One Million
Dollars ($1,000,000) or any amount in excess thereof); provided,
that if the aggregate amount of LIBOR Advances shall have been reduced, by
payment, prepayment, or conversion of part thereof, to be less than One Million
Dollars ($1,000,000), such LIBOR Advances shall automatically convert into
Prime Rate Advances, and on and after such date the right of Borrowers to
continue such Advances as, and convert such Advances into, LIBOR Advances shall
terminate; or

 

5

 

(iii)                               elect
to convert on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date (or any part thereof in an amount equal to One Million
Dollars ($1,000,000) or any amount in excess thereof) into Prime Rate Advances.

 

(b)                                 Parent
shall deliver a Notice of Conversion/Continuation in accordance with the terms
hereof to be received by Bank prior to 12:00 p.m. Pacific time (i) at least
three (3) Business Days in advance of the Conversion Date or Continuation
Date, if any Advances are to be converted into or continued as LIBOR Advances;
and (ii) on
the Conversion Date, if any Advances are to be converted into Prime Rate
Advances, in each case specifying the:

 

(i)                                     proposed
Conversion Date or Continuation Date;

 

(ii)                                  aggregate
amount of the Advances to be converted or continued which, if any Advances are
to be converted into or continued as LIBOR Advances, shall be in an aggregate
minimum principal amount of One Million Dollars ($1,000,000) or any amount in
excess thereof;

 

(iii)                               nature
of the proposed conversion or continuation; and

 

(iv)                              duration
of the requested Interest Period.

 

(c)                                  If
upon the expiration of any Interest Period applicable to any LIBOR Advances,
Borrowers shall have timely failed to select a new Interest Period to be
applicable to such LIBOR Advances, Borrowers shall be deemed to have elected to
convert such LIBOR Advances into Prime Rate Advances.

 

(d)                                 Any
LIBOR Advances shall, at Bank’s option, convert into Prime Rate Advances in the
event that (i) an Event of Default or Default shall exist, or (ii) the
aggregate principal amount of the Prime Rate Advances which have been
previously converted to LIBOR Advances, or the aggregate principal amount of
existing LIBOR Advances continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed the
Revolving Line.  Borrowers agree to pay
Bank, upon demand by Bank (or Bank may, at its option, charge the Designated
Deposit Account or any other account any Borrower maintains with Bank) any
amounts required to compensate Bank for any loss (including loss of anticipated
profits), cost, or expense incurred by Bank, as a result of the conversion of
LIBOR Advances to Prime Rate Advances pursuant to any of the foregoing.

 

(e)                                  Notwithstanding
anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof
shall be deemed to apply as if Bank had purchased such deposits to fund the
LIBOR Advances.

 

3.6                               Special
Provisions Governing LIBOR Advances.

 

Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with respect to LIBOR
Advances as to the matters covered:

 

(a)                                  Determination
of Applicable Interest Rate.  As soon
as practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone and confirmed in writing) to Parent.

 

(b)                                 Inability
to Determine Applicable Interest Rate. 
In the event that Bank shall have determined (which determination shall
be final and conclusive and binding upon all parties hereto), on any Interest
Rate Determination Date with respect to any LIBOR Advance, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Advance on the
basis provided for in the definition of LIBOR, Bank shall on such date give
notice (by facsimile or by 

 

6

 

telephone confirmed in
writing) to Parent of such determination, whereupon (i) no Advances may be
made as, or converted to, LIBOR Advances until such time as Bank notifies
Parent that the circumstances giving rise to such notice no longer exist, and (ii) any
Notice of Borrowing or Notice of Conversion/Continuation given by any Borrower
with respect to Advances in respect of which such determination was made shall
be deemed to be rescinded by Borrowers.

 

(c)                                  Compensation
for Breakage or Non-Commencement of Interest Periods.  Borrowers shall compensate Bank, upon written
request by Bank (which request shall set forth the manner and method of
computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Advances and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment
of such funds) such that Bank may incur: (i) if for any reason (other than
a default by Bank or due to any failure of Bank to fund LIBOR Advances due to
impracticability or illegality under Sections 3.7(d) and 3.7(e)) a
borrowing or a conversion to or continuation of any LIBOR Advance does not
occur on a date specified in a Notice of Borrowing or a Notice of
Conversion/Continuation, as the case may be, or (ii) if any principal
payment or any conversion of any of its LIBOR Advances occurs on a date prior
to the last day of an Interest Period applicable to that Advance.

 

(d)                                 Assumptions
Concerning Funding of LIBOR Advances. 
Calculation of all amounts payable to Bank under this Section 3.6
and under Section 3.4 shall be made as though Bank had actually funded
each of its relevant LIBOR Advances through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to the definition of
LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a
maturity comparable to the relevant Interest Period; provided,
however, that Bank may fund each of its LIBOR Advances in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes / calculating amounts payable under this Section 3.6 and under Section 3.4.

 

(e)                                  LIBOR
Advances After Default.  After the
occurrence and during the continuance of an Event of Default, (i) Borrowers
may not elect to have an Advance be made or continued as, or converted to, a
LIBOR Advance after the expiration of any Interest Period then in effect for
such Advance and (ii) subject to the provisions of Section 3.6(c),
any Notice of Conversion/Continuation given by Borrowers with respect to a
requested conversion/continuation that has not yet occurred shall be deemed to
be rescinded by Borrowers and be deemed a request to convert or continue
Advances referred to therein as Prime Rate Advances.

 

3.7                               Additional
Requirements/Provisions Regarding LIBOR Advances.

 

(a)                                  If
for any reason (including voluntary or mandatory prepayment or acceleration),
Bank receives all or part of the principal amount of a LIBOR Advance prior to
the last day of the Interest Period for such Advance, Borrowers shall
immediately notify Borrowers’ account officer at Bank and, on demand by Bank,
pay Bank the amount (if any) by which (i) the additional interest which
would have been payable on the amount so received had it not been received
until the last day of such Interest Period exceeds (ii) the interest which
would have been recoverable by Bank by placing the amount so received on
deposit in the certificate of deposit markets, the offshore currency markets,
or United States Treasury investment products, as the case may be, for a period
starting on the date on which it was so received and ending on the last day of
such Interest Period at the interest rate determined by Bank in its reasonable
discretion.  Bank’s determination as to
such amount shall be conclusive absent manifest error.

 

(b)                                 Borrowers
shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any costs incurred by Bank that
Bank determines are attributable to its making or maintaining of any amount
receivable by Bank hereunder in respect of any Advances relating thereto (such
increases in costs and reductions in amounts receivable being herein called “Additional Costs”), in each case resulting from any
Regulatory Change which:

 

(i)                                     changes
the basis of taxation of any amounts payable to Bank under this Agreement in
respect of any Advances (other than changes which affect taxes measured by or
imposed on the overall net income of Bank by the jurisdiction in which Bank has
its principal office);

 

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(ii)                                  imposes
or modifies any reserve, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with, or other
liabilities of Bank (including any Advances or any deposits referred to in the
definition of LIBOR); or

 

(iii)                               imposes
any other condition affecting this Agreement (or any of such extensions of
credit or liabilities).

 

Bank will notify Parent
of any event occurring after the Closing Date which will entitle Bank to
compensation pursuant to this Section 3.7 as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation.  Bank will furnish Parent with a statement
setting forth the basis and amount of each request by Bank for compensation
under this Section 3.7. 
Determinations and allocations by Bank for purposes of this Section 3.7
of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Advances, of making or maintaining Advances, or on amounts
receivable by it in respect of Advances, and of the additional amounts required
to compensate Bank in respect of any Additional Costs, shall be conclusive
absent manifest error.

 

(c)                                  If
Bank shall determine that the adoption or implementation of any applicable law,
rule, regulation, or treaty regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank,
or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a “Bank  Parent”) as a
consequence of its obligations hereunder to a level below that which Bank (or
its Bank Parent) could have achieved but for such adoption, change, or
compliance (taking into consideration policies with respect to capital
adequacy) by an amount deemed by Bank to be material, then from time to time,
within fifteen (15) days after demand by Bank, Borrowers shall pay to Bank such
additional amount or amounts as will compensate Bank for such reduction.  A statement of Bank claiming compensation
under this Section 3.7(c) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.

 

(d)                                 If,
at any time, Bank, in its sole and absolute discretion, determines that (i) the
amount of LIBOR Advances for periods equal to the corresponding Interest
Periods are not available to Bank in the offshore currency interbank markets,
or (ii) LIBOR does not accurately reflect the cost to Bank of lending the
LIBOR Advances, then Bank shall promptly give notice thereof to Parent.  Upon the giving of such notice, Bank’s
obligation to make the LIBOR Advances shall be suspended until such capability
is restored provided, however, Advances shall not be
suspended if Bank and Borrowers agree in writing to a different interest rate
applicable to LIBOR Advances.

 

(e)                                  If
it shall become unlawful for Bank to continue to fund or maintain any LIBOR
Advances, or to perform its obligations hereunder, upon demand by Bank,
Borrowers shall prepay the Advances in full with accrued interest thereon and
all other amounts payable by Borrowers hereunder (including, without
limitation, any amount payable in connection with such prepayment pursuant to Section 3.7(a))
and such Advances shall be replaced with a Prime Rate Advance.  Notwithstanding the foregoing, to the extent
a determination by Bank as described above relates to a LIBOR Advance then
being requested by Borrowers pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrowers shall have the option, subject to the
provisions of Section 3.6(c), to (i) rescind such Notice of Borrowing
or Notice of Conversion/Continuation by giving notice (by facsimile or by
telephone confirmed in writing) to Bank of such rescission on the date on which
Bank gives notice of its determination as described above, or (ii) modify
such Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime
Rate Advance or to have outstanding Advances converted into or continued as
Prime Rate Advances by giving notice (by facsimile or by telephone and confirmed
in writing) to Bank of such modification on the date on which Bank gives notice
of its determination as described above.

 

4                                         CREATION
OF SECURITY INTEREST

 

4.1                               Grant
of Security Interest.  Each Borrower
hereby grants Bank, to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to Bank, the
Collateral, 

 

8

 

wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof.  Each Borrower represents,
warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens that may have superior priority to
Bank’s Lien under this Agreement).  If
any Borrower shall acquire a commercial tort claim, Borrowers shall promptly
notify Bank in a writing signed by such Borrower of the general details thereof
and grant to Bank in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Bank.

 

If this Agreement is
terminated, Bank’s Lien in the Collateral shall continue until the Obligations
(other than inchoate indemnity obligations) are repaid in full in cash.  Upon payment in full in cash of the
Obligations and at such time as Bank’s obligation to make
Credit Extensions has terminated, Bank shall, at Borrowers’ sole cost and
expense, release its Liens in the Collateral and all rights therein shall
revert to Borrowers.

 

4.2                               Authorization
to File Financing Statements.  Each
Borrower hereby authorizes Bank to file financing statements, without notice to
any Borrower, with all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the
Collateral, by either a Borrower or any other Person, shall be deemed to
violate the rights of Bank under the Code. 
Such financing statements may indicate the Collateral as “all assets of
the Debtor” or words of similar effect, or as being of an equal or lesser
scope, or with greater detail, all in Bank’s discretion.

 

5                                         REPRESENTATIONS
AND WARRANTIES

 

Each Borrower represents and warrants as follows:

 

5.1                               Due
Organization, Authorization; Power and Authority.  Each Borrower is duly existing and in good
standing as a Registered Organization in its jurisdiction of formation and is
qualified and licensed to do business and is in good standing in any
jurisdiction in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on such Borrower’s business.  In connection with this Agreement, Parent has
delivered to Bank a completed certificate signed by Parent, entitled “Perfection
Certificate”.  Parent represents and
warrants to Bank that (a) Parent’s and each other Borrower’s exact legal
name is that indicated on the Perfection Certificate and Parent’s exact legal
name is listed on the signature page thereof; (b) each Borrower is an
organization of the type and is organized in the jurisdiction set forth in the
Perfection Certificate; (c) the Perfection Certificate accurately sets
forth each Borrower’s organizational identification number; (d) the
Perfection Certificate accurately sets forth each Borrower’s place of business,
or, if more than one, its chief executive office as well as each Borrower’s mailing
address (if different than its chief executive office); (e) except as set
forth in the Perfection Certificate, each Borrower (and each of its
predecessors) has not, in the past five (5) years, changed its
jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to each Borrower
and each of their Subsidiaries is accurate and complete (it being understood and agreed that Borrowers
may from time to time update certain information in the Perfection Certificates
after the Effective Date to the extent permitted by one or more specific
provisions in this Agreement).  If
any Borrower is not now a Registered Organization but later becomes one, such
Borrower shall promptly notify Bank of such occurrence and provide Bank with
such Borrower’s organizational identification number.

 

The execution, delivery and performance by Borrowers
of the Loan Documents to which they are a party have been duly authorized, and
do not (i) conflict with any of Borrowers’ organizational documents, (ii) contravene,
conflict with, constitute a default under or violate any material Requirement
of Law, (iii) contravene, conflict or violate any applicable order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority by which any Borrower or any of its Subsidiaries or any of their
property or assets may be bound or affected, (iv) require any action by,
filing, registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already
been obtained and are in full force and effect)  or
(v) constitute an event of default under any material agreement by which
any Borrower is bound.  No Borrower is in
default under any agreement to which it is a party or by which it is bound in
which the default could have a material adverse effect on such Borrower’s
business taken as a whole.

 

9

 

5.2                               Collateral.  Each Borrower has good title to, has rights
in, and the power to transfer each item of the Collateral upon which it
purports to grant a Lien hereunder, free and clear of any and all Liens except
Permitted Liens.  No Borrower has deposit
accounts other than the deposit accounts with Bank, the deposit accounts, if
any, described in the Perfection Certificate delivered to Bank in connection
herewith, or of which such Borrower has given Bank notice and taken such actions
as are necessary to give Bank a perfected security interest therein.

 

The Collateral is not in the possession
of any third party bailee (such as a warehouse) except as otherwise provided in
the Perfection Certificate.  None of the
components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as permitted pursuant to Section 7.2.  In the event that any Borrower, after the
date hereof, intends to store or otherwise deliver any portion of the Collateral
to a bailee, then such Borrower will first receive the written consent of Bank
and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion.

 

Each Borrower is the sole owner of its
intellectual property, except for non-exclusive licenses granted to its
customers in the ordinary course of business. 
Each patent is valid and enforceable, and no part of the intellectual
property has been judged invalid or unenforceable, in whole or in part, and to
the best of such Borrower’s knowledge, no claim has been made that any part of
the intellectual property violates the rights of any third party except to the
extent such claim could not reasonably be expected to have a material adverse
effect on a Borrower’s business.  Except
as noted on the Perfection Certificate, no Borrower is a party to, or is bound
by, any material license or other agreement with respect to which such Borrower
is the licensee (a) that prohibits or otherwise restricts such Borrower
from granting a security interest in such Borrower’s interest in such license
or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Bank’s right to sell any
Collateral.  Borrowers shall provide written
notice to Bank within ten (10) days of entering or becoming bound by any
such license or agreement (other than over-the-counter software that is
commercially available to the public). 
Borrowers shall take such steps as Bank requests to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for (x) all
such licenses or agreements to be deemed “Collateral” and for Bank to have a
security interest in it that might otherwise be restricted or prohibited by law
or by the terms of any such license or agreement, whether now existing or
entered into in the future, and (y) Bank to have the ability in the event
of a liquidation of any Collateral to dispose of such Collateral in accordance
with Bank’s rights and remedies under this Agreement and the other Loan
Documents.

 

5.3                               Intentionally
Omitted.

 

5.4                               Litigation.  Except as otherwise disclosed in Borrower’s
public filings, there are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against any
Borrower or any of its Subsidiaries involving more than Five Hundred Thousand
Dollars ($500,000).

 

5.5                               No
Material Deviation in Financial Statements. 
All consolidated financial statements for Borrowers and any of their
Subsidiaries delivered to Bank fairly present in all material respects each
Borrower’s consolidated financial condition and each Borrower’s consolidated
results of operations.  There has not
been any material deterioration in any Borrower’s consolidated financial condition
since the date of the most recent financial statements submitted to Bank.

 

5.6                               Solvency.  The fair salable value of Borrowers’ assets
(including goodwill minus disposition costs) exceeds the fair value of their
liabilities; Borrowers are not left with unreasonably small capital after the
transactions in this Agreement; and Borrowers are able to pay their debts
(including trade debts) as they mature.

 

5.7                               Regulatory
Compliance.  No Borrower is an “investment
company” or a company “controlled” by an “investment company” under the
Investment Company Act of 1940, as amended. 
No Borrower is engaged as one of its important activities in extending
credit for margin stock (under Regulations X, T and U of the Federal Reserve
Board of Governors).  Each Borrower has
complied in all material respects with the Federal Fair Labor Standards
Act.  No Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005.  No Borrower has violated any laws, ordinances
or rules, the violation of which could reasonably be expected to have a
material adverse effect on its business. 
No Borrower’s or any of its Subsidiaries’ properties or assets has been
used by any Borrower or any Subsidiary or, to the best of such 

 

10

 

Borrower’s knowledge, by
previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. 
Each Borrower and each of its Subsidiaries have obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Government Authorities that are necessary to continue
their respective businesses as currently conducted, except for any such
consents, approvals authorizations and notices that could not reasonably be
expected to have a material adverse effect on Borrower’s business, taken as
whole.

 

5.8                               Subsidiaries;
Investments.  No Borrower owns any
stock, partnership interest or other equity securities except for Permitted
Investments.

 

5.9                               Tax
Returns and Payments; Pension Contributions.  Each Borrower has timely filed all required
tax returns and reports, and each Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
such Borrower.  Borrowers may defer
payment of any contested taxes, provided that such Borrower (a) in good
faith contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies Bank in
writing of the commencement of, and any material development in, the
proceedings, (c) posts bonds or takes any other steps required to prevent
the governmental authority levying such contested taxes from obtaining a Lien
upon any of the Collateral that is other than a “Permitted Lien”.  No Borrower is aware of any claims or
adjustments proposed for any Borrower’s prior tax years which could result in
additional taxes becoming due and payable by any Borrower.  Each Borrower has paid all amounts necessary
to fund all present pension, profit sharing and deferred compensation plans in
accordance with their terms, and no Borrower has withdrawn from participation
in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of any Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.

 

5.10                        Use of
Proceeds.  Borrowers shall use the
proceeds of the Credit Extensions solely as working capital and to fund their
general business requirements and not for personal, family, household or
agricultural purposes.

 

5.11                        Full
Disclosure.  No written
representation, warranty or other statement of any Borrower in any certificate
or written statement given to Bank, as of the date such representation,
warranty, or other statement was made, taken together with all such written
certificates and written statements given to Bank, contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained in the certificates or statements not misleading
(it being recognized by Bank that the projections and forecasts provided by
Borrowers in good faith and based upon reasonable assumptions are not viewed as
facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected or forecasted results).

 

6                                         AFFIRMATIVE
COVENANTS

 

Each Borrower shall do all of the following:

 

6.1                               Government
Compliance.

 

(a)                                  Maintain
its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a material adverse effect on a Borrower’s business or operations taken as
a whole.  Each Borrower shall comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower’s business taken as a whole.

 

(b)                                 Obtain
all of the Governmental Approvals necessary for the performance by such
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Bank in all of its property.  Borrowers shall promptly provide copies of
any such obtained Governmental Approvals to Bank.

 

11

 

6.2                               Financial
Statements, Reports, Certificates.

 

(a)                                  Parent
shall deliver to Bank:  (i) as soon
as available, but no later than five (5) days after filing with the
Securities Exchange Commission, Parent’s 10K, 10Q, and 8K reports; (ii) a
Compliance Certificate together with delivery of the 10K and 10Q reports; (iii) within
thirty (30) days after the earlier of the end of each fiscal year or approval
thereof by Parent’s board of directors, annual financial projections for the
following fiscal year (on a quarterly basis) as approved by Parent’s board of
directors, together with any related business forecasts used in the preparation
of such annual financial projections; (iv) at Bank’s reasonable request, a
prompt report of any legal actions pending or threatened against a Borrower or
any Subsidiary that Borrower reasonably expects could result in a material
adverse effect on Borrower’s business, taken as a whole; and (v) at Bank’s
reasonable request, budgets, sales projections, operating plans or other
financial information.

 

Parent’s 10K, 10Q, and 8K reports required to be
delivered pursuant to Section 6.2(a)(i) shall be deemed to have been
delivered on the date on which Parent posts such report or provides a link
thereto on Parent’s or another website on the Internet; provided, that
Parent shall provide paper copies to Bank of the Compliance Certificates
required by Section 6.2(a)(ii).

 

(b)                                 Within
forty five (45) days after the last day of each month, Parent shall deliver to
Bank consolidated monthly  balance sheets
covering Borrowers’ and their Subsidiaries consolidated operations together
with a duly completed Compliance Certificate signed by a Responsible Officer of
Parent setting forth calculations showing compliance with the financial
covenants set forth in this Agreement.

 

(c)                                  As
soon as available, but no later than one hundred fifty (150) days after the
last day of Parent’s fiscal year, Parent shall deliver to Bank audited
consolidated financial statements prepared under GAAP , consistently applied,
covering Borrowers’ and their Subsidiaries consolidated operations, together
with an unqualified opinion on the financial statements from an independent
certified public accounting firm acceptable to Bank in its reasonable
discretion

 

(d)                                 Within
forty five (45) days after the last day of each quarter, Parent shall deliver
to Bank (i) a cash balance report, including account statements detailing
cash management types of investments held and maturity dates, and (ii) a
report of all Permitted Acquisitions in substantially the form attached here to
as Exhibit G including an EBITDA calculation for each such Permitted
Acquisition.

 

(e)                                  Borrowers’
shall allow Bank to audit Borrowers’ Collateral at Borrowers’ expense.  Such audits shall be conducted no more often
than once every twelve (12) months unless an Event of Default has occurred and
is continuing.

 

6.3                               Inventory;
Returns.  Keep all Inventory in good
and marketable condition, free from material defects.  Returns and allowances between a Borrower and
its Account Debtors shall follow such Borrower’s customary practices as they
exist at the Effective Date.  Borrowers
must promptly notify Bank of all returns, recoveries, disputes and claims that
involve more than One Million Five Hundred Thousand Dollars ($1,500,000).

 

6.4                               Taxes;
Pensions.  Timely file, and require
each of its Subsidiaries to timely file, all required tax returns and reports
and timely pay, and require each of its Subsidiaries to timely file, all
foreign, federal, state and local taxes, assessments, deposits and
contributions owed by each Borrower and each of its Subsidiaries, except for
deferred payment of any taxes contested pursuant to the terms of Section 5.9
hereof, and shall deliver to Bank, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with
their terms.

 

6.5                               Insurance.  Keep its business and the Collateral insured
for risks and in amounts standard for companies in such Borrower’s industry and
location and as Bank may reasonably request. 
Insurance policies shall be in a form, with companies, and in amounts
that are satisfactory to Bank. All property policies shall have a lender’s loss
payable endorsement showing Bank as lender loss payee and waive subrogation
against Bank, and all liability policies shall show, or have endorsements
showing, Bank as an additional insured. 
All policies (or the loss payable and additional insured endorsements)
shall provide that the insurer shall endeavor to give Bank at least 

 

12

 

twenty (20) days notice
before canceling, amending to reduce coverage , or declining to renew its
policy.  At Bank’s request, Borrowers
shall deliver true and correct copies of policies and evidence of all premium
payments.   If a Borrower fails to obtain
insurance as required under this Section 6.5 or to pay any amount or
furnish any required proof of payment to third persons and Bank, Bank may make
all or part of such payment or obtain such insurance policies required in this Section 6.5.

 

6.6                               Operating
Accounts.

 

(a)                                  At
all times after January 31, 2009 and prior to implementation of the
Accordion Feature, maintain Borrowers’ and their Subsidiaries’ primary domestic
operating and other deposit accounts with Bank which accounts shall represent
at least the greater of (i) average monthly balances not less than Three
Million Dollars ($3,000,000) or (ii) eighty-five percent (85%) of the
dollar value of Borrowers’ and such Subsidiaries’ cash held in deposit or
operating accounts at all banks.

 

(b)                                 At
all times after implementation of the Accordion Feature, maintain Borrowers’
and their Subsidiaries’ primary operating and other deposit accounts with Bank
which accounts shall have average monthly balances not less than Three Million
Dollars ($3,000,000) at all times.

 

(c)                                  At
all times after the date which is thirty (30) days after the Effective Date and
for so long as Borrowers and Borrowers’ Subsidiaries hold at least Twenty
Million Dollars ($20,000,000) in Cash and Cash Equivalents and Investments
Available for Sale (determined in accordance with GAAP), Borrowers shall
maintain at least Ten Million Dollars ($10,000,000) in any accounts at Bank of
Borrower’s choosing.  Bank and Borrower
hereby agree that should Bank’s money market or bank accounts have a ratings
decline by a recognized ratings agency, Borrower shall be permitted to instead
maintain such funds in a Money Market Mutual Fund offered by SVB Securities (in
which the underlying assets are not associated with SVB) that would comply with
Borrower’s investment policy. Borrower will also commit to promptly work with
Bank to identify other Bank products and services that Borrower could purchase
to provide similar value to Bank as such previously maintained accounts.

 

(d)                                 Borrowers
agree to promptly evaluate Bank and Bank’s Affiliates asset management products
and services for additional investments by Borrowers.

 

(e)                                  Provide
Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or Bank’s
Affiliates.  For each Collateral Account
that a Borrower at any time maintains, such Borrower shall cause the applicable
bank or financial institution (other than Bank) at or with which any Collateral
Account is maintained to execute and deliver a Control Agreement or other
appropriate instrument with respect to such Collateral Account to perfect Bank’s
Lien in such Collateral Account in accordance with the terms hereunder.  The provisions of the previous sentence shall
not apply to deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of a Borrower’s
employees and identified to Bank by Borrowers as such.

 

6.7                               Financial
Covenants.  Borrowers shall maintain,
on a consolidated basis with respect to Borrowers and their Subsidiaries, the
following financial ratios and covenants:

 

(a)                                  Adjusted
Quick Ratio. Measured monthly, a ratio of Quick Assets to Current
Liabilities minus Deferred Revenue of at least 1.00 to 1.00.

 

(b)                                 EBITDA.  Measured as of the end of each calendar
quarter during the following periods, quarterly EBITDA of at least the
following:

 

(i)                                     If
the total amount of outstanding Obligations is less than Ten Million Dollars
($10,000,000) at all times during a quarter, EBITDA of at least Five Million
Dollars ($5,000,000) for such quarter; and

 

(ii)                                  If
the total amount of outstanding Obligations is greater than or equal to Ten
Million Dollars ($10,000,000) at any time during a quarter, EBITDA of at least
the following:

 

13

 

	
  Period

  	
   

  	
  EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each quarter
  from Q3 2008 through Q2 2009

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each quarter
  from Q3 2009 through Q2 2010

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Q3 2010 and each
  quarter thereafter

  	
   

  	
  $

  	
  8,500,000

  	
   

  

 

(c)                                  Debt/Annualized
EBITDA. If the Accordion Feature has been implemented,  measured as of the end of each calendar
quarter, a Debt to Annualized EBITDA Ratio of not more than 2.25 to 1.00.

 

6.8                               Protection
and Registration of Intellectual Property Rights.  Each Borrower shall:  (a) protect, defend and maintain the
validity and enforceability of its intellectual property; (b) promptly
advise Bank in writing of material infringements of its intellectual property;
and (c) not allow any intellectual property material to such Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s
written consent.  If a Borrower (i) obtains
any patent, registered trademark or servicemark, registered copyright,
registered mask work, or any pending application for any of the foregoing,
whether as owner, licensee or otherwise, or (ii) applies for any patent or
the registration of any trademark or servicemark, then such Borrower shall
promptly provide written notice thereof to Bank and shall execute such
intellectual property security agreements and other documents and take such
other actions as Bank shall request in its good faith business judgment to perfect
and maintain a first priority perfected security interest in favor of Bank in
such property.  If a Borrower decides to
register any copyrights or mask works in the United States Copyright Office,
such Borrower shall: (x) provide Bank with at least fifteen (15) days
prior written notice of such Borrower’s intent to register such copyrights or
mask works together with a copy of the application it intends to file with the
United States Copyright Office (excluding exhibits thereto); (y) execute
an intellectual property security agreement and such other documents and take
such other actions as Bank may request in its good faith business judgment to
perfect and maintain a first priority perfected security interest in favor of
Bank in the copyrights or mask works intended to be registered with the United
States Copyright Office; and (z) record such intellectual property
security agreement with the United States Copyright Office contemporaneously
with filing the copyright or mask work application(s) with the United
States Copyright Office.  Each Borrower
shall promptly provide to Bank copies of all applications that it files for
patents or for the registration of trademarks, servicemarks, copyrights or mask
works, together with evidence of the recording of the intellectual property
security agreement necessary for Bank to perfect and maintain a first priority
perfected security interest in such property.

 

6.9                               Litigation
Cooperation.  From the date hereof
and continuing through the termination of this Agreement, make available to
Bank, without expense to Bank, Borrowers and their officers, employees and
agents and Borrowers’ books and records, to the extent that Bank may deem them
reasonably necessary to prosecute or defend any third-party suit or proceeding
instituted by or against Bank with respect to any Collateral or relating to
Borrowers.

 

6.10                        Acquisition
of Additional Domestic Entities. 
Upon the consummation of any Permitted Acquisition which constitutes the
acquisition by a Borrower or a Subsidiary of a Borrower of all or substantially
all of the capital stock of a Domestic Entity, Parent shall promptly notify
Bank of the consummation of such transaction and shall promptly take all action
as Bank reasonably requests to cause such Domestic Entity to become a Borrower
hereunder and to grant Bank a security interest in all the assets of such
Domestic Entity, provided however that the acquired Domestic Entity is merged
into a Borrower within thirty (30) days after such acquisition, then such
acquired Domestic Entity shall not be required to become a Borrower.

 

6.11                        Further
Assurances.  Execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank’s Lien in the Collateral or to effect the purposes of this
Agreement.  Deliver to Bank,  within five (5) days after the same are sent or
received, copies of all correspondence, reports, documents and other filings
with any Governmental Authority regarding compliance with or maintenance of
Governmental Approvals or Requirements of Law or that could reasonably be
expected to have a material effect on any of the Governmental Approvals or
otherwise on the operations of Borrowers or any of their Subsidiaries.

 

14

 

7                                         NEGATIVE
COVENANTS

 

No Borrower shall do any of the following without Bank’s
prior written consent which shall not be unreasonably withheld or delayed:

 

7.1                               Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively “Transfer”), or
permit any of its Subsidiaries to Transfer, all or any part of its business or
property, except for:

 

(a)                                  Transfers
in the ordinary course of business or transfers of single website assets for
reasonably equivalent consideration;

 

(b)                                 Transfers
from a Borrower to another Borrower;

 

(c)                                  Transfers
from Borrowers to Subsidiaries which are not Borrowers in an amount not to
exceed One Million Five Hundred Thousand Dollars ($1,500,000) in any fiscal
year;

 

(d)                                 Transfers
of property in connection with sale-leaseback transactions;

 

(e)                                  Transfers
of property to the extent such property is exchanged for credit against, or
proceeds are promptly applied to, the purchase price of other property used or
useful in the business of such Borrower or its Subsidiaries;

 

(f)                                    Transfers
constituting non-exclusive licenses and similar arrangements for the use of the
property of such Borrower or its Subsidiaries in the ordinary course of
business and other non-perpetual licenses that may be exclusive in some
respects other than territory (and/or that may be exclusive as to territory
only in discreet geographical areas outside of the United States), but that
could not result in a legal transfer of such Borrower’s title in the licensed
property;

 

(g)                                 Transfers
otherwise permitted by the Loan Documents;

 

(h)                                 sales
or discounting of delinquent accounts in the ordinary course of business;

 

(i)                                     Transfers
associated with the making or disposition of a Permitted Investment;

 

(j)                                     Transfers
in connection with Permitted Acquisitions; and

 

(k)                                  Transfers
of assets in the ordinary course of such Borrower’s business.

 

7.2                               Changes
in Business; Change in Control; Jurisdiction of Formation. Engage in any
material line of business other than those lines of business conducted by
Borrowers and their Subsidiaries on the date hereof and any businesses
reasonably related, complementary or incidental thereto or reasonable
extensions thereof, as mutually determined by Borrowers and Bank in their
reasonable discretion;  permit or
suffer any Change in Control.  No
Borrower will, without prior written notice, change its jurisdiction of
formation.

 

7.3                               Mergers
or Acquisitions.  Merge or
consolidate, or permit any of their Subsidiaries to merge or consolidate, with
any other Person, or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person.
Notwithstanding the foregoing, Borrowers and their Subsidiaries shall be
permitted to consummate any Permitted Acquisitions so long as no Event of
Default has occurred and is continuing or would exist after giving effect to
any such transactions.  Bank shall use
its best efforts to respond to any requests by Borrower to approve any such
transactions which would not be Permitted Acquisitions within five (5) Business
Days.

 

7.4                               Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

 

15

 

7.5                               Encumbrance.  Create, incur, allow, or suffer any Lien on any
of its property, or assign or convey any right to receive income, including the
sale of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, permit any Collateral not to be subject to the first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrowers or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of a Borrower’s or any
Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1
hereof and the definition of “Permitted Lien” herein.

 

7.6                               Maintenance
of Collateral Accounts.  Maintain any
Collateral Account except pursuant to the terms of Section 6.6.(b) hereof.

 

7.7                               Distributions;
Investments.  (a) Pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock other than Permitted Distributions; or (b) directly or
indirectly acquire or own any Person, or make any Investment in any Person,
other than Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8                               Transactions
with Affiliates.  Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
any Borrower except for (a) transactions that are in the ordinary course
of a Borrower’s business, upon fair and reasonable terms (when viewed in the
context of any series of transactions of which it may be a part, if applicable)
that are no less favorable to such Borrower than would be obtained in an arm’s
length transaction with a non-affiliated Person, as mutually determined by
Borrowers and Bank in their reasonable discretion; or (b) transactions
among Borrowers and their Subsidiaries so long as no Event of Default exists or
could result therefrom.

 

7.9                               Subordinated
Debt.  Make or permit any payment on
or amendments of any Subordinated Debt unless permitted by the terms of any
Subordination Agreement entered into by Bank and the holder or holders of such
Subordinated Debt.

 

7.10                        Compliance.  Become an “investment company” or a company
controlled by an “investment company”, under the Investment Company Act of
1940, as amended, or undertake as one of its important activities extending
credit to purchase or carry margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System), or use the proceeds of any
Credit Extension for that purpose; fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to have a material adverse effect on any Borrower’s
business, or permit any of its Subsidiaries to do so; withdraw or permit any
Subsidiary to withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to,
any present pension, profit sharing and deferred compensation plan which could
reasonably be expected to result in any liability of a Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.

 

8                                         EVENTS
OF DEFAULT

 

Any one of the following shall constitute an event of
default (an “Event of Default”) under this
Agreement:

 

8.1                               Payment
Default.  Borrowers fail to (a) make
any payment of principal or interest on any Credit Extension on its due date,
or (b) pay any other Obligations within three (3) Business Days after
such Obligations are due and payable (which three (3) day grace period
shall not apply to payments due on the Revolving Line Maturity Date).  During the cure period, the failure to cure
the payment default is not an Event of Default (but no Credit Extension will be
made during the cure period);

 

16

 

8.2                               Covenant
Default.

 

(a)                                  Borrowers
fail or neglect to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6 or 6.7
or violate any covenant in Section 7; or

 

(b)                                 Borrowers
fail or neglect to perform, keep, or observe any other term, provision,
condition, covenant or agreement contained in this Agreement or any Loan
Documents, and as to any default (other than those specified in this Section 8)
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure the default within ten (10) days after the occurrence
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by
Borrowers be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrowers shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the
failure to cure the default shall not be deemed an Event of Default (but no
Credit Extensions shall be made during such cure period).  Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (a) above;

 

8.3                               Material
Adverse Change.  A Material Adverse
Change occurs;

 

8.4                               Attachment;
Levy; Restraint on Business.  (a) (i) The
service of process seeking to attach, by trustee or similar process, any funds
of any Borrower or of any entity under control of any Borrower (including a
Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice
of lien, levy, or assessment is filed against any of a Borrower’s assets by any
government agency, and the same under subclauses (i) and (ii) hereof
are not, within ten (10) days after the occurrence thereof, discharged or
stayed (whether through the posting of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period;
and (b) (i) any material portion of a Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or (ii) any
court order enjoins, restrains, or prevents a Borrower from conducting any part
of its business;

 

8.5                               Insolvency.  (a) a Borrower is unable to pay its
debts (including trade debts) as they become due or otherwise becomes
insolvent; (b) a Borrower begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against a Borrower and not dismissed or stayed
within thirty (30) days (but no Credit Extensions shall be made while of any of
the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);

 

8.6                               Other
Agreements.  If a Borrower fails to (a) make
any payment that is due and payable with respect to any Material Indebtedness
and such failure continues after the applicable grace or notice period, if any,
specified in the agreement or instrument relating thereto, or (b) perform
or observe any other condition or covenant, or any other event shall occur or
condition exist under any agreement or instrument relating to any Material
Indebtedness, and such failure continues after the applicable grace or notice
period, if any, specified in the agreement or instrument relating thereto and
the effect of such failure, event or condition is to cause the holder or
holders of such Material Indebtedness to accelerate the maturity of such
Material Indebtedness or cause the mandatory repurchase of any Material
Indebtedness;

 

8.7                               Judgments.  One or more judgments, orders, or decrees for
the payment of money in an amount, individually or in the aggregate, of at
least One Million Five Hundred Thousand Dollars ($1,500,000) (not covered by
independent third-party insurance as to which liability has been accepted by
such insurance carrier) shall be rendered against any Borrower and shall remain
unsatisfied, unvacated, or unstayed for a period of twenty (20) days after the
entry thereof (provided that no Credit Extensions will be made prior to the
satisfaction, vacation, or stay of such judgment, order, or decree);

 

8.8                               Misrepresentations.  A Borrower or any Person acting for a
Borrower makes any representation, warranty, or other statement now or later in
this Agreement, any Loan Document or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material
respect when made;

 

17

 

8.9                               Subordinated
Debt.  A default or breach occurs
under any agreement between any Borrower and any creditor of a Borrower that
signed a subordination, intercreditor, or other similar agreement with Bank, or
any creditor that has signed such an agreement with Bank breaches any terms of
such agreement; or

 

9                                         BANK’S
RIGHTS AND REMEDIES

 

9.1                               Rights
and Remedies.  While an Event of
Default occurs and continues Bank may, without notice or demand, do any or all
of the following:

 

(a)                                  declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);

 

(b)                                 stop
advancing money or extending credit for Borrowers’ benefit under this Agreement
or under any other agreement between Borrowers and Bank;

 

(c)                                  demand
that Borrowers (i) deposit cash with Bank in an amount equal to the
aggregate amount of any Letters of Credit remaining undrawn, as collateral
security for the repayment of any future drawings under such Letters of Credit,
and Borrowers shall forthwith deposit and pay such amounts, and (ii) pay
in advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of any Letters of Credit;

 

(d)                                 terminate
any FX Forward Contracts;

 

(e)                                  settle
or adjust disputes and claims directly with Account Debtors for amounts on
terms and in any order that Bank considers advisable, notify any Person owing a
Borrower money of Bank’s security interest in such funds, and verify the amount
of such account;

 

(f)                                    make
any payments and do any acts it considers necessary or reasonable to protect
the Collateral and/or its security interest in the Collateral.  Each Borrower shall assemble the Collateral
if Bank requests and make it available as Bank designates.  Bank may enter premises where the Collateral
is located during normal business hours, take and maintain possession of any
part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Each Borrower grants Bank a license to enter and occupy any
of its premises, without charge, to exercise any of Bank’s rights or remedies;

 

(g)                                 apply
to the Obligations any (i) balances and deposits of Borrowers it holds, or
(ii) any amount held by Bank owing to or for the credit or the account of
a Borrower;

 

(h)                                 ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral.  Bank
is hereby granted a non-exclusive, royalty-free license or other right to use,
without charge, each Borrower’s labels, patents, copyrights, mask works, rights
of use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and, in connection with Bank’s exercise of its rights under this Section, each
Borrower’s rights under all licenses and all franchise agreements inure to Bank’s
benefit;

 

(i)                                     place
a “hold” on any account maintained with Bank and/or deliver a notice of
exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of
any Collateral;

 

(j)                                     have
reasonable access to Borrowers’ Books; and

 

(k)                                  exercise
all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).

