Document:

Exhibit 10.1

 

EXECUTION
COPY

 

STIPULATION
AND ORDER

 

This
STIPULATION (the “Agreement”) is made and entered into as of July 28,
2010 by and among the following parties:

 

(a)                                  The Official Committee of
Unsecured Creditors of Station Casinos, Inc. (the “Committee”); and

 

(b)                                 Station Casinos, Inc. (“SCI”
or “Opco”) and FCP Propco, LLC (collectively, the “Debtor Parties”).

 

RECITALS

 

WHEREAS, on December 28, 2010, the Committee filed its
Motion of the Official Committee of
Unsecured Creditors of Station Casinos, Inc., et. al., Pursuant to 11
U.S.C. §§ 105(a), 503(b), 1103(c), and 1109(b), for Entry of an Order Granting
Leave, Standing, and Authority to Prosecute and, if Appropriate, Settle Causes
of Action on Behalf of the Debtors Estates [Docket No. 738]
(collectively, with the Standing Supplement (as defined below), the “Standing
Motion”);

 

WHEREAS, on July 14, 2010 the Bankruptcy Court
approved [Docket No. 1778], the Second Amended and Restated Master Lease
Compromise Agreement (2d Revised), which provides, inter alia,
for pre-confirmation transition assistance in aid of, and to facilitate, the
transactions contemplated in the Plan (as defined below) (the “Second
Amended MLCA”);

 

WHEREAS, on June 8, 2010, the Committee filed a notice
of appeal of the Bid Procedures Order (as defined in the Plan) [Docket No. 1583]
(the “Bidding Procedures Appeal”);

 

WHEREAS, on June 15, 2010, the Debtors(1) filed
their Joint Chapter 11 Plan of Reorganization for
Station Casinos, Inc. and its Affiliated Debtors (Dated June 15, 2010)
[Docket No. 1629-1], as amended on July 13, 2010 [Docket No. 1771-1],
(the “Plan”) and their Disclosure Statement to
Accompany Joint Chapter 11 Plan of Reorganization for Station Casinos, Inc.
and its Affiliated Debtors (Dated June 15, 2010) [Docket No. 1630-1],
as amended on July 14, 2010 [Docket No. 1774-1], (the “Disclosure
Statement”), and on July 8, 2010 the Committee filed its objection to
the Debtors’ motion to approve the Disclosure Statement [Docket No. 1730]
(collectively, the “Disclosure Statement Objection”);

 

WHEREAS, on July 15, 2010, the Committee filed a
notice of appeal of the Second Amended MLCA [Docket No. 1784] (the “Second
Amended MLCA Appeal”);

 

WHEREAS, the summary of terms annexed hereto as Attachment 1
sets forth the material terms of the settlement of various issues among the
parties thereto, including the distribution of certain interests in the
entities formed as part of the transactions contemplated in

 

(1)                                  Unless
otherwise indicated, capitalized terms used but not otherwise defined herein
shall have the meaning ascribed to them in the Term Sheet.

 

 

the
Plan to the Opco Unsecured Creditors (as such summary of terms may be amended
from time to time in accordance with the terms of this Agreement and including
all exhibits, the “Term Sheet”); and

 

WHEREAS, in furtherance of confirmation of the Plan (as
amended to incorporate the terms of the Term Sheet, the “Amended Plan”),
the Parties hereby agree and stipulate as follows.

 

AGREEMENT

 

1.                                      Committee
Obligations

 

The
Committee hereby agrees that it will:

 

(a)                      cease and
desist, and seek appropriate stays of, all litigation activity of any kind or
description (including, without limitation, with respect to any and all Going
Private Transaction Causes of Action (as defined in the Plan) or any other
claims relating to, or arising out of, directly or indirectly, the Going
Private Transaction (as defined in the Plan)) and related pleadings (including
any pending appeals) involving any Debtor Party or any affiliate thereof, FG,
the Propco Lenders, Deutsche Bank Trust Company Americas, Deutsche Bank
Securities and J.P. Morgan Securities Inc., J.P. Morgan Chase Bank N.A., Frank
J. Fertitta III, Lorenzo J. Fertitta or the lenders under the Prepetition
Mezzanine Loans (as such term is defined in the Plan) and to refrain from
hereafter engaging in any such litigation activity (including appeals) and/or
filing any related pleadings in the Chapter 11 Cases or in any other matter
relating, directly or indirectly, thereto (whether such matter is before the
Bankruptcy Court or otherwise), including, without limitation, the Standing
Motion, the Bidding Procedures Appeal, the Disclosure Statement Objection, and
any pleadings or appeals related to the Second Amended MLCA (provided that the
Committee may take only those actions necessary in order to preserve or perfect
the Second Amended MLCA Appeal, including the filing of the designation of the
record on appeal and the statement of the issues to be presented)
(collectively, the “Litigation Actions”);

 

(b)                     upon the occurrence of the
Effective Date (as defined in the Plan), withdraw each and every Litigation
Action with prejudice and file appropriate dismissals for any and all
Litigation Action (including, without limitation, with respect to any and all
appeal rights the Committee may have been permitted to preserve or perfect
pursuant to Section 1(a)); and

 

(c)                      provide a
letter for inclusion in the plan solicitation materials (or statement to be
included in the Disclosure Statement) from the Committee recommending that all
Opco Unsecured Creditors vote to accept the Amended Plan in form and substance
reasonably acceptable to the Debtors, FG and the Propco Lenders.

 

2.                                      Termination.

 

(a)                      The Committee may terminate this Agreement by providing two (2) business
days advance written notice to the Debtors, the Propco Lenders, FG and the Put
Purchasers if the Committee determines that its fiduciary duties
require it to act or refrain from acting contrary to its obligations under this
Agreement, provided that the failure to obtain class

 

2

 

acceptance of one or more classes of Opco Unsecured
Creditors shall not be a basis to terminate this Agreement on fiduciary duty or
any other grounds.

 

(b)                     The Debtors may terminate
this Agreement by providing two (2) business days advance notice to the
Committee, the Propco Lenders, FG and the Put Purchasers if the Committee
breaches its obligations under this Agreement.

 

(c)                      Except as
provided in Section 3(b) below, this Agreement shall terminate,
without notice, if any condition set forth in the Term Sheet is not satisfied
in accordance with its terms unless otherwise waived by mutual agreement of the
Committee, the Debtors, FG and the Propco Lenders.

 

3.                                      Effect of Termination and Certain Other Events.

 

The
Parties hereby acknowledge and agree that:

 

(a)                      in the event
this Agreement is terminated, the Debtors shall modify the Amended Plan (as
amended to reflect the Term Sheet) to eliminate all consideration being offered
to the Opco Unsecured Creditors as specified in the Term Sheet; and

 

(b)                     this Agreement
shall not terminate as a result of the Propco Commitment having been
terminated, the failure of the Put Purchasers to satisfy any condition or
obligation specified in the Term Sheet relating to the Propco Commitment or the
Support Agreement having been terminated, it being understood and agreed that
in the event that any of the foregoing events occurs, so long as this Agreement
remains in effect and the Debtor Parties have determined not to effect the
rights offering (and subject to the satisfaction of the conditions contained in
the Term Sheet that do not relate to the Propco Commitment, the Support
Agreement or the obligations of the Put Parties), the Amended Plan shall be
modified to eliminate the rights offering specified in the Term Sheet but shall
continue to provide for distribution of New Propco Holdco Warrants to Opco
Unsecured Creditors (on the terms specified in the Term Sheet) and the
Committee shall continue to support confirmation of the Amended Plan as so
modified, including the settlement of the Going Private Transaction Causes of
Action and the releases as currently provided in the Plan.

 

3

 

IN
WITNESS WHEREOF, the Parties have entered into this Agreement on the day and
year first above written.

 

	
   

  	
  The
  Official Committee of Unsecured Creditors of Station Casinos, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bonnie Steingart

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Bonnie
  Steingart

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Counsel
  to Official Committee of Unsecured Creditors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Station
  Casinos, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard J. Haskins

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Richard
  J. Haskins

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FCP
  Propco, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank J. Fertitta III

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Frank
  J. Fertitta III

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

	
  SO
  ORDERED,

  	
   

  	
   

  
	
   

  	
  Hon. Gregg W. Zive

  	
   

  
	
   

  	
  United States Bankruptcy Judge

  	
   

  
				

 

 

Attachment 1

TERM SHEET

 

 

	
  July 28, 2010

  	
  STRICTLY CONFIDENTIAL

  

 

- FOR DISCUSSION AND SETTLEMENT
PURPOSES ONLY -

- PREPARED AT THE REQUEST AND
DIRECTION OF COUNSEL -

-SUBJECT TO RULE 408-

 

New
Propco Holdco

 

Summary
of Terms

 

Set
forth below is a summary of certain material terms of the possible investment
to be made by the Opco Unsecured Creditors (as such term is defined below) in
New Propco Holdco (as such term is defined below).  This summary of terms does not purport to
identify all material terms and conditions of any possible investment or
restructuring transaction. This summary of terms does not constitute (nor shall
it be construed as) an offer with respect to any securities or a solicitation
of acceptances or rejections as to any plan of reorganization, it being
understood that such offer or solicitation, if any, shall only be made in
compliance with applicable provisions of securities and bankruptcy law.

 

	
  Key Parties

  	
   

  	
  “Debtors”:
  Station Casinos, Inc. (“Opco”) and its subsidiaries and
  affiliates identified in footnote 1 below, collectively.(1)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “FG”:
  Fertitta Gaming LLC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “FG/Propco
  Lenders”: FG and the Propco Lenders (as such term is defined below),
  collectively.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Propco
  Lenders”: German American Capital Corporation and JPMorgan Chase Bank,
  N.A. in their respective capacities as lenders under the Amended and Restated
  Loan and Security Agreement, dated as of March 19, 2008.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Put
  Parties”: Entities affiliated with Fidelity Management &
  Research Company, Oaktree Capital Management, L.P. and Serengeti Asset
  Management, L.P. reasonably acceptable to the Debtors, FG and Propco
  Lenders.(2)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “UCC”:
  Opco Official Committee of Unsecured Creditors.

  
	
   

  	
   

  	
   

  
	
  New Propco Holdco Warrants

  	
   

  	
  In General: Subject to the conditions and other
  limitations set forth herein, the issuance to Opco for distribution to the
  unsecured creditors of Opco (collectively, the “Opco Unsecured Creditors”)
  through a newly organized corporation or limited liability company taxable as
  a corporation (“Blockerco”) of warrants (the “New Propco Holdco
  Warrants”) exercisable

  

 

(1) 
FCP Holding, Inc., FCP Voteco, LLC, Fertitta Partners LLC, Northern NV
Acquisitions, LLC, Reno Land Holdings, LLC, River Central, LLC, Tropicana
Station, LLC, GV Ranch Station, Inc., FCP
Propco, LLC (“FCP Propco”), FCP MezzCo Parent, LLC, FCP
MezzCo Parent Sub, LLC, FCP MezzCo Borrower I, LLC, FCP MezzCo Borrower II,
LLC, FCP MezzCo Borrower III, LLC, FCP MezzCo Borrower IV, LLC, FCP MezzCo
Borrower V, LLC, FCP MezzCo Borrower VI, LLC and FCP MezzCo Borrower VII, LLC.

 

(2)    It is understood that representatives of
Fidelity Management and Research Company and Serengeti Asset Management, L.P.
are on the UCC and therefore may, in their capacities as members of the UCC,
have fiduciary duties to the Opco Unsecured Creditors. Nothing in this summary
of terms (or the agreements contemplated hereby) shall prohibit or limit the
ability of such members of the UCC, in their respective capacities as such, to
act on matters before the UCC in accordance with such fiduciary duties; provided,
however, that the existence of such fiduciary duties shall not permit
such members to act, in their individual capacities, in a manner that is inconsistent
with their obligations in this summary of terms (or the agreements contemplated
hereby).

 

 

	
   

  	
   

  	
  by
  holders indirectly through Blockerco for equity interests in the entity (“New
  Propco Holdco”) formed to hold the non-voting interests issued by New
  Propco (as such term is defined in the Plan)(3), other than (i) the
  holders of Master Lease Rejection
  Damage Claims (as such term is defined in the Plan) and (ii) the
  Mortgage Lenders as holders of claims in Class S.7 (4) in
  connection with the Joint Chapter 11 Plan of Reorganization filed by Opco,
  FCP Propco, LLC and the other Debtors on June 15, 2010 or a Propco-only
  plan (alternatively and without differentiation, and as amended from time,
  the “Plan”). Certain terms and provisions relating to Blockerco and
  the representations and warranties to be made by the owners of Blockerco and
  various provisions relating thereto are set forth in Exhibit A hereto.
  For purposes hereof, references to ownership of New Propco Holdco Warrants
  and purchase or ownership of New Propco Holdco Equity shall mean purchase or
  ownership by the Opco Unsecured Creditors through Blockerco. The Debtors
  shall amend the Plan to provide that Opco Secured Lenders that vote in favor
  of the Plan will not have the right as Opco Unsecured Creditors to receive
  New Propco Holdco Warrants or to purchase New Propco Holdco Equity as
  provided herein.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount: Exercisable for 2.5% of the total equity
  of New Propco Holdco, subject to adjustment as described under “Other Terms.”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exercise Price: During the first two
  years after the Effective Date (as such term is defined in the Plan, the “Effective
  Date”), the product of (A) 2.5 times (B) the per unit value of
  equity interests in New Propco Holdco issued under the Plan (with the total
  value of such equity interests under the Plan being the sum of (i) the
  amount of $200 million plus the amount of any additional equity issued or
  capital contributions made as of the Effective Date, excluding the
  contribution of the New Propco Acquired Assets, as defined in the Plan, and
  (ii) the amount of any reduction in the debt agreed to by the Propco
  Lenders (with the consent of the Debtors and FG and approval, if required, of
  the Bankruptcy Court) in exchange for New Propco Holdco

  

 

(3)    It is contemplated that the New Propco
Holdco Warrants would be issued through the Blockerco structure in connection
with the Plan to all of the Opco Unsecured Creditors in a transaction exempt
from the securities laws pursuant to Section 1145 of the Bankruptcy Code.  There may be more than one (but not more than
five) Blockerco entities (each of which shall be considered “Blockerco”
hereunder) established if reasonably requested by the holders of a majority of
the shares issued by all of the Blockerco entities.  The holders of a majority of Blockerco shares
shall control Blockerco, including the right to design and control tax
mitigation techniques at Blockerco (the costs of which shall be borne by the
shareholders of Blockerco) that do not adversely affect New Propco Holdco or
its equityholders (except for adverse effects that are clearly de
minimis).  The New Propco Holdco Equity
(as such term is defined below) would be issued only to Accredited Investors in
all cases.

 

(4) 
It is understood that certain Opco Unsecured Creditors may request to structure
their investments in a manner which complies with applicable Nevada gaming
regulations for investments of this type. 
The parties intend to use reasonable efforts to accommodate such
requests to the extent reasonably practicable.

 

2

 

	
   

  	
   

  	
  Equity,
  the “Plan Value”), with such price thereafter increasing by 15% per
  year in each of years 3, 4, 5, 6 and 7 following the Effective Date; provided,
  that the exercise price may be adjusted as may be reasonably necessary in the
  discretion of the Debtors, FG or the Propco Lenders to satisfy the Tax
  Condition (as defined below).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Allocation: The allocation by Blockerco of New Propco
  Holdco Warrants among the classes or categories, as the case may be, of Opco
  Unsecured Creditors shall be effected on a pro rata basis
  in proportion to allowed unsecured claims, subject, in each case, to any
  applicable contractual subordination arrangements except to the extent the parties otherwise agree and such
  agreement is reflected in the Plan and approved by the Bankruptcy Court.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Treatment in Forced Exercise: In the case that the New
  Propco Holdco Warrants are subject to any forced exercise provision as part
  of a capital raise or similar transaction, the sole consequence to the
  nonexercising holders would be the termination of such warrants.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other Terms: Additional terms
  (including those relating to dilution) substantially similar to the terms
  provided for “Lender Warrants” referred to in Annex 3 to the Opco and FCP
  Propco Restructuring Term Sheet, dated March 24, 2010 (the “Propco
  Term Sheet”), except that future equity issuances by New Propco Holdco
  the proceeds of which are utilized to fund the acquisition of the New Opco
  Acquired Assets (as such term is defined in the Plan), and issuances of
  equity pursuant to conversion or exchange rights relating to debt securities
  the proceeds of which are utilized for such purpose, each shall not have a
  dilutive effect on the New Propco Holdco Warrants.