 

18

 

9.2                               Power
of Attorney.  Each Borrower hereby
irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the
occurrence and during the continuance of an Event of Default, to:  (a) endorse such Borrower’s name on any
checks or other forms of payment or security; (b) sign such Borrower’s
name on any invoice or bill of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts
directly with Account Debtors, for amounts and on terms Bank determines
reasonable; (d) make, settle, and adjust all claims under such Borrower’s
insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or
any judgment based thereon, or otherwise take any action to terminate or
discharge the same; and (f) transfer the Collateral into the name of Bank
or a third party as the Code permits. 
Each Borrower hereby appoints Bank as its lawful attorney-in-fact to
sign such Borrower’s name on any documents necessary to perfect or continue the
perfection of Bank’s security interest in the Collateral regardless of whether
an Event of Default has occurred until all Obligations have been satisfied in
full and Bank is under no further obligation to make Credit Extensions
hereunder.  Bank’s foregoing appointment
as each Borrower’s attorney in fact, and all of Bank’s rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank’s obligation to provide Credit Extensions
terminates.

 

9.3                               Protective
Payments.  If a Borrower fails to
obtain the insurance called for by Section 6.5 or fails to pay any premium
thereon or fails to pay any other amount which such Borrower is obligated to
pay under this Agreement or any other Loan Document, Bank may obtain such
insurance or make such payment, and all amounts so paid by Bank are Bank
Expenses and immediately due and payable, bearing interest at the then highest
applicable rate, and secured by the Collateral. 
Bank will make reasonable efforts to provide such Borrower with notice
of Bank obtaining such insurance at the time it is obtained or within a
reasonable time thereafter.  No payments
by Bank are deemed an agreement to make similar payments in the future or Bank’s
waiver of any Event of Default.

 

9.4                               Application
of Payments and Proceeds.  No
Borrower shall have the right to specify the order or the accounts to which
Bank shall allocate or apply any payments required to be made by Borrowers to
Bank or otherwise received by Bank under this Agreement when any such
allocation or application is not specified elsewhere in this Agreement.  If an Event of Default has occurred and is continuing,
Bank may apply any funds in its possession, whether from Borrowers account
balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion.  Any surplus shall be paid to Borrowers or
other Persons legally entitled thereto; each Borrower shall remain liable to
Bank for any deficiency.  If Bank, in its
good faith business judgment, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any sale of
Collateral, Bank shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of
cash therefor.

 

9.5                               Bank’s
Liability for Collateral.  So long as
Bank complies with reasonable banking practices and applicable laws and
regulations regarding the safekeeping of the Collateral in the possession or
under the control of Bank, Bank shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other Person.  Borrowers bear all risk of loss, damage or
destruction of the Collateral.

 

9.6                               No
Waiver; Remedies Cumulative.  Bank’s
failure, at any time or times, to require strict performance by Borrowers of
any provision of this Agreement or any other Loan Document shall not waive,
affect, or diminish any right of Bank thereafter to demand strict performance
and compliance herewith or therewith.  No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given.  Bank’s rights and remedies under this
Agreement and the other Loan Documents are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.

 

9.7                               Demand
Waiver.  Each Borrower waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which such Borrower is liable.

 

19

 

10                                  NOTICES

 

All notices, consents, requests, approvals, demands,
or other communication by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail
return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by electronic mail or facsimile transmission; (c) one
(1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the
address, facsimile number, or email address indicated below.  Bank or Borrowers may change their mailing or
electronic mail address or facsimile number by giving the other party written
notice thereof in accordance with the terms of this Section 10.

 

	
  If to Borrowers:

  	
   

  	
  Internet Brands, Inc. (on behalf of all Borrowers)

  
	
   

  	
   

  	
  909 N. Sepulveda Blvd., 11th Floor

  
	
   

  	
   

  	
  El Segundo, CA 90245

  
	
   

  	
   

  	
  Attn: Scott Friedman

  
	
   

  	
   

  	
  Fax: (310) 280-5325

  
	
   

  	
   

  	
  Email: scott.friedman@internetbrands.com

  
	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
  5820 Canoga Avenue, Suite 210

  
	
   

  	
   

  	
  Woodland Hills, CA 91367

  
	
   

  	
   

  	
  Attn: Stephen Hughes

  
	
   

  	
   

  	
  Fax: (818) 340-0397

  
	
   

  	
   

  	
  Email: SHughes@SVBank.com

  

 

11                                  CHOICE
OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE

 

California law governs the Loan Documents without
regard to principles of conflicts of law. 
Borrowers and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in Santa Clara County, California; provided, however,
that nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize
on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank. 
Each Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and each
Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court.  Each Borrower
hereby waives personal service of the summons, complaints, and other process
issued in such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or certified mail
addressed to such Borrower at the address set forth in Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier
to occur of such Borrower’s actual receipt thereof or three (3) days after
deposit in the U.S. mails, proper postage prepaid.

 

TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

 

WITHOUT INTENDING IN ANY
WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY, if the above waiver of the right to a trial by jury is not
enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the
dispute falls within the 

 

20

 

exclusive jurisdiction of the federal courts), sitting without a jury,
in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The
reference proceedings shall be conducted pursuant to and in accordance with the
provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive.  The private judge shall have
the power, among others, to grant provisional relief, including without
limitation, entering temporary restraining orders, issuing preliminary and
permanent injunctions and appointing receivers. 
All such proceedings shall be closed to the public and confidential and
all records relating thereto shall be permanently sealed.  If during the course of any dispute, a party
desires to seek provisional relief, but a judge has not been appointed at that
point pursuant to the judicial reference procedures, then such party may apply
to the Santa Clara County, California Superior Court for such relief.  The proceeding before the private judge shall
be conducted in the same manner as it would be before a court under the rules of
evidence applicable to judicial proceedings. 
The parties shall be entitled to discovery which shall be conducted in
the same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings.  The
private judge shall oversee discovery and may enforce all discovery rules and
order applicable to judicial proceedings in the same manner as a trial court
judge.  The parties agree that the
selected or appointed private judge shall have the power to decide all issues
in the action or proceeding, whether of fact or of law, and shall report a
statement of decision thereon pursuant to the California Code of Civil
Procedure § 644(a).  Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral, or obtain provisional remedies.  The private judge shall also determine all
issues relating to the applicability, interpretation, and enforceability of
this paragraph

 

12                                  GENERAL
PROVISIONS

 

12.1                        Successors
and Assigns.  This Agreement binds
and is for the benefit of the successors and permitted assigns of each
party.  No Borrower may assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion).  Bank has the right, without the consent of or
notice to Borrowers, to sell, transfer, negotiate, or grant participation in
all or any part of, or any interest in, Bank’s obligations, rights, and
benefits under this Agreement and the other Loan Documents.

 

12.2                        Indemnification.  Each Borrower agrees to indemnify, defend and
hold Bank and its directors, officers, employees, agents, attorneys, or any
other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against:  (a) all obligations, demands, claims,
and liabilities (collectively, “Claims”)
asserted by any other party in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid
by such Indemnified Person from, following, or arising from transactions
between Bank and Borrowers (including reasonable attorneys’ fees and expenses),
except for Claims and/or losses directly caused by such Indemnified Person’s
gross negligence or willful misconduct.

 

12.3                        Time of
Essence.  Time is of the essence for
the performance of all Obligations in this Agreement.

 

12.4                        Severability
of Provisions.  Each provision of
this Agreement is severable from every other provision in determining the
enforceability of any provision.

 

12.5                        Correction
of Loan Documents.  Bank may correct
patent errors and fill in any blanks in this Agreement and the other Loan
Documents consistent with the agreement of the parties.

 

12.6                        Amendments
in Writing; Integration.  All
amendments to this Agreement must be in writing and signed by Bank and each
Borrower.  This Agreement and the Loan
Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. 
All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.

 

12.7                        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.

 

21

 

12.8                        Borrowers’
Liability.  Any Borrower may, acting
singly, request Advances hereunder.  Each
Borrower hereby appoints the other as agent for the other for all purposes
hereunder, including with respect to requesting Advances hereunder. Each
Borrower hereunder shall be obligated to repay all Advances made hereunder,
regardless of which Borrower actually receives said Advance, as if each
Borrower hereunder directly received all Advances.  Notwithstanding any other provision of this
Agreement or other related document, each Borrower irrevocably waives all
rights that it may have at law or in equity (including, without limitation, any
law subrogating such Borrower to the rights of Bank under this Agreement) to
seek contribution, indemnification or any other form of reimbursement from any
other Borrower, or any other Person now or hereafter primarily or secondarily
liable for any of the Obligations, for any payment made by a Borrower with
respect to the Obligations in connection with this Agreement or otherwise and
all rights that it might have to benefit from, or to participate in, any
security for the Obligations as a result of any payment made by a Borrower with
respect to the Obligations in connection with this Agreement or otherwise,
until the Obligations are indefeasibly paid in full and this Agreement is
terminated.  Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited under this Section shall
be null and void.  If any payment is made
to a Borrower in contravention of this Section, such Borrower shall hold such
payment in trust for Bank and such payment shall be promptly delivered to Bank
for application to the Obligations, whether matured or unmatured.

 

12.9                        Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied.  The obligation of Borrowers in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run.

 

12.10                 Confidentiality.  In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required
by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; (e) as
Bank considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such service providers
have executed a confidentiality agreement with Bank with terms no less
restrictive than those contained herein. 
Confidential information does not include information that either: (i) is
in the public domain or in Bank’s possession when disclosed to Bank, or becomes
part of the public domain after disclosure to Bank; or (ii) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

 

Bank may use confidential information for any purpose,
including, without limitation, for the development of client databases,
reporting purposes, and market analysis, so long as Bank does not disclose any
Borrower’s identity or the identity of any person associated with Borrowers
unless otherwise expressly permitted by this Agreement.  The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.

 

12.11                 Attorneys’ Fees,
Costs and Expenses.  In any action or
proceeding between Borrowers and Bank arising out of or relating to the Loan
Documents, the prevailing party shall be entitled to recover its reasonable
attorneys’ fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled.

 

13                                  DEFINITIONS

 

13.1                        Definitions.  As used in this Agreement, the following
terms have the following meanings:

 

“Account” is any
“account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable
and other sums owing to Borrowers.

 

“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term
as may hereafter be made.

 

22

 

“Accordion Feature”
shall mean an increase to the Revolving Line to an amount equal to Seventy Five
Million Dollars ($75,000,000); provided (i) Parent requests the Accordion
Feature upon no less than thirty (30) Business Days’ prior written notice to
Bank, (ii) there is no Default or Event of Default in existence, and none
will exist upon the making of such Accordion Feature (both before and
immediately after giving effect to such Accordion Feature), (iii) Bank has
obtained the written commitment of an additional lender or lenders to fund such
increase to the Revolving Line on terms and conditions satisfactory to Bank and
Borrowers; (iv) Bank, Borrowers and such additional lender or lenders have
executed all documents requested by Bank and such additional lender or lenders
to evidence such additional commitment to lend; and (v) Borrowers have
taken all other actions requested by Bank and such additional lender or lenders
in connection therewith to the satisfaction of Bank and such lender or lenders
in their reasonable business discretion.

 

“Advance” or “Advances” means an advance (or advances) under the Revolving
Line.

 

“Affiliate” of
any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with
the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.

 

“Agreement” is
defined in the preamble hereof.

 

“Availability Amount”
is (a) the Revolving Line, minus (b) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (c) the
FX Reserve, minus (d) any amounts used for Cash Management Services, and
minus (e) the outstanding principal balance of any Advances; provided
however, if as of the end of the preceding calendar quarter, Borrower’s EBITDA
is less than the level required by Section 6.7(b)(ii) hereof for such
quarter, until such time as Borrower’s EBITDA for a succeeding calendar quarter
is greater than or equal to  the level
required by Section 6.7(b)(ii) hereof for such succeeding calendar
quarter, the term “Availability Amount” shall mean: (a) Ten Million
Dollars ($10,000,000), minus (b) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit), minus (c) the
FX Reserve, minus (d) any amounts used for Cash Management Services, and
minus (e) the outstanding principal balance of any Advances.

 

“Bank” is
defined in the preamble hereof.

 

“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrowers.

 

“Borrower” and “Borrowers” is defined in the preamble hereof

 

“Borrowers’ Books”
are all Borrowers’ books and records including ledgers, federal and state tax
returns, records regarding Borrowers’ assets or liabilities, the Collateral,
business operations or financial condition, and all computer programs or
storage or any equipment containing such information.

 

“Borrowing Resolutions”
are, with respect to any Person, those resolutions substantially in the forms
attached hereto as Exhibit E.

 

“Business Day”
is any day other than a Saturday, Sunday or other day on which banking
institutions in the State of California are authorized or required by law or
other governmental action to close, except that if any determination of a “Business
Day” shall relate to a LIBOR Advance, the term “Business Day” shall also mean a
day on which dealings are carried on in the London interbank market, and if any
determination of a “Business Day” shall relate to an FX Forward Contract, the
term “Business Day” shall mean a day on which dealings are carried on in the
country of settlement of the foreign (i.e., non-Dollar) currency.

 

“Cash Management Services” is
defined in Section 2.1.4.

 

23

 
“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of California; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 

 “Collateral” is any and all properties, rights and assets of
Borrowers described on Exhibit A.

 

“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account.

 

“Commodity Account”
is any “commodity account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Compliance Certificate”
is that certain certificate in the form attached hereto as Exhibit F.

 

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; but “Contingent Obligation” does not
include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the stated
or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support
arrangement.

 

“Continuation Date”
means any date on which a Borrower elects to continue a LIBOR Advance into
another Interest Period.

 

“Control Agreement”
is any control agreement entered into among the depository institution at which
a Borrower maintains a Deposit Account or the securities intermediary or
commodity intermediary at which a Borrower maintains a Securities Account or a
Commodity Account, such Borrower, and Bank pursuant to which Bank obtains
control (within the meaning of the Code) over such Deposit Account, Securities
Account, or Commodity Account.

 

“Conversion Date”
means any date on which Borrowers elect to convert a Prime Rate Advance to a
LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.

 

“Credit Extension”
is any Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash
Management Services, or any other extension of credit by Bank for a Borrower’s
benefit.

 

“Current Liabilities”
are all obligations and liabilities of Borrowers to Bank, plus, without
duplication, the aggregate amount of Borrowers’ Total Liabilities that mature
within one (1) year.

 

“Debt to Annualized EBITDA
Ratio” means a ratio of (i) all Indebtedness of Borrowers and
their Subsidiaries to (ii) EBITDA, measured on a trailing six (6) month
basis and multiplied by two (2).

 

 “Default Rate” is defined in Section 2.3(c).

 

24

 

“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts
and not yet recognized as revenue.

 

“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Designated Deposit Account”
is Parents’ deposit account, account number                           ,
maintained with Bank.

 

“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.

 

“Domestic Entity”
means a Person organized under the laws of the United States or any state or
territory thereof or the District of Columbia.

 

“EBITDA” means Net Income, plus
taxes, plus depreciation (including depreciation in cost of sales), plus
amortization, plus equity based compensation, plus other expense (foreign
exchange loss, realized investment losses, loss on asset sale, etc.), plus, to
the extent deducted in the calculation of Net Income, any non-recurring,
non-cash charges and any non-recurring cash charges (but only to the extent
such charges do not exceed Five Million Dollars ($5,000,000) in any calendar
year and Three Million Dollars ($3,000,000) per event), minus interest income,
minus other income (foreign exchange gain, realized investment gains, gain on
asset sale, etc.), all determined in accordance with GAAP (as applicable) and
on a consolidated basis for Borrowers and their Subsidiaries.  For the purposes of the foregoing EBITDA
calculation, a charge shall be deemed to be “non-recurring” if such charge
results from a different cause or is of a different type than a charge that was
previously taken and would otherwise be classified to be an extraordinary
event; Borrowers and Bank shall cooperate and use reasonable efforts to achieve
a mutually satisfactory determination as to whether or not a charge is “non-recurring”.  Items included in this EBITDA calculation
will be those incorporated in Borrowers’ measure of Adjusted EBITDA in
Borrowers’ public filings and/or disclosures.

 

 “Effective Amount” means with respect to any Advances on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowing and prepayments or repayments thereof occurring on such date.

 

“Effective Date”
is the date Bank executes this Agreement as indicated on the signature page hereof.

 

“Equipment” is
all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.

 

“ERISA” is the
Employee Retirement Income Security Act of 1974, and its regulations.

 

“Event of Default”
is defined in Section 8.

 

“Foreign Currency”
means lawful money of a country other than the United States.

 

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

 

“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrowers
which shall be a Business Day.

 

“FX Business Day”
is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by
Borrowers is available to Bank from the entity from which Bank shall buy or
sell such Foreign Currency.

 

“FX Forward Contract”  is defined in Section 2.1.3.

 

“FX Reduction Amount”
is defined in Section 2.1.3.

 

25

 

“FX Reserve”  is defined in Section 2.1.3.

 

“GAAP” is
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.

 

“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.

 

“Governmental
Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

 

 “Governmental Authority” is any nation or government, any
state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization.

 

“Indebtedness” is
(a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures
or similar instruments, (c) capital lease obligations, and (d) Contingent
Obligations.

 

“Indemnified Person”
is defined in Section 12.2.

 

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

 

“Interest Payment Date”
means, with respect to any LIBOR Advance, the last day of each Interest Period
applicable to such LIBOR Advance and, with respect to Prime Rate Advances, the
last day of each month (or, if the last day of the month does not fall on a
Business Day, then on the first Business Day following such date), and each date
a Prime Rate Advance is converted into a LIBOR Advance to the extent of the
amount converted to a LIBOR Advance.

 

“Interest Period”
means, as to any LIBOR Advance, the period commencing on the date of such LIBOR
Advance, or on the conversion/continuation date on which the LIBOR Advance is
converted into or continued as a LIBOR Advance, and ending on the date that is
one (1), two (2), or three (3) months thereafter, in each case as a
Borrower may elect in the applicable Notice of Borrowing or Notice of Conversion/Continuation;
provided, however, that (a) no
Interest Period with respect to any LIBOR Advance shall end later than the
Revolving Line Maturity Date, (b) the last day of an Interest Period shall
be determined in accordance with the practices of the LIBOR interbank market as
from time to time in effect, (c) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless, in the case of a LIBOR Advance, the result
of such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the preceding Business
Day, (d) any Interest Period pertaining to a LIBOR Advance that begins on
the last Business Day of a calendar month (or on a day for which there is no 

 

26

 

numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period, and (e) interest shall
accrue from and include the first Business Day of an Interest Period but
exclude the last Business Day of such Interest Period.

 

“Interest Rate
Determination Date” means each date for calculating the LIBOR for
purposes of determining the interest rate in respect of an Interest
Period.  The Interest Rate Determination
Date shall be the second Business Day prior to the first day of the related
Interest Period for a LIBOR Advance.

 

“Inventory” is
all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrowers’ custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

 

“Investment” is
any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to
any Person.

 

“IP Agreements”
are those certain Intellectual Property Security Agreements executed and
delivered by Borrowers to Bank dated as of October 7, 2008.

 

“Letter of Credit Fee”
is (a) if Borrowers’ Debt to Annualized EBITDA Ratio is less than 1.00 to
1.00, one and three quarters percent (1.75%) of the face amount of such Letter
of Credit, (b) if Borrowers’ Debt to Annualized EBITDA Ratio is greater
than or equal to 1.00 to 1.00 and less than or equal to than 2.00 to 1.00, two
and one quarter percent (2.25%) of the face amount of such Letter of Credit,
and (c) if Borrowers’ Debt to Annualized EBITDA Ratio is greater than 2.00
to 1.00, two and three quarters percent (2.75%) of the face amount of such
Letter of Credit.  Such Letter of Credit
Fee shall be adjusted quarterly based on Borrower’s Debt to Annualized EBITDA
reported for the prior quarter.

 

“LIBOR Rate”
means, for each Interest Period in respect of LIBOR Advances comprising part of
the same Advances, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/10,000th of one percent
(0.0001%)) equal to LIBOR for such Interest Period divided by
one (1) minus the Reserve Requirement for
such Interest Period.

 

“LIBOR Rate Margin”
is (a) if Borrowers’ Debt to Annualized EBITDA Ratio is less than 1.00 to
1.00, one and three quarters percent (1.75%), (b) if Borrowers’ Debt to
Annualized EBITDA Ratio is greater than or equal to 1.00 to 1.00 and less than
or equal to than 2.00 to 1.00, two and one quarter percent (2.25%), and (c) if
Borrowers’ Debt to Annualized EBITDA Ratio is greater than 2.00 to 1.00, two
and three quarters percent (2.75%). Such LIBOR Rate Margin shall be adjusted
quarterly based on Borrower’s Debt to Annualized EBITDA reported for the prior
quarter.

 

“LIBOR” means,
for any Interest Rate Determination Date with respect to an Interest Period for
any Advance to be made, continued as or converted into a LIBOR Advance, the
rate of interest per annum determined by Bank to be the per annum rate of
interest at which deposits in United States Dollars are offered to Bank in the
London interbank market (rounded upward, if necessary, to the nearest
1/10,000th of one percent (0.0001%)) in which Bank customarily participates at
11:00 a.m. (local time in such interbank market) two (2) Business
Days prior to the first day of such Interest Period for a period approximately
equal to such Interest Period and in an amount approximately equal to the
amount of such Advance.

 

“LIBOR Advance”
means an Advance that bears interest based at the LIBOR Rate.

 

“Letter of Credit”
means a standby letter of credit issued by Bank or another institution based
upon an application, guarantee, indemnity or similar agreement on the part of
Bank as set forth in Section 2.1.2.

 

“Letter of Credit
Application” is defined in Section 2.1.2(a).

 

27

 

“Lien” is a
claim, mortgage, deed of trust, levy, charge, pledge, security interest or
other encumbrance of any kind, whether voluntarily incurred or arising by
operation of law or otherwise against any property.

 

“Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, the IP
Agreements, any note, or notes or guaranties executed by a Borrower, and any
other present or future agreement between any Borrower and/or for the benefit
of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified.

 

“Material Adverse Change”
is (a) a material impairment in the perfection or priority of Bank’s Lien
in the Collateral or in the value of such Collateral; or (b) a material
adverse change in the business, operations, or condition (financial or otherwise)
of a Borrower.

 

“Material Indebtedness”
is any Indebtedness the principal amount of which is equal to or greater than
Five Hundred Thousand Dollars ($500,000).

 

“Net Income”
means, as calculated on a consolidated basis for Borrowers and their Subsidiaries
for any period as at any date of determination, the net profit (or loss), after
provision for taxes, of Borrowers and their Subsidiaries for such period taken
as a single accounting period.

 

“Notice of Borrowing”
means a notice given by Borrowers to Bank in accordance with Section 3.4(a),
substantially in the form of Exhibit C, with appropriate
insertions.

 

“Notice of
Conversion/Continuation” means a notice given by Borrowers to Bank
in accordance with Section 3.5, substantially in the form of Exhibit D,
with appropriate insertions.

 

“Obligations”
are Borrowers’ obligations to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrowers owe Bank now or later, whether under this
Agreement, the Loan Documents, or otherwise, including, without limitation, all
obligations relating to letters of credit (including reimbursement obligations
for drawn and undrawn letters of credit), cash management services, and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrowers assigned
to Bank, and the performance of Borrowers’ duties under the Loan Documents.

 

“Operating Documents” are, for
any Person, such Person’s formation documents, as certified with the Secretary
of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a
corporation, its bylaws in current form, (b) if such Person is a limited
liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.

 

“Parent” is
Internet Brands, Inc., a Delaware corporation.

 

“Payment/Advance Form”
is that certain form attached hereto as Exhibit B.

 

“Perfection Certificate”
is defined in Section 5.1.

 

“Permitted Acquisitions” means
the acquisition by Borrowers or their Subsidiaries of all or substantially all
of the capital stock or property of another Person or Persons where (i) the
consideration paid by Borrowers or their Subsidiaries in connection with such
transactions does not exceed (a) Twenty Million Dollars ($20,000,000) in
the aggregate in any calendar quarter or (b) Fifteen Million Dollars
($15,000,000) for any one transaction and (ii) where the aggregate EBITDA
of all entities acquired in connection with such transactions in each such
calendar quarter is greater than or equal to One Dollar ($1.00).

 

28

 

“Permitted Distributions”
means:

 

(a)                                  purchases
of capital stock from former employees, consultants and directors pursuant to
repurchase agreements or other similar agreements in an aggregate amount not to
exceed One Million Five Hundred Thousand Dollars ($1,500,000) in any fiscal
year provided that at the time of such purchase no Default or Event of Default
has occurred and is continuing;

 

(b)                                 distributions
or dividends consisting solely of a Borrower’s capital stock;

 

(c)                                  purchases
for value of any rights distributed in connection with any stockholder rights
plan;

 

(d)                                 purchases
of capital stock or options to acquire such capital stock with the proceeds
received from a substantially concurrent issuance of capital stock or
convertible securities;

 

(e)                                  purchases
of capital stock pledged as collateral for loans to employees;

 

(f)                                    purchases
of capital stock in connection with the exercise of stock options or stock
appreciation rights by way of cashless exercise or in connection with the
satisfaction of withholding tax obligations;

 

(g)                                 purchases
of fractional shares of capital stock arising out of stock dividends, splits or
combinations or business combinations; and

 

(h)                                 the
settlement or performance of such Person’s obligations under any equity
derivative transaction, option contract or similar transaction or combination
of transactions.

 

 “Permitted Indebtedness” is:

 

(a)                                  Borrowers’
Indebtedness to Bank under this Agreement and any other Loan Document;

 

(b)                                 (i) any
Indebtedness that does not exceed One Million Five Hundred Thousand Dollars
($1,500,000) in principal amount existing on the Effective Date, and (ii) any
Indebtedness in excess of One Million Five Hundred Thousand Dollars ($1,500,000)
in principal amount existing on the Effective Date and shown on the Perfection
Certificate;

 

(c)                                  Subordinated
Debt;

 

(d)                                 unsecured
Indebtedness to trade creditors incurred in the ordinary course of business;

 

(e)                                  guaranties
of Permitted Indebtedness;

 

(f)                                    Indebtedness
incurred as a result of endorsing negotiable instruments received in the
ordinary course of business;

 

(g)                                 Indebtedness
consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect Borrowers
against fluctuations in interest rates, currency exchange rates, or commodity
prices;

 

(h)                                 Indebtedness
between any Borrower and any of its Subsidiaries or among any of Borrowers’
Subsidiaries;

 

(i)                                     Indebtedness
with respect to documentary letters of credit;

 

(j)                                     capitalized
leases and purchase money Indebtedness not to exceed One Million Five Hundred
Thousand Dollars ($1,500,000) in the aggregate in any fiscal year secured by
Permitted Liens; and

 

29

 

(k)                                  refinanced
Permitted Indebtedness, provided that the amount of such Indebtedness is not
increased except by an amount equal to a reasonable premium or other reasonable
amount paid in connection with such refinancing and by an amount equal to any
existing, but unutilized, commitment thereunder.

 

 “Permitted Investments” are:

 

(a)                                  Investments
existing on the Effective Date;

 

(b)                                 (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or
its agencies or any State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 2 years after its creation and having the highest
rating from either Standard & Poor’s Corporation or Moody’s Investors
Service, Inc., and (iii) Bank’s certificates of deposit maturing no
more than 2 years after issue;

 

(c)                                  Investments
approved by a Parent’s Board of Directors or otherwise pursuant to a
Board-approved investment policy;

 

(d)                                 Investments
in or to a Borrower or any of its Subsidiaries;

 

(e)                                  Investments
consisting of Collateral Accounts in the name of a Borrower or any Subsidiary
so long as Bank has a first priority, perfected security interest in such
Collateral Accounts;

 

(f)                                    Investments
consisting of extensions of credit to a Borrower’s or its Subsidiaries’
customers in the nature of accounts receivable, prepaid royalties or notes
receivable arising from the sale or lease of goods, provision of services or
licensing activities of a Borrower;

 

(g)                                 Investments
received in satisfaction or partial satisfaction of obligations owed by
financially troubled obligors;

 

(h)                                 Investments
acquired in exchange for any other Investments in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization;

 

(i)                                     Investments
acquired as a result of a foreclosure with respect to any secured Investment;

 

(j)                                     Investments
consisting of interest rate, currency, or commodity swap agreements, interest
rate cap or collar agreements or arrangements designated to protect a Person
against fluctuations in interest rates, currency exchange rates, or commodity
prices; and

 

(k)                                  Investments
consisting of loans and advances to employees in an aggregate amount not to
exceed One Million Five Hundred Thousand Dollars ($1,500,000).

 

 “Permitted Liens” are:

 

(a)                                  (i) Liens
securing Permitted Indebtedness described under clause (b) of the
definition of “Permitted Indebtedness” or (ii) Liens arising under this
Agreement or other Loan Documents;

 

(b)                                 Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrowers maintain
adequate reserves on their Books, provided that no notice of any such
Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations adopted thereunder;

 

(c)                                  Liens
(including with respect to capital leases) (i) on property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by a Borrower
or its Subsidiaries incurred for financing such property (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto,
and the proceeds thereof) other than Accounts, Inventory, and Financed
Equipment, or (ii) existing on property (and accessions, additions, parts,
replacements, 

 

30

 

fixtures, improvements
and attachments thereto, and the proceeds thereof) when acquired other than
Accounts, Inventory, and Financed Equipment, if the Lien is confined to such
property (including accessions, additions, parts, replacements, fixtures,
improvements and attachments thereto, and the proceeds thereof);

 

(d)                                 Liens
incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness it secures may not increase;

 

(e)                                  leases
or subleases of real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other
than real property or intellectual property) granted in the ordinary course of
a Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;

 

(f)                                    non-exclusive
license of intellectual property granted to third parties in the ordinary
course of business, and licenses of intellectual property that could not result
in a legal transfer of title of the licensed property that may be exclusive in
respects other than territory and that may be exclusive as to territory only as
to discreet geographical areas outside of the United States;

 

(g)                                 leases
or subleases granted in the ordinary course of a Borrower’s business, including
in connection with a Borrower’s leased premises or leased property;

 

(h)                                 Liens
arising from attachments or judgments, orders, or decrees in circumstances not
constituting an Event of Default under Sections 8.4 and 8.7;

 

(i)                                     Liens
in favor of other financial institutions arising in connection with a Borrower’s
deposit or securities accounts held at such institutions provided Bank has a
perfected security interest in such accounts;

 

(j)                                     Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in
nature arising in the ordinary course of business so long as such Liens attach
only to Inventory, securing liabilities in the aggregate amount not to exceed
One Million Five Hundred Thousand Dollars ($1,500,000) and which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;  and

 

(k)                                  Liens
to secure payment of workers’ compensation, employment insurance, old-age
pensions, social security and other like obligations incurred in the ordinary
course of business (other than Liens imposed by ERISA).

 

 “Person” is any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or government agency.

 

“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

 

“Prime Rate Advance”
means an Advance that bears interest based at the Prime Rate.

 

“Prime Rate Margin”
is (a) if Borrowers’ Debt to Annualized EBITDA Ratio is less than 1.00 to
1.00, zero percent (0%), (b) if Borrowers’ Debt to Annualized EBITDA Ratio
is greater than or equal to 1.00 to 1.00 and less than or equal to than 2.00 to
1.00, one quarter of one percent (0.25%), and (c) if Borrowers’ Debt to
Annualized EBITDA Ratio is greater than 2.00 to 1.00, one half of one percent
(0.50%).  Such Prime Rate Margin shall be
adjusted quarterly based on Borrower’s Debt to Annualized EBITDA reported for
the prior quarter.

 

“Quick Assets”
is, on any date, Borrowers’ and Borrowers’ Subsidiaries consolidated,
unrestricted cash and marketable securities and net accounts receivable
(determined in accordance with GAAP).

 

31

 

“Registered Organization”
is any “registered organization” as defined in the Code with such additions to
such term as may hereafter be made.

 

“Regulatory Change”
means, with respect to Bank, any change on or after the date of this Agreement
in United States federal, state, or foreign laws or regulations, including
Regulation D, or the adoption or making on or after such date of any
interpretations, directives, or requests applying to a class of lenders
including Bank, of or under any United States federal or state, or any foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

 

“Requirement
of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Reserve Requirement”
means, for any Interest Period, the average maximum rate at which reserves
(including any marginal, supplemental, or emergency reserves) are required to
be maintained during such Interest Period under Regulation D against
“Eurocurrency liabilities” (as such term is used in Regulation D) by member
banks of the Federal Reserve System. 
Without limiting the effect of the foregoing, the Reserve Requirement
shall reflect any other reserves required to be maintained by Bank by reason of
any Regulatory Change against (a) any category of liabilities which
includes deposits by reference to which the LIBOR Rate is to be determined as
provided in the definition of LIBOR or (b) any category of extensions of
credit or other assets which include Advances.

 

“Responsible Officer”
is any of the Chief Executive Officer, President, Chief Financial Officer and
Controller of Parent.

 

“Revolving Line”
is an Advance or Advances in an amount equal to (a) Thirty Million Dollars
($30,000,000) prior to Borrowers achieving a trailing four (4) quarter
EBITDA of at least Thirty Five Million Dollars ($35,000,000), and (b) thereafter,
Thirty Five Million Dollars ($35,000,000); provided however, upon implementation
of the Accordion Feature, the term “Revolving Line” shall mean an Advance or
Advances in an amount equal to Seventy Five Million Dollars ($75,000,000).

 

“Revolving Line Maturity Date” is
October 7, 2012.

 

“Securities Account”
is any “securities account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Settlement Date”  is defined in Section 2.1.3.

 

“Subordinated Debt”
is (a) Indebtedness incurred by a Borrower subordinated to such Borrower’s
Indebtedness owed to Bank and which is reflected in a written agreement in a
manner and form reasonably acceptable to Bank and approved by Bank in writing,
and (b) to the extent the terms of subordination do not change adversely
to Bank, refinancings, refundings, renewals, amendments or extensions of any of
the foregoing.

 

“Subsidiary”
means, with respect to any Person, any Person of which more than 50.0% of the
voting stock or other equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly by such Person or
one or more of Affiliates of such Person.

 

“Total Liabilities”
is on any day, obligations that should, under GAAP, be classified as
liabilities on Borrower’s consolidated balance sheet, including all
Indebtedness.

 

 “Transfer” is defined in Section 7.1.

 

“Unused Revolving Line
Facility Fee” is defined in Section 2.4(c).

 

32

 

[Signature page follows.]

 

33

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed as of the Effective Date.

 

	
  BORROWERS:

  	
   

  
	
   

  	
   

  
	
  INTERNET BRANDS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  AUTODATA, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  AUTODATA SOLUTIONS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
									

 

[Signature Page to
Loan and Security Agreement]

[Signatures
continued next page.]

 

 

	
  CARSDIRECT MORTGAGE SERVICES, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  CD1FINANCIAL.COM, LLC

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  INTERNET MEDIA SOLUTIONS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LOANAPP, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
										

 

[Signature Page to
Loan and Security Agreement]

[Signatures
continued next page.]

 

 

	
  BANK:

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Effective Date:

  	
   

  	
   

  
						

 

[Signature Page to
Loan and Security Agreement]

 

 

EXHIBIT A – COLLATERAL DESCRIPTION

 

The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal
property:

 

All goods, Accounts (including health-care
receivables), Equipment, Inventory, contract rights or rights to payment of
money, leases, license agreements, franchise agreements, General Intangibles,
commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

 

all Borrower’s Books relating to the foregoing, and
any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.

 

Notwithstanding the foregoing,
the “Collateral” does not include more than 65% of the presently existing and
hereafter arising issued and outstanding shares of capital stock owned by
Borrower of any foreign Subsidiary which shares entitle the holder thereof to
vote for directors or any other matter.