  
	
   

  	
   

  	
   

  
	
  New Propco Holdco Investment Right

  	
   

  	
  In
  General: In connection with the Plan and subject to the
  conditions and other limitations set forth herein, each Opco Unsecured
  Creditor that is an “accredited investor” (“Accredited Investor”) as
  such term is defined in Regulation D promulgated under the Securities Act of
  1933, as amended, shall be entitled to participate in a rights offering
  through Blockerco (the “Propco Rights Offering”) pursuant to which it
  may subscribe for and purchase through Blockerco equity interests issued by
  New Propco Holdco (the “New Propco Holdco Equity”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount: $35.3
  million in New Propco Holdco Equity (unless such amount is increased in
  accordance with the terms set forth below in this sub-section or under the
  caption entitled “Effect of
  Subsequent Equity Offerings”), which amount represents approximately
  15% of the equity interests in New Propco 

  

 

3

 

	
   

  	
   

  	
  Holdco.(5)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Allocation: The
  opportunity to purchase New Propco Holdco Equity through Blockerco shall be
  allocated among the classes or categories, as the case may be, of Opco
  Unsecured Creditors on a pro rata basis
  in proportion to allowed unsecured claims (but with a minimum purchase being
  $250,000), subject, in each case, to any applicable contractual subordination
  arrangements except to the extent the
  parties otherwise agree and such agreement is reflected in the Plan and
  approved by the Bankruptcy Court; provided, that the Put Parties (so
  long as they hold at least 40% in aggregate principal amount of the unsecured
  senior notes of Opco) shall have the right to purchase at least one-half of
  the New Propco Holdco Equity available in the Propco Rights Offering (which
  equity shall be allocated among the Put Parties as they shall mutually
  agree).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Put
  Condition: The Propco Rights Offering shall only be
  available if the Put Parties
  have duly executed and delivered by July 29, 2010 (the “Commitment
  Submission Deadline”) a firm and irrevocable put commitment (the “Propco
  Commitment”), in form and substance acceptable to the Put Parties, Debtors and FG/Propco
  Lenders, to purchase through Blockerco $35.3 million of New Propco Holdco
  Equity which the Opco Unsecured Creditors or Put Parties are contemplated to be entitled to subscribe for
  hereunder as provided under “New Propco Holdco Investment Right—Amount” (the
  “Committed Propco Amount”) and which is not so purchased by the Opco
  Unsecured Creditors or the Put
  Parties pursuant to the proviso under “New Propco Holdco Investment
  Right—Allocation.” As used herein, the term “Commitment Percentage”
  shall mean 15%.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Propco Commitment shall also cover the amount (the “Upsizing Committed
  Amount”) up to a maximum of $100 million (i.e., up to a maximum of
  $64.7 million in addition to the original $35.3 million, the “Cap”) of
  New Propco Holdco Equity the Put
  Parties will irrevocably commit to purchase through Blockerco (to the
  extent not purchased by Opco Unsecured Creditors or by the Put Parties pursuant to the proviso
  under “New Propco Holdco Investment Right—Allocation”) in the event that any
  Acquisition or Additional Equity Issuance (in each case as such terms are
  defined below, with any equity raises to fund any Acquisition or any
  Additional Equity Issuances being collectively referred to as “Equity
  Raises”) is consummated. The Upsizing Committed Amount shall be expressed
  as the Commitment Percentage of any Equity Raises, it being understood that
  no

  

 

(5) 
Investment percentages contained throughout this summary of terms are
predicated upon, and subject to, $200 million initial valuation, as may be
adjusted for additional capital contributions to or new equity raised at New
Propco Holdco prior to closing.  For
example, assuming no additional equity is raised at closing other than that
contemplated under this sub-section, a $35.3 million total investment would
result in the acquisition of approximately 15% of the equity interests in New
Propco Holdco (before giving effect to potential future exercises of warrants
or options or the issuance of any equity interests upon the conversion of any
convertible securities).

 

4

 

	
   

  	
   

  	
  purchase
  price in respect of any Acquisition is expected to be definitively determined
  by the Commitment Submission Deadline.(6)  The irrevocable commitment of
  the Put Parties in respect of the Upsizing Committed Amount shall survive
  until June 30, 2011 (the period from the date of the Propco Commitment
  until June 30, 2011, the “Upsizing Commitment Period”) and shall
  be deemed to apply to, among other things, any equity raise consummated
  during the Upsizing Commitment Period.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Remedies
  for Failure to Purchase: If an Opco Unsecured
  Creditor fails to close on a purchase of New Propco Holdco Equity it agreed
  to make pursuant to the Propco Rights Offering through Blockerco, Blockerco
  shall have no liability with respect to such failure other than the loss of
  any equity it would have otherwise acquired on behalf of such Opco Unsecured
  Creditor, it being understood that New Propco Holdco shall have all rights to
  pursue any such Opco Unsecured Creditor; including any Put Party, for any
  failure to meet any commitment to make such a purchase or effect a purchase
  required under a put arrangement, and Blockerco shall cooperate with New
  Propco Holdco to the extent reasonably requested by New Propco Holdco in
  connection therewith. The Put Parties
  would purchase any New Propco Holdco Equity as to which an Opco Unsecured
  Creditor defaulted in its purchase commitment.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Use
  of Proceeds: Net proceeds derived by New Propco Holdco from any
  investment by the Opco Unsecured Creditors in the Propco Rights Offering
  shall be contributed by New Propco Holdco as equity to New Propco and
  utilized by New Propco for general corporate purposes, including, without
  limitation, to reduce debt or for one or more Acquisitions.

  
	
   

  	
   

  	
   

  
	
  Effect of Subsequent Equity Offerings:

  	
   

  	
  Upsizing: In the event
  that (i) (a) any bid submitted by New Propco Holdco or any of its
  subsidiaries to purchase (x) the New Opco Acquired Assets or any
  substantially similar collection of assets held by Opco or its subsidiaries
  (as the same may be amended from time to time, the “Stalking Horse Bid”)
  prevails and the transactions contemplated thereby (the “Opco Acquisition”)
  are contemplated to be consummated during the Upsizing Commitment Period,
  (y) equity interests in the reorganized successor to, or all or
  substantially all of the assets of, Green Valley Ranch Gaming, LLC and/or
  Aliante Gaming, LLC is accepted and any resulting transactions (such
  transactions, the “JV Acquisitions”) are contemplated to be
  consummated during the Upsizing Commitment Period or (z) equity
  interests in, or all or substantially all of the assets of, any other
  material gaming operating entity located within a 100-mile radius of the city
  limits of Las Vegas, Nevada is accepted, and the resulting transactions (the
  “Additional Acquisitions,” and

  

 

(6) 
Capital contributions will be deemed to include Propco cash/cash collateral or
equivalents delivered to New Propco Holdco or one of its subsidiaries at the
direction of the Propco Lenders that would otherwise be distributed to the
Propco Lenders as part of their recovery under the Plan.

 

5

 

	
   

  	
   

  	
  together
  with the Opco Acquisition and the JV Acquisitions, the “Acquisitions”)
  are contemplated to be consummated during the Upsizing Commitment Period (it
  being understood that no transaction shall be deemed to be an “Additional
  Acquisition” unless the Put Parties
  agree that the Propco Commitment shall apply to such transaction) and
  (b) any such Acquisition is to be funded, in whole or in part, through
  an Equity Raise in which existing equityholders of New Propco Holdco or
  others participate or (ii) any additional Equity Raises (“Additional
  Equity Issuances”) are contemplated to be consummated during the Upsizing
  Commitment Period (including, without limitation, an equity issuance approved
  by the Debtors, FG and the Propco Lenders the proceeds of which are used to
  repay not more than $50 million of debt owed to the Propco Lenders (the “Debt
  Paydown Issuance”), but excluding any equity issuances contemplated by
  the Propco Term Sheet) by New Propco Holdco for other purposes (it being
  understood that no equity issuance shall be deemed to be an Additional Equity
  Issuance, other than the Debt Paydown Issuance, unless the Put Parties agree that the Propco
  Commitment shall apply to such equity issuance), then the
  Opco Unsecured Creditors collectively shall be provided an opportunity to
  increase the amount of New Propco Holdco Equity they are entitled to
  subscribe for and purchase through Blockerco in the Propco Rights Offering
  (the amount of such increase, the “Upsizing Amount”) by the product
  resulting from the amount of the Equity Raises, multiplied by the Commitment
  Percentage; provided, that the aggregate opportunity offered to the
  Opco Unsecured Creditors shall not exceed the Cap. Such amounts which exceed
  the Cap shall be subject, with respect to the Opco Unsecured Creditors that
  own at least .5% of the outstanding New Propco Holdco Equity (aggregating,
  for this purpose and for purposes of determining eligibility to purchase as
  described under “Post-Effective Investment Right,” holdings by affiliated
  funds or other investment vehicles with a common investment manager) to
  preemptive rights substantially similar to those described under
  “Post-Effective Investment Right.” With respect to any Acquisitions or
  Additional Equity Issuances information will be provided to the Put Parties and other Opco Unsecured
  Creditors in reasonable detail, subject to reasonable confidentiality
  restrictions and any procedures designed to deal with competitive interests.
  With respect to Additional Acquisitions and any Additional Equity Issuances
  as to which the consent of the Put
  Parties is required for the Propco Commitment to apply, the Put Parties shall reply not later
  than 15 days after the delivery of information as to whether they so consent.
  It is understood that no acquisitions shall constitute JV Acquisitions or
  Additional Acquisitions to the extent the consideration to the sellers in the
  transaction constitutes equity or other securities or property of New Propco
  Holdco or any affiliate thereof, and no such acquisition shall give rise to
  rights of the Opco Unsecured Creditors to purchase New Propco Holdco Equity
  under “Post-Effective Investment Right” except to the extent equity offerings
  are 

  

 

6

 

	
   

  	
   

  	
  being
  made to finance such acquisition. In addition, there would be customary
  exceptions (such as offerings to employees) to triggering the right of Opco
  Unsecured Creditors to purchase New Propco Holdco Equity either in connection
  with an equity raise or in connection with the rights described under
  “Post-Effective Investment Right,” which customary exceptions shall also
  apply generally to preemptive rights held by other equityholders of New
  Propco Holdco.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Irrespective
  of whether any Opco Unsecured Creditors determine to increase the amount of
  New Propco Holdco Equity they subscribe for and purchase in accordance with
  the immediately preceding paragraph, the Put Parties shall continue to be irrevocably obligated to
  satisfy any obligations they have undertaken in respect of the Upsizing
  Committed Amount pursuant to the Propco Commitment.

  
	
   

  	
   

  	
   

  
	
  Subscriptions
  of the Opco Unsecured Creditors  in Propco Rights Offering

  	
   

  	
  If
  the Propco Commitment is duly and timely delivered by the Put Parties, then the Opco Unsecured
  Creditors shall collectively have the opportunity to subscribe through
  Blockerco for New Propco Holdco Equity in the Propco Rights Offering in an
  amount up to, as applicable, the (i) Committed Propco Amount, in the
  event that no Acquisitions requiring additional equity or Additional Equity
  Issuances are contemplated to be consummated during the Upsizing Commitment
  Period, or, (ii) the sum of the Committed Propco Amount plus the
  Upsizing Amount, in the event that any such Acquisition or Additional Equity
  Issuance is contemplated to be consummated during the Upsizing Commitment
  Period.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In
  order to be effective, each such subscription shall (i) be delivered by
  the Opco Unsecured Creditor tendering the same by no later than the deadline
  for doing so established by the Bankruptcy Court, (ii) be accompanied by
  a firm and irrevocable funding commitment of such Opco Unsecured Creditor to
  purchase the amount of New Propco Holdco Equity during the Upsizing
  Commitment Period for which it has subscribed, (iii) contain such other
  relevant information as the Debtors and FG/Propco Lenders shall reasonably
  direct and (iv) be in form and substance reasonably acceptable to the
  Debtors and FG/Propco Lenders.

  
	
   

  	
   

  	
   

  
	
  Pricing in Propco Rights Offering; Put
  Premium

  	
   

  	
  All
  purchasers in the Propco Rights Offering shall purchase New Propco Holdco
  Equity through Blockerco at Plan Value. The Put Parties shall be paid a
  premium in cash by New Propco Holdco (the “Put Premium”) equal to
  $3,000,000 on the Effective Date, assuming that the Propco Commitment has not
  been terminated and each of the Put Parties has complied with its respective
  obligations hereunder and thereunder (including having made the purchases
  contemplated thereby which are required to be made on or before the Effective
  Date). The payment of the Put Premium to the Put Parties on the Effective
  Date shall be effected in such manner (such as a deduction from the purchase
  price otherwise payable by the Put Parties for the New Propco

  

 

7

 

	
   

  	
   

  	
  Holdco
  Equity being purchased by them through Blockerco) as the Debtors, FG/Propco
  Lenders and the Put Parties shall reasonably determine. The Put Premium shall
  be treated as a non-refundable payment once made; provided, however,
  that each Put Party shall repay, in whole or in part, as the case may be, its
  proportionate share of the aggregate Put Premium provided for herein in the
  event that such Put Party (i) breaches its obligation to fund any equity
  raise following the Effective Date (in which case, such Put Party shall
  return to New Propco Holdco that portion of the Put Premium received by it
  which is attributable to the amount of any such equity raise which is not so
  funded), (ii) intentionally or recklessly breaches any representation
  set forth on Exhibit A that it made or was required to make on or as of
  the Effective Date and such breach results in the rescission of all or a
  portion of the amount invested in any equity raise by such Put Party pursuant
  to the terms hereof (in which case, the Put Premium attributable to the
  rescinded amount shall be returned), or (iii) (x) cannot make any
  representations or provide support for verifications set forth on
  Exhibit A on or as of the Effective Date and (y) enters into escrow
  or other arrangements to permit funding of its investment pending
  confirmation of such representations or verifications, but such
  representations or verifications cannot be finalized as a result of any
  intentional act by or on behalf of such Put Party undertaken for the purpose
  of having such representations or verifications being unable to be made and
  such failure results in any portion of the purchases contemplated by such Put
  Party’s Propco Commitment not being completed or being rescinded (in which
  case, the Put Premium attributable to the unpurchased or rescinded amount so
  placed in escrow by such Put Party shall be returned to New Propco Holdco).

  
	
   

  	
   

  	
   

  
	
  Post-Effective
  Investment Right

  	
   

  	
  In
  the event that any equity raise is contemplated from existing equityholders
  of New Propco Holdco to fund an acquisition of an operating property or
  business or for other purposes, which equity raise is contemplated to be
  consummated following the end of the Upsizing Commitment Period (a “Post-Effective
  Equity Raise”), then the
  Opco Unsecured Creditors that are (i) Accredited Investors,
  (ii) own indirectly (together with affiliated funds or other investment
  vehicles with a common investment manager) through Blockerco at least .5% of
  the outstanding New Propco Holdco Equity and (iii) participated in the
  Propco Rights Offering (the “Qualifying Creditors”) shall be entitled
  to participate in any such Post-Effective Equity Raise and subscribe for and
  purchase such amount of the New Propco Holdco Equity through Blockerco
  offered in such Post-Effective Equity Raise or make such amount of capital
  contributions through Blockerco, as the case may be, as shall enable each
  Qualifying Creditor electing to participate to retain a position in the New
  Propco Holdco Equity equal to the percentage of the outstanding New Propco Holdco
  Equity so held by it immediately prior to such Post-Effective Equity Raise.
  The Qualifying Creditors will be provided

  

 

8

 

	
   

  	
   

  	
  with
  information in reasonable detail (subject to reasonable confidentiality restrictions
  and any procedures designed to deal with competitive interests) on a timely
  basis relating to each such Post-Effective Equity Raise and, to the extent
  they elect to do so, shall be entitled to participate in any Post-Effective
  Equity Raise (i) on a pro rata
  basis in proportion to their respective investments in the Propco Rights
  Offering and (ii) at the same price at which other equityholders of New
  Propco Holdco are entitled to participate in the same. To the extent a
  Qualifying Creditor does not elect to exercise its rights to purchase in a
  Post-Effective Equity Raise, such rights may be exercised by other Qualifying
  Creditors (it being understood that there may be sharing arrangements with
  respect to preemptive rights involving other holders of New Propco Holdco
  Equity). Notwithstanding the foregoing, the participation of the Qualifying
  Creditors in any Post-Effective Equity Raise shall be subject to such
  parameters as the Board of Directors or similar governing body of New Propco
  Holdco (the “Board”) shall determine are appropriate in order to
  ensure successful execution, including, without limitation, parameters with
  respect to the put commitments or similar arrangements relating to such
  Post-Effective Equity Raise. Any Qualifying Creditor that does not purchase
  the full amount of New Propco Holdco Equity offered to it in connection with
  any equity raise (whether a Post-Effective Equity Raise or an Equity Raise)
  shall lose its rights to participate in future Post-Effective Equity Raises.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Use of Proceeds: Net proceeds derived by
  New Propco Holdco from any investment by the Qualifying Creditors in a
  Post-Effective Equity Raise shall be contributed by New Propco Holdco as
  equity to New Propco and utilized by New Propco for general corporate purposes
  or to fund one or more acquisitions.