 

 

EXHIBIT B

 

Loan Payment/Advance Request Form

 

DEADLINE FOR SAME DAY PROCESSING IS NOON P.S.T.*

 

	
  Fax To:

  	
   

  	
  Date:

  	
   

  

 

	
  LOAN PAYMENT:

  
	
   

  
	
  INTERNET BRANDS, INC., on behalf of all Borrowers

  
	
   

  	
   

  	
   

  
	
  From Account #

  	
   

  	
   

  	
  To Account #

  	
   

  
	
   

  	
         (Deposit Account #)

  	
   

  	
   

  	
                    (Loan Account #)

  
	
   

  	
   

  	
   

  
	
  Principal $

  	
   

  	
   

  	
  and/or Interest $

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
   

  	
   

  
										

 

	
  LOAN ADVANCE:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Complete Outgoing Wire Request section
  below if all or a portion of the funds from this loan advance are for
  an outgoing wire.

  
	
   

  	
   

  	
   

  
	
  From Account #

  	
   

  	
   

  	
  To Account #

  	
   

  
	
   

  	
          (Loan Account
  #)

  	
   

  	
   

  	
                 (Deposit
  Account #)

  
	
   

  	
   

  	
   

  
	
  Amount of
  Advance $

  	
   

  	
   

  	
   

  
								

 

All Borrowers’
representations and
warranties in the Loan and Security Agreement are true, correct and complete in
all material respects on the date of the request for an advance; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date:

 

	
  Authorized
  Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  
	
  Print
  Name/Title:

  	
   

  	
   

  	
   

  	
   

  
						

 

OUTGOING WIRE REQUEST:

Complete only if all or a portion
of funds from the loan advance above is to be wired.

Deadline for same day
processing is noon, P.S.T.

 

	
  Beneficiary
  Name:

  	
   

  	
   

  	
  Amount
  of Wire: $

  	
   

  
	
  Beneficiary
  Bank:

  	
   

  	
   

  	
  Account
  Number:

  	
   

  
	
  City and State:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Beneficiary Bank
  Transit (ABA) #:

  	
   

  	
   

  	
  Beneficiary Bank
  Code (Swift, Sort, Chip, etc.):

  	
   

  
	
   

  	
   

  	
   

  	
             (For
  International Wire Only)

  	
   

  
	
   

  	
   

  	
   

  
	
  Intermediary
  Bank:

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  
	
  For Further
  Credit to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Special
  Instruction:

  	
   

  
														

 

By signing below, I (we)
acknowledge and agree that my (our) funds transfer request shall be processed
in accordance with and subject to the terms and conditions set forth in the
agreements(s) covering funds transfer service(s), which agreements(s) were
previously received and executed by me (us).

 

	
  Authorized
  Signature:

  	
   

  	
   

  	
  2nd
  Signature (if required):

  	
   

  
	
  Print
  Name/Title:

  	
   

  	
   

  	
  Print
  Name/Title:

  	
   

  
	
  Telephone
  #:

  	
   

  	
   

  	
  Telephone #:

  	
   

  
									

 

* Unless
otherwise provided for an Advance bearing interest at LIBOR.

 

 

EXHIBIT C

 

FORM OF NOTICE OF BORROWING

 

INTERNET BRANDS, INC., on behalf of all Borrowers

 

	
   

  	
   

  	
  Date:

  

 

TO:         SILICON
VALLEY BANK

3003 Tasman Drive

Santa Clara, CA
95054

Attention:  Corporate Services Department

 

RE:          Loan
and Security Agreement dated as of October 7, 2008 (as amended, modified,
supplemented or restated from time to time, the “Loan
Agreement”), by and between INTERNET BRANDS, INC., AUTODATA, INC.,
AUTODATA SOLUTIONS, INC., CARSDIRECT MORTGAGE SERVICES, INC., CD1FINANCIAL.COM,
LLC, INTERNET MEDIA SOLUTIONS, INC. AND LOANAPP, INC.  (each
a “Borrower” and, collectively, “Borrowers”), and Silicon Valley Bank (the “Bank”)

 

Ladies and
Gentlemen:

 

The undersigned
refers to the Loan Agreement, the terms defined therein and used herein as so
defined, and hereby gives you notice irrevocably, pursuant to Section 3.4(a) of
the Loan Agreement, of the borrowing of an Advance.

 

1.             The Funding Date, which shall be a
Business Day, of the requested borrowing is
                              .

 

2.             The aggregate amount of the requested
borrowing is
$                          .

 

3.             The requested Advance shall consist of
$                      
of Prime Rate Advances and $            
of LIBOR Advances.

 

4.             The duration of the Interest Period for
the LIBOR Advances included in the requested Advance shall be
                    
months.

 

The undersigned
hereby certifies that the following statements are true on the date hereof, and
will be true on the date of the proposed Advance before and after giving effect
thereto, and to the application of the proceeds therefrom, as applicable:

 

(a)           all representations and
warranties of Borrowers contained in the Loan Agreement are true, accurate and
complete in all material respects as of the date hereof; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the
text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date;

 

(b)           no Default or Event of
Default has occurred and is continuing, or would result from such proposed
Advance; and

 

(c)           the
requested Advance will not cause the aggregate principal amount of the outstanding
Advances to exceed, as of the designated Funding Date, (i) the Revolving
Line minus (ii) the amount of all outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, and
minus (iv) the aggregate outstanding Advances (including any amounts used
for Cash Management Services).

 

 

	
   

  	
   

  	
  INTERNET BRANDS, INC., on
  behalf of all

  
	
   

  	
   

  	
  Borrowers

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

For
internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
      

  	
  %

  	
   

  	
   

  

 

 

EXHIBIT D

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

INTERNET BRANDS, INC., on behalf of all Borrowers

 

	
   

  	
   

  	
  Date:

  	
   

  

 

To:                              Silicon
Valley Bank

3003 Tasman Drive

Santa Clara, CA 
95054

Attention:

 

Re:                               Loan
and Security Agreement dated as of October 7, 2008 (as amended, modified,
supplemented or restated from time to time, the “Loan
Agreement”), by and between INTERNET BRANDS, INC., AUTODATA, INC.,
AUTODATA SOLUTIONS, INC., CARSDIRECT MORTGAGE SERVICES, INC., CD1FINANCIAL.COM,
LLC, INTERNET MEDIA SOLUTIONS, INC. and LOANAPP, INC.  (each
a “Borrower” and, collectively, “Borrowers”), and Silicon Valley Bank (the “Bank”)

 

Ladies and Gentlemen:

 

The
undersigned refers to the Loan Agreement, the terms defined therein being used
herein as therein defined, and hereby gives you notice irrevocably, pursuant to
Section 3.5 of the Loan Agreement, of the [conversion] [continuation] of
the Advances specified herein, that:

 

1.             The date of the [conversion] [continuation] is                                 ,
20      .

 

2.             The aggregate amount of the proposed Advances to be
[converted] is $                         
or [continued] is $                            .

 

3.             The Advances are to be [converted into] [continued as]
[LIBOR] [Prime Rate] Advances.

 

4.             The duration of the
Interest Period for the LIBOR Advances included in the [conversion]
[continuation] shall be months.

 

The
undersigned, on behalf of all Borrowers, hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto
and to the application of the proceeds therefrom:

 

(a)           all representations and warranties of
Borrowers stated in the Loan Agreement are true, accurate and complete in all
material respects as of the date hereof; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; and

 

(b)           no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion] [continuation].

 

[Signature page follows.]

 

 

	
   

  	
  INTERNET
  BRANDS, INC., on behalf of all

  
	
   

  	
  Borrowers

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

For
internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

 

EXHIBIT E

 

Forms of
Corporate/LLC Borrowing Resolutions

 

 

BORROWING RESOLUTIONS

 

	
  

  	
   

  	
  Silicon Valley Bank

  

 

CORPORATE BORROWING CERTIFICATE

 

	
  BORROWER:
  [BORROWER]

  	
   

  	
  DATE:
  October 7, 2008

  
	
  BANK:   Silicon Valley Bank

  	
   

  	
   

  

 

I
hereby certify as follows, as of the date set forth above:

 

1.   I
am the Secretary, Assistant Secretary or other officer of the Borrower. My
title is as set forth below.

 

2.   Borrower’s
exact legal name is set forth above. Borrower is a corporation existing under
the laws of the State of

	
   

  	
  .

  

             [print name of state]

 

3.   Attached
hereto are true, correct and complete copies of Borrower’s Articles/Certificate
of Incorporation (including amendments), as filed with the Secretary of State
of the state in which Borrower is incorporated as set forth in paragraph 1
above. Such Articles/Certificate of Incorporation have not been amended,
annulled, rescinded, revoked or supplemented, and remain in full force and
effect as of the date hereof.

 

4.   The
following resolutions were duly and validly adopted by Borrower’s Board of
Directors at a duly held meeting of such directors (or pursuant to a unanimous
written consent or other authorized corporate action). Such resolutions are in
full force and effect as of the date hereof and have not been in any way modified,
repealed, rescinded, amended or revoked, and Bank may rely on them until Bank
receives written notice of revocation from Borrower.

 

RESOLVED,
that any one of the following officers or
employees of Borrower, whose names, titles and signatures are below, may act on
behalf of Borrower:

 

	
  Name

  	
   

  	
  Title

  	
   

  	
  Signature

  	
   

  	
  Authorized to

  Add or Remove

  Signatories

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  

 

RESOLVED
FURTHER, that any one of the
persons designated above with a checked box beside his or her name may, from time
to time, add or remove any individuals to and from the above list of persons
authorized to act on behalf of Borrower.

 

RESOLVED FURTHER, that such
individuals may, on behalf of Borrower:

 

Borrow
Money. Borrow money from Silicon Valley Bank (“Bank”).

Execute
Loan Documents. Execute any loan documents Bank requires.

Grant
Security. Grant Bank a security interest in any of Borrower’s
assets.

 

 

Negotiate
Items. Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

Letters
of Credit. Apply for letters of credit from Bank.

Foreign
Exchange Contracts. Execute spot or forward foreign exchange
contracts.

Further
Acts. Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents
or agreement that waive Borrowers right to a jury trial) they believe to be
necessary to effectuate such
resolutions.

 

RESOLVED FURTHER, that all acts
authorized by the above resolutions and any prior acts relating thereto are
ratified.

 

5.
The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

*** If the Secretary, Assistant Secretary or other
certifying officer executing above is designated by the resolutions set forth
in paragraph 4 as one of the authorized signing officers, this Certificate must
also be signed by a second authorized officer or director of Borrower.

 

I, the
                                                    
of Borrower, hereby certify as to paragraphs 1 through 5 above, as 

                                 [print
title]

of the date set forth
above.

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

	
  

  	
   

  	
  Silicon Valley Bank

  

 

LIMITED LIABILITY COMPANY BORROWING CERTIFICATE

 

	
  BORROWER:

  	
   

  	
  DATE:
  October 7, 2008

  

BANK:   Silicon
Valley Bank

 

I/We hereby certify as
follows, as of the date set forth above:

 

Borrower is duly
organized, existing and in good standing as a

          o
member-managed

          o
manager-managed

 

limited liability company
under the laws of the State of                  ,
and that we are all of Borrower’s

          o
members

          o
managers

 

and that Borrower’s name
shown above is the exact legal name of Borrower.

 

We/ I certify
that at a duly held meeting of Borrower (or by other authorized company action)
the following resolutions were adopted. Such
resolutions are in full force and effect as of the date hereof and have not
been in any way modified, repealed, rescinded, amended or revoked, and Bank may
rely on them until Bank receives written notice of revocation from Borrower.

 

RESOLVED,
that any one of the following individuals,
whose names, titles and signatures are below, may act on behalf of Borrower:

 

	
  Name

  	
   

  	
  Title

  	
   

  	
  Signature

  	
   

  	
  Authorized to

  Add or Remove

  Signatories

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  o

  

 

RESOLVED
FURTHER, that any one of the
persons designated above with a checked box beside his or her name may, from
time to time, add or remove any individuals to and from the above list of
persons authorized to act on behalf of Borrower.

 

RESOLVED
FURTHER, that such
individuals may, on behalf of Borrower:

 

Borrow
Money. Borrow money from Bank.

Execute
Loan Documents. Execute any loan documents Bank requires.

Grant
Security. Grant Bank a security interest in any of Borrower’s
assets.

Negotiate
Items. Negotiate or discount all drafts, trade acceptances,
promissory notes, or other indebtedness in which Borrower has an interest and
receive cash or otherwise use the proceeds.

Letters
of Credit. Apply for letters of credit from Bank.

Foreign
Exchange Contracts. Execute spot or forward foreign exchange
contracts.

 

 

Further
Acts. Designate other individuals to request advances, pay
fees and costs and execute other documents or agreements (including documents
or agreement that waive Borrowers right to a
jury trial) they believe to be necessary to effectuate such resolutions.

 

RESOLVED FURTHER, that all acts
authorized by the above resolutions and any prior acts relating thereto are
ratified.

 

The
persons listed above are Borrower’s members/managers or employees with their
titles and signatures shown next to their names.

 

The execution, delivery,
and performance of this Certificate are within the undersigned’s powers, have
been duly authorized, and are not in conflict with nor constitute a breach of
any provision contained in the undersigned’s operating agreement, nor will they
constitute an event of default under any material agreement to which the undersigned
is a party or by which the undersigned is bound. No consent from any other
party is required to execute this Certificate.

 

We/I certify that the
persons listed below are Borrower’s members/managers with their signatures
shown above their names.

 

We/I have read all the
provisions of this Limited Liability Company Borrowing Certificate, and we
certify and agree to its terms.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    [print
  name] 

  	
   

  	
    [print
  name] 

  
	
   

  	
   

  	
   

  
	
    [title]

  	
   

  	
    [title]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    [print
  name] 

  	
   

  	
    [print
  name] 

  
	
   

  	
   

  	
   

  
	
    [title]

  	
   

  	
    [title]

  

 

 

EXHIBIT F

 

COMPLIANCE CERTIFICATE

 

	
  TO:

  	
   

  	
  SILICON VALLEY
  BANK

  	
  Date:

  	
   

  
	
  FROM:

  	
   

  	
  INTERNET BRANDS,
  INC., for itself and on behalf of all Borrowers

  	
   

  	
   

  

 

The undersigned
authorized officer of Internet Brands, Inc. (“Parent”) certifies, on behalf
of itself and all other Borrowers, that under the terms and conditions of the
Loan and Security Agreement between Parent, the other Borrowers and Bank (the “Agreement”),
(1) Borrowers are in complete compliance for the period ending
                              
with all required covenants except as noted below, (2) there are no Events
of Default, (3) all representations and warranties in the Agreement are
true and correct in all material respects on this date except as noted below;
provided, however, that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (4) Borrowers,
and each of their Subsidiaries, have timely filed all required tax returns and
reports, and Borrowers have timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrowers except as
otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (5) no Liens have been levied or claims made against Borrowers or any
of their Subsidiaries relating to unpaid employee payroll or benefits of which
Borrowers have not previously provided written notification to Bank. Attached
are the required documents supporting the certification. The undersigned
certifies that these are prepared in accordance with GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes. The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrowers are not in compliance with any
of the terms of the Agreement, and that compliance is determined not just at
the date this certificate is delivered. Capitalized terms used but not
otherwise defined herein shall have the meanings given them in the Agreement.

 

Please
indicate compliance status by circling Yes/No under “Complies” column.

 

	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly balance
  sheet with Compliance Certificate

  	
   

  	
  Monthly within
  45 days

  	
   

  	
  Yes  No

  
	
  Annual financial
  statement (CPA Audited) + CC

  	
   

  	
  FYE within 150
  days

  	
   

  	
  Yes  No

  
	
  10-Q, 10-K and
  8-K

  	
   

  	
  Within 5 days
  after filing with SEC

  	
   

  	
  Yes  No

  
	
  Quarterly report
  of Cash/Investment Balances and Permitted Acquisitions

  	
   

  	
  Quarterly within
  45 days

  	
   

  	
  Yes  No

  
	
  Annual
  Projections

  	
   

  	
  Earlier of 30
  days after FYE or board approval

  	
   

  	
  Yes  No

  

 

	
  The following
  Intellectual Property was registered by a Borrower after the Effective Date
  (if no registrations, state “None”)

  

 

	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Adjusted
  Quick Ratio (Monthly)

  	
   

  	
  1.00:1.00

  	
   

  	
  :1.00

  	
   

  	
  Yes  No

  
	
  Minimum EBITDA
  (Quarterly)

  	
   

  	
  See Attached

  	
   

  	
  $

  	
   

  	
  Yes  No

  
	
  Maximum Debt to
  Annualized EBITDA (Quarterly)

  	
   

  	
  *

  	
   

  	
  :1.00

  	
   

  	
    Yes  No*

  

 

*  2.25 to 1.00
required after implementation of the Accordion Feature but to be reported
quarterly for purposes of determining applicable margins and letter of credit
fees

 

 

The following financial
covenant analyses and information set forth in Schedule 1 attached hereto are
true and accurate as of the date of this Certificate.

 

The following are the
exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions
to note.”)

 

 

 

	
  INTERNET
  BRANDS, INC., for itself and 

  	
  BANK USE ONLY

  
	
  on
  behalf of all Borrowers

  	
   

  	
   

  
	
   

  	
  Received
  by:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
  Compliance
  Status:            Yes   No

  
												

 

 

Schedule 1 to Compliance
Certificate

 

Financial Covenants of
Borrower

 

I.              Adjusted Quick Ratio
(Section 6.7(a))

 

Required:               1.00:1.00

 

Actual:

 

	
  A.

  	
   

  	
  Aggregate value of the unrestricted cash and
  marketable securities of Borrowers and their Subsidiaries

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Aggregate value of the net accounts receivable of
  Borrowers and their Subsidiaries (per GAAP)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Quick Assets (line A plus line B)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Aggregate value of Obligations to Bank

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate value of liabilities of Borrowers and
  their Subsidiaries (including all Indebtedness) that matures within one
  (1) year.

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Aggregate value of all amounts received or
  invoiced by Borrowers in advance of performance under contracts and not yet
  recognized as revenue

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  Current Liabilities (line D plus line E minus line
  F)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Adjusted Quick Ratio (line C divided by line G)

  	
   

  	
   

  

 

Is line H equal to or
greater than 1.00:1:00?

 

	
                o  No,
  not in compliance

  	
   

  	
  o  Yes,
  in compliance

  

 

 

II.            EBITDA (Section 6.7(b))

 

Required:

 

(i) If the total amount of outstanding
Obligations is less than Ten Million Dollars ($10,000,000) at all times during
a quarter, EBITDA of at least Five Million Dollars ($5,000,000); and

 

(ii)           If
the total amount of outstanding Obligations is greater than or equal to Ten
Million Dollars ($10,000,000) at any time during a quarter, EBITDA of at least
the following:

 

	
  Period

  	
   

  	
  EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each quarter
  from Q3 2008 through Q2 2009

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  Each quarter
  from Q3 2009 through Q2 2010

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
  Q3 2010 and each
  quarter thereafter

  	
   

  	
  $

  	
  8,500,000

  	
   

  

 

Actual:

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Net Income of
  Borrowers and their Subsidiaries

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Income taxes

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Depreciation
  (including Depreciation in Cost of Sales) & Amortization

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Equity Based
  Compensation

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Other expense
  (foreign exchange loss, realized investment losses, loss on asset sale, etc.)

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  to the extent
  deducted from Net Income, non-recurring, non-cash charges

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  to the extent deducted from Net Income,
  non-recurring cash charges (but only to the extent such charges do not exceed
  Five Million Dollars ($5,000,000) in any calendar year and Three Million
  Dollars ($3,000,000) per event)

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Interest income

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Other income
  (foreign exchange gain, realized investment gains, gain on asset sale, etc.)

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

  	
  EBITDA (line A plus line B plus line C plus line D
  plus line E plus line F plus line G minus line H minus line I)

  	
   

  	
        

  	
   

  

 

Is line J equal to or greater than the amount required
above for the applicable quarter?

 

	
  o No,
  not in compliance

  	
   

  	
                                 o Yes,
  in compliance

  

 

 

III.           Debt to Annualized EBITDA (Section 6.7(c))

 

Required:               2.25:1.00
(after implementation of the Accordion Feature)

 

Actual:

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Aggregate value
  of all Indebtedness of Borrowers and their Subsidiaries

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  2X the value of
  Schedule II, line J above measured on a trailing 6 month basis

  	
   

  	
  $

  	
         

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Debt to
  Annualized EBITDA Ratio (line A divided by line B)

  	
   

  	
   

  	
         

  	
   

  

 

Is line C equal to or greater than 2.25:1.00?

 

	
                 o  No,
  not in compliance

  	
   

  	
                        o  Yes,
  in compliance

  

 

 

EXHIBIT G

 

REPORT OF PERMITTED ACQUISITIONS

 

[Please see attached Excel Spreadsheet]

 

 

	
  EBITDA Calculation for Permitted Acquisitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Net
  Income of Acquired Entity

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Income
  taxes

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Depreciation
  (including Depreciation in Cost of Sales) & Amortization

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Equity
  Based Compensation

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Other
  expense (foreign exchange loss, realized investment losses, loss on asset
  sale, etc.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  to the extent deducted
  from Net Income, non-recurring, non-cash charges

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

  	
  to the extent deducted
  from Net Income, non-recurring cash charges (but only to the extent such
  charges do not exceed Five Million Dollars ($5,000,000) in any calendar year
  and Three Million Dollars ($3,000,000) per event)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  Interest
  income

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Other
  income (foreign exchange gain, realized investment gains, gain on asset sale,
  etc.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

  	
  EBITDA
  (line A plus line B plus line C plus line D plus line E plus line F plus line
  G minus line H minus line I)

  	
   

  	
  $

  	
   

  

 

aExhibit 10.1

 

Execution Version

 

Published CUSIP Number:
[                ]

 

 

CREDIT AGREEMENT

 

Dated as of October 8, 2008

 

among

 

QUIDEL CORPORATION

 

as Borrower,

 

BANK OF AMERICA, N.A.,

as Agent, Swing Line Lender

and

L/C Issuer,

 

U.S. BANK N.A., as Syndication Agent

 

and

 

The Other Lenders Party from time to time
hereto

 

BANC OF
AMERICA SECURITIES LLC,

 

as

 

Sole Lead Arranger and Sole Book Manager

 

 

 

	
  ARTICLE I

  	
  DEFINITIONS AND ACCOUNTING TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Defined Terms

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Other Interpretive Provisions

  	
  27

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Accounting Terms

  	
  28

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Rounding

  	
  28

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Times of Day

  	
  29

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Letter of Credit Amounts

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE COMMITMENTS AND CREDIT
  EXTENSIONS

  	
  29

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Committed Loans

  	
  29

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Borrowings, Conversions and Continuations of
  Committed Loans

  	
  29

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Letters of Credit

  	
  31

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Swing Line Loans

  	
  40

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Prepayments

  	
  43

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Termination or Reduction of Commitments

  	
  46

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Repayment of Loans

  	
  46

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Interest

  	
  47

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Fees

  	
  47

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Computation of Interest and Fees; Retroactive
  Adjustments of Applicable Rate

  	
  48

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Evidence of Debt

  	
  49

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  Payments Generally

  	
  49

  
	
   

  	
   

  	
   

  
	
  2.13

  	
  Sharing of Payments

  	
  51

  
	
   

  	
   

  	
   

  
	
  2.14

  	
  Increase in Commitments

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  TAXES, YIELD PROTECTION AND
  ILLEGALITY

  	
  53

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Taxes

  	
  53

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Illegality

  	
  56

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Inability to Determine Rates

  	
  56

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Increased Costs

  	
  57

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Compensation for Losses

  	
  58

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Mitigation Obligations; Replacement of Lenders

  	
  59

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  Survival

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  CONDITIONS PRECEDENT TO CREDIT
  EXTENSIONS

  	
  59

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions of Initial Credit Extension

  	
  59

  

 

 

	
  4.2

  	
  Conditions to all Credit Extensions

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND WARRANTIES

  	
  64

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Existence, Qualification and Power; Compliance with
  Laws

  	
  64

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Authorization; No Contravention

  	
  64

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Governmental Authorization; Other Consents

  	
  64

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Binding Effect

  	
  64

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Financial Statements; No Material Adverse Effect

  	
  65

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Litigation

  	
  65

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  No Default

  	
  65

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Ownership of Property; Liens

  	
  66

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Environmental Compliance

  	
  66

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Insurance

  	
  66

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  Taxes

  	
  66

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  ERISA Compliance

  	
  66

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  Subsidiaries; Equity Interests

  	
  67

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  Margin Regulations; Investment Company Act; Public
  Utility Holding Company Act

  	
  68

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  Disclosure

  	
  68

  
	
   

  	
   

  	
   

  
	
  5.16

  	
  Compliance with Laws

  	
  68

  
	
   

  	
   

  	
   

  
	
  5.17

  	
  Intellectual Property; Licenses, Etc

  	
  68

  
	
   

  	
   

  	
   

  
	
  5.18

  	
  Rights in Collateral; Priority of Liens

  	
  69

  
	
   

  	
   

  	
   

  
	
  5.19

  	
  Solvency

  	
  70

  
	
   

  	
   

  	
   

  
	
  5.20

  	
  Casualty, Etc

  	
  70

  
	
   

  	
   

  	
   

  
	
  5.21

  	
  No Medicare/Medicaid Receivables

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  AFFIRMATIVE COVENANTS

  	
  70

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial Statements

  	
  71

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Certificates; Other Information

  	
  71

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Notices

  	
  74

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Payment of Obligations

  	
  74

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Preservation of Existence, Etc

  	
  74

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Maintenance of Properties; Application of Net
  Insurance/Condemnation Proceeds

  	
  75

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Maintenance of Insurance

  	
  77

  

 

 

	
  6.8

  	
  Compliance with Laws and Contractual Obligations

  	
  77

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Books and Records

  	
  78

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Inspection Rights

  	
  79

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Use of Proceeds

  	
  78

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  Financial Covenants

  	
  78

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  Additional Guarantors

  	
  78

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  Collateral Records

  	
  79

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  Cash Management System

  	
  79

  
	
   

  	
   

  	
   

  
	
  6.16

  	
  Security Interests

  	
  79

  
	
   

  	
   

  	
   

  
	
  6.17

  	
  Compliance with Environmental Laws

  	
  80

  
	
   

  	
   

  	
   

  
	
  6.18

  	
  Further Assurances

  	
  80

  
	
   

  	
   

  	
   

  
	
  6.19

  	
  Material Contracts

  	
  81

  
	
   

  	
   

  	
   

  
	
  6.20

  	
  Medicare/Medicaid Receivables

  	
  81

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  NEGATIVE COVENANTS

  	
  81

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Liens

  	
  81

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Investments

  	
  82

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Indebtedness

  	
  83

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Fundamental Changes

  	
  84

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Dispositions

  	
  84

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Restricted Payments

  	
  85

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Change in Nature of Business

  	
  86

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Transactions with Affiliates

  	
  86

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  Burdensome Agreements

  	
  86

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Use of Proceeds

  	
  87

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Foreign Subsidiaries; OSC

  	
  87

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  Capital Expenditures

  	
  87

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  Amendments of Organization Documents

  	
  87

  
	
   

  	
   

  	
   

  
	
  7.14

  	
  Accounting Changes

  	
  88

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  EVENTS OF DEFAULT AND REMEDIES

  	
  88

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Events of Default

  	
  88

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Remedies Upon Event of Default

  	
  90

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Application of Funds

  	
  91

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  AGENT

  	
  92

  

 

 

	
  9.1

  	
  Appointment and Authority

  	
  92

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Rights as a Lender

  	
  92

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Exculpatory Provisions

  	
  92

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Reliance by Agent

  	
  93

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Delegation of Duties

  	
  93

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Resignation of Agent

  	
  94

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Non-Reliance on Agent and Other Lenders

  	
  95

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  No Other Duties, Etc

  	
  95

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Agent May File Proofs of Claim

  	
  95

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Collateral and Guaranty Matters

  	
  96

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Secured Cash Management Agreements and Secured Hedge
  Agreements

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  MISCELLANEOUS

  	
  97

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Amendments, Etc

  	
  97

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Notices and Other Communications; Facsimile Copies

  	
  98

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  No Waiver; Cumulative Remedies

  	
  100

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Expenses; Indemnity; Damage Waiver

  	
  101

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Payments Set Aside

  	
  102

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Successors and Assigns

  	
  103

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Treatment of Certain Information; Confidentiality

  	
  107

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Right of Set-off

  	
  107

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Interest Rate Limitation

  	
  108

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Counterparts; Integration; Effectiveness

  	
  108

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Survival of Representations and Warranties

  	
  108

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  Severability

  	
  109

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  Replacement of Lenders

  	
  109

  
	
   

  	
   

  	
   

  
	
  10.14

  	
  Governing Law; Jurisdiction; Etc

  	
  109

  
	
   

  	
   

  	
   

  
	
  10.15

  	
  Waiver of Right to Trial by Jury

  	
  110

  
	
   

  	
   

  	
   

  
	
  10.16

  	
  California Judicial Reference

  	
  111

  
	
   

  	
   

  	
   

  
	
  10.17

  	
  No Advisory or Fiduciary Responsibility

  	
  111

  
	
   

  	
   

  	
   

  
	
  10.18

  	
  Electronic Execution of Assignments and Certain
  Other Documents

  	
  111

  
	
   

  	
   

  	
   

  
	
  10.19

  	
  USA PATRIOT Act

  	
  112

  

 

 

SCHEDULES

 

	
  2.1

  	
  Commitments and Pro Rata Shares

  
	
  4.1

  	
  Deposit Accounts and Securities Accounts

  
	
  5.5

  	
  Material Indebtedness and Other Liabilities

  
	
  5.9

  	
  Environmental Matters

  
	
  5.13

  	
  Subsidiaries and Other Equity Investments

  
	
  5.17(a)

  	
  IP Rights

  
	
  5.17(b)

  	
  Material Intellectual Property Licenses

  
	
  5.18

  	
  Existing UCC and IP Filings

  
	
  7.1

  	
  Existing Liens

  
	
  7.3

  	
  Existing Indebtedness

  
	
  10.2

  	
  Agent’s Office, Certain Addresses for Notices

  

 

EXHIBITS

 

	
  A-1

  	
  Form of Committed Loan Notice

  
	
  A-2

  	
  Form of Swing Line Loan Notice

  
	
  B

  	
  Form of Note

  
	
  C

  	
  Form of Guaranty

  
	
  D

  	
  Form of Compliance Certificate

  
	
  E

  	
  Form of Assignment and Assumption

  
	
  F

  	
  Form of Security Agreement

  
	
  G

  	
  Form of Landlord Waiver

  
	
  H

  	
  Form of Deposit Account Control Agreement

  
	
  I

  	
  Form of Securities Account Control Agreement

  
	
  J

  	
  Form of Solvency Certificate

  
	
  K

  	
  Form of Opinion of Counsel to Loan Parties

  

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT
(this “Agreement”) is entered into as of October 8,
2008 among QUIDEL CORPORATION, a Delaware
corporation (“Borrower”), each lender from
time to time party hereto (collectively, “Lenders”
and individually, a “Lender”), U.S. BANK N.A., as Syndication Agent, and BANK OF AMERICA, N.A., as
Agent, Swing Line Lender and L/C Issuer.

 

Borrower has requested that the Lenders
provide a revolving credit facility, and the Lenders are willing to do so on
the terms and conditions set forth herein. 
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

 

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.

 

1.1          Defined
Terms.  As used in this Agreement,
the following terms shall have the meanings set forth below:

 

“Acquisition”
means any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business unit or
division of a Person, or of any significant portion of any business unit or
division if such portion exceeds $5,000,000 in the aggregate, (b) the
acquisition of all of the Equity Interests of any Person, or otherwise causing
any Person to become a wholly-owned Subsidiary, or (c) a merger or
consolidation or any other combination with another Person.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form
supplied by Agent.

 

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified. 
“Control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings
correlative thereto.  Without limiting
the generality of the foregoing, a Person shall be deemed to be Controlled by
another Person if such other Person possesses, directly or indirectly, power to
vote 10% or more of the
securities having ordinary voting power for the election of directors, managing
general partners or the equivalent.

 

“Agent”
means Bank of America in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.

 

“Agent’s Office”
means Agent’s address and, as appropriate, account as set forth on Schedule
10.2, or such other address or account as Agent may from time to time
notify Borrower and Lenders.

 

“Agent-Related Persons”   means Agent, together with its Affiliates, and
the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.

 

1

 

“Aggregate Commitments”
means the Commitments of all Lenders.

 

“Agreement”
means this Credit Agreement.

 

“Applicable Rate”
means from time to time, the following percentages per annum, based upon the
Funded Debt to EBITDA Ratio (the “Financial Covenant”)
as set forth in the most recent Compliance Certificate received by the Agent
pursuant to Section 6.2(b).

 

Applicable
Rate

 

	
  Pricing

  Level

  	
   

  	
  Funded Debt to EBITDA

  Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar Rate

  Margin

  or Standby

  Letters of Credit

  	
   

  	
  Base Rate

  Margin

  	
   

  
	
  1

  	
   

  	
  Greater than
  2.50:1.00

  	
   

  	
  0.50

  	
  %

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  
	
  2

  	
   

  	
  Less than or
  equal to 2.50:1.00 but greater than or equal to 2.00:1.00

  	
   

  	
  0.45

  	
  %

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  
	
  3

  	
   

  	
  Less than
  2.00:1.00 but greater than or equal to 1.50:1.00

  	
   

  	
  0. 40

  	
  %

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  
	
  4

  	
   

  	
  Less than
  1.50:1.00 but greater than or equal to 1.00:1.00

  	
   

  	
  0.35

  	
  %

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  
	
  5

  	
   

  	
  Less than
  1.00:1.00

  	
   

  	
  0.30

  	
  %

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  

 

Any increase
or decrease in the Applicable Rate resulting from a change in the Financial
Covenant shall become effective commencing on the 5th Business Day
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.2(b); provided, however, that if no
Compliance Certificate is delivered when due in accordance with such Section,
then, upon the request of the Required Lenders, Pricing Level 1 shall apply
commencing on the 5th Business Day following the date such
Compliance Certificate was required to have been delivered to but excluding the
date such Compliance Certificate is received by Agent and, thereafter, the
pricing level indicated by such Compliance Certificate until such pricing level
is required to be adjusted pursuant to the terms of this definition.  The Applicable Rate in effect from the
Closing Date through the date a Compliance Certificate is delivered pursuant to
Section 6.2(b) for the reporting period ending on September 30,
2008 shall be determined based upon Pricing Level 5.

 

“Approved Fund”
means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“Arranger”
means Banc of America Securities
LLC, in its capacity as sole lead arranger and sole book manager.

 

2

 

“Asset Sale”
means the sale by Borrower or any of its Subsidiaries to any Person other than
Borrower or its wholly-owned Guarantors of (i) any of the stock of any of
Borrower’s Subsidiaries (other than directors’ qualifying shares to the extent
required by law),  (ii) substantially
all of the assets of any division or line of business of Borrower or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible)
of Borrower or any of its Subsidiaries (other than (a) inventory and Cash
Equivalents sold in the ordinary course of business, (b) sales,
assignments, transfers or dispositions of accounts in the ordinary course of
business for purposes of collection, (c) subleases of real property leases
no longer necessary to the business of Borrower and its Subsidiaries, (d) non-exclusive
licenses of immaterial IP Rights in the ordinary course of business for not less
than fair market value, (e) non-exclusive licenses of IP Rights in the
ordinary course of business solely in connection with cooperative agreements
with third parties for further development of such IP Rights, (f) dispositions
for fair value of equipment that is obsolete, worn-out or no longer used or
useful in the business of Borrower or any of its Subsidiaries, (g) dispositions
by means of trade-in, of equipment used in the ordinary course of business, so
long as such equipment is replaced, substantially concurrently, by like-kind
equipment and (h) any such other assets to the extent that the aggregate
value of such assets sold in any single transaction or related series of
transactions is equal to $100,000 or less).

 

“Assignee Group”
means two or more Eligible Assignees that are Affiliates of one another or two
or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an Eligible
Assignee (with the consent of any party whose consent is required by Section 10.6(b)),
and accepted by Agent, in substantially the form of Exhibit E or
any other form approved by Agent.

 

“Attorney Costs”
means and includes all reasonable fees, expenses and disbursements of any law
firm or other external counsel and, without duplication, the allocated cost of
internal legal services and all expenses and disbursements of internal counsel.

 

“Attributable Indebtedness”
means, on any date, (a) in respect of any capital lease of any Person, the
capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of
any Synthetic Lease Obligation, the capitalized amount of the remaining lease
payments under the relevant lease that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease.

 

“Audited Financial
Statements” means the audited consolidated balance sheet of
Borrower and its Subsidiaries for the fiscal year ended December 31, 2007 and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year
of Borrower and its Subsidiaries, including the notes thereto.

 

“Availability Period”
means the period from and including the Closing Date to the earliest of (a) the
Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.6, and (c) the date of termination of
the Commitment of each Lender to make Loans and of the obligation of the L/C
Issuer to make L/C Credit Extensions pursuant to Section 8.2.

 

3

 

“Bank of America”
means Bank of America, N.A. and its successors.

 

“Base Rate”
means for any day a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its “prime
rate.”  The “prime rate” is a rate set by
Bank of America based upon various factors including Bank of America’s costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.  Any change in
such rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.

 

“Base Rate Committed Loan”
means a Committed Loan that is a Base Rate Loan.

 

“Base Rate Loan”
means a Loan that bears interest based on the Base Rate.

 

“Borrower”
has the meaning specified in the introductory paragraph hereto.

 

“Borrowing”
means a Committed Borrowing or a Swing Line Borrowing, as the context requires.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
State of California or the state where Agent’s Office is located and, if such
day relates to any Eurodollar Rate Loan, means any such day on which dealings
in Dollar deposits are conducted by and between banks in the London interbank
Eurodollar market.