  
	
   

  	
   

  	
   

  
	
  Voting Rights

  	
   

  	
  Subject
  to the requirements of applicable gaming laws and regulations (and following
  receipt of any applicable approvals required thereby), the New Propco Holdco
  Equity and the equity interests for which the New Propco Holdco Warrants are
  exercisable shall carry voting rights as set forth in the definitive
  agreements developed by FG/Propco Lenders.

  
	
   

  	
   

  	
   

  
	
  Tag-Along Rights

  	
   

  	
  Qualifying
  Creditors will have the right to tag along with a sale or series of related
  sales of at least 10.5% of the outstanding New Propco Holdco Equity sold by
  other holders of New Propco Holdco Equity, except transfers between
  affiliates or other specified related parties and certain transfers between
  FG and Colony Capital (“Exempted Transfers”). It is understood that
  for purposes of computing whether the 10.5% threshold has been reached
  (i) sales made at least three months apart shall be deemed not to be
  related and (ii) any increase in the amount of New Propco Holdco Equity
  sought to be sold pursuant to the Top-Up right described under “Rights of
  First

  

 

9

 

	
   

  	
   

  	
  Refusal”
  shall be disregarded. Any such other holder (collectively, the “Initiating
  Holder”) would give notice to the Qualifying Creditors, as well as other
  equityholders with tag-along rights (“Other Tag Holders”) of an intent
  to sell at least 10.5% of such equity and a proposed price. To participate in
  the tag-along, the Qualifying Creditor would need to respond within 15 days.
  If such creditor (an “Electing Creditor”) gives notice of its desire
  to participate, the Initiating Holder would market its holdings as well as
  the proportionate holdings of the Electing Creditors and Other Tag Holders
  that responded affirmatively (collectively, the “Electing Holders”) at
  a price not less than 95% of the price specified in the original notice, and
  the electing Qualifying Creditors would give a power of attorney to the
  Initiating Holder to sell these interests, subject to the process described
  under “Rights of First Refusal.” Such proportionate participation right of
  each Electing Holder and electing Other Tag Holder would be determined by
  multiplying its ownership of New Propco Holdco Equity by the percentage of
  the New Propco Holdco Equity owned by the Initiating Holder that the
  Initiating Holder is seeking to sell as set forth in the notice given by the
  Initiating Holder. If not all of the interests could be sold, the amount sold
  would be allocated among the Initiating Holder and the Electing Holders in
  the respective proportions of the New Propco Holdco Equity sought to be sold
  by them; provided, that if the sale is of amounts remaining after a
  partial purchase described under “Rights of First Refusal” and the Initiating
  Holder has determined to increase the amount of New Propco Holdco Equity
  being sold pursuant to the Top-Up right described therein, such proportionate
  allocation among sellers shall also reflect such additional equity sought to
  be sold by the Initiating Holder and the other Electing Holders. All
  interests would be sold in the form of New Propco Holdco Equity, so Blockerco
  would have the ability to make such tag sale itself directly and then redeem
  the underlying Blockerco shares held by Electing Creditors, except as provided
  in the following sentence. In connection with a sale involving Qualifying
  Creditors that are Electing Holders, the Initiating Holder will, if requested
  by the holders of a majority of the equity sought to be sold by such Electing
  Holders, request potential buyers to quote, if they are willing to do so, a
  price at which they would buy Blockerco shares, as well as a price at which
  they would buy units of New Propco Holdco Equity, and (if the prospective
  buyer and such majority holders agree) such sales could be consummated as
  sales of Blockerco shares at a price not less than 95% of the price the
  prospective buyer originally quoted for the Blockerco shares; provided,
  that the Initiating Holder is also able to sell the equity sought to be sold
  by it to such buyer in compliance with the requirements of this paragraph. To
  the extent a Qualifying Creditor does not elect to exercise its tag rights,
  such rights may be exercised by other Qualifying Creditors (it being
  understood that there may be sharing arrangements with respect to tag rights
  involving other holders of New Propco Holdco Equity, which sharing
  arrangements by the Qualifying

  

 

10

 

	
   

  	
   

  	
  Creditors
  or the other holders of New Propco Holdco Equity shall not be subject to tag
  rights by persons not party to such sharing arrangements).

  
	
   

  	
   

  	
   

  
	
  Rights of First Refusal

  	
   

  	
  Qualifying
  Creditors that indirectly own at least 2.5% of the outstanding equity of New
  Propco Holdco through Blockerco and their affiliates (collectively, “2.5%
  Holders”) would have the right to purchase their pro rata share of any
  New Propco Holdco Equity sought to be sold by other holders of New Propco
  Holdco Equity (other than Exempted Transfers). In addition, all Opco
  Unsecured Creditors that purchase New Propco Holdco Equity would be bound by
  the obligation to offer their equity to other direct or indirect holders of
  New Propco Holdco Equity pursuant to the first refusal procedures described
  herein; provided, that (i) the Opco Unsecured Creditors may
  effect such sales in Blockerco shares (other than in a tag-along sale with
  New Propco Holdco Equity, except as provided in the last sentence under
  “Tag-Along Rights”) rather than being required to exchange such shares for
  New Propco Holdco Equity and (ii) a transfer by Blockerco of New Propco
  Holdco Equity to a shareholder of Blockerco in exchange for or redemption of
  the shares of Blockerco held by such shareholder shall not trigger such first
  refusal process, it being understood that such transferees will be bound by
  such first refusal requirements. If a holder of New Propco Holdco Equity or
  shares in Blockerco (a “Selling Holder”) desires to sell its interest
  in New Propco Holdco Equity or Blockerco shares, it would give notice to the
  2.5% Holders and all other holders having purchase rights (the 2.5% Holders
  and such other holders, collectively, “Other Holders”) of the amount
  it wanted to sell and the proposed price per unit of New Propco Holdco
  Equity; provided, that if the amount of New Propco Holdco Equity
  sought to be sold causes the tag-along provisions to be applicable, the total
  amount after giving effect to tag-along rights also will be disclosed. The
  Other Holders would have 15 days after the expiration of the 15-day notice
  period described under “Tag-Along Rights” applicable to the contemplated
  transaction to decide whether to purchase or not at such price and would be
  entitled to purchase their proportionate share (based on the respective
  proportionate ownership of New Propco Holdco Equity held by the Other Holders
  that desire to purchase) of the amount offered. To the extent the Other
  Holders do not agree to purchase all of the New Propco Holdco Equity, so
  offered, then the Selling Holder (for itself and as agent for the holders
  exercising tag-along rights) could sell the remaining equity (plus any
  additional equity up to the amount originally offered that does not cause the
  amount being sold to the Other Holders to exceed 10% of the amount of
  outstanding New Propco Holdco Equity) at a price of at least 95% of the
  amount originally specified. If the application of the first refusal rights
  would result in the amount remaining to be sold by the Selling Holders
  (including any amounts to be sold by holders exercising tag-along rights) to
  be less than 10% of the outstanding New Propco Holdco Equity, the Initiating
  Holder and the Electing Holders would have the right on 

  

 

11

 

	
   

  	
   

  	
  a
  pro rata basis (the “Top-Up”) to increase the amount of equity being
  sold by it and the Electing Holders to the lesser of the (i) amount
  originally sought to be sold by them before the partial purchase by the Other
  Holders and (ii) amount necessary to cause such remaining amount to be
  sold by the Selling Holder and the holders exercising tag-along rights to be
  at least 10% of the outstanding New Propco Holdco Equity. Furthermore, there
  would be no obligation of the Selling Holders to sell pursuant to the first
  refusal rights in a sale of less than all the New Propco Holdco Equity
  offered if the related Top-Up would cause the amount of New Propco Holdco
  Equity owned by the Initiating Holder to be less than 10% of the outstanding
  New Propco Holdco Equity after giving effect to all contemplated sales. A
  purchase by a 2.5% Holder would be made through Blockerco as described in the
  antepenultimate sentence under “Tag-Along Rights.” To the extent a 2.5%
  Holder does not elect to exercise its rights of first refusal, such rights
  may be exercised by other 2.5% Holders (it being understood that there may be
  sharing arrangements with respect to rights of first refusal involving other
  holders of New Propco Holdco Equity).

  
	
   

  	
   

  	
   

  
	
  Board Observation Rights

  	
   

  	
  For
  so long as they collectively continue to indirectly hold through Blockerco at
  least one-half of the percentage of equity interests in New Propco Holdco
  indirectly acquired by them solely as a result of their participation in the
  transactions contemplated hereby (the “Minimum Ownership Condition”),
  the Qualifying Creditors (acting by vote of the holders of a majority of the
  New Propco Holdco Equity owned indirectly by them through Blockerco)
  collectively shall be entitled to nominate and appoint (the “Appointment
  Right”) an independent observer (the “Independent Observer”)
  to the Board of New Propco Holdco in accordance with the procedures specified
  in the immediately two succeeding paragraphs; provided, however,
  that the Board may direct such observer to recuse himself from meetings or
  proceedings of the Board in the event that information of competitive
  significance, as determined by the Board, concerning New Propco
  Holdco is reasonably expected to be discussed at any such meeting or
  proceeding or in order to preserve any legal privileges at any such meeting
  or proceeding.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Subject to reasonable confidentiality restrictions, the Independent
  Observer shall be provided, at the same time as the members of the Board are
  provided, with copies of materials prepared for and provided to the members
  of the Board in connection with their service on the Board (including a
  meeting agenda and Board package, in the event that such materials are
  prepared); provided, however, that the Board may exclude or
  redact from those materials made available to the Independent Observer
  information of competitive significance concerning New Propco Holdco and its
  subsidiaries and information which, if disclosed to the Independent Observer,
  would jeopardize the preservation of any legal privileges attaching thereto,
  in each case, as determined by the Board in its good faith discretion.

  

 

12

 

	
   

  	
   

  	
  In order to exercise the Appointment Right, the Qualifying Creditors
  shall submit to the Board for its consideration a list of no fewer than three
  candidates (the “Candidate List”) to serve as the
  Independent Observer, it being understood and agreed that the Qualifying
  Creditors shall include on the Candidate List only candidates who they
  reasonably believe the Board will consider to be acceptable. Each such
  candidate shall (i) not be affiliated with any competitor of New
  Propco Holdco or a subsidiary thereof, (ii) be independent of New
  Propco Holdco within the meaning of Section 303A.02 of the New York
  Stock Exchange Listing Standards and, accordingly, without a direct or
  indirect material relationship with New Propco Holdco, and (iii) be able
  to serve in the capacity of Independent Observer without contravening
  any applicable laws or regulations, including gaming laws or regulations. The
  Board shall use its reasonable efforts to screen the candidates appearing on
  the Candidate List (which screening shall consist of such interviews,
  background examinations and similar vetting processes as the Board shall
  determine in its reasonable discretion) within forty-five (45) days following
  the submission of the Candidate List to the Board by the Qualifying
  Creditors, provided that the Qualifying Creditors and the candidates whose
  names appear on the Candidate List promptly comply with the reasonable
  requests made by the Board pursuant to this sentence. Following the
  completion of the aforementioned screening exercise, in the event that the
  Board determines in its sole discretion that any one or more of the screened
  candidates appearing on the Candidate List is acceptable to it, the Board
  shall so advise the Qualifying Creditors, whereupon the Qualifying Creditors
  shall be entitled to exercise the Appointment Right with respect to any such
  screened candidate that the Board has determined to be acceptable. In the
  event that the Board determines in its sole discretion not to approve any
  candidate appearing on the Candidate List, it shall promptly so advise the
  Qualifying Creditors and the Qualifying Creditors shall thereafter supplement
  such Candidate List with additional candidates who satisfy the requirements
  set forth in the first and second sentences of this paragraph and resubmit
  the same to the Board for screening in accordance with the third sentence of
  this paragraph. The Board and the Qualifying Creditors shall use their
  respective reasonable efforts to promptly complete the actions contemplated
  to be undertaken by each of them pursuant to this paragraph in order to meet
  the timeframes set forth in the third sentence of this paragraph and in order
  that the Appointment Right be completed within ninety (90) days following the
  date on which the Board receives the initial applicable Candidate List from
  the Qualifying Creditors. It is understood and agreed that the Board’s
  exercise of its sole discretion as provided for in the fourth and fifth
  sentences of this paragraph shall be carried out in good faith.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In
  the event that the Independent Observer resigns or is removed from
  office 

  

 

13

 

	
   

  	
   

  	
  and
  the Qualifying Creditors continue to satisfy the Minimum Ownership Condition,
  then the Qualifying Creditors collectively shall be entitled to exercise the
  Appointment Right in the manner specified herein in order to replace the
  outgoing Independent Observer.

  
	
   

  	
   

  	
   

  
	
  Certain Additional Rights

  	
   

  	
  The
  Qualifying Creditors shall be entitled to certain additional rights with
  respect to their indirect equity interests in New Propco Holdco, which rights
  shall be memorialized in the operating agreement of New Propco Holdco, an
  equityholders agreement or a separate agreement with or through Blockerco.
  Such rights, which may in some instances overlap with other contemplated
  rights of the Opco Unsecured Creditors specified herein, shall be limited to
  (i) customary piggyback registration rights, (ii) the tag-along rights
  described under “Tag-Along Rights,” (iii) with respect to the Qualifying
  Creditors that own at least .5% of the outstanding New Propco Holdco Equity,
  the preemptive rights described under “Post-Effective Investment Right,”
  (iv) with respect to 2.5% Holders, the rights of first refusal described
  under “Rights of First Refusal,” (v) the ability to vote through
  pass-through voting arrangements at Blockerco on certain matters submitted to
  all voting equityholders of New Propco Holdco and (vi) the right to an
  Independent Observer as provided under “Board Observation Rights;” provided,
  however, that such rights under clauses (v) and (vi)  shall
  in no event be deemed to include any other rights set forth under the caption
  entitled “Corporate Governance” in the Propco Term Sheet or on Annex 7 to the
  Propco Term Sheet, including, without limitation, any inspection rights
  (other than limited inspection rights required under the Delaware Limited
  Liability Company Act to be granted to equityholders) or Board designation
  rights. The organizational documents of New Propco Holdco will provide for
  (x) the making of distributions to equityholders of amounts estimated to
  be necessary to pay taxes (including estimated taxes) on taxable income
  allocated to them by New Propco Holdco from time to time (taking into account
  losses or other tax benefits previously allocated and subject to the
  availability of distributable cash and compliance with credit or other
  agreements relating to New Propco Holdco or any of its affiliates (which
  agreements shall permit such tax distributions except during the continuation
  of an event of default but without any requirement to permit distributions
  with respect to income attributable to a subsidiary if such subsidiary does
  not make such a tax distribution)) and (y) distribution to equityholders
  of annual and quarterly consolidated balance sheets, income statements,
  statements of cash flows and (in the case of annual periods) statements of
  changes in members’ equity of New Propco Holdco if they are not publicly
  available (including any audit report with respect thereto if such an audit
  report is prepared), subject to reasonable confidentiality provisions.
  Notwithstanding the foregoing, each of the preceding rights, other than the
  registration rights, shall terminate upon the occurrence of a bona  fide public
  offering of at least 15% of the New

  

 

14

 

	
   

  	
   

  	
  Propco
  Holdco Equity. In connection with any initial public offering by New Propco
  Holdco, Blockerco shall be offered the opportunity, in its sole discretion,
  to engage in a merger whereby the shares of Blockerco would be converted into
  shares of the entity going public on a tax-free basis to the extent permitted
  by applicable law.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  New Propco Holdco Equity and the New Propco Holdco Warrants (and the equity
  interests issuable upon the exercise thereof) issued through Blockerco to the
  Qualifying Creditors shall also be subject to (i) certain drag-along
  duties with respect to such securities, (ii) a prohibition on transfer
  for six months following the Effective Date and certain other limitations on
  transfer pursuant to applicable gaming and securities laws, (iii) an
  obligation to provide a right of first refusal with respect to such
  securities to FG/Propco Lenders and any other parties so provided for in the
  equityholders agreement of New Propco Holdco and (iv) obligations
  substantially similar to the obligations set forth under the caption entitled
  “Corporate Governance” in the Propco Term Sheet, including, a prohibition on
  selling any such securities without the consent of the other equityholders to
  any “strategic buyer” listed on Annex 6 to the Propco Term Sheet.