 

“Capital Expenditures” means, with respect to any period,
the aggregate of all expenditures of Borrower and its Subsidiaries during such
period determined on a consolidated basis that, in accordance with GAAP, are or
should be included in “acquisition of property and equipment” or similar items
reflected in the consolidated statement of cash flows of Borrower and its
Subsidiaries; provided that Capital Expenditures shall not include any
expenditures (i) to the extent made with Net Insurance/Condemnation
Proceeds in accordance with Section 2.5(d)(ii) or with Net Asset Sale
Proceeds in accordance with Section 2.5(d)(i), (ii) constituting tenant
improvements under leases to the extent reimbursed or required to be reimbursed
by the landlord with respect thereto within one year of expenditure (and, if
required to be reimbursed, which are in fact so reimbursed within such period),
or (iii) which constitute a Permitted Acquisition permitted under Section 7.2(f) or
an Investment permitted under Section 7.2(h) or (i).

 

“Cash” means
money, currency or a credit balance in a Deposit Account.

 

“Cash Collateral”
means the Cash deposited with the Agent as collateral when Borrower Cash
Collateralizes L/C Obligations.

 

“Cash Collateralize”
has the meaning specified in Section 2.3(g).

 

“Cash Equivalents”
means, as at any date of determination, (i) marketable securities (a) issued
or directly and unconditionally guaranteed as to interest and principal by the
United 

 

4

 

States government or (b) issued
by any agency of the United States the obligations of which are backed by the
full faith and credit of the United States, in each case maturing within one
year after such date; (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof, in each case maturing within one
year after such date and having, at the time of the acquisition thereof, one of
the two highest ratings obtainable from either Standard & Poor’s (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”); (iii) commercial
paper maturing no more than one year from the date of creation thereof and
having, at the time of the acquisition thereof, a rating of at least A-1 from
S&P or at least P-1 from Moody’s; (iv) certificates of deposit or
bankers’ acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the laws of
the United States of America or any state thereof or the District of Columbia
that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and/or (v) shares
of any money market mutual fund that (a) has at least 90% of its assets
invested continuously in the types of investments referred to in clauses (i) through
(iv) above and (b) has net assets of not less than $500,000,000.

 

“Cash Management Agreement”
means any agreement to provide cash management services, including treasury,
depository, overdraft, credit or debit card, electronic funds transfer and
other cash management arrangements.

 

“Cash Management Bank” means any
Person that, at the time it enters into a Cash Management Agreement, is a
Lender or an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement.

 

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

 

“Change of Control”
means, with respect to any Person, an event or series of events by which:

 

(a)           any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that
such person or group has the right to acquire (such right, an “option right”),
whether such right is exercisable immediately or only after the passage of
time) directly or indirectly, of 30% or more of the equity securities of such
Person entitled to vote for members of the board of directors or equivalent
governing body of such Person on a fully diluted basis (and taking into account
all such securities that such person or group has the right to acquire pursuant
to any option right); or

 

5

 

(b)           during any period
of 24 consecutive months, a majority of the members of the board of directors
or other equivalent governing body of such Person cease to be composed of
individuals (i) who were members of that board or equivalent governing
body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to
in clause (i) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as a
result of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other than
a solicitation for the election of one or more directors by or on behalf of the
board of directors).

 

“Closing Date”
means the first date all the conditions precedent in Section 4.1
are satisfied or waived in accordance with Section 10.1.

 

“Code” means
the Internal Revenue Code of 1986.

 

“Collateral”
shall mean any and all assets and rights and interests in or to property of Borrower
and each of the other Loan Parties, whether real or personal, tangible or
intangible, in which a Lien is granted or purported to be granted to Agent for
the benefit of the Secured Parties pursuant to the Collateral Documents.

 

“Collateral Documents”
means the Security Agreement, the Control Agreements, the Landlord Waivers, and
all agreements, instruments and documents now or hereafter executed and
delivered in connection with this Agreement pursuant to which Liens are granted
or purported to be granted to Agent for the benefit of the Secured Parties in
Collateral securing all or part of the Obligations each in form and substance
satisfactory to Agent.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Committed Loans to
Borrower pursuant to Section 2.1, (b) purchase participations in
L/C Obligations and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.1 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

 

“Committed Borrowing”
means borrowing consisting of simultaneous Committed Loans of the same Type
and, in the case of Eurodollar Rate Loans, having the same Interest Period made
by each of the Lenders pursuant to Section 2.1.

 

“Committed Loan”
has the meaning specified in Section 2.1.

 

“Committed Loan Notice”
means a notice of (a) a Committed Borrowing, (b) a conversion of
Committed Loans from one Type to the other, or (c) a continuation of
Eurodollar 

 

6

 

Rate Loans, pursuant to Section 2.2(a),
which, if in writing, shall be substantially in the form of Exhibit A-1.

 

“Compliance Certificate”
means a certificate substantially in the form of Exhibit D.

 

“Contractual Obligation”
means, as to any Person, any provision of any security issued by such Person or
of any agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

 

“Control”
has the meaning specified in the definition of “Affiliate.”

 

“Control Agreement”
means an agreement, satisfactory in form and substance to Agent substantially
in the form of Exhibit H or Exhibit I, as applicable,
(with such changes that are reasonably acceptable to Agent) and executed by the
financial institution or securities intermediary at which a Deposit Account or
Securities Account, as the case may be, is maintained, pursuant to which such
financial institution or securities intermediary confirms and acknowledges
Agent’s security interest in such account and agrees that the financial
institution or securities intermediary, as the case may be, will comply with
instructions originated by Agent as to disposition of funds in such account,
without further consent by Borrower or the applicable Subsidiary, as the case
may be.

 

“Credit Extension”
means each of the following:  (a) a
Borrowing and (b) an L/C Credit Extension.

 

“Debtor Relief Laws”
means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

“Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.

 

“Default Rate”
means (a) when used with respect to Obligations other than L/C Fees,
Secured Hedge Agreements and Secured Cash Management Agreements, an interest
rate equal to (i) the Base Rate plus (ii) the Applicable Rate,
if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided,
however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used
with respect to L/C Fees, a rate equal to the Applicable Rate plus 2% per
annum, in all cases to the fullest extent permitted by applicable Laws.

 

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Committed
Loans, participations in L/C Obligations or participations in Swing Line Loans
required to be funded by it hereunder within one Business Day of the date required
to be funded by it hereunder unless such failure has been cured, (b) has
otherwise failed to pay over to Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute or unless such failure has 

 

7

 

been cured, or (c) has
been deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

 

“Deposit Account”
means a demand, time, savings, passbook or similar account maintained with a
Person engaged in the business of banking, including a savings bank, savings
and loan association, credit union or trust company.

 

“Disposition”
or “Dispose” means the sale, transfer,
license, lease or other disposition (including any sale and leaseback
transaction) of any property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.

 

“Dollar” and
“$” mean lawful money of the United
States.

 

“Domestic Subsidiary”
means any Subsidiary that is organized or existing under the laws of the United
States, any state thereof or the District of Columbia.

 

“Dormant Foreign Subsidiary”
means Quidel Deutschland, GmbH, Metra Biosystems, GMBH, Metra Biosystems,
Limited (UK) and Metra Biosystems, Quidel Limited (Italy).

 

“EBITDA”
means for any period, an amount determined for Borrower and its Subsidiaries on
a consolidated basis equal to: net income, less income or plus loss from
discontinued operations and extraordinary items, plus income taxes, plus
interest expense and debt issuance costs and commissions, discounts and other
fees and charges associated with initial incurrence of any Indebtedness, plus
non-cash stock compensation expenses, plus depreciation, plus amortization
(including amortization of inventory write-ups and deferred revenue
adjustments), plus transaction expenses or other initial non cash or fair value
adjustments related to any merger, acquisition or joint venture, and
non-recurring and non-cash charges associated with any impairment analysis
required under Financial Accounting Standards No. 142 and 144; provided
that EBITDA shall be determined after giving effect on a pro forma basis to any
Permitted Acquisitions that have been consummated to the extent either Agent
has approved the financial statements of the applicable acquired Persons or
assets or such financial statements are audited by a national accounting firm
reasonably acceptable to Agent (and in either case giving effect to pro forma
adjustments as determined by the Board of Directors of Borrower in good faith
and approved by Agent).

 

“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Section 10.6(b)(iii),
(v) and (vi) (subject to such consents, if any, as may be
required under Section 10.6(b)(iii)).

 

“Environmental Laws”
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to hazardous
substances or wastes, air emissions and discharges to waste or public systems.

 

8

 

“Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of Borrower, any other Loan Party or any of their respective Subsidiaries
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Environmental
Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or
other ownership or profit interests in) such Person, all of the warrants,
options or other rights for the purchase or acquisition from such Person of
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or
business (whether or not incorporated) under common control with Borrower
within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code). 
Any former ERISA Affiliate of Borrower or its Subsidiaries shall
continue to be considered an ERISA Affiliate within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of
Borrower or its Subsidiaries and with respect to liabilities arising after such
period for which Borrower or its Subsidiaries could be liable under the Code or
ERISA.

 

“ERISA Event” means (a) a
Reportable Event with respect to a Pension Plan; (b) a withdrawal by
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate; (g) the
occurrence of an act or omission which could give rise to the imposition on
Borrower, its Subsidiaries or any of their ERISA 

 

9

 

Affiliates
of material fines, penalties, taxes or related charges under Chapter 43 of the
Code or under Sections 409, 502(c), (i) or(l) or 4071 of ERISA in
respect of any Plan; (h) the assertion of a material claim (other than
routine claims for benefits) against any Plan other than a Multiemployer Plan
or the assets thereof, or against Borrower, its Subsidiaries or any of their
ERISA Affiliates in connection with any Plan; (i) receipt from the
Internal Revenue Service of notice of failure of any Plan to qualify under Section 401(a) of
the Code, or the failure of any trust forming part of a Plan to qualify for
exemption from taxation under Section 501(a) of the Code; or (j) a
determination that any Pension Plan is, or is expected to be, in “at-risk”
status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of
the Code).

 

“Eurodollar Base Rate”
has the meaning specified in the definition of Eurodollar Rate.

 

“Eurodollar Rate”
means for any Interest Period with respect to a Eurodollar Rate Loan, a rate
per annum determined by Agent pursuant to the following formula:

 

	
  Eurodollar Rate =

  	
  Eurodollar Base Rate

  
	
  1.00 – Eurodollar Reserve
  Percentage

  

 

Where,

 

“Eurodollar Base Rate”
means, for such Interest Period, the rate per annum equal to the British
Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters
(or other commercially available source providing quotations of BBA LIBOR as
designated by Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period. 
If such rate is not available at such time for any reason, then the “Eurodollar
Base Rate” for such Interest Period shall be the rate per annum determined by
Agent to be the rate at which deposits in Dollars for delivery on the first day
of such Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by Bank of America and
with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar
market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.

 

“Eurodollar Reserve
Percentage” means, for any day during any Interest Period, the
reserve percentage (expressed as a decimal, carried out to five decimal places)
in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred
to as “Eurocurrency liabilities”).  The
Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar Reserve
Percentage.

 

“Eurodollar Rate Loan”
means a Committed Loan that bears interest at a rate based on the Eurodollar
Rate.

 

“Event of Default”
has the meaning specified in Section 8.1.

 

10

 

“Excluded Accounts”
means, collectively, (i) that certain Deposit Account of Borrower numbered
IBAN DE22533400240395549900 maintained with Commerzbank AG, and (ii) that
certain Deposit Account of Borrower numbered IBAN 03204 20501 000000046037
maintained with Banca di Legnano.

 

“Excluded Taxes”
means, with respect to Agent, any Lender, the L/C Issuer or any other recipient
of any payment to be made by or on account of any obligation of Borrower
hereunder, (a) taxes imposed on or measured by its overall net income
(however denominated), and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable Lending Office
is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which Borrower is located,
and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by Borrower under Section 10.13), any United States  withholding tax that (i) is required to be imposed on
amounts payable to such Foreign Lender pursuant to the Laws in force at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or (ii) is attributable to such Foreign Lender’s failure (other than as
a result of a Change in Law) to comply with Section 3.1(e)(ii),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new Lending Office (or assignment),
to receive additional amounts from Borrower with respect to such withholding
tax pursuant to Section 3.1(c).

 

“Existing Credit Agreement”
has the meaning specified in Section 4.1(a)(x).

 

“Facilities”
means any and all real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased, operated
or used by Borrower or any of its Subsidiaries or any of their respective
predecessors or Affiliates.

 

“Federal Funds Rate”   means, for any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by
Agent.

 

“Fee Letter”
means the letter agreement, dated September 24, 2008, among Borrower,
Agent and the Arranger.

 

“First Priority Lien”
means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that (i) such Lien is perfected and
has priority over any other Lien on such Collateral and (ii) such Lien is
the only Lien (other than Liens permitted pursuant to Section 7.1)
to which such Collateral is subject.

 

11

 

“Foreign Lender”
means any Lender that is organized under the Laws of a jurisdiction other than
that in which Borrower is resident for tax purposes (including such a Lender
when acting in the capacity of the L/C Issuer). 
For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

 

 “FRB” means the Board of Governors
of the Federal Reserve System of the United States.

 

“Fund” means
any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its activities.

 

“Funded Debt”
means all outstanding Indebtedness for borrowed money and other
interest-bearing Indebtedness, including current and long term Indebtedness, less
the non-current portion of Subordinated Indebtedness.

 

“Funded Debt to EBITDA
Ratio” means, as at any date of determination, the ratio of
Funded Debt as at such date to EBITDA for the consecutive four fiscal quarters
ending on the last day of the most recently ended fiscal quarter.

 

“GAAP” means
generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

 

“Governing Body”
means the board of directors or other body having the power to direct or cause
the direction of the management and policies of a Person that is a corporation,
partnership, trust or limited liability company.

 

“Governmental Authority”
means the government of the United States or any other nation, or of any
political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Governmental Authorization”
means any permit, license, registration, authorization, plan, directive,
accreditation, consent, order or consent decree of or from, or notice to, any
Governmental Authority.

 

“Guarantee”
means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or
services for the 

 

12

 

purpose of assuring the
obligee in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
or (b) any Lien on any assets of such Person securing any Indebtedness or
other obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed
to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.  The term “Guarantee” as a verb
has a corresponding meaning.

 

“Guarantor”
or “Subsidiary Guarantor” means,
collectively, Pacific Biotech, Inc., a California corporation, Metra
Biosystems, Inc., a California corporation, Osteo Sciences Corporation, an
Oregon corporation and Litmus Concepts, Inc., a California corporation,
and any other Subsidiary of Borrower that executes and delivers a counterpart
of the Guaranty from time to time after the Closing Date in accordance with Section 6.13.

 

“Guaranty”
or “Subsidiary Guaranty” means the
Subsidiary Guaranty made by the Guarantor in favor of Agent and for the benefit
of the Lenders, substantially in the form of Exhibit C.

 

“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedge Bank” means any Person that, at the time it
enters into Swap Contract permitted under Article VII, is a Lender
or an Affiliate of a Lender, in its capacity as a party to such Swap Contract.

 

“Hostile Acquisition”
means the acquisition of the capital stock or other Equity Interests of a
Person through a tender offer or similar solicitation of the owners of such
capital stock or other Equity Interests which has not been approved (prior to
such acquisition and which approval remains in effect) by resolutions of the
Governing Body of such Person.

 

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

 

(a)           all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments;

 

13

 

(b)           all direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;

 

(c)           net obligations of such Person under any Swap Contract;

 

(d)           all obligations of such Person to pay the deferred
purchase price of property or services (other than trade accounts payable in
the ordinary course of business) including any purchase price adjustments with
respect to any Permitted Acquisition and any earn-out obligations when and upon
the time at which the earn-out becomes certain and non-contingent as to payment
obligation;

 

(e)           indebtedness (excluding prepaid interest thereon) secured
by a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

 

(f)            capital leases and Synthetic Lease Obligations;

 

(g)           all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interest
in such Person or any other Person, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; provided that this
clause (g) shall not include obligations of Borrower to purchase, redeem,
retire, defease or otherwise acquire for value Equity Interests upon the
exercise of any stock options of Borrower to the extent (and only to the
extent) that such purchase, redemption or acquisition for value would be permitted
under Section 7.6(d)(ii); and

 

(h)           all Guarantees of such Person in respect of any of the
foregoing.

 

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.  The amount of
any capital lease or Synthetic Lease Obligation as of any date shall be deemed
to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Information”
has the meaning specified in Section 10.7.

 

“Interest Charges”
means, for any period, for Borrower and its Subsidiaries on a consolidated
basis, the sum of (a) all interest, premium payments, debt discount, fees,
charges and related expenses of Borrower and its Subsidiaries in connection
with borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP and (b) the portion of rent 

 

14

 

expense of Borrower and its
Subsidiaries under capital leases that is treated as interest in accordance
with GAAP.

 

“Interest Coverage Ratio”
means, as of any date of determination, the ratio of (a) EBITDA for the
period of the four prior fiscal quarters ending on such date to (b) Interest
Charges for such period.

 

“Interest Payment Date”
means, (a) as to any Loan other than a Base Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Rate Loan exceeds
three months, the respective dates that fall every three months after the
beginning of such Interest Period shall also be Interest Payment Dates; and (b) as
to any Base Rate Loan (including a Swing Line Loan), the last Business Day of
each March, June, September and December and
the Maturity Date.

 

“Interest Period”
means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar
Rate Loan and ending on the date one,
two, three or six months thereafter, in each case as selected by
Borrower in its Committed Loan Notice; provided that:

 

(i)            any Interest Period that would otherwise 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;

 

(ii)           any 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)
shall end on the last Business Day of the calendar month at the end of such
Interest Period; and

 

(iii)          no Interest Period shall extend beyond the Maturity Date.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance
or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the Person Guarantees
Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. 
For purposes of covenant compliance, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment. Without limiting the generality of
the foregoing, the term “Investment” shall include, without limitation, any
Acquisition.

 

“IP Collateral”
means, collectively, the IP Rights that constitute Collateral under the
Security Agreement.

 

15

 

“IP Filing Office”
means the United States Patent and Trademark Office, the United States
Copyright Office or any successor or substitute office in which filings are
necessary or, in the opinion of Agent, desirable in order to create or perfect
Liens on any IP Collateral.

 

“IP Rights”
has the meaning specified in Section 5.17.

 

“IRS” means
the United States Internal Revenue Service.

 

“ISP” means,
with respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or
such later version thereof as may be in effect at the time of issuance).

 

“Issuer Documents”
means with respect to any Letter of Credit, the L/C Application, and any other
document, agreement and instrument entered into by the L/C Issuer and Borrower
(or any Subsidiary) or in favor of the L/C Issuer and relating to any such
Letter of Credit.

 

“Landlord Waiver” means any landlord
waiver, mortgagee waiver, bailee letter or any similar acknowledgement
agreement of any landlord in respect of any Real Property Asset or other
location where any Collateral is located, substantially in the form of Exhibit G
annexed hereto, with such changes thereto as may be agreed to by Agent in the
reasonable exercise of its discretion.

 

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative
or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

 

“L/C Advance”
means, with respect to each Lender, such Lender’s funding of its participation
in any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C Application”
means an application and agreement for the issuance or amendment of a Letter of
Credit in the form from time to time in use by the L/C Issuer.

 

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Borrowing.

 

“L/C Credit Extension”
means, with respect to any Letter of Credit, the issuance thereof or extension
of the expiry date thereof, or the increase of the amount thereof.

 

“L/C Expiration Date”
means the day that is seven days prior to the Maturity Date then in effect (or,
if such day is not a Business Day, the next preceding Business Day).

 

“L/C Fee”
has the meaning specified in Section 2.3(i).

 

16

 

“L/C Issuer”
means Bank of America in its capacity as issuer of Letters of Credit hereunder,
or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing
the amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 1.6.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“L/C Sublimit”
means an amount equal to $25,000,000.  The L/C Sublimit is part of, and not in
addition to, the Aggregate Commitments.

 

“Leasehold Property”
means any leasehold interest of any Loan Party as lessee under any lease of
real property.

 

“Lender” has
the meaning specified in the introductory paragraph hereto and, as the context
requires, includes the Swing Line Lender and the L/C Issuer.

 

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify Borrower and Agent.

 

“Letter of Credit”
means any letter of credit issued hereunder. 
A Letter of Credit may be a commercial letter of credit or a standby
letter of credit.

 

“Lien” means
any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

 

“Loan” means
an extension of credit by a Lender to Borrower under Article II in
the form of a Committed Loan or a Swing Line Loan.

 

“Loan Documents”
means this Agreement, each Note, each Issuer Document, the Fee Letter, each Collateral Document and the Guaranty.

 

“Loan Parties”
means, collectively, Borrower and each Person (other than Agent, the L/C Issuer
or any Lender) executing a Loan Document  including, without limitation, each Guarantor
and each Person executing a Collateral Document.

 

“Material Adverse Effect”
means (a) a material adverse change in, or a material adverse effect upon,
the operations, business, properties, liabilities (actual or contingent), or
condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a
whole; (b) a material 

 

17

 

impairment of the rights and
remedies of Agent or any Lender under the Loan Documents, or of the ability of
any Loan Party to perform its obligations under any Loan Document to which it
is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.

 

“Material Contract”
means any agreement or arrangement to which any Loan Party is a party (other
than the Loan Documents) with respect to which breach, termination,
nonperformance or failure to renew could reasonably be expected to result in
the loss of 5% or more of revenue for Borrower and its Subsidiaries in any
twelve month period or could reasonably be expected to have any other Material
Adverse Effect; provided that the term “Material Contract” shall not
include any ordinary course distribution agreement that does not include
material defined purchase requirements.

 

“Material Intellectual
Property License” means any Material Contract that is a license
relating to intellectual property owned, held or used by any Loan Party.

 

“Material Subsidiary”
means each Subsidiary of Borrower now existing or hereafter acquired or formed
by Company which has total assets of greater than $250,000.

 

“Maturity Date”
means October 8, 2013; provided, however, that if such date
is not a Business Day, the Maturity Date shall be the next preceding Business
Day.

 

“Medicaid”
means that government-sponsored entitlement program under Title XIX, P.L. 89-97
of the Social Security Act, which provides federal grants to states for medical
assistance based on specific eligibility criteria, as set forth on Section 1396,
et seq. of Title 42 of the United States Code.

 

“Medicare”
means that government-sponsored insurance program under Title XVIII, P.L.
89-97, of the Social Security Act, which provides for a health insurance system
for eligible elderly and disabled individuals, as set forth at Section 1395,
et seq. of Title 42 of the United States Code.

 

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

 

“Net Asset Sale Proceeds,” with respect to any Asset
Sale, means Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) received from such Asset Sale, net of any bona
fide direct costs and expenses incurred in connection with such Asset Sale,
including (i) sale, use or other transaction taxes and income taxes paid
or payable by Borrower or any of its Subsidiaries as a direct result thereof (provided
that with respect to income taxes that are payable by Borrower or such
Subsidiary, the amount shall be limited to income taxes reasonably estimated to
be actually payable by Borrower or such Subsidiary within two years of the date
of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale) and (ii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is (a) secured by a Lien on the stock or assets in 

 

18

 

question and that is
required to be repaid under the terms thereof as a result of such Asset Sale
and (b) actually paid at the time of receipt of such Cash payment to a Person
that is not an Affiliate of any Loan Party or of any Affiliate of a Loan Party.

 

“Net Insurance/Condemnation
Proceeds” means any Cash payments or proceeds received by
Borrower or any of its Subsidiaries (i) under any business interruption or
casualty insurance policy in respect of a covered loss thereunder or (ii) as
a result of the taking of any assets of Borrower or any of its Subsidiaries by
any Person pursuant to the power of eminent domain, condemnation or otherwise,
or pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, in each case net of any bona fide direct costs and
expenses incurred by Borrower or any of its Subsidiaries in connection with any
such event described in clause (i) or (ii) above, including (a) any
actual third party costs and expenses (including reasonable legal fees and
expenses) incurred in connection with the adjustment or settlement of any
claims of Borrower or such Subsidiary in respect thereof, (b) sale, use or
other transaction taxes and income taxes paid or payable by Borrower or any of
its Subsidiaries as a direct result thereof (provided that with respect
to income taxes that are payable by Borrower or such Subsidiary, the amount
shall be limited to income taxes reasonably estimated to be actually payable by
Borrower or such Subsidiary within two years of the date of such event as a
result of any gain recognized in connection with such event) and (c) payment
of the outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness (other than the Loans) that is (A) secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such event and (B) actually paid at
the time of receipt of such Cash payment to a Person that is not an Affiliate
of any Loan Party or of any Affiliate of a Loan Party.

 

“Note” means
a promissory note made by Borrower in favor of a Lender evidencing Loans made
by such Lender, substantially in the form of Exhibit B.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or arising under any
Secured Hedge Agreements, Secured Cash Management Agreements or otherwise with
respect to any Loan or Letter of Credit, in each case, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest
and fees are allowed claims in such proceeding.

 

“Organization Documents”
means, (a) with respect to any corporation, the certificate or articles of
incorporation and the bylaws (or equivalent or comparable constitutive
documents with respect to any non-U.S. jurisdiction); (b) with respect to
any limited liability company, the certificate or articles of formation or
organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or 

 

19

 

organization and, if
applicable, any certificate or articles of formation or organization of such
entity.

 

“OSC” means
Osteo Sciences Corporation, an Oregon corporation.

 

“Other Taxes”
means all present or future stamp or documentary Taxes or any other excise or
property Taxes arising from any payment made hereunder or under any other Loan
Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

 

“Outstanding Amount”
means (i) with respect to Committed Loans and Swing Line Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any borrowings and prepayments or repayments of Committed Loans and Swing Line
Loans, as the case may be, occurring on such date; and (ii) with respect
to any L/C Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.

 

“Participant”
has the meaning specified in Section 10.6(d).

 

“PBGC” means
the Pension Benefit Guaranty Corporation.

 

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

 

“Permitted Acquisition”
means an Acquisition with respect to which all of the following conditions
shall have been satisfied (or Requisite Lenders shall have otherwise approved
such Acquisition):

 

(a)           the Person, division or business being acquired (the “Target”) shall be in such lines of
business such that Borrower will be in compliance with Section 7.7
after giving effect to such Acquisition; provided that this clause (a) shall
not apply to the extent no Person, division or business is being acquired in
connection with such Acquisition;

 

(b)           such Acquisition shall not be a Hostile Acquisition;

 

(c)           the assets so acquired shall be transferred free and clear
of any Liens (except to the extent permitted by Section 7.1), no
Indebtedness shall be incurred, guaranteed, assumed or consolidated in
connection with such Acquisition (except to the extent permitted by Section 7.3),
and, if assets so acquired shall be owned by a Subsidiary (after giving effect
to such Acquisition),  Agent shall have
received Lien searches reasonably satisfactory to Agent with respect to the
assets of, and Equity Interests in, any business being acquired

 

20

 

(d)           the Total Consideration paid or payable with respect to
such Acquisition (excluding consideration paid or payable with Equity Interests
of Borrower) shall not exceed $50,000,000;

 

(e)           before and after giving effect to such Acquisition, (i) all
representations and warranties contained in the Loan Documents shall be true
and correct on and as of the date of consummation of such Acquisition and (ii) no
Default or Event of Default shall exist, including with respect to the
covenants contained in Section 6.12, before and after giving effect
to such Acquisition, based on the financial statements most recently delivered
to Agent pursuant to Sections 6.1(a) or 6.1(b) as
adjusted on a pro forma basis including the Target based on pro forma
assumptions reasonably acceptable to Agent;

 

(f)            Agent shall have received a First Priority Lien in
substantially all of the personal property and mixed property assets being
acquired (except for Liens securing Indebtedness permitted under Section 7.3(e))
and all filings, recordings and other actions with respect thereto shall be
reasonably satisfactory in form and substance to Agent and, in the case of an
Acquisition of the type described in clauses (b) or (c) of the
definition thereof, Agent shall have received an opinion of counsel in each
applicable jurisdiction reasonably satisfactory to it to the effect that Agent
has been granted a perfected security interest in such assets and as to such
other matters as Agent may reasonably require;

 

(g)           to the extent any representation or warranty herein makes
reference to one or more of the Schedules to this Agreement, Borrower shall
make revisions to such Schedules, in each case as of the date of the
consummation of such Acquisition and notwithstanding that such representation
or warranty may expressly state that it is made as of an earlier date,
reasonably acceptable to Agent, solely to take into account the consummation of
such Acquisition;

 

(h)           Borrower and its Subsidiaries shall have obtained all
material permits, licenses, authorizations or consents from all Governmental
Authorities and all material consents of other Persons, in each case that are
necessary in connection with such proposed Acquisition or the continued
operation of the business being acquired in such proposed Acquisition, prior to
or concurrently with the consummation thereof, and each of the foregoing shall
be in full force and effect;

 

(i)            subject to the waiver by Required Lenders in their
reasonable discretion, all applicable waiting periods with respect to such proposed
Acquisition shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on such Acquisition (including the
Pre-Merger/Hart-Scott-Rodino Act, as amended), and no action, request for stay,
petition for review or rehearing, reconsideration or appeal with respect to any
of the foregoing shall be pending, and the time for any applicable Governmental
Authority to take action to set aside its consent on its own motion shall have
expired;

 

(j)            Agent shall have received a certificate from Borrower’s
insurance broker or other evidence satisfactory to it that all insurance
required to be maintained pursuant to Section 6.7 is in full force
and effect with respect to any tangible assets being acquired in such 

 

21

 

Acquisition and that Agent
on behalf of the Lenders has been named as additional insured, mortgagee and
loss payee thereunder to the extent required under Section 6.7;

 

(k)           after giving effect to such Acquisition, the sum of (i) the
amount by which the Aggregate Commitments exceeds Total Outstandings plus (ii) the
amount of cash held by Borrower and its Subsidiaries, shall equal at least
$25,000,000;

 

(l)            such Acquisition shall be made by Borrower or a
wholly-owned Subsidiary of Borrower and if such Acquisition involves
acquisition of the Equity Interests of any Person, such Acquisition shall be
for 100% of the outstanding Equity Interests of such Person and such Person
shall be a Person incorporated or organized under the laws of the United States
of America or any state thereof;

 

(m)          to the extent that the Target has rights to any Medicare or
Medicaid receivables, prior to the closing of such Acquisition, (i) Borrower
shall have given prior written notice of such to Agent and Lenders and (ii) Borrower
shall have complied with Section 6.20 with respect to such
Acquisition and Target; and

 

(n)           (i) at least ten Business Days prior to the closing
of such Acquisition, Borrower shall have delivered to Agent and each Lender all
available financial statements of the Target (provided that this clause (i) shall
not apply to the extent no Person, division or business is being acquired in
connection with such Acquisition (whether directly or pursuant to a merger,
consolidation or other combination)) and, if requested by Agent or any Lender, (ii) within
five Business Days prior to the closing of such Acquisition, Borrower shall
have delivered to Agent and any Lender, such other documents and agreements
relating to such Acquisition as Agent or such Lender may reasonably request,
and (iii) on or prior to the closing date of such Acquisition, Borrower
shall have delivered to Agent and each Lender (1) a copy of the purchase
agreement pursuant to which such Acquisition will be consummated, (2) unless
waived by Agent in its reasonable discretion, a consent to the assignment of
such purchase agreement to Agent for collateral purposes, which consent shall
be in form and substance satisfactory to Agent; (3) a copy of each
material services agreement, consulting agreement, lease, credit or financing
agreement or other material agreement relating to such Acquisition to be in
effect after the consummation of such Acquisition, (4) unless waived by
Agent in its reasonable discretion, if an opinion of counsel to the sellers is
obtained by any Loan Party in connection with such Acquisition, the same
opinion also addressed to Agent and the Lenders or a letter permitting them to
rely thereon, (5) such other information or reports as Agent may
reasonably request with respect to such Acquisition, and (6) an executed
officer’s certificate in form and substance reasonably satisfactory to Agent
and Requisite Lenders certifying that such Acquisition satisfies all of the
conditions set forth in this definition and attaching thereto a Compliance
Certificate.

 

“Permitted Stock Repurchase”
means Borrower’s purchase, redemption or other acquisition of the shares of its
common stock for solely cash consideration (a “Stock
Repurchase”) with respect to which all of the following
conditions shall have been satisfied:

 

(a)           both before and after giving effect to such Stock
Repurchase, no Default or Event of Default shall exist or shall be caused
thereby;

 

22

 

(b)           Borrower and its Subsidiaries shall be in actual and pro
forma compliance with the covenants contained in Section 6.12
before and after giving effect to such Stock Repurchase, and upon the request
of Agent, Borrower shall have delivered to Agent a Compliance Certificate
demonstrating such compliance and a certificate executed by a Responsible
Officer of Borrower certifying as to compliance with clauses (a) and (c) of
this definition; and

 

(c)           after giving effect to such Stock Repurchase, the sum of (i) the
amount by which the Aggregate Commitments exceeds Total Outstandings plus (ii) the
amount of cash held by Borrower and its Subsidiaries shall equal at least
$25,000,000.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

“Plan” means
any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“Pledged Collateral”
has the meaning given such term in the Security Agreement.

 

“Pro Rata Share”
means, with respect to each Lender at any time, a fraction (expressed as a
percentage, carried out to the ninth decimal place), the numerator of which is
the amount of the Commitment of such Lender at such time and the denominator of
which is the amount of the Aggregate Commitments at such time; provided
that if the commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.2
or the Aggregate Commitments have expired, then the Pro Rata Share of each
Lender shall be determined based on the Pro Rata Share of such Lender
immediately prior to such termination and after giving effect to any subsequent
assignments made pursuant to the terms hereof. 
The initial Pro Rata Share of each Lender is set forth opposite the name
of such Lender on Schedule 2.1 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.

 

“Real Property Asset”
means, at any time of determination, any interest then owned by any Loan Party
in any real property.

 

“Register”
has the meaning specified in Section 10.6(c).

 

“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents, trustees and advisors of such Person
and of such Person’s Affiliates.

 

“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

 

“Request for Credit
Extension” means (a) with respect to a Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with
respect to an L/C Credit Extension, a L/C Application, and (c) with
respect to a Swing Line Loan, a Swing Line Loan Notice.

 

23

 

“Required Lenders”
means, as of any date of determination, Lenders having more than 50% of the
Aggregate Commitments or, if the commitment of each Lender to make Loans and
the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 8.2, Lenders holding in the
aggregate more than 50% of the Total Outstandings (with the aggregate amount of
each Lender’s risk participation and funded participation in L/C Obligations
and Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders; provided
further that (i) if at any time there are only two Lenders, then
Required Lenders must comprise both of such Lenders and (ii) if at any
time there are three or more Lenders, then Required Lenders must comprise at
least three Lenders.

 

“Responsible Officer”
means the chief executive officer, president, chief financial officer,
treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such capital stock or other Equity Interest or on account of any return
of capital to Borrower’s stockholders, partners or members (or the equivalent
Person thereof) or any payment or prepayment of principal of, premium, if any,
or interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to any Subordinated Indebtedness.

 

“Secured Cash Management
Agreement” means any Cash Management Agreement that is entered
into by and between any Loan Party and any Cash Management Bank.

 

“Secured Hedge Agreement”
means any Swap Contract permitted under Article VII that is entered into
by and between any Loan Party and any Hedge Bank.

 

“Secured Parties”
means, collectively, Agent, the Lenders, the L/C Issuer, the Hedge Banks, the
Cash Management Banks, each co-agent or sub-agent appointed by the Agent from
time to time pursuant to Section 9.5, and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral
under the terms of the Collateral Documents.

 

“Securities Account”
means an account to which a financial asset is or may be credited in accordance
with an agreement under which the Person maintaining the account undertakes to
treat the Person for whom the account is maintained as entitled to exercise the
rights that comprise the financial asset.

 

“Security Agreement”
means the Security Agreement by and among Borrower, Guarantors, the Agent and
each of the other grantors party thereto executed and delivered on the 

 

24

 

Closing Date, substantially
in the form of Exhibit F annexed hereto, as such Security Agreement
may thereafter be amended, supplemented or otherwise modified from time to
time.

 

“Solvency Certificate”
means an officer’s certificate of each Loan Party substantially in the form of Exhibit J
with appropriate attachments.

 

“Solvent”,
with respect to any Person, means that as of the date of determination both (i)(a) the
then fair saleable value of the tangible and intangible property of such
Person, including Equity Interests owned by such Person, is (1) greater
than the total amount of liabilities (including contingent liabilities) of such
Person and (2) not less than the amount that will be required to pay the
probable liabilities on such Person’s then existing debts as they become
absolute and due considering all financing alternatives and potential asset
sales reasonably available to such Person; (b) such Person’s capital is
not unreasonably small in relation to its business or any contemplated or
undertaken transaction; and (c) such Person does not intend to incur, or
reasonably believe that it will incur, debts beyond its ability to pay such
debts as they become due; and (ii) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. 
For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

“Stock Repurchase”
has the meaning set forth in the definition of “Permitted Stock Repurchase”.

 

“Subordinated Indebtedness”
means unsecured Indebtedness incurred by Borrower or any Subsidiary, the terms
of which Indebtedness (including the covenants, events of default and  subordination provisions thereof) and all
documentation relating thereto shall be in form and substance satisfactory to
Agent and Required Lenders, it being understood that there shall be no payments
of any kind thereunder (other than payment of scheduled interest, the amounts
and frequency of which are acceptable to Agent and other Required Lenders and
other payments (if any) acceptable to Agent and Required Lenders)  prior to the seventeen month anniversary
after the Maturity Date then in effect and all payments thereunder shall be
subordinated in right of payment to the Obligations pursuant to subordination
provisions acceptable to Agent and Required Lenders in their sole discretion.

 

“Subordinated Liabilities”
means liabilities subordinated to the Obligations in a manner acceptable to
Agent in its sole discretion.

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors
or other governing body (other than securities or interests having such power
only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of Borrower.

 

25

 

“Subsidiary
Guarantor” or “Guarantor”
means, collectively, Pacific Biotech, Inc., a California corporation,
Metra Biosystems, Inc., a California corporation, Osteo Sciences Corporation,
an Oregon corporation and Litmus Concepts, Inc., a California corporation,
and any other Subsidiary of Borrower that executes and delivers a counterpart
of the Guaranty from time to time after the Closing Date in accordance with Section 6.13.

 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any
such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value”
means, in respect of any one or more Swap Contracts, after taking into account
the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have
been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the
date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

 

“Swing Line Borrowing”
means a borrowing of a Swing Line Loan pursuant to Section 2.4.

 

“Swing Line Lender”
means Bank of America in its capacity as provider of Swing Line Loans, or any
successor swing line lender hereunder.