  
	
   

  	
   

  	
   

  
	
  Compliance
  with Gaming Law Requirements

  	
   

  	
  Opco
  Unsecured Creditors receiving New Propco Holdco Warrants or New Propco Holdco
  Equity through Blockerco will be required to furnish all information
  concerning themselves and their direct and indirect owners as shall be
  required under applicable gaming laws.

  
	
   

  	
   

  	
   

  
	
  Gaming
  Redemptions

  	
   

  	
  The
  New Propco Holdco Equity, the New Propco Holdco Warrants and the equity
  interests for which the New Propco Holdco Warrants are exercisable, in each
  case, issued to the Opco Unsecured Creditors through Blockerco as
  contemplated herein, shall be subject to certain mandatory disposition and
  redemption requirements pursuant to applicable gaming laws and regulations.

  
	
   

  	
   

  	
   

  
	
  Representations and Warranties

  	
   

  	
  Customary
  representations and warranties of Blockerco and the Opco Unsecured Creditors,
  including, without limitation, those representations and warranties described
  below under the caption entitled “Conditions” and any as may be required from
  time to time under applicable securities laws.

  
	
   

  	
   

  	
   

  
	
  Documentary
  Review Rights

  	
   

  	
  Opco will utilize its
  commercially reasonable efforts to furnish to the UCC and its designated
  counsel for their review draft copies of pleadings and filings (including,
  without limitation, the Plan, the Disclosure Statement and any motions or
  other filings seeking approval of the UCC Stipulation or seeking approval of
  Opco’s contemplated payment of certain legal fees and expenses as provided
  herein) (the “Relevant Pleadings”) relating to the consideration
  contemplated to be made available to the Opco Unsecured Creditors hereunder
  or the other terms hereof prior to the filing by the Debtors of such
  pleadings and filings with the Bankruptcy Court. Designated counsel to the
  UCC shall be entitled to proffer to Opco, through Opco’s

  

 

15

 

	
   

  	
   

  	
  counsel, reasonable
  comments with respect to the Relevant Pleadings. Provided that they are
  timely delivered to Opco through its counsel, Opco shall give such comments
  its reasonable consideration, it being understood and agreed that Opco shall
  in no event have any obligation to accept such comments or otherwise
  incorporate the same into the Relevant Pleadings. In addition, in the event
  that the Debtors request a determination from the Internal Revenue Service
  (the “IRS”) concerning the application of certain tax laws and
  regulations to their proposed restructuring, Opco shall furnish a copy of the
  documentation evidencing such request to the UCC and its counsel promptly
  following the submission thereof to the IRS; provided, however,
  that Opco shall be entitled to redact from such documentation any
  confidential or privileged information contained therein prior to furnishing
  such documentation to the UCC and its counsel. Subject to the proviso set
  forth in the preceding sentence, Opco shall furnish to the UCC and its
  counsel promptly after delivery of the executed UCC Stipulation a copy of the
  current draft of such documentation described in the preceding sentence.

  
	
   

  	
   

  	
   

  
	
  Consideration

  	
   

  	
  In
  consideration for the rights contemplated to be granted herein under the
  captions entitled “New Propco Holdco
  Warrants,” “New Propco Holdco Investment Right,” “Effect of Subsequent Equity
  Offerings,” “Subscriptions of the Opco Unsecured Creditors in Propco Rights Offering,” “Pricing in Propco Rights Offering;
  Put Premium,” “Post-Effective Investment Right,” “Tag-Along Rights,” “Rights
  of First Refusal,” “Board Observation Rights” and “Certain Additional
  Rights,” (i) the Put Parties
  shall deliver to FG/Propco Lenders and the Debtors a funding commitment
  letter consistent with the terms hereof, in form and substance satisfactory
  to FG/Propco Lenders and the Debtors, by no later than July 29, 2010;
  and (ii) the Put Parties
  shall execute a definitive agreement in the form attached hereto as Exhibit B
  (the “Support Agreement”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  UCC shall enter into a stipulation with the Debtors in the form attached
  hereto as Exhibit C (the “UCC Stipulation”).
  Notwithstanding any termination of the UCC Stipulation, the Put Parties shall remain obligated
  to fund their equity commitments consistent with the terms of the Propco
  Commitment and so long as the Support Agreement has not been terminated.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Opco
  shall promptly file a motion seeking Bankruptcy Court approval of the UCC
  Stipulation and related transactions, and the UCC shall provide a support
  letter or statement for inclusion in the plan solicitation materials for both
  a joint Plan and/or individual plans of reorganization for Propco and Opco in
  form and substance acceptable to the Debtors and FG/Propco Lenders.

  
	
   

  	
   

  	
   

  
	
  Implementation and Documentation

  	
   

  	
  The
  UCC Stipulation to be approved by the Bankruptcy Court as soon as practicable
  following agreement thereof to the terms set forth herein. The

  

 

16

 

	
   

  	
   

  	
  Support
  Agreement will not be subject to Bankruptcy Court Approval. Distribution of
  New Propco Holdco Warrants and certain rights set forth under the captions
  entitled “New Propco Holdco
  Investment Right,” “Effect of Subsequent Equity Offerings,” “Subscriptions
  of the Opco Unsecured Creditors in Propco
  Rights Offering” and “Pricing in Propco
  Rights Offering; Put Premium” to be accomplished pursuant to a confirmed Plan
  or as the parties shall otherwise agree. Certain other terms provided for
  herein, including, without limitation, those described under the captions
  entitled “Post-Effective Investment Right,” “Voting Rights,” “Tag-Along
  Rights,” “Rights of First Refusal,” “Board Observation Rights,” “Certain
  Additional Rights,” “Compliance with Gaming Law Requirements” and “Gaming
  Redemptions,” shall be set forth in an equityholders agreement among New
  Propco Holdco, Blockerco, FG/Propco Lenders and the Opco Unsecured Creditors
  as well as in such other definitive documentation as the parties shall agree.

  
	
   

  	
   

  	
   

  
	
  Conditions

  	
   

  	
  The
  above proposal is conditioned, inter alia,
  upon (i) execution of a Support Agreement by the Put Parties no later than July 28, 2010,
  (ii) execution of the UCC Stipulation by the UCC and the Debtors no
  later than July 28, 2010, (iii) approval of the UCC Stipulation by
  the Bankruptcy Court, (iv) satisfaction of all conditions specified
  herein, including the Tax Condition, (v) the UCC Stipulation and the
  Support Agreement having not been terminated, (vi) the Bankruptcy Court
  entering an order approving the amendments to the Disclosure Statement and
  Plan to incorporate the terms hereof and authorizing solicitation in respect
  of the Plan as so amended such that the confirmation hearing scheduled for
  August 27, 2010 is not delayed as a result of such amendments, (vii) transfer
  to New Propco of additional transition and related assets of types and on
  terms supported by the Debtors and FG/Propco Lenders, free and clear of all
  liens and encumbrances, (viii) confirmation and effectiveness of the
  Plan providing for the transfers, settlement of the Going Private Transaction
  Causes of Action and releases specified in the Plan (and described herein),
  (ix) approval of the respective investment committees of the Put Parties not later than
  July 29, 2010 and the execution and delivery of the Propco Commitment on
  or before such date and (x) the occurrence of the Effective Date on or
  before June 30, 2011. This proposal also is conditioned on the
  negotiation and execution of documentation mutually acceptable to Debtors,
  FG/Propco Lenders, the UCC and the Put
  Parties.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding the foregoing, the right of the
  Opco Unsecured Creditors to receive the New Propco Holdco Warrants and the
  other terms of this proposal not relating to the Propco Rights Offering shall
  not be subject to clauses (i), (iv) (to the extent it relates only to
  the Propco Rights Offering, including the Tax Condition to such extent),
  (v) (to the extent it relates only to the Support Agreement),
  (vi) (to the extent it relates only to the Propco Rights Offering) and
  (ix).