 

“Swing Line Loan”
has the meaning specified in Section 2.4(a).

 

“Swing Line Loan Notice”
means a notice of a Swing Line Borrowing pursuant to Section 2.4(b),
which, if in writing, shall be substantially in the form of Exhibit A-2.

 

“Swing Line Sublimit”
means an amount equal to the lesser of (a) $15,000,000 and (b) the
Aggregate Commitments.  The Swing Line
Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Synthetic Lease Obligation”
means the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use
or 

 

26

 

possession of property
creating obligations that do not appear on the balance sheet of such Person but
which, upon the insolvency or bankruptcy of such Person, would be characterized
as the indebtedness of such Person (without regard to accounting treatment).

 

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

 

“Total Consideration”
means, with respect to any Acquisition, (without duplication) the sum of (a) the
total amount of cash paid in connection with such Acquisition, (b) all
Indebtedness incurred in connection with such Acquisition, (c) the amount
of direct and contingent liabilities assumed in connection with such
Acquisition (excluding normal trade payables, accruals and indemnities), (d) the
amount of Indebtedness payable to the seller in connection with such
Acquisition and (e) the amounts paid or to be paid under any covenant not
to compete, consulting agreements, “earn-up” or “earn-out” agreements and other
deferred or contingent payment obligations in connection with such Acquisition,
as reasonably estimated by Borrower and satisfactory to the Agent in its
reasonable discretion.

 

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

 

“Type”
means, with respect to a Committed Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“UCC” means
the Uniform Commercial Code as in effect in any applicable jurisdiction.

 

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

 

“United States”
and “U.S.” mean the United States of
America.

 

“Unreimbursed Amount”
has the meaning specified in Section 2.3(c)(i).

 

1.2          Other Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a)           The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. 
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any 

 

27

 

reference herein to any Person shall be construed to include such
Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset”
and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

(b)           In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and
including;” the words “to” and “until” each mean “to but
excluding;” and the word “through” means “to and including.”

 

(c)           Section headings herein and in the other Loan
Documents are included for convenience of reference only and shall not affect
the interpretation of this Agreement or any other Loan Document.

 

1.3          Accounting Terms.

 

(a)           All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

 

(b)           If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either Borrower or the Required Lenders shall so request, Agent,
Lenders and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided  that,
until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) Borrower
shall provide to Agent and Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

 

1.4          Rounding.  Any financial ratios required to be
maintained by Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

 

28

 

1.5          Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Pacific time (daylight or standard, as applicable).

 

1.6          Letter of Credit Amounts.  Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of
any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.

 

ARTICLE II  THE
COMMITMENTS AND CREDIT EXTENSIONS.

 

2.1          Committed Loans.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make loans (each such loan, a “Committed
Loan”) to Borrower from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender’s Commitment; provided, however,
that after giving effect to any Committed Borrowing, (i) the Total
Outstandings shall not exceed the Aggregate Commitments, and (ii) the
aggregate Outstanding Amount of the Committed Loans of any Lender, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Commitment. 
Within the limits of each Lender’s Commitment, and subject to the other
terms and conditions hereof, Borrower may borrow under this Section 2.1,
prepay under Section 2.5, and reborrow under this Section 2.1.  Committed Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

 

The amount of each Lender’s Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the original
Aggregate Commitment is $120,000,000; provided that the amount of the
Commitments of each Lender shall be adjusted to give effect to any assignments
of such Commitments pursuant to Section 10.6 and shall be reduced
from time to time by the amount of any reductions thereto made pursuant to Section 2.5
or Section 2.6.  Each Lender’s
Commitment shall expire immediately and without further action on the Maturity
Date and all Loans and all other amounts owed hereunder with respect to the
Loans and the Commitments shall be paid in full no later than that date.

 

2.2          Borrowings, Conversions and
Continuations of Committed Loans.

 

(a)           Each Committed Borrowing, each conversion of Committed
Loans from one Type to the other, and each continuation of Eurodollar Rate
Loans shall be made upon Borrower’s irrevocable notice to Agent, which may be
given by telephone.  Each such notice
must be received by Agent not later than 8:00 a.m. (i) three Business
Days (in the case of Eurodollar Rate Loans) prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) on
the requested date of any Borrowing of Base Rate Committed Loans.  Each telephonic notice by Borrower pursuant
to this Section 2.2(a) must be confirmed promptly by delivery
to Agent of a written Committed Loan Notice, appropriately completed and signed
by a Responsible Officer of Borrower. 
Each Borrowing of, conversion 

 

29

 

to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Except as provided in Sections 2.3(c) and
2.4(c), each Borrowing of or conversion to Base Rate Committed Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof.  Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether Borrower
is requesting a Committed Borrowing, a conversion of Committed Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Committed
Loans to be borrowed, converted or continued, (iv) the Type of Committed
Loans to be borrowed or to which existing Committed Loans are to be converted,
and (v) if applicable, the duration of the Interest Period with respect
thereto.  If Borrower fails to specify a
Type of Committed Loan in a Committed Loan Notice or if Borrower fails to give
a timely notice requesting a conversion or continuation, then the applicable
Committed Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans.  If Borrower requests a Borrowing of,
conversion to, or continuation of Eurodollar Rate Loans in any such Committed
Loan Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

 

(b)           Following receipt of a Committed Loan Notice, Agent shall
promptly notify each Lender of the amount of its Pro Rata Share of the
applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by Borrower, Agent shall notify each Lender of the
details of any automatic conversion to Base Rate Loans described in the
preceding subsection.  In the case of a
Committed Borrowing, each Lender shall make the amount of its Committed Loan
available to Agent in immediately available funds at Agent’s Office not later
than 10:00 a.m. on the Business Day specified in the applicable Committed
Loan Notice.  Upon satisfaction of the
applicable conditions set forth in Section 4.2 (and, if such
Borrowing is the initial Credit Extension, Section 4.1), Agent
shall make all funds so received available to Borrower in like funds as
received by Agent either by (i) crediting the account of Borrower on the
books of Bank of America with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) Agent by Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
is given by Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Borrowing first, shall be applied, to the payment in full of any
such L/C Borrowings, and second, shall be made available to Borrower as
provided above.

 

(c)           Except as otherwise provided herein, a Eurodollar Rate
Loan may be continued or converted only on the last day of an Interest Period
for such Eurodollar Rate Loan.  During
the existence of a Default, no Loans may be requested as, converted to or
continued as Eurodollar Rate Loans without the consent of the Required Lenders,
and during the existence of an Event of Default, the Required Lenders may
demand that any or all of the then outstanding Eurodollar Rate Loans be converted
immediately to Base Rate Loans and Borrower agrees to pay all amounts due under
Section 3.5 in accordance with the terms thereof due to any such
conversion.

 

30

 

(d)           Agent shall promptly notify
Borrower and Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans upon determination of such interest rate.  The determination of the Eurodollar Rate by
Agent shall be conclusive in the absence of manifest error.  At any time that Base Rate Loans are
outstanding, Agent shall notify Borrower and the Lenders of any change in Bank
of America’s prime rate used in determining the Base Rate promptly following
the public announcement of such change.

 

(e)           After giving effect to all
Committed Borrowings, all conversions of Committed Loans from one Type to the
other, and all continuations of Committed Loans as the same Type, there shall
not be more than 6 Interest Periods in effect with respect to Committed Loans.

 

2.3          Letters of Credit.

 

(a)           The Letter of Credit
Commitment.

 

(i)            Subject to the terms and
conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon
the agreements of the Lenders set forth in this Section 2.3, (1) from
time to time on any Business Day during the period from the Closing Date until
the L/C Expiration Date, to issue Letters of Credit for the account of Borrower
or its Subsidiaries, and to
amend or extend Letters of
Credit previously issued by it, in accordance with subsection (b) below,
and (2) to honor drawings under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of Borrower or its Subsidiaries
and any drawings thereunder; provided that after giving effect to any
L/C Credit Extension with respect to any Letter of Credit, (x) the Total
Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate
Outstanding Amount of the Committed Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount
of the L/C Obligations shall not exceed the L/C Sublimit.  Each request by Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by
Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed.

 

(ii)           The L/C Issuer shall not
issue any Letter of Credit, if:

 

(A)          subject
to Section 2.3(b)(iv), the expiry date of such
requested commercial Letter of Credit would occur more than twelve months after
the date of issuance or last extension
or such standby Letter of Credit would occur more than twenty-four months after
the date of 

 

31

 

issuance or last extension,
unless the Required Lenders have approved such expiry date; or

 

(B)           the expiry date of such
requested Letter of Credit would occur after the L/C Expiration Date, unless
all the Lenders have approved such expiry date.

 

(C)           the expiry date of such
requested Letter of Credit would occur after the Maturity Date, unless Borrower
shall have Cash Collateralized 105% of the maximum aggregate L/C Obligations of
such Letter of Credit upon the issuance of such Letter of Credit.

 

(iii)          The L/C Issuer shall be
under no obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or
decree of any Governmental Authority or arbitrator shall by its terms purport
to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any
Law applicable to the L/C Issuer or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

 

(B)                                the issuance of
such Letter of Credit would violate any Laws or one or more policies of the L/C
Issuer;

 

(C)           except as otherwise agreed
by Agent and the L/C Issuer, such Letter of Credit is in an initial stated
amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby
Letter of Credit;

 

(D)          such Letter of Credit is to
be denominated in a currency other than Dollars; or

 

(E)           a default of any Lender’s
obligations to fund under Section 2.3(c) exists or any Lender
is at such time a Defaulting Lender hereunder, unless the L/C Issuer has
entered into satisfactory arrangements with Borrower or such Lender to
eliminate the L/C Issuer’s risk with respect to such Lender.

 

32

 

(iv)          The L/C Issuer shall not
amend any Letter of Credit if the L/C Issuer would not be permitted at such
time to issue such Letter of Credit in its amended form under the terms hereof.

 

(v)           The L/C Issuer shall be
under no obligation to amend any Letter of Credit if (A) the L/C Issuer
would have no obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of such Letter
of Credit does not accept the proposed amendment to such Letter of Credit.

 

(vi)          The L/C Issuer shall act on
behalf of the Lenders with respect to any Letters of Credit issued by it and
the documents associated therewith, and the L/C Issuer shall have all of the
benefits and immunities (A) provided to Agent in Article IX
with respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and Issuer
Documents pertaining to such Letters of Credit as fully as if the term “Agent”
as used in Article IX included the L/C Issuer with respect to such
acts or omissions, and (B) as additionally provided herein with respect to
the L/C Issuer.

 

(b)       Procedures for Issuance and Amendment of Letters of
Credit; Extension of Letters of Credit.

 

(i)            Each Letter of Credit shall
be issued or amended, as the case may be, upon the request of Borrower
delivered to the L/C Issuer (with a copy to Agent) in the form of a L/C
Application, appropriately completed and signed by a Responsible Officer of
Borrower.  Such L/C Application must be
received by the L/C Issuer and Agent not later than 8:00 a.m. at least two
Business Days (or such later date and time as Agent and the L/C Issuer may
agree in a particular instance in their sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be.  In the case of a request for an initial
issuance of a Letter of Credit, such L/C Application shall specify in form and
detail satisfactory to the L/C Issuer:  (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the
name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) the purpose and nature of the requested Letter of
Credit; and (H) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such L/C Application shall specify in form
and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a
Business Day); (C) the nature of the proposed amendment; and (D) such
other matters as the L/C Issuer may require. 
Additionally, Borrower shall furnish to the L/C Issuer and
Agent such other documents and information pertaining to such requested
Letter of Credit issuance or amendment, including any Issuer Documents, as the
L/C Issuer or Agent may require.

 

33

 

(ii)           Promptly after receipt of
any L/C Application at the address set forth in Section 10.2 for
receiving L/C Applications and related correspondence, the L/C Issuer will
confirm with Agent (by telephone or in writing) that Agent has received a copy
of such L/C Application from Borrower and, if not, the L/C Issuer will provide
Agent with a copy thereof.  Unless the
L/C Issuer has received written notice from any Lender, Agent or any Loan
Party, at least one Business Day prior to the requested date of issuance or
amendment of the applicable Letter of Credit, that one or more applicable
conditions contained in Article IV shall not then be satisfied, then,
subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of Borrower (or the applicable Subsidiary) or
enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s Pro
Rata Share times the amount of such Letter of Credit.

 

(iii)          Promptly after its delivery
of any Letter of Credit or any amendment to a Letter of Credit to an advising
bank with respect thereto or to the beneficiary thereof, the L/C Issuer will
also deliver to Borrower and Agent a true and complete copy of such Letter of
Credit or amendment.

 

(iv)          If Borrower so requests in
any applicable L/C Application, the L/C Issuer may, in its sole and absolute
discretion, agree to issue a standby Letter of Credit that has automatic
extension provisions (each, an “Auto-Extension Letter of
Credit”); provided that any such Auto-Extension Letter of Credit
must permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Non-Extension Notice Date”) in each
such twelve-month period to be agreed upon at the time such Letter of Credit is
issued.  Unless otherwise directed by the
L/C Issuer, Borrower shall not be required to make a specific request to the
L/C Issuer for any such extension.  Once
an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed
to have authorized (but may not require) the L/C Issuer to permit the extension
of such Letter of Credit at any time to an expiry date not later than the L/C
Expiration Date; provided, however, that the L/C Issuer shall not permit any
such extension if (A) the L/C Issuer has determined that it would not be
permitted, or would have no obligation, at such time to issue such Letter of
Credit in its revised form (as extended) under the terms hereof (by reason of
the provisions of clause (ii) or (iii) of Section 2.3(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before the
Non-Extension Notice Date (1) from Agent that the Required Lenders have
elected not to permit such extension or (2) from Agent, any Lender or any
Loan Party that one or more of the applicable conditions specified in Section 4.2
is not then satisfied, and in each such case directing the L/C Issuer not to
permit such extension.

 

34

 

(v)           If Borrower so requests in
any applicable L/C Application, the L/C Issuer may, in its sole and absolute
discretion, agree to issue a Letter of Credit that permits the automatic
reinstatement of all or a portion of the stated amount thereof after any
drawing thereunder (each, an “Auto-Reinstatement Letter
of Credit”).  Unless
otherwise directed by the L/C Issuer, Borrower shall not be required to make a
specific request to the L/C Issuer to permit such reinstatement.  Once an Auto-Reinstatement Letter of Credit
has been issued, except as provided in the following sentence, the Lenders
shall be deemed to have authorized (but may not require) the L/C Issuer to
reinstate all or a portion of the stated amount thereof in accordance with the provisions
of such Letter of Credit. 
Notwithstanding the foregoing, if such Auto-Reinstatement Letter of
Credit permits the L/C Issuer to decline to reinstate all or any portion of the
stated amount thereof after a drawing thereunder by giving notice of such
non-reinstatement within a specified number of days after such drawing (the “Non-Reinstatement Deadline”), the
L/C Issuer shall not permit such reinstatement if it has received a notice
(which may be by telephone or in writing) on or before the day that is seven
Business Days before the Non-Reinstatement Deadline (A) from Agent that
the Required Lenders have elected not to permit such reinstatement or (B) from
Agent, any Lender or Borrower that one or more of the applicable conditions
specified in Section 4.2 is not then satisfied (treating such
reinstatement as an L/C Credit Extension for purposes of this clause) and, in
each case, directing the L/C Issuer not to permit such reinstatement.

 

(c)       Drawings and Reimbursements; Funding of
Participations.

 

(i)            Upon receipt from the
beneficiary of any Letter of Credit of any notice of a drawing under such
Letter of Credit, the L/C Issuer shall notify Borrower and Agent thereof.  Not later than 11:00 a.m. on the
Business Day after the date of any payment by the L/C Issuer under a Letter of
Credit (each such date of payment, an “Honor Date”),
Borrower shall reimburse the L/C Issuer through Agent in an amount equal to the
amount of such drawing plus accrued interest on the amount of such drawing
(which interest shall accrue from the Honor Date to the time of reimbursement
as if the amount of such drawing were a Base Rate Loan).  If Borrower fails to so reimburse the L/C
Issuer by such time, Agent shall promptly notify each Lender of the Honor Date,
the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Pro Rata Share
thereof.  In such event, Borrower shall
be deemed to have requested a Committed Borrowing of Base Rate Loans to be
disbursed on the Business Day after the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.2
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.2 (other than the delivery of a Committed Loan
Notice).  Any notice given by the L/C
Issuer or Agent pursuant to this Section 2.3(c)(i) may be
given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

 

35

 

(ii)           Each Lender (including a
Lender acting as L/C Issuer) shall upon any notice pursuant to Section 2.3(c)(i) make
funds available to Agent for the account of the L/C Issuer at the Agent’s
Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not
later than 11:00 a.m. on the Business Day specified in such notice by
Agent, whereupon, subject to the provisions of Section 2.3(c)(iii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Committed Loan to Borrower in such amount. 
Agent shall remit the funds so received to the L/C Issuer.

 

(iii)          With respect to any
Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of
Base Rate Loans because the conditions set forth in Section 4.2
cannot be satisfied or for any other reason, Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Lender’s
payment to Agent for the account of the L/C Issuer pursuant to Section 2.3(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.3.

 

(iv)          Until each Lender funds its
Committed Loan or L/C Advance pursuant to this Section 2.3(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Pro Rata Share of such amount shall be
solely for the account of the L/C Issuer.

 

(v)           Each Lender’s obligation to
make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts
drawn under Letters of Credit, as contemplated by this Section 2.3(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, Borrower or
any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.3(c) is
subject to the conditions set forth in Section 4.2 (other than
delivery by Borrower of a Committed Loan Notice).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

 

(vi)          If any Lender fails to make
available to Agent for the account of the L/C Issuer any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section 2.3(c) by
the time specified in Section 2.3(c)(ii), the L/C Issuer shall be
entitled to recover from such Lender (acting through Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is 

 

36

 

immediately available to the L/C Issuer at a rate per annum equal to
the greater of the Federal Funds Rate and a rate determined by the L/C Issuer
in accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C
Borrowing, as the case may be.  A
certificate of the L/C Issuer submitted to any Lender (through Agent) with
respect to any amounts owing under this clause (vi) shall be conclusive
absent manifest error.

 

(d)       Repayment of Participations.

 

(i)            At any time after the L/C
Issuer has made a payment under any Letter of Credit and has received from any
Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.3(c),
if Agent receives for the account of the L/C Issuer any payment in respect of
the related Unreimbursed Amount or interest thereon (whether directly from
Borrower or otherwise, including proceeds of Cash Collateral applied thereto by
Agent), Agent will distribute to such Lender its Pro Rata Share thereof in the
same funds as those received by Agent.

 

(ii)           If any payment received by
Agent for the account of the L/C Issuer pursuant to Section 2.3(c)(i) is
required to be returned under any of the circumstances described in Section 10.5
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to Agent for the account of the L/C Issuer
its Pro Rata Share thereof on demand of Agent, plus interest thereon from the
date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this
clause shall survive payment in full of the Obligations and the termination of
this Agreement.

 

(e)           Obligations Absolute.  The
obligation of Borrower to reimburse the L/C Issuer for each drawing under each
Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including the following:

 

(i)            any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other Loan
Document;

 

(ii)           the existence of any claim,
counterclaim, set-off, defense or other right that Borrower or any Subsidiary
may have at any time against any beneficiary or any transferee of such Letter
of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), the L/C Issuer or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by such Letter of
Credit or any agreement or instrument relating thereto, or any unrelated
transaction;

 

37

 

(iii)          any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the L/C
Issuer under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

 

(v)           any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, Borrower or any Subsidiary.

 

Borrower
shall promptly examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance
with Borrower’s instructions or other irregularity, Borrower will immediately
notify the L/C Issuer.  Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and
its correspondents unless such notice is given as aforesaid.

 

(f)        Role of L/C Issuer.  Each Lender and Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.  None of the L/C Issuer, Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer shall be liable to any Lender for (i) any action taken or
omitted in connection herewith at the request or with the approval of Lenders
or the Required Lenders, as applicable; (ii) any action taken or omitted
in the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Issuer Document.  Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement.  None of the L/C Issuer,
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer, shall be liable or responsible for
any of the matters described in clauses (i) through (v) of Section 2.3(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by Borrower
which Borrower proves were 

 

38

 

caused by the L/C Issuer’s willful misconduct or gross negligence or
the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit.  In furtherance and not in limitation of the
foregoing, the L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral.  Upon the request of Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as
of the L/C Expiration Date, any L/C Obligation for any reason remains
outstanding, Borrower shall, in each case, immediately Cash Collateralize the
then Outstanding Amount of all L/C Obligations. 
Sections 2.3(a), 2.5 and 8.2(c) set forth
certain additional requirements to deliver Cash Collateral hereunder.  For purposes hereof, “Cash Collateralize”
means to pledge and deposit with or deliver to Agent, for the benefit of the
L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to Agent and the L/C Issuer (which documents are hereby consented
to by Lenders).  Derivatives of such term
have corresponding meanings.  Borrower
hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America.  If at any
time Agent determines that any funds held as Cash Collateral are subject to any
right or claim of any Person other than Agent or that the total amount of such
funds is less than the aggregate Outstanding Amount of all L/C Obligations,
Borrower will, forthwith upon demand by Agent, pay to Agent, as additional
funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such
aggregate Outstanding Amount over (y) the total amount of funds, if any,
then held as Cash Collateral that Agent determines to be free and clear of any
such right and claim.  Upon the drawing
of any Letter of Credit for which funds are on deposit as Cash Collateral, such
funds shall be applied, to the extent permitted under applicable Laws, to
reimburse the L/C Issuer.

 

(h)           Applicability of ISP and UCP.  Unless
otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of
Credit is issued, (i) the rules of the ISP shall apply to each
standby Letter of Credit, and (ii) the rules of the Uniform Customs
and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce at the time of issuance shall apply to each
commercial Letter of Credit.

 

(i)            L/C Fees.  Borrower shall pay to Agent for the account
of each Lender in accordance with its Pro Rata Share an L/C fee (the “L/C
Fee”) (i) for each commercial Letter of Credit equal to the then
applicable commercial letter of credit fees of the L/C Issuer then in effect,
and (ii) for each standby Letter of Credit equal to the Applicable Rate times
the daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit).  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.6.  L/C Fees shall be (i) computed on a 

 

39

 

quarterly basis in arrears and (ii) due and payable on the first
Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the L/C Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily maximum amount available to be drawn under each
standby Letter of Credit shall be computed and multiplied by the Applicable
Rate separately for each period during such quarter that such Applicable Rate
was in effect.  Notwithstanding anything
to the contrary contained herein, upon the request of the Required Lenders,
while any Event of Default exists, all L/C Fees shall accrue at the Default
Rate.

 

(j)            Fronting Fee and Documentary
and Processing Charges Payable to L/C Issuer.  Borrower shall pay
directly to the L/C Issuer for its own account a fronting fee with respect to (i) each
commercial Letter of Credit, at the rate specified in the Fee Letter, computed
on the amount of such Letter of Credit, and payable upon the issuance thereof, (ii) with
respect to any amendment of a commercial Letter of Credit increasing the amount
of such Letter of Credit, at a rate separately agreed between Borrower and the
L/C Issuer, computed on the amount of such increase, and payable upon the
effectiveness of such amendment, and (iii) with respect to each standby
Letter of Credit, at the rate per annum specified in the Fee Letter, computed
on the daily amount available to be drawn under such Letter of Credit on a
quarterly basis in arrears.  Such
fronting fee shall be due and payable on the tenth Business Day after the end
of each March, June, September and
December in respect of the most recently-ended quarterly period (or
portion thereof, in the case of the first payment), commencing with the first
such date to occur after the issuance of such Letter of Credit, on the L/C
Expiration Date and thereafter on demand. 
For purposes of computing the daily amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined
in accordance with Section 1.6. 
In addition, Borrower shall pay directly to the L/C Issuer for its own
account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect.  Such individual customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

(k)           Conflict with Issuer
Documents.  In the
event of any conflict between the terms hereof and the terms of any Issuer
Document, the terms hereof shall control.

 

(l)            Letters of Credit Issued for
Subsidiaries. 
Notwithstanding that a Letter of Credit issued or outstanding hereunder
is in support of any obligations of, or is for the account of, a Subsidiary,
Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and
all drawings under such Letter of Credit. 
Borrower hereby acknowledges that the issuance of Letters of Credit for
the account of Subsidiaries inures to the benefit of Borrower, and that
Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.

 

2.4               Swing Line Loans.

 

(a)           The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.4, to make loans (each
such loan, a “Swing Line Loan”) to Borrower from time

 

40

 

to
time on any Business Day during the Availability Period in an aggregate amount
not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Pro Rata Share of the Outstanding Amount of Committed Loans and L/C Obligations
of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s
Commitment; provided, however, that after giving effect to any
Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, and (ii) the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata
Share of the Outstanding Amount of all Swing Line Loans shall not exceed such
Lender’s Commitment, and provided, further, that Borrower shall
not use the proceeds of any Swing Line Loan to refinance any outstanding Swing
Line Loan.  Within the foregoing limits,
and subject to the other terms and conditions hereof, Borrower may borrow under
this Section 2.4, prepay under Section 2.5, and
reborrow under this Section 2.4. 
Each Swing Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing Line
Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Pro Rata Share times the amount of such Swing Line Loan.

 

(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
Borrower’s irrevocable notice to the Swing Line Lender and Agent, which may be
given by telephone. Each such notice must be received by the Swing Line Lender
and Agent not later than 10:00 a.m. on the requested borrowing date, and
shall specify (i) the amount to be borrowed, which shall be a minimum of
$500,000, and (ii) the requested borrowing date, which shall be a Business
Day.  Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and Agent of a written
Swing Line Loan Notice, appropriately completed and signed by a Responsible
Officer of Borrower.  Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the
Swing Line Lender will confirm with Agent (by telephone or in writing) that
Agent has also received such Swing Line Loan Notice and, if not, the Swing Line
Lender will notify Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received
notice (by telephone or in writing) from Agent (including at the request of any
Lender) prior to 11:00 a.m. on the date of the proposed Swing Line
Borrowing (A) directing the Swing Line Lender not to make such Swing Line
Loan as a result of the limitations set forth in the first proviso to the first
sentence of Section 2.4(a), or (B) that one or more of the
applicable conditions specified in Article IV is not then
satisfied, then, subject to the terms and conditions hereof, the Swing Line
Lender will, not later than 12:00 noon on the borrowing date specified in such
Swing Line Loan Notice, make the amount of its Swing Line Loan available to
Borrower.

 

(c)       Refinancing of Swing Line Loans.

 

(i)             The Swing Line Lender at any time in its sole and
absolute discretion may request, on behalf of Borrower (which hereby
irrevocably authorizes the Swing Line Lender to so request on its behalf), that
each Lender make a Base Rate Committed Loan in an amount equal to such Lender’s
Pro Rata Share of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Committed Loan 

 

41

 

Notice for purposes hereof) and in accordance with the requirements of Section 2.2,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.2.  The Swing Line Lender shall furnish Borrower
with a copy of the applicable Committed Loan Notice promptly after delivering
such notice to Agent.  Each Lender shall
make an amount equal to its Pro Rata Share of the amount specified in such
Committed Loan Notice available to Agent in immediately available funds for the
account of the Swing Line Lender at Agent’s Office not later than 10:00 a.m.
on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.4(c)(ii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Committed Loan to Borrower in such amount. 
Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)           If for any reason any Swing Line Loan cannot be refinanced
by such a Committed Borrowing in accordance with Section 2.4(c)(i),
the request for Base Rate Committed Loans submitted by the Swing Line Lender as
set forth herein shall be deemed to be a request by the Swing Line Lender that
each of the Lenders fund its risk participation in the relevant Swing Line Loan
and each Lender’s payment to Agent for the account of the Swing Line Lender
pursuant to Section 2.4(c)(i) shall be deemed payment in
respect of such participation.

 

(iii)          If any Lender fails to make available to Agent for the account
of the Swing Line Lender any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.4(c) by the time
specified in Section 2.4(c)(i), the Swing Line Lender shall be
entitled to recover from such Lender (acting through Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the
Swing Line Lender at a rate per annum equal to the greater of the Federal Funds
Rate and a rate determined by the Swing Line Lender in accordance with banking
industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by the Swing Line Lender in
connection with the foregoing.  If such
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Lender’s Committed Loan included in the relevant
Committed Borrowing or funded participation in the relevant Swing Line Loan, as
the case may be.  A certificate of the
Swing Line Lender submitted to any Lender (through Agent) with respect to any
amounts owing under this clause (iii) shall be conclusive absent manifest
error.

 

(iv)          Each Lender’s obligation to make Committed Loans or to
purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.4(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, Borrower or any other
Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not
similar to any of 

 

42

 

the foregoing; provided, however, that each Lender’s
obligation to make Committed Loans pursuant to this Section 2.4(c) is
subject to the conditions set forth in Section 4.2.  No such funding of risk participations shall
relieve or otherwise impair the obligation of Borrower to repay Swing Line
Loans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At any time after any Lender has purchased and funded a
risk participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Lender its Pro Rata Share thereof in the same funds as those
received by the Swing Line Lender.

 

(ii)           If any payment received by the Swing Line Lender in
respect of principal or interest on any Swing Line Loan is required to be
returned by the Swing Line Lender under any of the circumstances described in Section 10.5
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Lender shall pay to the Swing Line Lender its Pro Rata
Share thereof on demand of Agent, plus interest thereon from the date of such
demand to the date such amount is returned, at a rate per annum equal to the
Federal Funds Rate.  Agent will make such
demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)           Interest for Account of Swing Line Lender.  The Swing Line Lender shall be responsible
for invoicing Borrower for interest on the Swing Line Loans.  Until each Lender funds its Base Rate
Committed Loan or risk participation pursuant to this Section 2.4
to refinance such Lender’s Pro Rata Share of any Swing Line Loan, interest in
respect of such Pro Rata Share shall be solely for the account of the Swing
Line Lender.

 

(f)            Payments Directly to Swing Line Lender.  Borrower shall make all payments of principal
and interest in respect of the Swing Line Loans directly to the Swing Line
Lender.

 

2.5          Prepayments.

 

(a)           Voluntary Prepayments.  Borrower may, upon notice to Agent, at any
time or from time to time voluntarily prepay Committed Loans in whole or in
part without premium or penalty; but with accrued interest thereon and any
amounts due under Section 3.5, provided that (i) such
notice must be received by Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on
the date of prepayment of Base Rate Committed Loans; (ii) any prepayment
of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a
whole multiple of $500,000 in excess thereof; and (iii) any prepayment of
Base Rate Committed Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding.  Each such notice shall specify the date and
amount 

 

43

 

of such prepayment and the Type(s) of Committed Loans to be
prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of
such Loans.  Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender’s Pro Rata Share of such prepayment. 
If such notice is given by Borrower, Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein.  Any prepayment
of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
together with any additional amounts required pursuant to Section 3.5.  Each such prepayment shall be applied to the
Committed Loans of Lenders in accordance with their respective Pro Rata Shares.

 

(b)           Borrower may, upon notice to the Swing Line Lender (with a
copy to Agent), at any time or from time to time, voluntarily prepay Swing Line
Loans in whole or in part without premium or penalty; provided that (i) such
notice must be received by the Swing Line Lender and Agent not later than 1:00 p.m.
on the date of the prepayment, and (ii) any such prepayment shall be in a
minimum principal amount of $100,000. 
Each such notice shall specify the date and amount of such
prepayment.  If such notice is given by
Borrower, Borrower shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein.

 

(c)           Mandatory Prepayments from Excess Utilization.  If for any reason the Total Outstandings at
any time exceed the Aggregate Commitments then in effect, Borrower shall
immediately prepay Loans but with accrued interest thereon and any amounts due
under Section 3.5, and/or Cash Collateralize the L/C Obligations in
an aggregate amount equal to such excess; provided, however, that
Borrower shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.5(c) unless after the prepayment in
full of the Loans the Total Outstandings exceed the Aggregate Commitments then
in effect.

 

(d)           Mandatory Prepayments and Mandatory Reductions of
Commitments.  The Loans shall be
prepaid and/or the Aggregate Commitments shall be permanently reduced in the
amounts and under the circumstances set forth below, and all such prepayments
and/or reductions to be applied as set forth below or as more specifically
provided in Section 2.5(e)(ii):

 

(i)            Mandatory Prepayments and Reductions From Net Asset
Sale Proceeds.  No later than the
date of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale
Proceeds in respect of any Asset Sale, Borrower shall either (1) prepay
Loans and/or permanently reduce the Aggregate Commitments in accordance with Section 2.5(e)(ii),
in each case, in an aggregate amount equal to such Net Asset Sale Proceeds or
(2), so long as no Default or Event of Default shall have occurred and be
continuing and to the extent that the aggregate Net Asset Sale Proceeds from
the Closing Date through the date of determination that are so reinvested or
proposed to be so reinvested under this Section 2.5(d)(i) do
not exceed $3,000,000, deliver to Agent an officer’s certificate setting forth (x) that
portion of such Net Asset Sale Proceeds that Borrower or such Subsidiary
intends to reinvest in equipment or other productive assets of the general type
used in the business of Borrower and its Subsidiaries within 180 days of such
date of receipt and (y) the proposed use of such portion of the Net Asset
Sale Proceeds 

 

44

 

and such other information with respect to such reinvestment as Agent
may reasonably request, and Borrower shall, or shall cause one or more of its
Subsidiaries to, promptly and diligently apply such portion to such
reinvestment purposes; provided, however, that, pending such reinvestment, such
portion of the Net Asset Sale Proceeds shall be applied to prepay outstanding
Loans (without a reduction in the Aggregate Commitments) to the full extent
thereof.  In addition, Borrower shall, no
later than 180 days after receipt of such Net Asset Sale Proceeds that have not
theretofore been applied to the Obligations hereunder or that have not been so
reinvested as provided above, make an additional prepayment of the Loans
(and/or the Aggregate Commitments shall be permanently reduced) as set forth
above in the full amount of all such Net Asset Sale Proceeds.

 

(ii)           Prepayments and Reductions from Net
Insurance/Condemnation Proceeds.  No
later than three (3) Business Days following the date of receipt by Agent,
Borrower or any of its Subsidiaries of any Net Insurance/Condemnation Proceeds
that are required to be applied to prepay the Loans and/or reduce the Aggregate
Commitments pursuant to Section 6.6(b), Borrower shall either (1) prepay
Loans and/or permanently reduce the Aggregate Commitments in accordance with Section 2.5(e)(ii),
in each case, in an aggregate amount equal to such Net Insurance/Condemnation
Proceeds or (2), so long as no Default or Event of Default shall have occurred
and be continuing and to the extent that the aggregate Net
Insurance/Condemnation Proceeds from the Closing Date through the date of
determination that are so reinvested or proposed to be so reinvested under this
Section 2.5(d)(ii) or under Section 6.6(b)(ii) do
not exceed $10,000,000, deliver to Agent an officer’s certificate setting forth
(x) that portion of such Net Insurance/Condemnation Proceeds that Borrower
or such Subsidiary intends to reinvest in equipment or other productive assets
of the general type used in the business of Borrower and its Subsidiaries
within 180 days of such date of receipt and (y) the proposed use of such
portion of the Net Insurance/Condemnation Proceeds and such other information
with respect to such reinvestment as Agent may reasonably request, and Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such portion to such reinvestment purposes; provided, however,
that, pending such reinvestment, such portion of the Net Insurance/Condemnation
Proceeds shall be applied to prepay outstanding Loans (without a reduction in
the Aggregate Commitments) to the full extent thereof.  In addition, Borrower shall, no later than
180 days after receipt of such Net Insurance/Condemnation Proceeds that have not
theretofore been applied to the Obligations hereunder or that have not been so
reinvested as provided above, make an additional prepayment of the Loans
(and/or the Aggregate Commitments shall be permanently reduced) as set forth
above in the full amount of all such Net Insurance/Condemnation Proceeds.

 

(e)           Application of Prepayments and Reductions of Aggregate
Commitments.

 

45

 

(i)            Application of Voluntary Prepayments by Type of Loans.  Any voluntary prepayments pursuant to Section 2.5(a) shall
be applied as specified by Borrower in the applicable notice of prepayment;
provided that in the event Borrower fails to specify the Type of Loans to which
any such prepayment shall be applied, such prepayment shall be applied to repay
Base Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner that minimizes the amount of any payment
required to be made by Borrower pursuant to Section 3.5.

 

(ii)           Application of Mandatory Prepayments by Type of Loans.  Except as provided in Section 2.5(c),
any amount required to be applied as a mandatory prepayment of the Loans and/or
a reduction of the Aggregate Commitments shall be applied first to prepay the
Loans to the full extent thereof and to permanently reduce the Aggregate
Commitments by the amount of such prepayment, and second, to the extent of any
remaining portion of such amount, to further permanently reduce the Aggregate
Commitments to the full extent thereof. 
Any mandatory prepayments pursuant to this Section 2.5 shall
be applied as specified by Borrower in written notice to Agent; provided that
in the event Borrower fails to specify the Type of Loan to which any such
prepayment shall be applied, such prepayment shall be applied to repay Base
Rate Loans to the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner that minimizes the amount of any payment
required to be made by Borrower pursuant to Section 3.5.  Any mandatory reduction of the Aggregate
Commitments pursuant to this Section 2.5(e) shall be in
proportion to each Lender’s Pro Rata Share.

 

2.6          Termination or Reduction of
Commitments.  Borrower
may, upon notice to Agent, terminate the Aggregate Commitments, or from time to
time permanently reduce the Aggregate Commitments; provided that (i) any
such notice shall be received by Agent not later than 8:00 a.m. five
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof, (iii) Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Total Outstandings would
exceed the Aggregate Commitments, and (iv) if, after giving effect to any
reduction of the Aggregate Commitments, the L/C Sublimit or the Swing Line
Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall
be automatically reduced by the amount of such excess.  Agent will promptly notify the Lenders of any
such notice of termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitments
shall be applied to the Commitment of each Lender according to its Pro Rata
Share.  All fees accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

 

2.7          Repayment of Loans.

 

(a)           Borrower shall repay to Lenders on the Maturity Date the
aggregate principal amount of Committed Loans outstanding on such date.

 

46

 

(b)           Borrower shall repay each Swing Line Loan on the earlier
to occur of (i) the date ten Business Days after such Loan is made and (ii) the
Maturity Date.

 

2.8          Interest.

 

(a)           Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; (ii) each
Base Rate Committed Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate plus the Applicable Rate; and (iii) each Swing Line
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate.

 

(b)           (i)        If any
amount of principal of any Loan is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.

 

(ii)           If any amount (other than principal of any Loan) payable
by Borrower under any Loan Document is not paid when due (without regard to any
applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then upon the request of the Required Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required Lenders, while any Event
of Default exists, Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

(iv)          Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.

 

(c)           Interest on each Loan shall be due and payable in arrears
on each Interest Payment Date applicable thereto and at such other times as may
be specified herein.  Interest hereunder
shall be due and payable in accordance with the terms hereof before and after
judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law.

 

2.9          Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.3:

 

(a)           Commitment Fee.  Borrower shall pay to
Agent for the account of each Lender in accordance with its Pro Rata Share, a
commitment fee equal to the Applicable Rate times the actual daily
amount by which the Aggregate Commitments exceed the sum of (i) the
Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of
L/C Obligations.  The commitment fee
shall accrue at all times during the Availability Period, 

 

47

 

including at any time during which one or more of the conditions in Article IV
is not met, and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing
Date, and on the Maturity Date.  The
commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Rate during any quarter, the actual daily amount shall
be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.

 

(b)           Other Fees.

 

(i)            Borrower shall pay to the Arranger and Agent for their
own respective accounts fees in the amounts and at the times specified in the
Fee Letter.  Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.

 

(ii)           Borrower shall pay to the Lenders such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified.  Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.

 

2.10        Computation of Interest and Fees;
Retroactive Adjustments of Applicable Rate.

 

(a)           All computations of interest for Base Rate Loans when the
Base Rate is determined by Bank of America’s “prime rate” shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed.  All other computations of fees
and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than
if computed on the basis of a 365-day year). 
Interest shall accrue on each Loan for the day on which the Loan is made,
and shall not accrue on a Loan, or any portion thereof, for the day on which
the Loan or such portion is paid, provided that any Loan that is repaid
on the same day on which it is made shall, subject to Section 2.12(a),
bear interest for one day.  Each
determination by Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

 

(b)           If, as a result of any restatement of or other adjustment
to the financial statements of Borrower or for any other reason, Borrower or
the Lenders determine that (i) the Funded Debt to EBITDA Ratio as
calculated by Borrower as of any applicable date was inaccurate and (ii) a
proper calculation of the Funded Debt to EBITDA Ratio would have resulted in
higher pricing for such period, Borrower shall immediately and retroactively be
obligated to pay to Agent for the account of the applicable Lenders or the L/C
Issuer, as the case may be, promptly on demand by Agent (or, after the
occurrence of an actual or deemed entry of an order for relief with respect to
Borrower under the Bankruptcy Code of the United States, automatically and
without further action by Agent, any Lender or the L/C Issuer), an amount equal
to the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such
period.  This paragraph shall not limit
the rights of Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.3(c)(iii),
2.3(i) or 2.8(b) or under Article VIII.  Borrower’s obligations under this 

 

48

 

paragraph shall survive the termination of the Aggregate Commitments
and the repayment of all other Obligations hereunder.

 

2.11        Evidence of Debt.

 

(a)           The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
Agent in the ordinary course of business. 
The accounts or records maintained by Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
Lenders to Borrower and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of
Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
Agent in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error. 
Upon the request of any Lender made through Agent, Borrower shall
execute and deliver to such Lender (through Agent) a Note, which shall evidence
such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note
and endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto.

 

(b)           In addition to the accounts and records referred to in
subsection (a), each Lender and Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit. 
In the event of any conflict between the accounts and records maintained
by Agent and the accounts and records of any Lender in respect of such matters,
the accounts and records of Agent shall control in the absence of manifest
error.

 

2.12        Payments Generally.

 

(a)           (i)        General.  All payments to be made by Borrower shall be
made without condition or deduction for any counterclaim, defense, recoupment
or setoff.  Except as otherwise expressly
provided herein, all payments by Borrower hereunder shall be made to Agent, for
the account of the respective Lenders to which such payment is owed, at the
Agent’s Office in Dollars and in immediately available funds not later than
11:00 a.m. on the date specified herein. 
Agent will promptly distribute to each Lender its Pro Rata Share (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by Agent after 11:00 a.m.
shall be deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue. 
If any payment to be made by Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

 

(ii)           Borrower Account. 
On each date when the payment of any principal, interest or fees are due
hereunder or under any Note, Borrower agrees to maintain on deposit in an
ordinary checking account maintained by Borrower with Agent (as such account
shall be designated by Borrower in a written notice to Agent from time to time,
the “Borrower Account”) an amount sufficient to pay such principal,
interest or fees in full on such date. 
Borrower hereby authorizes 

 

49

 

Agent (A) to deduct automatically all principal, interest or fees
when due hereunder or under any Note from Borrower Account, and (B) if and
to the extent any payment of principal, interest or fees under this Agreement
or any Note is not made when due to deduct any such amount from any or all of
the accounts of Borrower maintained at Agent. 
Agent agrees to provide written notice to Borrower of any automatic
deduction made pursuant to this Section 2.12(a)(ii) showing in
reasonable detail the amounts of such deduction.  Lenders agree to reimburse Borrower based on
their Pro Rata Share for any amounts deducted from such accounts in excess of
amount due hereunder and under any other Loan Documents.

 

(b)           (i)        Funding
by Lenders; Presumption by Agent. 
Unless Agent shall have received notice from a Lender prior to the
proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the
case of any Committed Borrowing of Base Rate Loans, prior to 9:00 a.m. on
the date of such Committed Borrowing) that such Lender will not make available
to Agent such Lender’s share of such Committed Borrowing, Agent may assume that
such Lender has made such share available on such date in accordance with Section 2.2
(or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender
has made such share available in accordance with and at the time required by Section 2.2)
and may, in reliance upon such assumption, make available to Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Committed Borrowing
available to Agent, then the applicable Lender and Borrower severally agree to
pay to Agent forthwith on demand such corresponding amount in immediately
available funds with interest thereon, for each day from and including the date
such amount is made available to Borrower to but excluding the date of payment
to Agent, at (A) in the case of a payment to be made by such Lender, the
greater of the Federal Funds Rate and a rate determined by Agent in accordance
with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by Agent in
connection with the foregoing, and (B) in the case of a payment to be made
by Borrower, the interest rate applicable to Base Rate Loans.  If Borrower and such Lender shall pay such
interest to Agent for the same or an overlapping period, Agent shall promptly
remit to Borrower the amount of such interest paid by Borrower for such
period.  If such Lender pays its share of
the applicable Committed Borrowing to Agent, then the amount so paid shall
constitute such Lender’s Committed Loan included in such Committed
Borrowing.  Any payment by Borrower shall
be without prejudice to any claim Borrower may have against a Lender that shall
have failed to make such payment to Agent.

 

(ii)           Payments by Borrower; Presumptions by Agent.  Unless Agent shall have received notice from
Borrower prior to the date on which any payment is due to Agent for the account
of the Lenders or the L/C Issuer hereunder that Borrower will not make such
payment, Agent may assume that Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if Borrower has not in fact
made such payment, then each of the Lenders or the L/C Issuer, as the case may
be, severally agrees to repay to Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in immediately available funds
with interest thereon, for

 

50

 

each day from and including the date such
amount is distributed to it to but excluding the date of payment to Agent, at
the greater of the Federal Funds Rate and a rate determined by Agent in
accordance with banking industry rules on interbank compensation.

 

A notice of Agent to any Lender or Borrower
with respect to any amount owing under this subsection (b) shall be
conclusive, absent manifest error.

 

(c)           Failure to Satisfy Conditions
Precedent.  If any Lender makes
available to Agent funds for any Loan to be made by such Lender as provided in
the foregoing provisions of this Article II, and such funds are not
made available to Borrower by Agent because the conditions to the applicable
Credit Extension set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, Agent shall return such funds (in
like funds as received from such Lender) to such Lender, without interest.

 

(d)           Obligations of Lenders Several.  The obligations of the Lenders hereunder to
make Committed Loans, to fund participations in Letters of Credit and Swing
Line Loans and to make payments pursuant to Section 10.4(c) are
several and not joint.  The failure of
any Lender to make any Committed Loan, to fund any such participation or to
make any payment under Section 10.4(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan or purchase its participation.

 

(e)           Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.

 

2.13        Sharing of Payments.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Committed Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it resulting
in such Lender’s receiving payment of a proportion of the aggregate amount of
such Committed Loans or participations and accrued interest thereon greater
than its pro  rata share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify Agent of such
fact, and (b) purchase (for cash at face value) participations in the
Committed Loans and subparticipations in L/C Obligations and Swing Line Loans
of the other Lenders, or make such other adjustments as shall be equitable, so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Committed Loans and other amounts owing them, provided
that:

 

(i)            if any such participations or
subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest; and

 

51

 

(ii)           the provisions of this Section shall
not be construed to apply to (x) any payment made by Borrower pursuant to
and in accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than to
Borrower or any Subsidiary thereof (as to which the provisions of this Section shall
apply).

 

Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of Borrower in
the amount of such participation.

 

2.14        Increase
in Commitments.

 

(a)           Request for Increase.  Provided there exists no Default, upon notice
to Agent (which shall promptly notify the Lenders), Borrower may from time to
time, request an increase in the Aggregate Commitments by an amount (for all
such requests) not exceeding $75,000,000; provided that (i) any
such request for an increase shall be in a minimum amount of $10,000,000, and (ii) Borrower
may make a maximum of three such requests. 
At the time of sending such notice, Borrower (in consultation with
Agent) shall specify the time period within which each Lender is requested to
respond (which shall in no event be less than ten Business Days from the date
of delivery of such notice to the Lenders).

 

(b)           Lender Elections to Increase.  Each Lender shall notify Agent within such
time period whether or not it agrees to increase its Commitment and, if so,
whether by an amount equal to, greater than, or less than its Pro Rata Share of
such requested increase.  Any Lender not
responding within such time period shall be deemed to have declined to increase
its Commitment.

 

(c)           Notification by Agent; Additional
Lenders.  Agent shall notify Borrower
and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested
increase and subject to the approval of Agent, the L/C Issuer and the Swing
Line Lender (which approvals shall not be unreasonably withheld), Borrower may
also invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to Agent and its counsel.

 

(d)           Effective Date and Allocations.  If the Aggregate Commitments are increased in
accordance with this Section, Agent and Borrower shall determine the effective
date (the “Increase Effective Date”) and the final allocation of such
increase.  Agent shall promptly notify
Borrower and the Lenders of the final allocation of such increase and the
Increase Effective Date.

 

(e)           Conditions to Effectiveness of
Increase.  As a condition precedent
to such increase, Borrower shall deliver to Agent a certificate of each Loan
Party dated as of the Increase Effective Date (in sufficient copies for each
Lender) signed by a Responsible Officer 

 

52

 

of such Loan Party (i) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to
such increase, and (ii) in the case of Borrower, certifying that, before
and after giving effect to such increase, (A) the representations and
warranties contained in Article V and the other Loan Documents are
true and correct on and as of the Increase Effective Date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of such earlier date, and except
that for purposes of this Section 2.14, the representations and
warranties contained in subsections (a) and (b) of Section 5.5
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.1, and (B) no
Default exists.  Borrower shall prepay
any Committed Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.5) to the extent
necessary to keep the outstanding Committed Loans ratable with any revised Pro
Rata Shares arising from any nonratable increase in the Commitments under this
Section.

 

(f)            Conflicting Provisions.  This Section shall supersede any
provisions in Section 2.13 or 10.1 to the contrary.

 

ARTICLE III                 TAXES,
YIELD PROTECTION AND ILLEGALITY.

 

3.1          Taxes.

 

(a)           Payments Free of Taxes; Obligation
to Withhold; Payments on Account of Taxes.

 

(i)            Any and all payments by or on
account of any obligation of Borrower hereunder or under any other Loan
Document shall to the extent permitted by applicable Laws be made free and
clear of and without reduction or withholding for any Indemnified Taxes.  If, however, applicable Laws require Borrower
or Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted
in accordance with such Laws as determined by Borrower or Agent, as the case
may be, upon the basis of the information and documentation to be delivered
pursuant to subsection (e) below.

 

(ii)           If Borrower or Agent shall be required
by the Code to withhold or  deduct any
Taxes, including both United States Federal backup withholding and withholding
taxes, from any payment, then (A) Agent shall withhold or make such
deductions as are determined by Agent to be required based upon the information
and documentation it has received pursuant to subsection (e) below, (B) Agent
shall timely pay the full amount withheld or deducted to the relevant
Governmental Authority in accordance with the Code, and (C) to the extent
that the withholding or deduction is made on account of Indemnified Taxes or
Other Taxes, the sum payable by Borrower shall be increased as necessary so
that after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to
the sum it would have received had no such withholding or deduction been made.

 

53

 

(b)           Payment of Other Taxes by Borrower.  Without limiting the provisions of subsection
(a) above, Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable Laws.

 

(c)           Tax Indemnifications.  Without limiting the provisions of subsection
(a) or (b) above, Borrower shall, and does hereby, indemnify Agent,
each Lender and the L/C Issuer, and shall make payment in respect thereof
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) withheld or
deducted by Borrower or Agent or paid by Agent, such Lender or the L/C Issuer,
as the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as
to the amount of any such payment or liability delivered to Borrower by a
Lender or the L/C Issuer (with a copy to Agent), or by Agent on its own behalf
or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest
error.

 

(d)           Evidence of Payments.  Upon request by
Borrower or Agent, as the case may be, after any payment of Taxes by Borrower
or by Agent to a Governmental Authority as provided in this Section 3.1,
Borrower shall deliver to Agent or Agent shall deliver to Borrower, as the case
may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required
by Laws to report such payment or other evidence of such payment reasonably
satisfactory to Borrower or Agent, as the case may be.

 

(e)           Status of Lenders; Tax
Documentation.

 

(i)            Each Lender shall deliver to
Borrower and to Agent, at the time or times prescribed by applicable Laws or
when reasonably requested by Borrower or Agent, such properly completed and
executed documentation prescribed by applicable Laws or by the taxing
authorities of any jurisdiction and such other reasonably requested information
that would entitle such Lender to an exemption from, or reduction of,
applicable Taxes in respect of all payments to be made to such Lender by
Borrower pursuant to this Agreement or otherwise to establish such Lender’s
status for withholding tax purposes in the applicable jurisdiction; provided,
however, that such Lender is legally entitled to complete, execute and deliver
such documentation and in such Lender’s reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.

 

(ii)           Each Foreign Lender that is entitled
under the Code or any applicable treaty to an exemption from or reduction of
withholding tax with respect to payments hereunder or under any other Loan
Document shall deliver to Borrower and Agent (in such number of copies as shall
be reasonably requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request 

 

54

 

of Borrower or Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is
applicable:

 

(I)            executed originals of Internal
Revenue Service Form W-8BEN claiming eligibility for benefits of an income
tax treaty to which the United States is a party,

 

(II)           executed originals of Internal
Revenue Service Form W-8ECI,

 

(III)         executed originals of Internal Revenue
Service Form W-8IMY and all required supporting documentation,

 

(IV)         in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under section 881(c) of
the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a
“bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) executed originals of  Internal Revenue Service Form W-8BEN, or

 

(V)           executed originals of any other form
prescribed by applicable Laws as a basis for claiming exemption from or a
reduction in United States Federal withholding tax together with such
supplementary documentation as may be prescribed by applicable Laws to permit
Borrower or Agent to determine the withholding or deduction required to be
made.

 

(iii)          Each Lender shall promptly (A) notify
Borrower and Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (B) take such steps as
shall not be materially disadvantageous to it, in the reasonable judgment of
such Lender, and as may be reasonably necessary (including the re-designation
of its Lending Office) to avoid any requirement of applicable Laws of any
jurisdiction that Borrower or Agent make any withholding or deduction for taxes
from amounts payable to such Lender.

 

(f)            Treatment of Certain Refunds.  Unless required by applicable Laws, at no
time shall Agent have any obligation to file for or otherwise pursue on behalf
of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or
the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for
the account of such Lender or the L/C Issuer, as the case may be.  If Agent, any Lender or the L/C Issuer
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by Borrower or with respect
to which Borrower has paid additional amounts pursuant to this Section, it
shall pay to Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrower under this Section with

 

55

 

respect to the Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses incurred by Agent, such
Lender or the L/C Issuer, as the case may be, and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such
refund), provided that Borrower, upon the request of Agent, such Lender
or the L/C Issuer, agrees to repay the amount paid over to Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such
Lender or the L/C Issuer is required to repay such refund to such Governmental
Authority.  This subsection shall not be
construed to require Agent, any Lender or the L/C Issuer to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to Borrower or any other Person.

 

3.2          Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to Borrower through Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies Agent and
Borrower that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice,
Borrower shall, upon demand from such Lender (with a copy to Agent), prepay or,
if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans.  Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the
amount so prepaid or converted and all amounts due under Section 3.5
in accordance with the terms thereof due to such prepayment or conversion.

 

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

 

56

 

3.4          Increased Costs.

 

(a)           Increased Costs Generally.  If any Change in Law shall:

 

(i)            impose, modify or deem applicable
any reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate) or
the L/C Issuer;

 

(ii)           subject any Lender or the L/C Issuer
to any tax of any kind whatsoever with respect to this Agreement, any Letter of
Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan
made by it, or change the basis of taxation of payments to such Lender or the
L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.1 and any change in the rate of any Excluded
Tax payable by such Lender or the L/C Issuer); or

 

(iii)          impose on any Lender or the L/C Issuer
or the London interbank market any other condition, cost or expense affecting
this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of
Credit or participation therein;

 

and the result
of any of the foregoing shall be to increase the cost to such Lender of making
or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to
make any such Loan), or to increase the cost to such Lender or the L/C Issuer
of participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by such Lender or the
L/C Issuer hereunder (whether of principal, interest or any other amount) then,
upon request of such Lender or the L/C Issuer, Borrower will pay to such Lender
or the L/C Issuer, as the case may be, such additional amount or amounts as
will compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time
Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer
or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.

 

57

 

(c)           Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuer
setting forth the reason for such claim in reasonable detail and the amount or
amounts necessary to compensate such Lender or the L/C Issuer or its holding
company, as the case may be, as specified in subsection (a) or (b) of
this Section and delivered to Borrower shall be conclusive absent manifest
error.  Borrower shall pay such Lender or
the L/C Issuer, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or the L/C
Issuer’s right to demand such compensation, provided that Borrower shall
not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender or
the L/C Issuer, as the case may be, notifies Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
L/C Issuer’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

3.5          Compensation for
Losses.  Upon
demand of any Lender (with a copy to Agent) from time to time, Borrower shall
promptly compensate such Lender for and hold such Lender harmless from any
loss, cost or expense incurred by it as a result of:

 

(a)           any continuation, conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise);

 

(b)           any failure by Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by Borrower; or

 

(c)           any assignment of a Eurodollar Rate
Loan on a day other than the last day of the Interest Period thereof as a
result of a request by Borrower pursuant to Section 10.13;

 

including any loss of anticipated profits and any loss or expense
arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained.  Borrower shall
also pay any customary administrative fees charged by such Lender in connection
with the foregoing.  For purposes of
calculating amounts payable by Borrower to Lenders under this Section 3.5,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it
at the Eurodollar Base Rate used in determining the Eurodollar Rate, as
applicable, for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

58

 

3.6          Mitigation
Obligations; Replacement of Lenders.

 

(a)           Designation of a Different Lending Office.  If
any Lender requests compensation under Section 3.4, or Borrower is
required to pay any additional amount to any Lender, the L/C Issuer, or any Governmental Authority for the account of
any Lender or the L/C Issuer pursuant
to Section 3.1, or if any Lender gives a notice pursuant to Section 3.2,
then such Lender or the L/C Issuer shall, as applicable, use reasonable efforts
to designate a different Lending Office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.1
or 3.4, as the case may be, in the future, or eliminate the need for the
notice pursuant to Section 3.2, as applicable, and (ii) in
each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender or the L/C
Issuer, as the case may be.  Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with
any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.4,
or if Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.1,
Borrower may replace such Lender in accordance with Section 10.13.

 

3.7          Survival.  All of Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder, and resignation of Agent.

 

ARTICLE IV  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS.

 

4.1          Conditions of Initial Credit Extension.  The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

(a)           Closing Documents.  Agent’s receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date) and
each in form and substance satisfactory to Agent and each of the Lenders:

 

(i)            executed counterparts of this
Agreement  and the other Loan Documents, sufficient in number for
distribution to Agent, each Lender and Borrower;

 

(ii)           a Note executed by Borrower in favor
of each Lender requesting a Note;

 

(iii)          such certificates of resolutions or
other action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as Agent may require evidencing the identity,
authority and capacity of each 

 

59

 

Responsible Officer thereof authorized to act
as a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

 

(iv)          such documents and certifications as
Agent may reasonably require to evidence that each Loan Party is duly organized
or formed (including copies of Organization Documents of each Loan Party
certified by the Secretary of State of its jurisdiction of incorporation), and
that each Loan Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification,
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect;

 

(v)           a favorable opinion of counsel to the
Loan Parties substantially in the form of Exhibits K annexed hereto
acceptable to Agent addressed to Agent and each Lender, as to the matters set
forth in such Exhibits and such other matters concerning the Loan Parties and
the Loan Documents as the Required Lenders may reasonably request;

 

(vi)          a certificate of a Responsible Officer
of each Loan Party either (A) attaching copies of all consents, licenses
and approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses and approvals
shall be in full force and effect, or (B) stating that no such consents,
licenses or approvals are so required;

 

(vii)         a certificate signed by a Responsible
Officer of Borrower certifying (A) that the conditions specified in Sections
4.2(a) and (b) have been satisfied, and (B) that
there has been no event or circumstance since June 30, 2008 that has had
or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect;

 

(viii)        evidence that all insurance required to
be maintained pursuant to the Loan Documents has been obtained and is in effect
and that Agent on behalf of Lenders has been named as additional insured and/or
loss payee thereunder to the extent required under Section 6.7;

 

(ix)           a duly completed Compliance
Certificate as of June 30, 2008, signed by a Responsible Officer of
Borrower;

 

(x)            evidence that (A) all
commitments under the Credit Agreement dated as of January 31, 2005 among
Borrower, Bank of America, as agent and l/c issuer and the lenders from time to
time party thereto (as amended, the “Existing Credit Agreement”)
have been or concurrently with the Closing Date are being terminated pursuant
to a payoff letter in form and substance satisfactory to Agent, (B) all
outstanding amounts thereunder have been or concurrently with the Closing Date
are being paid in full, (C) any Liens securing obligations under the

 

60

 

Existing Credit Agreement have been or
concurrently with the Closing Date are being released, and (D) arrangements
satisfactory to Agent have been made with respect to any letters of credit
outstanding thereunder;

 

(xi)           an officers’ certificate of each Loan
Party dated the Closing Date, substantially in the form of Exhibit J
annexed hereto and with appropriate attachments, in each case demonstrating
that, after giving effect to the consummation of the transactions contemplated
by the Loan Documents, such Loan Party on a consolidated basis will be Solvent;
and

 

(xii)          such other assurances, certificates,
documents, consents or opinions as Agent, the L/C Issuer, the Swing Line Lender
or the Required Lenders reasonably may require.

 

(b)           Fees.  Any fees required to be paid on or before the
Closing Date (whether pursuant to the terms hereof, the Fee Letter or
otherwise) shall have been paid.

 

(c)           Attorneys’ Fees.  Unless waived by Agent, Borrower shall have
paid all Attorney Costs of Agent to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between Borrower and Agent).

 

(d)           Closing Date.  The Closing Date shall have occurred on or
before October 8, 2008.

 

(e)           No Litigation.  No action, suit, investigation or proceeding
shall be pending or threatened in any court or before any arbitrator or
Governmental Authority that purports or could reasonably be expected to (i) have
a Material Adverse Effect on Borrower, or (ii) affect any transaction
contemplated hereunder or the ability of Borrower or any other Loan Party to
perform their respective obligations under the Loan Documents to which they are
a party.

 

(f)            Security Interests in Personal
and Mixed Property.  Agent shall have
received evidence satisfactory to it that each Loan Party shall have taken or
caused to be taken all such actions, executed and delivered or caused to be
executed and delivered all such agreements, documents and instruments, and made
or caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (iii), (iv) and (v) below)
that may be necessary or, in the opinion of Agent, desirable in order to create
in favor of Agent, for the benefit of Lenders, a valid and (upon such filing
and recording) perfected First Priority Lien (except for Liens permitted under
clauses (b) through (i) of Section 7.1) on the entire
personal and mixed property Collateral. 
Such actions shall include the following:

 

(i)            Delivery to Agent of each Collateral
Document, including the Security Agreement, duly executed by each Loan Party;

 

(ii)           Stock Certificates; Instruments.  Delivery to Agent of (a) certificates
(which certificates shall be accompanied by irrevocable undated 

 

61

 

stock power, duly endorsed in blank and
otherwise satisfactory in form and substance to Agent) representing all Equity
Interests pledged pursuant to the Security Agreement, and (b) all
promissory notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Agent) evidencing any Collateral;

 

(iii)          Lien Searches and UCC Termination
Statements.  Delivery to Agent of (a) the
results of a recent search, by a Person satisfactory to Agent, of all effective
UCC financing statements and all judgment and tax lien filings (or similar
filings in the applicable foreign jurisdictions) which may have been made with
respect to any personal or mixed property of Borrower or any Subsidiary that is
a Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements (or similar terminations in the
applicable foreign jurisdictions) duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to terminate any
effective UCC financing statements (or similar filings in the applicable
foreign jurisdictions) disclosed in such search (other than any such financing
statements in respect of Liens permitted to remain outstanding pursuant to the
terms of this Agreement).

 

(iv)          UCC Financing Statements.  Delivery to Agent of UCC financing
statements, with respect to all personal and mixed property Collateral of such
Loan Party, for filing in all jurisdictions as may be necessary or, in the
opinion of Agent, desirable to perfect the security interests created in the
Collateral pursuant to the Collateral Documents;

 

(v)           Cover Sheets, Etc.  Delivery to Agent of all cover sheets or
other documents or instruments required to be filed with any IP Filing Office
in order to create or perfect Liens in respect of any IP Collateral, together
with releases duly executed (if necessary) of security interests by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective filings in any IP Filing Office in respect
of any IP Collateral (other than any such filings in respect of Liens permitted
to remain outstanding pursuant to the terms of this Agreement); and

 

(vi)          Delivery to Agent of evidence that all
other action that Agent may deem necessary or desirable in order to perfect the
Liens created under the Security Agreement has been taken (including receipt of
any payoff letters, Landlord Waivers to the extent obtained prior to the
Closing Date and Control Agreements to the extent obtained prior to the Closing
Date).

 

(g)           [Reserved].

 

(h)           Financial Statements; Business
Plan.  On or before the Closing Date,
Agent shall have received copies of (i) the Audited Financial Statements, (ii) the
unaudited consolidated balance sheet of Borrower and its Subsidiaries dated June 30,
2008, and the related consolidated statements of income or operations and cash
flows for the fiscal quarter ended on such date, and (iii) a business plan
and budget of Borrower and its Subsidiaries on a 

 

62

 

consolidated basis, including forecasts
prepared by management of Borrower, of consolidated balance sheets and
statements of income or operations and cash flows of Borrower and its
Subsidiaries on an annual basis for the five years following the Closing Date.

 

(i)            Material Intellectual Property
Licenses.  On or before the Closing
Date, Agent shall have received copies of all documentation evidencing Material
Intellectual Property Licenses.

 

(j)            Other Information and
Certifications.  Agent shall have
received, in form and substance reasonably satisfactory to it, all such
reports, audits or certifications as it may reasonably request.

 

Without limiting the generality of the
provisions of the last paragraph of Section 9.3, for purposes of
determining compliance with the conditions specified in this Section 4.1,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.2          Conditions to all
Credit Extensions. 
The obligation of each Lender to honor any Request for Credit Extension
(other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject
to the following conditions precedent:

 

(a)           The representations and warranties of
Borrower and each other Loan Party contained in Article V or any
other Loan Document, or which are contained in any document furnished at any
time under or in connection herewith or therewith, shall be true and correct on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that
for purposes of this Section 4.2, the representations and
warranties contained in subsections (a) and (b) of Section 5.5
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.1.

 

(b)           No Default shall exist, or would
result from such proposed Credit Extension or from the application of the
proceeds thereof.

 

(c)           After giving effect to the proposed
Credit Extension, (i) Total Outstandings shall not exceed the Aggregate
Commitments then in effect, (ii) if the proposed Credit Extension is a
Swing Line Loan, the Outstanding Amount of Swing Line Loans shall not exceed
the Swing Line Sublimit, and (iii) if the proposed Credit Extension is a
Letter of Credit, the Outstanding Amount of L/C Obligations shall not exceed
the L/C Sublimit.

 

(d)           Agent and, if applicable, the L/C
Issuer or the Swing Line Lender shall have received a Request for Credit
Extension in accordance with the requirements hereof.

 

63

 

Each Request
for Credit Extension (other than a Committed Loan Notice requesting a
conversion of Committed Loans to the other Type, or a continuation of
Eurodollar Rate Loans) submitted by Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.2(a),
(b) and (c) have been satisfied on and as of the date
of the applicable Credit Extension.

 

ARTICLE V  REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants to Agent and
the Lenders that:

 

5.1          Existence,
Qualification and Power; Compliance with Laws.  Each Loan Party and each Material Subsidiary
thereof (a) is duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own
or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party, (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is
in compliance with all Laws; except in each case referred to in clauses (a) (as
to the good standing of Loan Parties other than Borrower) (b)(i), (c) or (d) of
this Section 5.1, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

5.2          Authorization; No
Contravention. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict
with in any material respect or result in any material breach or contravention
of, or the creation of any material Lien under, or require any payment to be
made under (i) any Contractual Obligation to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law applicable to any Loan Party.

 

5.3          Governmental Authorization;
Other Consents. 
Except for filings necessary to perfect Liens granted under the Loan
Documents and other immaterial filings with any Governmental Authority, no
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by any Loan
Party of this Agreement or any other Loan Document.

 

5.4          Binding Effect.  This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. 
This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles.

 

64

 

5.5          Financial
Statements; No Material Adverse Effect.

 

(a)           The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present, in all material respects, the financial condition of Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and (iii) show
all material indebtedness and other liabilities, direct or contingent, of
Borrower and its Subsidiaries as of the date thereof required to be disclosed
under GAAP, including material liabilities for taxes, commitments and
Indebtedness.

 

(b)           The unaudited consolidated balance
sheet of Borrower and its Subsidiaries dated June 30, 2008, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for the fiscal quarter ended on that date (i) were prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, and (ii) fairly
present, in all material respects, the financial condition of Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to
the absence of footnotes and to normal year-end audit adjustments.  Schedule 5.5 sets forth all material
indebtedness and other liabilities, direct or contingent, of Borrower and its
consolidated Subsidiaries as of the date of such financial statements,
including material liabilities for taxes, commitments and Indebtedness.

 

(c)           Since the date of the Audited
Financial Statements, there has been no event or circumstance, in the
aggregate, that has had or could reasonably be expected to have a Material Adverse
Effect.

 

(d)           The consolidated forecasted balance
sheets, statements of income and cash flows of Borrower and its Subsidiaries
delivered pursuant to Section 4.1 or Section 6.1 were
prepared in good faith on the basis of assumptions which Borrower believed were
fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, Borrower’s best estimate
of its future financial condition and performance (it being understood that
projections are subject to significant uncertainties and contingencies, many of
which are beyond Borrower’s control, and that no assurance can be given that
projections will be realized).

 

5.6          Litigation.  There are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against Borrower or any of its Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.

 

5.7          No Default.  Neither any Loan Party nor any Subsidiary
thereof is in default under or with respect to any Contractual Obligation that
could, either individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.  No Default
has occurred 

 

65

 

and is
continuing or is reasonably likely to result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

 

5.8          Ownership of
Property; Liens. 
Each of Borrower and each Subsidiary has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
The property of Borrower and its Subsidiaries is subject to no Liens,
other than Liens permitted by Section 7.1.

 

5.9          Environmental
Compliance. 
Borrower and its Subsidiaries conduct in the ordinary course of business
a review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
Borrower has reasonably concluded that, except as specifically disclosed in Schedule
5.9, such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10        Insurance.  The properties of Borrower and its
Subsidiaries are insured with reputable insurance companies not Affiliates of
Borrower, in such amounts (after giving effect to any self-insurance compatible
with the following standards), with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable Subsidiary
operates.

 

5.11        Taxes.  Borrower and its Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except (a) those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with GAAP and (b) immaterial
taxes.  There is no proposed tax
assessment against Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.

 

5.12        ERISA
Compliance.

 

(a)           Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws.  Each Plan that is
intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto or the remedial
amendment period to file such application has not expired and, to the best
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification.  Borrower
and each ERISA Affiliate have made all required contributions to each Plan
subject to Section 412 of the Code in all material respects, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Plan.

 

66

 

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

 

(c)           (i)  No ERISA Event has occurred
or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any material liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any material
liability (and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.

 

5.13        Subsidiaries; Equity
Interests.  As
of the Closing Date, no Loan Party has any Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, and all
of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by a Loan Party in the
amounts specified on Part (a) of Schedule 5.13 free and clear
of all Liens except those created under the Collateral Documents.  No Loan Party has any equity investments or
owns any Equity Interests in any other corporation or entity other than those
specifically disclosed in Part (b) of Schedule 5.13 (and those
not yet required to be set forth on an update to Schedule 5.13 pursuant
to Section 6.2(g)).  Set
forth on Part (c) of Schedule 5.13 is a complete and accurate
list of all Loan Parties (other than those not yet required to be set forth on
an update to Schedule 5.13 pursuant to Section 6.2(g)),
showing as of the Closing Date (as to each Loan Party) the jurisdiction of its
incorporation, the address of its principal place of business and its U.S.
taxpayer identification number or, in the case of any non-U.S. Loan Party that
does not have a U.S. taxpayer identification number, its unique identification
number issued to it by the jurisdiction of its incorporation.  The copy of the charter of each Loan Party
and each amendment thereto provided pursuant to Section 4.1(a)(iv) or any amendments or modifications thereto delivered after
the Closing Date (which amendments or modifications comply with Section 7.13)
is a true and correct copy of each such document, each of which is valid and in
full force and effect.  Neither the book
value nor the fair market value of the total assets of OSC (without netting
against its liabilities and without taking into account any intercompany loan
(if any) receivable by OSC as of the Closing Date and described in Schedule 7
of the Security Agreement) exceeds $10,000 and OSC does not and will not engage
in any operations or business other than owning its IP Rights. Neither the book
value nor the fair market value of the total assets of any Dormant Foreign
Subsidiary (without netting against its liabilities and without taking into
account any intercompany loan (if any) receivable by such Dormant Foreign
Subsidiary as of the Closing Date and described in Schedule 7 of the Security
Agreement) exceeds $100,000 and none of the Dormant Foreign Subsidiaries
engages in or will engage in any operations or business.

 

67

 

5.14        Margin Regulations;
Investment Company Act; Public Utility Holding Company Act.

 

(a)           Borrower is not engaged and will not
engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.  No part of the proceeds of any Credit
Extensions hereunder will be used for “purchasing” or “carrying” “margin stock”
as so defined or for any purpose which violates, or which would be inconsistent
with, the provisions of Regulations U or X of the FRB.

 

(b)           None of Borrower, any Person
Controlling Borrower, or any Subsidiary (i) is a “holding company,” or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company” or of
a “subsidiary company” of a “holding company,” within the meaning of the Public
Utility Holding Company Act of 1935, or (ii) is or is required to be
registered as an “investment company” under the Investment Company Act of 1940.

 

5.15        Disclosure.  Borrower has disclosed to Agent and Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No report,
financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of any Loan Party to Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder or under any other Loan Document (in each
case, as modified or supplemented by other information so furnished) contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to projected
financial information, Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.

 

5.16        Compliance with Laws.  Each Loan Party and each Subsidiary thereof
is in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

5.17        Intellectual Property;
Licenses, Etc.

 

(a)           Borrower and its Subsidiaries own, or
possess the right to use in all material respects, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intellectual property rights (collectively, “IP Rights”)
that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person, and Schedule 5.17(a) sets
forth a complete and accurate list of all such IP Rights owned or used by
Borrower and each of its Subsidiaries (other than those held or used pursuant
to a license and those not yet required to be set forth on an update to Schedule
5.17 pursuant to Section 6.2(g));

 

68

 

(b)           To the best knowledge of Borrower, no
slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by Borrower
or any Subsidiary infringes in any material respect upon any rights held by any
other Person; and

 

(c)           Borrower has provided to Agent
documentation evidencing all Material Intellectual Property Licenses (except
those not yet required to be delivered pursuant to Section 6.2(h))
and each such Material Intellectual Property License is in full force and
effect in all material respects and no Loan Party is in breach of any such
Material Intellectual Property License or any provision of such documentation
in any material respect.  Schedule
5.17(b) sets forth a complete and accurate list of all Material
Intellectual Property Licenses (other than those not yet required to be set
forth on an update to Schedule 5.17 pursuant to Section 6.2(g) or
(h)).

 

(d)           No claim or litigation regarding any
of the foregoing is pending or, to the best knowledge of Borrower, threatened,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

 

5.18        Rights
in Collateral; Priority of Liens.

 

(a)           Borrower and each other Loan Party
own the property (or rights or interest therein) granted by it as Collateral
under the Collateral Documents, free and clear of any and all Liens in favor of
third parties, except for Liens permitted under Section 7.1.  The
execution and delivery of the Collateral Documents by Loan Parties and the
delivery to Agent of the Pledged Collateral (all of which Pledged Collateral
has been so delivered) are effective to create in favor of Agent for the
benefit of Lenders, as security for the respective Obligations (as defined in
the applicable Collateral Document in respect of any Collateral), a valid and
perfected First Priority Lien on all of the Collateral, subject to Liens
permitted under clauses (b) through (i) of Section 7.1,
and all filings and other actions necessary or desirable to perfect and
maintain the perfection and first priority status of such Liens have been duly
made or taken and remain in full force and effect, subject to Liens permitted
under clauses (b) through (i) of Section 7.1, other than
the filing of any UCC financing statements delivered to Agent for filing (but
not yet filed), the periodic filing of UCC continuation statements in respect
of UCC financing statements filed by or on behalf of Agent and other action
described in Section 4(b) of the Security Agreement.  Upon the proper filing of UCC financing
statements, and the taking of the other actions required by the Required
Lenders as described in Section 4(b) of the Security Agreement, the
Liens granted pursuant to the Collateral Documents will constitute, subject to
Liens permitted under clauses (b) through (i) of Section 7.1,
valid and enforceable first, prior and perfected Liens on the Collateral in
favor of Agent, for the ratable benefit of Agent and Lenders.

 

(b)           No Governmental Authorization is
required for either (i) the pledge or grant by any Loan Party of the Liens
purported to be created in favor of Agent pursuant to any of the Collateral
Documents, or (ii) the exercise by Agent of any rights or remedies in
respect of any Collateral (whether specifically granted or created pursuant to
any of the Collateral Documents or created or provided for by applicable law),
except for filings or recordings contemplated by Section 5.18(a) and
except as may be required, in connection with the 

 

69

 

disposition of any Pledged Collateral, by
laws generally affecting the offering and sale of securities and in connection
with the disposition of any government receivables.  As of the Closing Date, Borrower and its
Subsidiaries have received no written notice of any pending or threatened condemnation
proceeding, exercise of the power of eminent domain by any Governmental
Authority, or any similar proceeding affecting any Facility or any interest
therein.  As of the Closing Date, to the
best of Borrower’s knowledge, after due investigation and inquiry, no such
proceeding is pending, contemplated or threatened.

 

(c)           Except such (i) as may have been
filed in favor of Agent as contemplated by Section 5.18(a), (ii) as
set forth on Schedule 5.18 annexed hereto or (iii) financing
statements related to Liens permitted by Section 7.1(b), (h) or (i), (A) no
effective UCC financing statement, fixture filing or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing
or recording office, and (B) no effective filing granting Liens covering
all or any part of the IP Collateral is on file in any IP Filing Office.

 

(d)           The pledge of the Pledged Collateral
pursuant to the Collateral Documents does not violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System; provided that the
foregoing does not address Agent’s obtaining a Form U-1 from Borrower.

 

(e)           All information supplied to Agent by
or on behalf of any Loan Party with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate
and complete in all material respects. 
All representations and warranties of the Loan Parties set forth in the
Collateral Documents are true and correct.

 

5.19        Solvency.  As of the Closing Date, the Loan Parties,
together with their Subsidiaries on a consolidated basis, are Solvent.

 

5.20        Casualty, Etc.  Neither the businesses nor the properties of
any Loan Party or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.21        No
Medicare/Medicaid Receivables.  As of the Closing Date, neither Borrower nor
any of its Subsidiaries has rights to any Medicare or Medicaid
receivables.  After the Closing Date,
neither Borrower nor any of its Subsidiaries has rights to any Medicare or
Medicaid receivables other than Medicare or Medicaid receivables not exceeding
at any time $5,000,000 in the aggregate, provided that Loan Parties
shall be in compliance with the requirements of Section 6.20 at any
time that any Loan Party has any rights to any Medicare or Medicaid
receivables.

 

ARTICLE VI  AFFIRMATIVE COVENANTS.

 

So long as any Lender shall have any
Commitment hereunder, any Loan or other Obligation hereunder shall remain
unpaid or unsatisfied, or any Letter of Credit shall remain outstanding,
Borrower shall, and shall (except in the case of the covenants set forth in Sections
6.1, 6.2, 6.3 and 6.11) cause each Subsidiary to:

 

70

 

6.1          Financial
Statements.  Deliver to Agent and each Lender, in form and
detail satisfactory to Agent and the Required Lenders:

 

(a)           as soon as available, but in any
event within 90 days after the end of each fiscal year of Borrower, a
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal year, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP, audited
and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the Required
Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit;

 

(b)           as soon as available, but in any
event within 45 days after the end of each of the first three fiscal quarters
of each fiscal year of Borrower, a consolidated balance sheet of Borrower and
its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income or operations and cash flows for such fiscal
quarter and for the portion of Borrower’s fiscal year then ended, setting forth
in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of Borrower as fairly presenting the financial condition, results of
operations and cash flows of Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes; and

 

(c)           as soon as available, but in any
event not more than 30 days after the end of each fiscal year of Borrower, forecasts prepared by
management of Borrower, in substantially the form provided at closing, of
consolidated balance sheets and statements of income or operations and cash
flows of Borrower and its
Subsidiaries on a quarterly
basis for the immediately following fiscal year.

 

As to any information contained in materials furnished
pursuant to Section 6.2(d), Borrower shall not be separately
required to furnish such information under Section 6.1(a) or (b) above,
but the foregoing shall not be in derogation of the obligation of Borrower to
furnish the information and materials described in Sections 6.1(a) and
(b) above at the times specified therein.

 

6.2          Certificates; Other
Information. 
Deliver to Agent and each Lender, in form and detail satisfactory to
Agent and the Required Lenders:

 

(a)           concurrently with the delivery of the
financial statements referred to in Section 6.1(a), a certificate
of its independent certified public accountants certifying such financial
statements and stating that in making the examination necessary therefor no
knowledge was obtained of any Default under the financial covenants set forth
herein or, if any such Default shall exist, stating the nature and status of
such event;

 

71

 

(b)           concurrently with the delivery of the
financial statements referred to in Sections 6.1(a) and (b),
a duly completed Compliance Certificate signed by a Responsible Officer of
Borrower;

 

(c)           promptly after any request by Agent
or any Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of Borrower by independent accountants in connection
with the accounts or books of Borrower or any Subsidiary, or any audit of any
of them;

 

(d)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of Borrower, and copies of all
annual, regular, periodic and special reports and registration statements which
Borrower may file or be required to file with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act
of 1934, and not otherwise required to be delivered to Agent pursuant hereto;

 

(e)           promptly upon request by Agent, but
no more than once per fiscal year unless an Event of Default has occurred and
is continuing, a certificate from Borrower’s insurance broker(s) in form
reasonably satisfactory to Agent outlining all material insurance coverage
maintained as of the date of such certificate by Borrower and its Subsidiaries;

 

(f)            promptly, and in any event within
five Business Days after receipt thereof by any Loan Party or any Subsidiary
thereof, copies of each notice or other correspondence received from the SEC
(or comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation or other inquiry by such agency
regarding financial or other operational results of any Loan Party or any Subsidiary
thereof;

 

(g)           as soon as available after the end of
each fiscal year, but in any event within 30 days after the end of each fiscal
year of Borrower, (i) a report supplementing Schedule 5.17(a),
setting forth (A) a list of registration numbers for all patents,
trademarks, service marks, trade names and copyrights awarded to Borrower or
any Subsidiary thereof during such fiscal year and (B) a list of all
patent applications, trademark applications, service mark applications, trade
name applications and copyright applications submitted by Borrower or any
Subsidiary thereof during such fiscal year and the status of each such
application; and (ii) a report supplementing Schedule 5.13
containing a description of all changes in the information included in such
Schedules as may be necessary for such Schedules to be accurate and complete,
each such report to be signed by a Responsible Officer of Borrower and to be in
a form reasonably satisfactory to Agent;

 

(h)           concurrently with the delivery of the
financial statements referred to in Section 6.1(a) and (b),
documentation evidencing any Material Intellectual Property License entered
into during the period covered by such financial statements and a report
supplementing Schedule 5.17(b) with respect to each such license;
and

 

72

 

(i)            promptly, such additional
information regarding the business, financial or corporate affairs of Borrower
or any Subsidiary, or compliance with the terms of the Loan Documents, as Agent
or any Lender may from time to time reasonably request.

 

Documents required to be delivered pursuant
to Section 6.1(a) or (b) or Section 6.2(d) (to
the extent any such documents are included in materials otherwise filed with
the SEC) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date (i) on which Borrower posts such
documents, or provides a link thereto on Borrower’s website on the Internet at
the website address listed on Schedule 10.2; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet website,
if any, to which each Lender and Agent have access (whether a commercial,
third-party website or whether sponsored by Agent); provided that:  (i) Borrower shall deliver paper copies
of such documents to Agent or any Lender that requests Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by Agent or such Lender and (ii) Borrower shall notify Agent and each
Lender (by telecopier or electronic mail) of the posting of any such documents
and provide to Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. 
Notwithstanding anything contained herein, in every instance Borrower
shall be required to provide paper copies of the Compliance Certificates
required by Section 6.2(b) to Agent.  Except for such Compliance Certificates,
Agent shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility
to monitor compliance by Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

Borrower hereby acknowledges that (a) Agent
and/or the Arranger will make available to the Lenders and the L/C Issuer
materials and/or information provided by or on behalf of Borrower hereunder
(collectively, “Borrower Materials”) by posting Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and (b) certain
of the Lenders (each, a “Public Lender”) may have personnel who do not
wish to receive material non-public information with respect to Borrower or its
Affiliates, or the respective securities of any of the foregoing, and who may
be engaged in investment and other market-related activities with respect to
such Persons’ securities.  Borrower
hereby agrees that it will use commercially reasonable efforts to identify that
portion of Borrower Materials that may be distributed to the Public Lenders and
that (w) all such Borrower Materials shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower
Materials “PUBLIC,” Borrower shall be deemed to have authorized Agent, the
Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials as
not containing any material non-public information (although it may be
sensitive and proprietary) with respect to Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall
be treated as set forth in Section 10.7); (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Side Information;” and (z) Agent and
the Arranger shall be entitled to treat any Borrower Materials that are not
marked “PUBLIC” as being suitable only for posting on a portion of the Platform
not designated “Public Side Information.”

 

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6.3          Notices.  Promptly after any Responsible Officer or any
other officer (including without limitation any senior vice president,
executive vice president or any other vice president) of any Loan Party obtains
knowledge or receives notice thereof, notify Agent and each Lender:

 

(a)           of the occurrence of any Default;

 

(b)           of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect, including (i) any
breach or non-performance of, or any default under, a Contractual Obligation of
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any development
in, any litigation or proceeding affecting Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws, that has resulted or
could reasonably be expected to result in a Material Adverse Effect;

 

(c)           of the occurrence of any ERISA Event;

 

(d)           of any material change in accounting
policies or financial reporting practices by Borrower or any Subsidiary,
including any determination by Borrower referred to in Section 2.10(b);
and

 

(e)           of any loss or termination of any
Material Intellectual Property License.

 

Each notice
pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower setting forth details of the occurrence
referred to therein and stating what action Borrower has taken and proposes to
take with respect thereto.  Each notice
pursuant to Section 6.3(a) shall describe with particularity
any provisions of this Agreement and any other Loan Document that have been
breached.

 

6.4          Payment of
Obligations. 
Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all Tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by Borrower or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property, except for
Liens permitted under Section 7.1; and (c) all Indebtedness,
as and when due and payable, but subject to any subordination provisions
contained in any instrument or agreement evidencing such Indebtedness, except
to the extent that (i) such unpaid claims, obligations and liabilities
under clauses (a), (b) and (c) do not exceed $500,000 individually or
in the aggregate and (ii) in the case of such claims under clause (b),
such claims, if unpaid, would not become a Lien that is not permitted under Section 7.1.

 

6.5          Preservation of
Existence, Etc. 
(a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its organization
except in a transaction permitted by Section 7.4 or 7.5; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered 

 

74

 

patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

 

6.6          Maintenance
of Properties; Application of Net Insurance/Condemnation Proceeds.

 

(a)           Maintenance of Properties.  (i) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted; (ii) make
all necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (iii) use the standard of care typical in the industry
in the operation and maintenance of its facilities.

 

(b)           Application of Net
Insurance/Condemnation Proceeds.

 

(i)            Business Interruption Insurance.  Upon receipt by Borrower or any of its
Subsidiaries of any business interruption insurance proceeds constituting Net
Insurance/Condemnation Proceeds, (a) so long as no Event of Default or
Default shall have occurred and be continuing, 
Borrower or such Subsidiary may retain and apply such Net
Insurance/Condemnation Proceeds for working capital purposes, and (b) if
an Event of Default or Default shall have occurred and be continuing, Borrower
shall apply an amount equal to such Net Insurance/ Condemnation Proceeds to
prepay the Loans (and/or the Aggregate Commitments shall be reduced) as
provided in Section 2.5(d)(ii); provided that if Borrower
makes a written request to Lenders through Agent requesting that it not be
required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments), then Borrower shall not be required to apply such an
amount to prepay the Loans (and/or to reduce the Aggregate Commitments) so long
as Required Lenders in their sole discretion consent to such request in writing
within 30 days of such request (and Lenders hereby agree to respond to such
request in a timely fashion).

 

(ii)           Net Insurance/Condemnation
Proceeds Received by Borrower.  Upon
receipt by Borrower or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long as
no Event of Default or Default shall have occurred and be continuing, Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or reimburse
the costs of repairing, restoring or replacing the assets in respect of which
such Net Insurance/Condemnation Proceeds were received or, to the extent not so
applied, to either (1) prepay the Loans (and/or the Aggregate Commitments
shall be reduced) as provided in Section 2.5(d)(ii), or (2) so
long as no Default or Event of Default shall have occurred and be continuing
and to the extent that aggregate Net Insurance/Condemnation Proceeds so reinvested
or proposed to be reinvested under this Section 6.6(b)(ii) or Section 2.5(d)(ii) from
the Closing Date through the date of determination do not exceed $10,000,000,
deliver to Agent an officer’s certificate setting forth (x) that portion
of such Net 

 

75

 

Insurance/Condemnation Proceeds that Borrower
or such Subsidiary intends to reinvest in equipment or other productive assets
of the general type used in the business of Borrower and its Subsidiaries within
180 days of such date of receipt and (y) the proposed use of such portion
of the Net Insurance/Condemnation Proceeds and such other information with
respect to such reinvestment as Agent may reasonably request, and Borrower
shall, or shall cause one or more of its Subsidiaries to, promptly and
diligently apply such portion to such reinvestment purposes; provided, however,
that, pending such reinvestment, such portion of the Net Insurance/Condemnation
Proceeds shall be applied to prepay outstanding Loans (without a reduction in
the Aggregate Commitments) to the full extent thereof, and (b) if an Event
of Default or Default shall have occurred and be continuing, Borrower shall
apply an amount equal to such Net Insurance/Condemnation Proceeds to prepay the
Loans (and/or the Aggregate Commitments shall be reduced) as provided in Section 2.5(d)(ii);
provided that if Borrower makes a written request to Lenders through
Agent requesting that it not be required to apply such an amount to prepay the
Loans (and/or to reduce the Aggregate Commitments), then Borrower shall not be
required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments) so long as Required Lenders in their sole discretion
consent to such request in writing within 30 days of such request (and Lenders
hereby agree to respond to such request in a timely fashion).

 

(iii)          Net Insurance/Condemnation Proceeds
Received by Agent.  Upon receipt by
Agent of any Net Insurance/Condemnation Proceeds as loss payee, (a) if and
to the extent Borrower would have been required to apply such Net
Insurance/Condemnation Proceeds (if it had received them directly) to prepay
the Loans and/or reduce the Aggregate Commitments, Agent shall, and Borrower
hereby authorizes Agent to, apply such Net Insurance/Condemnation Proceeds to
prepay the Loans (and/or the Aggregate Commitments shall be reduced) as
provided in Section 6.6(b)(ii); provided that if Borrower
makes a written request to Lenders through Agent requesting that it not be
required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments), then Borrower shall not be required to, and Agent shall
not, apply such an amount to prepay the Loans (and/or to reduce the Aggregate
Commitments) so long as Required Lenders in their sole discretion consent to
such request in writing within 30 days of such request (and Lenders hereby
agree to respond to such request in a timely fashion) and (b) to the
extent the foregoing clause (a) does not apply (or does not require
prepayment of the Loans and/or reduction of the Aggregate Commitments) and (1) the
aggregate amount of such Net Insurance/Condemnation Proceeds received (and
reasonably expected to be received) by Agent in respect of any covered loss
does not exceed $10,000,000, Agent shall deliver such Net
Insurance/Condemnation Proceeds to Borrower, and Borrower shall, or shall cause
one or more of its Subsidiaries to, promptly apply such Net Insurance/
Condemnation Proceeds to the costs of repairing, restoring, or replacing the
assets in respect of which such Net Insurance/Condemnation Proceeds were
received or to reinvest such proceeds in productive assets of the general type
used in the business of Borrower and its Subsidiaries within 180 days 

 

76

 

of such date of receipt in accordance with
the requirements of clause (ii) above, and (2) if the aggregate
amount of Net Insurance/Condemnation Proceeds received (and reasonably expected
to be received) by Agent in respect of any covered loss exceeds $10,000,000,
Agent shall hold such Net Insurance/Condemnation Proceeds as Collateral under
the Security Agreement and, so long as Borrower or any of its Subsidiaries
proceeds diligently to repair, restore or replace the assets of Borrower or
such Subsidiary in respect of which such Net Insurance/Condemnation Proceeds
were received or to reinvest such proceeds in productive assets, Agent shall
from time to time disburse to Borrower or such Subsidiary from the Collateral
Account, to the extent of any such Net Insurance/Condemnation Proceeds
remaining therein in respect of the applicable covered loss, amounts necessary
to pay the cost of such repair, restoration, replacement or reinvestment after,
where applicable the receipt by Agent of invoices or other documentation
reasonably satisfactory to Agent relating to the amount of costs so incurred
and the work performed (including, if required by Agent, lien releases and
architects’ certificates); provided, however that if at any time Agent
reasonably determines (A) that Borrower or such Subsidiary is not
proceeding diligently with such repair, restoration or replacement or (B) that
such repair, restoration, replacement or reinvestment cannot be completed with
the Net Insurance/Condemnation Proceeds then held by Agent for such purpose,
together with funds otherwise available to Borrower for such purpose, or that
such repair, restoration, replacement or reinvestment cannot be completed
within 180 days after the receipt by Agent of such Net Insurance/Condemnation
Proceeds, Agent shall, and Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Aggregate
Commitments shall be reduced) as provided in Section 2.5(d)(ii).

 

6.7          Maintenance of
Insurance. 
Maintain with reputable insurance companies not Affiliates of Borrower,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts (after giving effect to any
self-insurance compatible with the following standards) as are customarily
carried under similar circumstances by such other Persons and providing for not
less than 30 days’ prior notice to Agent of termination, lapse or cancellation
of such insurance.  Each such insurance
policy shall (a) in the case of each such insurance policy other than each
business interruption and casualty insurance policy, name Agent for the benefit
of Lenders as an additional insured thereunder as its interests may appear and (b) in
the case of each business interruption and casualty insurance policy, contain a
loss payable clause or endorsement, satisfactory in form and substance to
Agent, that names Agent for the benefit of Lenders as the loss payee thereunder
for any covered loss and provides for at least 30 days prior written notice to
Agent of any modification or cancellation of such policy.

 

6.8          Compliance
with Laws and Contractual Obligations.

 

(a)           Comply in all material respects with
the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (i) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted;
or (ii) the 

 

77

 

failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

 

(b)           Comply in all material respects with
all Contractual Obligations, except in such instances in which the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

6.9          Books and Records.  (a)  Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of Borrower or such Subsidiary, as the case
may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over Borrower or such Subsidiary, as the case
may be.  Borrower shall maintain at all
times books and records pertaining to the Collateral in such detail, form and
scope as Agent or any Lender shall reasonably require.

 

6.10        Inspection Rights.  Permit representatives and independent
contractors of Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants and
to conduct up to two collateral audits during any twelve month period, all at
the expense of Borrower and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to Borrower; provided, however, that when an Event of Default exists
Agent or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of Borrower at any time
during normal business hours and without advance notice.

 

6.11        Use of Proceeds.  Use the proceeds of the Credit Extensions (i) on
the Closing Date, to refinance certain existing Indebtedness, and (ii) for
working capital and other general corporate purposes (including, without
limitation, Capital Expenditures and Permitted Acquisitions) not in contravention
of any Law or of any Loan Document.

 

6.12        Financial Covenants.

 

(a)           Funded Debt to EBITDA Ratio.  Maintain on a consolidated basis a Funded
Debt to EBITDA Ratio not exceeding 3.00:1.00
as of the end of each fiscal quarter of Borrower.  This ratio will be calculated at the
end of each reporting period for which this Agreement requires Borrower to
deliver financial statements, using the results of the four-fiscal quarter
period ending with that reporting period.

 

(b)           Interest Coverage Ratio.  Maintain on a consolidated basis an Interest
Coverage Ratio not less than 3.50:1.00 as of the end of each fiscal quarter of
Borrower.  This ratio will be calculated
at the end of each reporting period for which this Agreement requires Borrower
to deliver financial statements, using the results of the four-fiscal quarter
period ending with that reporting period.

 

6.13        Additional Guarantors.  Notify Agent at the time that any Person
becomes a Material Subsidiary that is a Domestic Subsidiary, and promptly
thereafter (and in any event 

 

78

 

within 30
days), cause such Person to (a) become a Guarantor by executing and
delivering to Agent a counterpart of the Guaranty or such other document as
Agent shall deem appropriate for such purpose, and (b) execute and deliver
to Agent a counterpart of the Security Agreement and take such further actions
and execute all such further documents and instruments as may be necessary or,
in the opinion of the Agent, for the benefit of the Lenders, except for Liens
permitted under clause (b) through (i) of Section 7.1, a
valid perfected First Priority Lien on all of the personal and mixed property
assets of such Material Subsidiary described in the applicable forms of
Collateral Documents.  In addition,
Borrower shall, or shall cause the Subsidiary that owns the Equity Interests of
such Person to, execute and deliver to Agent a supplement to the Security
Agreement and to deliver to Agent all certificates representing such Equity
Interests of such Person (accompanied by irrevocable undated stock powers, duly
endorsed in blank) and deliver to Agent documents of the types referred to in
clauses (iii) and (iv) of Section 4.1(a) and
favorable opinions of counsel to the Loan Parties and such Person addressed to
Agent and Lenders (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
this Section 6.13), all in form, content and scope reasonably
satisfactory to Agent.

 

6.14        Collateral Records.  To execute and deliver promptly, and to cause
each other Loan Party to execute and deliver promptly, to Agent, from time to
time, solely for Agent’s convenience in maintaining a record of the Collateral,
such written statements and schedules as Agent may reasonably require
designating, identifying or describing the Collateral.  The failure by Borrower or any other Loan
Party, however, to promptly give Agent such statements or schedules shall not
affect, diminish, modify or otherwise limit the Liens on the Collateral granted
pursuant to the Collateral Documents.

 

6.15        Cash Management System.  Borrower shall, and shall cause each of its
Domestic Subsidiaries to, at all times after the 180th day after the
Closing Date use commercially reasonable efforts to maintain all of their
respective Deposit Accounts, Securities Accounts and their respective treasury
management arrangements, depository and other cash management arrangements with
Bank of America, N.A. or other institutions providing a Control Agreement in
form attached hereto or otherwise acceptable to Agent.  Borrower shall not establish or maintain, and
shall not permit any of its Domestic Subsidiaries to establish or maintain, any
Deposit Account or Securities Account (other than Deposit Accounts maintained
at Bank of America, N.A. and other than Excluded Accounts) unless Borrower or
such Subsidiary, as the case may be, has (i) executed and delivered to
Agent a Control Agreement with respect to such Deposit Account or Securities
Account and (ii) taken all other steps necessary or, in the opinion of
Agent, desirable to ensure that Agent has a perfected security interest in such
account.

 

6.16        Security
Interests.

 

(a)           General Covenant.  To, and to cause each other Loan Party to, (i) in
the exercise of Borrower’s commercial reasonable judgment, defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein, (ii) comply with the requirements of all
state and federal laws in order to grant to Agent and Lenders valid and
perfected first priority security interests in the Collateral (except for Liens
permitted under clauses (b) through (i) of Section 7.1),
with perfection, in the case of any investment property or deposit account
(other than Excluded Accounts), being effected by 

 

79

 

giving Agent control of such investment
property or deposit account, rather than by the filing of a UCC financing
statement with respect to such investment property, and (iii) do whatever
Agent may reasonably request, from time to time, to effect the purposes of this
Agreement and the other Loan Documents, including filing notices of liens, UCC
financing statements, fixture filings and amendments, renewals and
continuations thereof; cooperating with Agent’s representatives; keeping stock
records; obtaining waivers from landlords and mortgagees and from warehousemen
and their landlords and mortgages; and, paying claims which might, if unpaid,
become a Lien on the Collateral.  Agent
is hereby authorized by Borrower to file any UCC financing statements covering
the Collateral whether or not Borrower’s signatures appear thereon.

 

(b)           Landlord Waivers.  (i) On or before January 6, 2009 or
such later date as Agent may agree in its sole discretion, deliver to Agent a
fully executed Landlord Waiver with respect to each Leasehold Property of any
Loan Party and (ii) on or before the date that any Loan Party enters into
any lease with respect to any Leasehold Property after the Closing Date,
deliver to Agent a fully executed Landlord Waiver with respect to such
Leasehold Property of such Loan Party.

 

(c)           Cash Management Documentation.  On or before the date that is 30 days after
the Closing Date or such later date as Agent may agree in its sole discretion,
deliver to Agent fully executed Control Agreements with respect to each Loan
Party’s Deposit Accounts and Securities Accounts (other than such Deposit
Accounts maintained with Bank of America, N.A. and other than Excluded Accounts),
each of which Deposit Accounts and Securities Accounts as of the Closing Date
are set forth on Schedule 4.1; provided that if the form of
the Control Agreement materially differs from Exhibit H or I, as the case
may be, then at the reasonable request of Agent, Borrower shall concurrently
deliver with such Control Agreement an opinion of counsel in form and substance
reasonably satisfactory to Agent.

 

6.17        Compliance with
Environmental Laws. 
Each Loan Party shall at all times use all commercially reasonable
efforts to remain in compliance with all applicable Environmental Laws.  Each Loan Party shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all actions
necessary to (i) cure any violation of applicable Environmental Laws by
such Loan Party or its Subsidiaries that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and (ii) make
an appropriate response to any Environmental Liability of such Loan Party or
any of its Subsidiaries and discharge any obligations it may have to any Person
thereunder where failure to do so could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

6.18        Further Assurances.  At any time or from time to time upon the
request of Agent, each Loan Party will, at its expense, promptly execute,
acknowledge and deliver such further documents and do such other acts and
things as Agent may reasonably request in order to effect fully the purposes of
the Loan Documents.  In furtherance and
not in limitation of the foregoing, each Loan Party shall take such actions as
Agent may reasonably request from time to time to ensure that the Obligations
are guarantied by the Guarantors and are secured by a First Priority Lien
(subject to the Liens permitted by Section 7.1) on substantially
all of the assets of Borrower and its Domestic Subsidiaries and all of the
outstanding Equity Interests of Borrower

 

80

 

and its Subsidiaries (subject to the express limitations contained in
the Loan Documents, including with respect to foreign Subsidiaries).

 

6.19        Material Contracts.  Except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, perform and
observe all the terms and provisions of each Material Contract to be performed
or observed by it, maintain each such Material Contract in full force and
effect, enforce each such Material Contract in accordance with its terms, and
cause each of its Subsidiaries to do so.

 

6.20        Medicare/Medicaid
Receivables. 
Conduct its business so as not to obtain any rights to any Medicare or
Medicaid receivables; provided that Loan Parties may obtain and hold
rights to Medicare or Medicaid receivables not exceeding at any time $5,000,000
in the aggregate, so long as (i) at least 30 days prior to obtaining any
rights to Medicare or Medicaid receivables, such Loan Party shall have given
prior written notice to Agent and Lenders of the fact that it is planning to
obtain such rights and in such notice describe the proposed transaction
pursuant to which such Loan Party will receive rights to such receivables
(whether pursuant to an Acquisition or otherwise) and (ii) prior to the
earlier of such Loan Party obtaining any such rights to Medicare or Medicaid
receivables or the consummation of such transaction, (A) Borrower shall
have put into place collateral arrangements with respect to such receivables,
including control agreements and segregation of proceeds, as may be required by
Agent and, in each case, in form and substance satisfactory to Agent and (B) any
representations, covenants, defaults and associated definitions related to such
receivables and matters related thereto as may be required by Agent shall have
been added to this Agreement pursuant to documentation in form and substance
satisfactory to Agent (and Agent and the Lenders shall have received such
certificates and opinions of counsel as may be required by Agent in connection
therewith).  Each Lender, Agent and
Borrower hereby agree that notwithstanding anything to the contrary in Section 10.1
or any other provision of the Loan Documents, any such additions to this
Agreement may be added by Agent and Borrower pursuant to such documentation
without obtaining the consent of Required Lenders or any other Lender so long
as such additions do not reduce the obligations of Borrower under this
Agreement.

 

ARTICLE VII  NEGATIVE COVENANTS.

 

So long as any Lender shall have any
Commitment hereunder, any Loan or other Obligation hereunder shall remain
unpaid or unsatisfied, or any Letter of Credit shall remain outstanding,
Borrower shall not, nor shall it permit any Subsidiary to, directly or
indirectly:

 

7.1          Liens.  Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and
listed on Schedule 7.1 and any renewals or extensions thereof, provided
that the property covered thereby is not increased and any renewal or extension
of the obligations secured or benefited thereby is permitted by Section 7.3(b);

 

81

 

(c)           Liens for Taxes not yet due or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(d)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(e)           pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment insurance
and other social security legislation, other than any Lien imposed by any Plan
or the PBGC under ERISA;

 

(f)            deposits to secure the performance
of bids, trade contracts and leases (other than Indebtedness), statutory
obligations, surety bonds (other than bonds related to judgments or
litigation), performance bonds and other obligations of a like nature incurred
in the ordinary course of business;

 

(g)           easements, rights-of-way,
restrictions and other similar encumbrances affecting real property which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;

 

(h)           Liens securing judgments for the
payment of money not constituting an Event of Default under Section 8.1(h) or
securing appeal or other surety bonds related to such judgments; and

 

(i)            Liens securing Indebtedness
permitted under Section 7.3(e); provided that (i) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value, whichever is lower, of the property being
acquired, constructed or improved on the date of acquisition.

 

7.2          Investments.  Make or own any Investments, except:

 

(a)           Investments held by Borrower or such
Subsidiary in the form of Cash Equivalents or short-term marketable debt
securities;

 

(b)           advances to officers, directors and
employees of Borrower and Subsidiary Guarantors in an aggregate amount not to
exceed $250,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

 

(c)           Investments owned by Borrower as of
the Closing Date in the Equity Interests of any wholly-owned Subsidiary as
described on Schedule 5.13;

 

(d)           Investments consisting of extensions
of credit in the nature of accounts receivable or notes receivable arising from
the grant of trade credit in the ordinary course of 

 

82

 

business, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;
and

 

(e)           Guarantees permitted by Section 7.3;

 

(f)            Permitted Acquisitions by Borrower
or any wholly-owned Subsidiary Guarantor;

 

(g)           Investments consisting of extensions
of credit or capital contributions by Borrower to wholly-owned Subsidiary
Guarantors so long as such Investments consisting of extensions of credit are
evidenced by promissory notes pledged to Agent under the Collateral Documents;

 

(h)           Investments in Persons other than
Subsidiaries not exceeding at any time an aggregate outstanding amount of
$5,000,000; and

 

(i)            additional Investments not exceeding
at any time an aggregate outstanding amount of $10,000,000.

 

7.3          Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a)           Indebtedness under the Loan
Documents;

 

(b)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.3 and any refinancings, refundings,
renewals or extensions thereof; provided that the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder;

 

(c)           Guarantees of Borrower or any
Subsidiary in respect of Indebtedness otherwise permitted hereunder of Borrower
or any wholly-owned Subsidiary Guarantor;

 

(d)           obligations (contingent or otherwise)
of Borrower or any Subsidiary existing or arising under any Swap Contract, provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person, and not for purposes of speculation or taking a “market
view;” and (ii) such Swap Contract does not contain any provision
exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party;

 

(e)           Indebtedness
in respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets (including equipment) within the limitations
set forth in Section 7.1(i); provided, however, that
the aggregate amount of all such Indebtedness at any one time outstanding shall
not exceed $5,000,000;

 

83

 

(f)            Indebtedness
incurred by Borrower or any of its Subsidiaries arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations in connection with Permitted Acquisitions or permitted Dispositions
of any business, assets or Subsidiary of Borrower or any of its Subsidiaries;

 

(g)           Indebtedness of any
wholly-owned Subsidiary Guarantor to Borrower or to any other wholly-owned
Subsidiary Guarantor so long as such Indebtedness is evidenced by
promissory notes pledged to Agent under the Collateral Documents; and

 

(h)           other unsecured Indebtedness not
exceeding $10,000,000 in the aggregate at any time outstanding.

 

7.4          Fundamental Changes.  Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

 

(a)           any Subsidiary may merge with (i) Borrower,
provided that Borrower shall be the continuing or surviving Person, or (ii) any
one or more other Subsidiaries, provided that when any wholly-owned
Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving Person, and, provided further that if a Guarantor is merging with
another Subsidiary, the Guarantor shall be the surviving Person; and

 

(b)           any Subsidiary may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to Borrower
or to another Subsidiary; provided that if the transferor in such a
transaction is a wholly-owned Subsidiary, then the transferee must either be
Borrower or a wholly-owned Subsidiary and,
provided further that if the transferor of such assets is a Guarantor, the
transferee thereof must either be Borrower or a Guarantor.

 

7.5          Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

 

(a)           Dispositions of obsolete or worn out
property, or immaterial property no longer useful or necessary to the business
of Borrower and its Subsidiaries, whether now owned or hereafter acquired, in
the ordinary course of business;

 

(b)           Dispositions of inventory and Cash
Equivalents in the ordinary course of business and sales, assignments,
transfers or dispositions of accounts in the ordinary course of business for
purposes of collection;

 

(c)           Dispositions of equipment or real
property to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are reasonably promptly applied to the purchase
price of such replacement property;

 

(d)           Dispositions of property by Borrower
to any of its wholly-owned Subsidiary Guarantors or by any Subsidiary to
Borrower or to a wholly-owned Subsidiary 

 

84

 

Guarantor; provided that if the
transferor of such property is Borrower or a Guarantor, the transferee thereof
must either be Borrower or a wholly-owned Guarantor;

 

(e)           Dispositions permitted by Section 7.4
and Dispositions of Cash Equivalents permitted by Section 7.2;

 

(f)            licenses of IP Rights in the
ordinary course of business;

 

(g)           subleases of leased properties no
longer needed by Borrower and its Subsidiaries and not material to the
operation of Borrower and its Subsidiaries; and

 

(h)           Dispositions not otherwise permitted
hereunder if (i) at the time of any Disposition, no Event of Default or
Default shall exist or shall result from such Disposition, (ii) the
aggregate sales price of such Disposition shall be paid in cash, and (iii) the
proceeds from Dispositions under this clause (h) since the Closing Date
shall not exceed $500,000 in the aggregate.

 

provided,
however, that any Disposition pursuant to clauses (a) through (h) (other
than clause (d)) shall be for fair market value.

 

7.6          Restricted
Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that:

 

(a)           each Subsidiary may make Restricted
Payments to Borrower and to wholly-owned Subsidiary Guarantors (and, in the
case of a Restricted Payment by a non-wholly-owned Subsidiary, to Borrower and
any Subsidiary and to each other owner of capital stock or other Equity Interests
of such Subsidiary on a pro rata basis based on their relative ownership
interests) and any Subsidiary that is not a Guarantor may make Restricted
Payments to any other Subsidiary and to each other owner of capital stock or
other Equity Interests of such Subsidiary on a pro rata basis based on their
relative ownership interests;

 

(b)           Borrower and each Subsidiary
Guarantor may declare and make dividend payments or other distributions payable
solely in the common stock or other common equity interests of such Person;

 

(c)           Borrower and each Subsidiary
Guarantor may purchase, redeem or otherwise acquire shares of its common stock
or other common equity interests or warrants or options to acquire any such
shares with the proceeds received from the substantially concurrent issue of
new shares of its common stock or other common equity interests;

 

(d)           Borrower may (i) repurchase or
redeem for value Equity Interests of Borrower held by present or former
officers, directors or employees (or their transferees, estates or
beneficiaries under their estates) upon their death, disability, retirement,
severance or termination of employment or service or pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan, agreement or arrangement, provided that the aggregate amount of
all such repurchases or redemptions for value under this clause (i) shall
not exceed $2,000,000 in any one fiscal year, and (ii) make repurchases of
Equity Interests deemed to occur upon the exercise of stock options if the
Equity Interests 

 

85

 

represent a portion of the exercise price
thereof or upon the vesting of restricted stock, restricted stock units or
performance share units to the extent necessary to satisfy tax withholding
obligations attributable to such vesting; and

 

(e)           Borrower may make any Permitted Stock
Repurchase; provided that, after giving effect to such Permitted Stock
Repurchase, the aggregate amount of cash paid or payable for all Permitted
Stock Repurchases consummated during the term of this Agreement commencing on
the Closing Date shall not exceed $50,000,000.

 

7.7          Change in Nature of
Business. 
Engage in any material line of business substantially different from
those lines of business conducted by Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto.  Notwithstanding anything in this Agreement to
the contrary, OSC shall not at any time engage in any business other than owning
its IP Rights and none of the Dormant Foreign Subsidiaries shall engage in any
business.

 

7.8          Transactions with
Affiliates. 
Enter into any transaction of any kind with any Affiliate of Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to Borrower or such Subsidiary as
would be obtainable by Borrower or such Subsidiary at the time in a comparable
arm’s length transaction with a Person other than an Affiliate, provided that
the foregoing restriction shall not apply to (i) transactions between or
among Borrower and any of its wholly-owned Subsidiary Guarantors or between and
among any wholly-owned Subsidiary Guarantors or between and among Subsidiaries
that are not Guarantors, (ii) customary fees, indemnification and
reimbursement of directors, officers and employees of Borrower and its
Subsidiaries, (iii) any Investment permitted by Section 7.2(b),
(c), (e) or (g), (iv) Restricted Payments permitted by Section 7.6,
(v) officer and employee compensation (including bonuses) and other
benefits (including retirement, health, stock option and other benefit plans)
and indemnification and reimbursement arrangements with respect to such
Persons, in each case, in the ordinary course of business or (vi) ordinary
course expenses not exceeding $250,000 in any fiscal year in connection with
continuing the non-operational status of and/or dissolution of the Dormant
Foreign Subsidiaries.

 

7.9          Burdensome
Agreements. 
Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that (a) limits the ability (i) of any
Subsidiary to make Restricted Payments to Borrower or any Guarantor or to
otherwise transfer property to Borrower or any Guarantor, (ii) of any
Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of Borrower
or any Subsidiary to create, incur, assume or suffer to exist Liens on property
of such Person; provided, however, that clause (i) and
clause (iii) shall not prohibit any restriction on transfer or negative
pledge incurred or provided in favor of any holder of Indebtedness permitted
under Section 7.3(e) solely to the extent any such restriction
on transfer or negative pledge relates to the property financed by or the
subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person. 
Notwithstanding the forgoing, the Borrower and its Subsidiaries may
enter into a Contractual Obligation (a) that has restrictions described in
clause (a) above by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses, joint
venture agreements and similar agreements entered into in the ordinary course
of business, in each case, relating solely to the assets subject to such lease
or license or assets 

 

86

 

relating
solely to the assets of such joint venture, (b) that has restrictions
described in clause (a)(i) above to the extent such restriction only
restricts assignments of such contracts entered into in the ordinary course of
business, (c) that has restrictions described in clause (a) above by
virtue of customary provisions in asset sale and stock sale agreements and
other similar agreements entered into in the ordinary course of business
permitted under the terms of this Agreement to the extent such restriction only
restricts the transfer of ownership interests in the assets or stock that is to
be sold pursuant thereto, pending the sale of such assets and (d) that has
restrictions described in clause (a) above by virtue of restrictions on
cash or deposits or net worth imposed by suppliers or landlords under contracts
entered into in the ordinary course of business.

 

7.10        Use of Proceeds.  Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such
purpose or for any Hostile Acquisition.

 

7.11        Foreign Subsidiaries; OSC.  Make
any Investments in OSC, any Dormant Foreign Subsidiary or any other foreign
Subsidiary after the Closing Date, Guarantee any obligations of OSC, any
Dormant Foreign Subsidiary or any other foreign Subsidiary after the Closing
Date, or otherwise transfer any assets (including the repayment of any
intercompany payables) to OSC, any Dormant Foreign Subsidiary or any other
foreign Subsidiary after the Closing Date.

 

7.12        Capital Expenditures.  Make or become legally obligated to make any
Capital Expenditure, except for Capital Expenditures not exceeding, in the aggregate
for Borrower and it Subsidiaries during each fiscal year set forth below, the
amount (the “Base Amount”) set forth opposite such fiscal year:

 

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2008

  	
   

  	
  $

  	
  6,000,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  7,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  8,500,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  2013

  	
   

  	
  $

  	
  9,500,000

  	
   

  

 

provided  that the Base Amount for any
fiscal year shall be increased by an amount equal to the excess, if any, (but
in no event more than 50%) of the Base Amount for the immediately preceding
fiscal year (prior to any adjustments in accordance with this proviso) over the
actual amount of Capital Expenditures for such previous fiscal year.

 

7.13        Amendments of
Organization Documents.  No Loan Party shall nor shall it permit any
of its Subsidiaries to, agree to any amendment, restatement, supplement or
other modification to, or waiver of, any of its Organization Documents after
the Closing Date without in each case obtaining the prior written consent of
Requisite Lenders to such amendment, restatement, supplement or other
modification or waiver, other than an amendment, restatement, 

 

87

 

supplement or
other modification or waiver that is not adverse in any material respect to the
interests of the Lenders.

 

7.14        Accounting Changes.  Make (a) any material change in
accounting policies or reporting practices, except as permitted by GAAP, or (b) any
change in fiscal year.

 

7.15        Excluded Accounts.  Maintain a collective balance of more than
$275,000 in the aggregate in the Excluded Accounts at any time.

 

ARTICLE VIII  EVENTS OF DEFAULT AND REMEDIES.

 

8.1          Events
of Default.  Any
of the following shall constitute an “Event of Default”:

 

(a)           Non-Payment.  Borrower or any other Loan Party fails to pay
(i) when and as required to be paid herein, any amount of principal of any
Loan or any L/C Obligation, or (ii) within three days after the same
becomes due, any interest on any Loan or on any L/C Obligation, or any fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

 

(b)           Specific Covenants.  Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.1, 6.2,
6.3, 6.5 (as to existence), 6.10, 6.11, 6.12,
6.13, 6.15 or 6.16 or Article VII; or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in any other subsection of this Section 8)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after the earlier of (i) any Responsible
Officer or any other officer (including without limitation any senior vice
president, executive vice president or any other vice president) of any Loan
Party becoming aware of such failure or (ii) receipt by Borrower or any
other Loan Party of notice from Agent or any Lender of such failure; or

 

(d)           Representations and Warranties.  Any representation, warranty or certification
made or deemed made by or on behalf of Borrower or any other Loan Party herein,
in any other Loan Document, or in any document delivered in connection herewith
or therewith shall be incorrect or misleading when made or deemed made; or

 

(e)           Cross-Default.  (i) Borrower or any Subsidiary (A) fails
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000, or (B) fails
to observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or
a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded 

 

88

 

or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded (except for due on sale clauses in Indebtedness
relating to capital leases permitted under Section 7.3(b) or 7.3(e));
or (ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default
under such Swap Contract as to which Borrower or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by Borrower or such Subsidiary as a result thereof is
greater than $10,000,000 and, in the case of clause (B) above, such amount
is not paid within 10 days; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) Borrower or any Subsidiary becomes
unable or admits in writing its inability or fails generally to pay its debts
as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

 

(h)           Judgments.  There is entered against Borrower or any
Subsidiary (i) a judgment or order for the payment of money in an
aggregate amount exceeding $1,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or (ii) any
one or more non-monetary judgments that have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 30 days during
which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of Borrower under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $2,500,000, or (ii) Borrower or any ERISA Affiliate fails to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of
ERISA under a Multiemployer Plan in an aggregate amount in excess of
$2,500,000; or

 

89

 

(j)            Invalidity of Loan Documents;
Failure of Security.  (i) Any
Loan Document, at any time after its execution and delivery and for any reason
other than as expressly permitted hereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any Loan
Document; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document or (ii) the Agent shall not have or shall cease to have
a valid and perfected First Priority Lien in any Collateral (other than Liens
permitted under clauses (b) through (i) of Section 7.1
and items of Collateral deemed immaterial by Agent in its sole discretion)
purported to be covered by the Collateral Documents, in each case for any
reason other than failure of Agent or any Lender to take any action within its
control; or

 

(k)           Change of Control.  There occurs any Change of Control with
respect to Borrower; or

 

(l)            Material Adverse Effect.  There occurs any event or circumstance that
has a Material Adverse Effect; or

 

(m)          Loss of ISO 9001 Certifications.  Borrower or any of its Subsidiaries shall
have ceased to have maintained in full force and effect each of their
respective International Organization for Standardization (“ISO”) 9001 and ISO
13485:2003 certifications (other than due to the sale of any such ISO 9001 or
ISO 13485:2003 certification pursuant to a Disposition permitted under this
Agreement and other than due to any voluntary shutdown of plants by any Loan
Party for reasons other than the loss of the applicable ISO 9001 or ISO
13485:2003 certification).

 

8.2          Remedies Upon Event
of Default.  If
any Event of Default occurs and is continuing, Agent shall, at the request of,
or may, with the consent of, the Required Lenders, take any or all of the
following actions:

 

(a)           declare the commitment of each Lender
to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;

 

(b)           declare the unpaid principal amount
of all outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Borrower;

 

(c)           require that Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)           exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law;

 

provided,
however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions shall

 

90

 

automatically
terminate, the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable, and the obligation of Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case
without further act of Agent or any Lender.

 

8.3          Application of Funds.  After the exercise of remedies provided for
in Section 8.2 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.2),
any amounts received on account of the Obligations shall be applied by Agent in
the following order:

 

First, to payment of
that portion of the Obligations constituting fees, indemnities, expenses and
other amounts (including Attorney Costs and amounts payable under Article III)
payable to Agent in its capacity as such;

 

Second, to payment
of that portion of the Obligations constituting fees, indemnities and other
amounts (other than principal and interest) payable to the Lenders and their
Affiliates (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

 

Third, to payment of
that portion of the Obligations constituting accrued and unpaid interest on the
Loans, L/C Borrowings and other Obligations, ratably among the Lenders in
proportion to the respective amounts described in this clause Third
payable to them;

 

Fourth, to payment
of that portion of the Obligations constituting unpaid principal of the Loans
and L/C Borrowings and the Swap Termination Value and other amounts owing to
Lenders and their Affiliates under Secured Hedge Agreements and Secured Cash
Management Agreements, ratably among the Lenders and their Affiliates in
proportion to the respective amounts described in this clause Fourth
held by them;

 

Fifth, to Agent for
the account of the L/C Issuer, to Cash Collateralize that portion of L/C
Obligations comprised of the aggregate undrawn amount of Letters of Credit; and

 

Last, the balance,
if any, after all of the Obligations have been indefeasibly paid in full, to
Borrower or as otherwise required by Law.

 

Subject to Section 2.3(c),
amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause Fifth above shall be applied to satisfy
drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash Collateral
after all Letters of Credit have either been fully drawn or expired, such
remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.

 

Notwithstanding the foregoing, Obligations
arising under Secured Cash Management Agreements and Secured Hedge Agreements
shall be excluded from the application described above if Agent has not
received written notice thereof, together with such supporting documentation as
Agent may request, from the applicable Cash Management Bank or Hedge Bank, as
the case may be.  Each Cash Management
Bank or Hedge Bank not a party to the Credit Agreement that has given the
notice contemplated by the preceding sentence shall, by such 

 

91

 

notice, be
deemed to have acknowledged and accepted the appointment of Agent pursuant to
the terms of Article IX hereof for itself and its Affiliates as if
a “Lender” party hereto.

 

ARTICLE IX  AGENT.

 

9.1          Appointment
and Authority.

 

(a)           Each
of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America
to act on its behalf as Agent hereunder and under the other Loan Documents and
authorizes Agent to take such actions on its behalf and to exercise such powers
as are delegated to Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.  The provisions of this Article are
solely for the benefit of Agent, the Lenders and the L/C Issuer, and Borrower shall not  have rights as a third party beneficiary of any of
such provisions.

 

(b)           Agent
shall also act as the “collateral
agent” under the Loan Documents, and each of the Lenders (including
in its capacities as a potential Hedge Bank and a potential Cash Management
Bank) and the L/C Issuer hereby irrevocably appoints and authorizes Agent to
act as the agent of such Lender and the L/C Issuer for purposes of acquiring,
holding and enforcing any and all Liens on Collateral granted by any of the
Loan Parties to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto.  In this connection, Agent, as “collateral
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by Agent
pursuant to Section 9.5 for purposes of holding or enforcing any Lien
on the Collateral (or any portion thereof) granted under the Collateral
Documents, or for exercising any rights and remedies thereunder at the
direction of Agent), shall be entitled to the benefits of all provisions of
this Article IX and Article X (including Section 10.4(c),
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

 

9.2          Rights as a Lender.  The Person serving as Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as Agent hereunder in its individual
capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not Agent hereunder and without any duty to account therefor to the Lenders.

 

9.3          Exculpatory Provisions.  Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the
generality of the foregoing, Agent:

 

(a)           shall
not be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing;

 

(b)           shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the 

 

92

 

Required Lenders (or such other number or
percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents), provided that Agent shall not be required to take
any action that, in its opinion or the opinion of its counsel, may expose Agent
to liability or that is contrary to any Loan Document or applicable law; and

 

(c)           shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to Borrower or any of its Affiliates that is communicated
to or obtained by the Person serving as Agent or any of its Affiliates in any
capacity.

 

(d)           Agent
shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections
10.1 and 8.2) or (ii) in the absence of its own gross
negligence or willful misconduct.  Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to Agent by Borrower, a Lender or the L/C
Issuer.

 

(e)           Agent
shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to Agent.

 

9.4          Reliance by Agent.  Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  Agent also may rely upon any statement made
to it orally or by telephone and believed by it to have been made by the proper
Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that
by its terms must be fulfilled to the satisfaction of a Lender or the L/C
Issuer, Agent may presume that such condition is satisfactory to such Lender or
the L/C Issuer unless Agent shall have received notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit.  Agent may
consult with legal counsel (who may be counsel for Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

 

9.5          Delegation of Duties.  Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document
by or through any one or 

 

93

 

more
sub-agents appointed by Agent.  Agent and
any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of Agent and any such
sub-agent, and shall apply to their respective activities in connection with
the syndication of the credit facilities provided for herein as well as
activities as Agent.

 

9.6          Resignation of Agent.  Agent may at any time give notice of its
resignation to the Lenders, the L/C Issuer and Borrower.  Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, with, at all times
other than during the existence of an Event of Default, the consent of Borrower
(which consent of Borrower shall not be unreasonably withheld or delayed), to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may on behalf of the Lenders and the L/C Issuer,
appoint a successor Agent meeting the qualifications set forth above; provided
that if Agent shall notify Borrower and the Lenders that no qualifying Person
has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other
Loan Documents (except that in the case
of any collateral security held by Agent on behalf of the Lenders or the L/C
Issuer under any of the Loan Documents, the retiring Agent shall continue to
hold such collateral security until such time as a successor Agent is
appointed) and (b) all payments, communications and determinations
provided to be made by, to or through Agent shall instead be made by or to each
Lender and the L/C Issuer directly, until such time as the Required Lenders
appoint a successor Agent as provided for above in this Section.  Upon the acceptance of a successor’s
appointment as Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
(or retired) Agent, and the retiring Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not
already discharged therefrom as provided above in this Section).  The fees payable by Borrower to a successor
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between Borrower and such successor. 
After the retiring Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article and Section 10.4
shall continue in effect for the benefit of such retiring Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Agent was acting as Agent.

 

Any resignation by Bank of America as Agent
pursuant to this Section shall also constitute its resignation as L/C
Issuer and Swing Line Lender.  Upon the
acceptance of a successor’s appointment as Agent hereunder, (i) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer and Swing Line Lender, (ii) the
retiring L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (iii) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

94

 

9.7          Non-Reliance on Agent
and Other Lenders.  Each Lender and
the L/C Issuer acknowledges that it has, independently and without reliance
upon Agent or any other Lender or any of their Related Parties and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.  Each Lender and the L/C Issuer also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.

 

9.8          No Other Duties, Etc.  Anything herein to the contrary
notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof
shall have any powers, duties or responsibilities under this Agreement or any
of the other Loan Documents, except in its capacity, as applicable, as Agent, a
Lender or the L/C Issuer hereunder.

 

9.9          Agent May File
Proofs of Claim.  In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, Agent (irrespective of whether the
principal of any Loan or L/C Obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether Agent
shall have made any demand on Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise

 

(a)           to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the L/C Issuer and
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the L/C Issuer and Agent and their
respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer and Agent under Sections 2.3(i) and (j), 2.9
and 10.4) allowed in such judicial proceeding; and

 

(b)           to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to Agent and, if Agent shall consent to the making of such payments
directly to the Lenders and the L/C Issuer, to pay to Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of Agent and
its agents and counsel, and any other amounts due Agent under Sections 2.9
and 10.4.

 

Nothing contained herein shall be deemed to
authorize Agent to authorize or consent to or accept or adopt on behalf of any
Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lender or the L/C
Issuer to authorize Agent to vote in respect of the claim of any Lender or the
L/C Issuer or in any such proceeding.

 

95

 

9.10        Collateral and Guaranty
Matters.  Each of the Lenders
(including in its capacities as a potential Cash Management Bank and a
potential Hedge Bank) and the L/C Issuer irrevocably authorize Agent, at its
option and in its discretion,

 

(a)           to
release any Lien on any property granted to or held by Agent under any Loan
Document (i) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than (A) contingent indemnification
obligations and (B) obligations and liabilities under Secured Cash
Management Agreements and Secured Hedge Agreements as to which arrangements
satisfactory to the applicable Cash Management Bank of Hedge Bank shall have
been made) and the expiration or termination of all Letters of Credit (other
than Letters of Credit as to which other arrangements satisfactory to Agent and
the L/C Issuer shall have been made), (ii) that is sold or to be sold as
part of or in connection with any sale permitted hereunder or under any other
Loan Document, or (iii)  if approved, authorized or ratified in writing in
accordance with Section 10.1;

 

(b)           to
release any Guarantor from its obligations under the Guaranty if such Person
ceases to be a Subsidiary as a result of a transaction permitted hereunder; and

 

(c)           to
subordinate any Lien on any property granted to or held by Agent under any Loan
Document to the holder of any Lien on such property that is permitted by Section 7.1(i).

 

Upon request by Agent at any time, the
Required Lenders will confirm in writing Agent’s authority to release or
subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.  In each case as specified in this Section 9.10,
Agent will, at Borrower’s expense, execute and deliver to the applicable Loan
Party such documents as such Loan Party may reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents or to subordinate its interest in such
item, or to release such Guarantor from its obligations under the Guaranty, in
each case in accordance with the terms of the Loan Documents and this Section 9.10.

 

9.11        Secured Cash Management
Agreements and Secured Hedge Agreements. 
No Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.3,
any Guaranty or any Collateral by virtue of the provisions hereof or of any
Guaranty or any Collateral Document shall have any right to notice of any
action or to consent to, direct or object to any action hereunder or under any
other Loan Document or otherwise in respect of the Collateral (including the
release or impairment of any Collateral) other than in its capacity as a Lender
and, in such case, only to the extent expressly provided in the Loan
Documents.  Notwithstanding any other
provision of this Article IX to the contrary, Agent shall not be
required to verify the payment of, or that other satisfactory arrangements have
been made with respect to, Obligations arising under Secured Cash Management
Agreements and Secured Hedge Agreements unless Agent has received written
notice of such Obligations, together with such supporting documentation as
Agent may request, from the applicable Cash Management Bank or Hedge Bank, as
the case may be.

 

96

 

ARTICLE X  MISCELLANEOUS.

 

10.1        Amendments, Etc.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and Borrower or the applicable Loan
Party, as the case may be, and acknowledged by Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such
amendment, waiver or consent shall:

 

(a)           waive
any condition set forth in Section 4.1(a) without the written
consent of each Lender;

 

(b)           extend
or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.2) without the written consent of
such Lender;

 

(c)           postpone
any date fixed by this Agreement or any other Loan Document for any payment
(excluding mandatory prepayments) of principal, interest, fees or other amounts
due to the Lenders (or any of them) hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby;

 

(d)           reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.1)
any fees or other amounts payable hereunder or under any other Loan Document,
or change the manner of computation of any financial ratio (including any
change in any applicable defined term) used in determining the Applicable Rate
that would result in a reduction of any interest rate on any Loan or any fee
payable hereunder, without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required
Lenders shall be necessary (i) to amend the definition of “Default Rate”
or to waive any obligation of Borrower to pay interest or L/C Fees at the
Default Rate or (ii) to amend any financial covenant hereunder (or any
defined term used therein) even if the effect of such amendment would be to
reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee
payable hereunder;

 

(e)           change
Section 2.13 or Section 8.3 in a manner that would
alter the pro rata sharing of payments required thereby without the written
consent of each Lender;

 

(f)            change
any provision of this Section or the definition of “Required Lenders” or
any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; or

 

(g)           release
any Guarantor from the Guaranty or release the Liens on all or substantially
all of the Collateral except in accordance with the terms of any Loan Document
without the written consent of each Lender; and,

 

provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to 

 

97

 

be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and
signed by the Swing Line Lender in addition to the Lenders required above,
affect the rights or duties of the Swing Line Lender under this Agreement or
any other Loan Document; (iii) no amendment, waiver or consent shall,
unless in writing and signed by Agent in addition to the Lenders required
above, affect the rights or duties of Agent under this Agreement or any other
Loan Document; and (iv) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties
thereto.  Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

 

If any Lender does not consent to a proposed
amendment, waiver, consent or release with respect to any Loan Document that
requires the consent of each Lender and that has been approved by the Required
Lenders, Borrower may replace such non-consenting Lender in accordance with Section 10.13;
provided that such amendment, waiver, consent or release can be effected
as a result of the assignment contemplated by such Section (together with
all other such assignments required by Borrower to be made pursuant to this
paragraph).

 

10.2        Notices
and Other Communications; Facsimile Copies.

 

(a)           Notices
Generally.  Except in the case of
notices and other communications expressly permitted to be given by telephone
(and except as provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

 

(i)            if
to Borrower, Agent, the L/C Issuer or the Swing Line Lender, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.2; and

 

(ii)           if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

 

Notices and other communications sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices and other communications sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient).  Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).

 

(b)           Electronic
Communications.  Notices and other communications
to the Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by Agent, provided that the foregoing
shall not apply to notices to any Lender or the 

 

98

 

L/C Issuer pursuant to Article II
if such Lender or the L/C Issuer, as applicable, has notified Agent that it is
incapable of receiving notices under such Article by electronic
communication.  Agent or Borrower may, in
its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.

 

Unless Agent otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement), provided that if such notice
or other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)           The
Platform.  THE PLATFORM IS
PROVIDED “AS IS” AND “AS AVAILABLE.”  THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR
OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH BORROWER
MATERIALS OR THE PLATFORM.  In no event
shall Agent or any of its Related Parties (collectively, the “Agent Parties”)
have any liability to Borrower, any Lender, the L/C Issuer or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) arising out of Borrower’s or Agent’s transmission
of Borrower Materials through the Internet, except to the extent that such
losses, claims, damages, liabilities or expenses are determined by a court of
competent jurisdiction by a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Agent Party; provided,
however, that in no event shall any Agent Party have any liability to
Borrower, any Lender, the L/C Issuer or any other Person for indirect, special,
incidental, consequential or punitive damages (as opposed to direct or actual
damages).

 

(d)           Change
of Address, Etc.  Each of Borrower,
Agent, the L/C Issuer and the Swing Line Lender may change its address,
telecopier or telephone number for notices and other communications hereunder
by notice to the other parties hereto. 
Each other Lender may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to Borrower, Agent,
the L/C Issuer and the Swing Line Lender. 
In addition, each Lender agrees to notify Agent from time to time to
ensure that Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii) accurate wire
instructions for such Lender. 
Furthermore, each Public Lender agrees to cause at least one individual
at or on behalf of such Public Lender to at all times have selected the

 

99

 

“Private Side Information” or similar designation on the content
declaration screen of the Platform in order to enable such Public Lender or its
delegate, in accordance with such Public Lender’s compliance procedures and
applicable Law, including United States Federal and state securities Laws, to
make reference to Borrower Materials that are not made available through the “Public
Side Information” portion of the Platform and that may contain material
non-public information with respect to Borrower or its securities for purposes
of United States Federal or state securities laws.

 

(e)           Reliance
by Agent, L/C Issuer and Lenders.  Agent, the L/C Issuer and the
Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly
given by or on behalf of Borrower even if (i) such notices were not made
in a manner specified herein, were incomplete or were not preceded or followed
by any other form of notice specified herein, or (ii) the terms thereof,
as understood by the recipient, varied from any confirmation thereof.  Borrower shall indemnify Agent, the L/C
Issuer, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of Borrower.  All telephonic notices to and other
telephonic communications with Agent may be recorded by Agent, and each of the
parties hereto hereby consents to such recording.

 

10.3        No Waiver;
Cumulative Remedies.  No
failure by any Lender, the L/C Issuer or Agent to exercise, and no delay by any
such Person in exercising, any right, remedy, power or privilege hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.  The
rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the authority to enforce rights
and remedies hereunder and under the other Loan Documents against the Loan
Parties or any of them shall be vested exclusively in, and all actions and
proceedings at law in connection with such enforcement shall be instituted and
maintained exclusively by, Agent in accordance with Section 8.2 for
the benefit of all the Lenders and the L/C Issuer; provided, however,
that the foregoing shall not prohibit (a) Agent from exercising on its own
behalf the rights and remedies that inure to its benefit (solely in its
capacity as Agent) hereunder and under the other Loan Documents, (b) the
L/C Issuer or the Swing Line Lender from exercising the rights and remedies
that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line
Lender, as the case may be) hereunder and under the other Loan Documents, (c) any
Lender from exercising setoff rights in accordance with Section 10.8
(subject to the terms of Section 2.13), or (d) any Lender from
filing proofs of claim or appearing and filing pleadings on its own behalf
during the pendency of a proceeding relative to any Loan Party under any Debtor
Relief Law; and provided, further, that if at any time there is
no Person acting as Agent hereunder and under the other Loan Documents, then (i) the
Required Lenders shall have the rights otherwise ascribed to Agent pursuant to Section 8.2
and (ii) in addition to the matters set forth in clauses (b), (c) and
(d) of the preceding proviso and subject to Section 2.13,

 

100

 

any Lender
may, with the consent of the Required Lenders, enforce any rights and remedies
available to it and as authorized by the Required Lenders.

 

10.4        Expenses; Indemnity; Damage Waiver.

 

(a)           Costs
and Expenses.  Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by Agent and its Affiliates
(including the reasonable fees, charges and disbursements of counsel for
Agent), in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in
connection with the issuance, amendment, renewal or extension of any Letter of
Credit or any demand for payment thereunder and (iii) all out-of-pocket
expenses incurred by Agent, any Lender or the L/C Issuer (including the fees,
charges and disbursements of any counsel for Agent, any Lender or the L/C
Issuer), and shall pay all fees and time charges for attorneys who may be
employees of Agent, any Lender or the L/C Issuer, in connection with the
enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this
Section, or (B) in connection with Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b)           Indemnification
by Borrower.  Borrower shall
indemnify Agent (and any sub-agent thereof), the Arranger, each Lender and the
L/C Issuer, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any
Indemnitee), and shall indemnify and hold harmless each Indemnitee from all
fees and time charges and disbursements for attorneys who may be employees of
any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by Borrower or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, or, in the case of Agent (and any sub-agent
thereof) and its Related Parties only, the administration of this Agreement and
the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought
by a third party or by Borrower or any other Loan Party or any of Borrower’s or such Loan Party’s directors, shareholders or
creditors, and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or 

 

101

 

related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result
from a claim brought by Borrower or any other Loan Party against an Indemnitee
for material breach of such Indemnitee’s obligations hereunder or under any
other Loan Document, if Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

 

(c)           Reimbursement
by Lenders.  To the extent that
Borrower for any reason fails to indefeasibly pay any amount required under
subsection (a) or (b) of this Section to be paid by it
to Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any
of the foregoing, each Lender severally agrees to pay to Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Pro Rata Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against Agent
(or any such sub-agent) or the L/C Issuer in its capacity as such, or against
any Related Party of any of the foregoing acting for Agent (or any such
sub-agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.12(d).

 

(d)           Waiver
of Consequential Damages, Etc.  To
the fullest extent permitted by applicable law, Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. 
No Indemnitee referred to in subsection (b) above shall be liable
for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by
such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby other than for
direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

(f)            Survival.  The agreements in this Section shall
survive the resignation of Agent, the
L/C Issuer and the Swing Line Lender, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge
of all the other Obligations.

 

10.5        Payments Set
Aside.  To the extent that any
payment by or on behalf of Borrower is made to Agent, the L/C Issuer or any
Lender, or Agent, the L/C Issuer or any Lender exercises its right of set-off,
and such payment or the proceeds of such set-off or any part thereof 

 

102

 

is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Agent, the
L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Lender and the L/C Issuer
severally agrees to pay to Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by Agent, plus interest
thereon from the date of such demand to the date such payment is made at a rate
per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the L/C
Issuer under clause (b) of the preceding sentence shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

10.6        Successors
and Assigns.  (a) Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of Agent and each Lender and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except (i) to
an Eligible Assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of
subsection (f)  of this Section (and any other attempted assignment
or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the
extent expressly contemplated hereby, the Related Parties of each of Agent, the
L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under
or by reason of this Agreement.

 

(b)           Assignments
by Lenders.  Any Lender may at any
time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b), participations in
L/C Obligations and in Swing Line Loans) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

 

(i)            Minimum
Amounts.

 

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and

 

(B)           in
any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered 

 

103

 

to Agent or, if “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date, shall not be less than
$5,000,000  unless each of Agent and, so long as
no Event of Default has occurred and is continuing, Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met.

 

(ii)           Proportionate
Amounts.  Each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or the Commitment assigned, except that this clause (ii) shall not apply
to the Swing Line Lender’s rights and obligations in respect of Swing Line
Loans;

 

(iii)          Required
Consents.  No consent shall be
required for any assignment except to the extent required by subsection (b)(i)(B) of
this Section and, in addition:

 

(A)          the
consent of Borrower (such consent not to be unreasonably withheld or delayed)
shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund;

 

(B)           the
consent of Agent (such consent not to be unreasonably withheld or delayed)
shall be required if such assignment is to a Person that is not a Lender, an
Affiliate of such Lender or an Approved Fund with respect to such Lender;

 

(C)           the
consent of the L/C Issuer (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of
the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding); and

 

(D)          the
consent of the Swing Line Lender (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment.

 

(iv)          Assignment
and Assumption.  The parties to each
assignment shall execute and deliver to Agent an Assignment and Assumption,
together with a processing and recordation fee in the amount of $3,500; provided,
however, that Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall
deliver to Agent an Administrative Questionnaire.

 

104

 

(v)           No
Assignment to Borrower.  No such
assignment shall be made to Borrower or any of Borrower’s Affiliates or
Subsidiaries.

 

(vi)          No
Assignment to Natural Persons.  No
such assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof
by Agent pursuant to subsection (c) of this Section, from and after the
effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
3.1, 3.4, 3.5, and 10.4 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

 

(c)           Register.  Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at Agent’s Office a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of
the Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and Borrower, Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by Borrower and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, Borrower or Agent, sell participations to any Person
(other than a natural person or Borrower or any of Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender’s participations in L/C
Obligations and/or Swing Line Loans) owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) Borrower, Agent,  the Lenders and the L/C Issuer shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in
the first proviso to Section 10.1  

 

105

 

that affects such Participant.  Subject to subsection (e) of this
Section, Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.1, 3.4 and 3.5 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.8 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it
were a Lender.

 

(e)           Limitations
upon Participant Rights.  A Participant
shall not be entitled to receive any greater payment under Section 3.1
or 3.4 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.1
unless Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of Borrower, to comply with Section 3.1(e) as
though it were a Lender.

 

(f)            Certain
Pledges.  Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

 

(g)           Resignation
as L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of America may, (i) upon
30 days’ notice to Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon
30 days’ notice to Borrower, resign as Swing Line Lender.  In the event of any such resignation as L/C
Issuer or Swing Line Lender, Borrower shall be entitled to appoint from among
the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by Borrower to appoint any such successor shall
affect the resignation of Bank of America as L/C Issuer or Swing Line Lender,
as the case may be.  If Bank of America
resigns as L/C Issuer, it shall retain all the rights, powers, privileges and
duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.3(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Base Rate Committed Loans or fund risk participations in outstanding
Swing Line Loans pursuant to Section 2.4(c).  Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the
successor L/C Issuer shall issue letters of credit in substitution for the Letters
of Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to Bank of America to effectively assume the
obligations of Bank of America with respect to such Letters of Credit.

 

106

 

10.7        Treatment of
Certain Information; Confidentiality.  Each of Agent, the Lenders and the L/C Issuer
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its Affiliates and to its
and its Affiliates’ respective partners, directors, officers, employees,
agents, trustees, advisors and representatives (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or any Eligible Assignee
invited to be a Lender pursuant to Section 2.15(c) or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to Borrower and its obligations, (g) with the consent
of Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y) becomes
available to Agent, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than Borrower.

 

For purposes of this Section, “Information”
means all information received from Borrower or any Subsidiary relating to
Borrower or any Subsidiary or any of their respective businesses, other than
any such information that is available to Agent, any Lender or the L/C Issuer
on a nonconfidential basis prior to disclosure by Borrower or any Subsidiary, provided
that, in the case of information received from Borrower or any Subsidiary after
the date hereof, such information is clearly identified at the time of delivery
as confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Each of Agent, the Lenders and the L/C Issuer
acknowledges that (a) the Information may include material non-public
information concerning Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
information and (c) it will handle such material non-public information in
accordance with applicable Law, including United States Federal and state
securities Laws.

 

10.8        Right of
Set-off.  If an Event of
Default shall have occurred and be continuing, each Lender, the L/C Issuer and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by applicable law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender, the L/C Issuer or any such
Affiliate to or for the credit or the account of Borrower against any and all
of the obligations of Borrower now or hereafter existing under this Agreement
or any other Loan Document to such Lender or the L/C Issuer, irrespective of 

 

107

 

whether or not
such Lender or the L/C Issuer shall have made any demand under this Agreement
or any other Loan Document and although such obligations of Borrower may be contingent or unmatured or are
owed to a branch or office of such Lender or the L/C Issuer different from the
branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender, the L/C Issuer and
their respective Affiliates under this Section are in addition to other
rights and remedies (including other rights of setoff) that such Lender, the
L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify Borrower and Agent promptly after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.  Notwithstanding
the provisions of this Section 10.8, if at any time any Lender, the
L/C Issuer or any of their respective Affiliates maintains one or more deposit
accounts for Borrower into which Medicare and/or Medicaid receivables are
deposited, such Person shall waive the right of setoff set forth herein.

 

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

 

10.10      Counterparts;
Integration; Effectiveness. 
This Agreement may be executed in counterparts (and by different parties
hereto in different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.1,
this Agreement shall become effective when it shall have been executed by Agent
and when Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic imaging
means shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

10.11      Survival of
Representations and Warranties. 
All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof.  Such representations
and warranties have been or will be relied upon by Agent and each Lender,
regardless of any investigation made by Agent or any Lender or on their behalf
and notwithstanding that Agent or any Lender may have had notice or knowledge
of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

108

 

10.12      Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

10.13      Replacement of Lenders.  If any Lender requests compensation under Section 3.4,
or if Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.1,
if any Lender is a Defaulting Lender or
if any other circumstance exists hereunder that gives Borrower the right to
replace a Lender as a party hereto, then Borrower may, at its sole
expense and effort, upon notice to such Lender and Agent, require such Lender
to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.6),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

 

(a)           Borrower
shall have paid to Agent the assignment fee specified in Section 10.6(b);

 

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.5) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or Borrower (in the case of all other amounts);

 

(c)           in
the case of any such assignment resulting from a claim for compensation under Section 3.4
or payments required to be made pursuant to Section 3.1, such
assignment will result in a reduction in such compensation or payments
thereafter; and

 

(d)           such
assignment does not conflict with applicable Laws.

 

A Lender shall
not be required to make any such assignment or delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
Borrower to require such assignment and delegation cease to apply.

 

10.14      Governing
Law; Jurisdiction; Etc.

 

(a)           GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

 

(b)           SUBMISSION
TO JURISDICTION.  BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA  

 

109

 

AND OF THE UNITED STATES DISTRICT COURT OF
THE CENTRAL DISTRICT OF SUCH STATE,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA  STATE
COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL
COURT.  EACH OF THE PARTIES HERETO AGREES
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY
LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER
OF VENUE.  BORROWER IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS
SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE
OF PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 10.2.  NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15      Waiver of Right to Trial by
Jury.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN 

 

110

 

DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16      California Judicial Reference. 
If any action or proceeding is filed in a court of the State of
California by or against any party hereto in connection with any of the
transactions contemplated by this Agreement or any other Loan Document, (a) the
court shall, and is hereby directed to, make a general reference pursuant to
California Code of Civil Procedure Section 638 to a referee (who shall be
a single active or retired judge) to hear and determine all of the issues in
such action or proceeding (whether of fact or of law) and to report a statement
of decision, provided that at the option of any party to such
proceeding, any such issues pertaining to a “provisional remedy” as defined in
California Code of Civil Procedure Section 1281.8 shall be heard and
determined by the court, and (b) notwithstanding any contrary provision
hereof, the non-prevailing party shall be solely responsible to pay all fees
and expenses of any referee appointed in such action or proceeding.

 

10.17      No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), Borrower
acknowledges and agrees, and
acknowledges its Affiliates’ understanding, that: (i) (A) the
arranging and other services regarding this Agreement provided by Agent and the Arranger are arm’s-length
commercial transactions between Borrower and its Affiliates, on the one hand, and Agent and the Arranger, on the other hand, (B) Borrower has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate, and (C) Borrower is capable of evaluating, and
understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) Agent and the Arranger each is and has been
acting solely as a principal and, except as expressly agreed in writing by the
relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary for Borrower or any of its Affiliates, or any other Person and (B) neither Agent nor the Arranger has any obligation to
Borrower or any of its
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and (iii) Agent
and the Arranger and their
respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of Borrower and its Affiliates, and neither Agent nor the Arranger has any obligation to
disclose any of such interests to Borrower or its Affiliates.  To the fullest extent permitted by law, Borrower hereby waives and releases
any claims that it may have against Agent and the Arranger with respect to any breach or alleged breach of
agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.

 

10.18      Electronic Execution of
Assignments and Certain Other Documents. 
The words “execution,” “signed,” “signature,” and words of like import
in any Assignment and Assumption or in any amendment or other modification
hereof (including waivers and consents) shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

111

 

10.19      USA PATRIOT Act.  Each Lender that is subject to the Act (as
hereinafter defined) and Agent (for itself and not on behalf of any Lender)
hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”),
it is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender or Agent, as applicable, to identify
Borrower in accordance with the Act. 
Borrower shall, promptly following a request by Agent or any Lender,
provide all documentation and other information that Agent or such Lender
requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including
the Act.

 

112

 

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

 

 

	
   

  	
   

  	
  QUIDEL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John M.
  Radak

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  John M. Radak

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  

 

 

	
   

  	
   

  	
  BANK OF AMERICA, N.A.,  as

  
	
   

  	
   

  	
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Tiffany
  Shin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Tiffany Shin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.,  as
  a Lender, L/C

  Issuer and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Geoffrey C. Wilson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Geoffrey C. Wilson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

	
   

  	
   

  	
  U.S. BANK N.A.,  as
  Syndication Agent and a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Maureen
  Sullivan

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Maureen Sullivan

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A.,  as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Camille
  Farnsworth-Schrader

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Camille Farnsworth-Schrader

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

	
   

  	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,  as
  a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glenn
  Fortin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Glenn Fortin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:  Vice President

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