  

 

17

 

	
   

  	
   

  	
  It shall be a condition to an Opco Unsecured
  Creditor’s receipt of the New Propco Holdco Warrants that such Opco Unsecured
  Creditor shall represent and warrant, on the Effective Date, that it has no
  present plan or intention as of the Effective Date to exercise the New Propco
  Holdco Warrants (it being understood that an intent to exercise if
  the strike price is in the money due to increases in equity value after the
  Effective Date shall not be considered a present plan or intention), subject
  to future reexamination during the exercise period thereof based upon then
  current value information.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding
  anything else to the contrary contained herein, the terms hereof are subject
  in their entirety to applicable state and federal securities laws and
  applicable tax limitations (including, without limitation, those relating to
  section 267 of the Internal Revenue Code of 1986, as amended (the “Code”).
  In furtherance of the foregoing and not in limitation thereof, an Opco
  Unsecured Creditor’s purchase of New Propco Holdco Equity through Blockerco
  shall be subject to the conditions set forth in Exhibit A. It is
  understood that any liability for breach of any representations in
  Exhibit A shall be several and not joint and limited to the greater of
  (i) the initial investment by the breaching party in New Propco Holdco
  Equity through Blockerco and (ii) $250,000, it being understood that New
  Propco Holdco shall have the additional right in the case of any such breach
  to rescind the investment by the breaching party by paying the breaching
  party the amount of its investment (i.e., the amount paid less any
  dividends received) whereupon such breaching party shall surrender its direct
  or indirect equity interests in New Propco Holdco (subject to a right of the
  breaching party to promptly cure any immaterial breaches, if such breaches
  are capable of cure), provided that to the extent that an investment is
  rescinded, the liability for breach shall be measured giving effect to such
  rescission, including any liabilities or benefits incurred pursuant to the
  rescission. It is expressly acknowledged and agreed that any and all
  consideration provided, directly or indirectly, to the Opco Unsecured
  Creditors hereunder shall be conditioned (the “Tax Condition”) on
  (i) the Bankruptcy Court having issued a final order in form and
  substance acceptable to the Debtors and FG/Propco Lenders, including as to
  tax matters, and (ii) the IRS having issued a private letter ruling to
  Opco, in form and substance acceptable to the Debtors and FG/Propco Lenders,
  regarding the application of Section 267 of the Code to the transactions
  contemplated by the Plan, including, without limitation, if the Stalking
  Horse Bidder is the Successful Bidder (each as defined in the Plan), the
  transactions contemplated by the Stalking Horse APA (as defined in the Plan,
  the “Stalking Horse APA”). If the Debtors, FG or the Propco Lenders
  determine, in their sole discretion, that such order or ruling is likely not
  to be issued by reason of any of the terms described herein (including,
  without limitation, a requirement that the Debtors, FG or the Propco Lenders
  provide a representation to the IRS or the Bankruptcy Court with respect to
  the direct

  

 

18

 

	
   

  	
   

  	
  or
  indirect ownership of New Propco Holdco or the Debtors by or through the Opco
  Unsecured Creditors or the Put Parties that cannot be fully supported by the
  representations described in Exhibit A), such terms, including without
  limitation the terms set forth in Exhibit A, shall be modified as the
  Debtors and FG/Propco Lenders deem necessary (including, without limitation,
  the elimination of any equity issuances or modifications of the terms of such
  equity) to enable the Bankruptcy Court to issue such order or the IRS to
  issue such ruling; provided, that if such modifications or the terms
  of any such Bankruptcy Court order or IRS private letter ruling are
  materially adverse to the terms of the arrangements described herein related
  to the Opco Unsecured Creditors, the UCC may terminate any agreements entered
  into that embody this summary of terms and, if such modifications or the
  terms of any such Bankruptcy Court order or IRS private letter ruling are
  materially adverse to the rights of the Put Parties, the Put Parties may
  terminate the Propco Commitment. In the event of a termination of the
  arrangements contemplated hereby with respect to the Put Parties arising from
  the Tax Condition (including, without limitation, a termination by the Put
  Parties arising from a materially adverse modification of the terms herein
  relating to the Put Parties), which in any such case results from the failure
  of the Debtors, FG or the Propco Lenders to act reasonably with respect to
  the Tax Condition (it being understood that the unwillingness of the Debtors,
  FG or the Propco Lenders to proceed if the final order of the Bankruptcy
  Court does not contain the findings described in the Confirmation Order (as
  defined in the Stalking Horse APA, the “Confirmation Order”) shall be
  deemed to be reasonable), then each Put Party whose Propco Commitment has
  been terminated shall be paid an aggregate amount equal to 1.333 times the
  portion of the Put Premium attributable to its terminated Propco Commitment; provided,
  that no payment shall be due unless the UCC Stipulation remains in effect
  through the Effective Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This
  summary of terms assumes that the reasonable and documented fees and expenses
  of the UCC (and its legal advisors and financial advisor) and the reasonable
  and documented fees and expenses of the Put Parties (and their legal
  advisors), up to an amount to be mutually agreed by the Debtors, FG/Propco
  Lenders and Put Parties, shall be paid by Opco, with respect to the fees and
  expenses of the UCC, and by Opco and Propco (as such term is defined in the
  Plan, “Propco”), with respect to the fees and expenses of the Put
  Parties (with Opco and Propco each paying one-half of such fees and
  expenses), it being understood that such expenses (other than those of the
  UCC, or as otherwise provided below) shall be paid only if the Effective Date
  occurs; provided, that the agreed legal expenses of the Put Parties
  shall be paid as follows: one-half of the agreed legal expenses of the Put
  Parties shall be paid within 15 days of the execution of the Propco
  Commitment and the remainder of the agreed legal expenses of the Put Parties
  shall be paid

  

 

19

 

	
   

  	
   

  	
  promptly
  after confirmation of the Plan, subject in each case to Bankruptcy Court
  approval, it being understood that the failure to procure a Bankruptcy Court
  approval shall not cause a termination of the Propco Commitment; provided,
  that the Debtors comply with the immediately succeeding sentence. In case
  such Bankruptcy Court approval is not received, the parties shall negotiate
  alternate arrangements with respect to Opco’s and Propco’s payment of such
  legal expenses. The Debtors shall promptly file for, and use reasonable
  efforts to, seek the entry of an order from the Bankruptcy Court authorizing
  payment by the Debtors of the first one-half of the agreed legal expenses
  within 15 days after the Propco Commitment is executed and the balance at
  confirmation of the Plan.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This
  summary of terms also assumes that the reasonable and documented fees and
  expenses of the trustees for the outstanding unsecured notes of Opco
  (including the legal fees and expenses) in an amount to be mutually agreed by
  the Debtors, FG/Propco Lenders and the respective indenture trustees, or as
  otherwise determined by the Bankruptcy Court, shall be paid by Opco upon
  confirmation of the Plan (with respect to amounts accrued), and with respect
  to fees and expenses incurred between confirmation of the Plan and the
  Effective Date, shall be paid by Opco on the Effective Date, subject in each
  case to Bankruptcy Court approval to be included in the Confirmation Order
  (it being understood that (i) such “reasonable” fees and expenses shall
  not include any legal fees or expenses incurred by the trustees after the
  date hereof in opposing implementation of the terms hereof (including
  confirmation of the Plan) or engaging in litigation activity against any of
  the Debtors, FG or the Propco Lenders, or any of their respective affiliates
  and (ii) the failure to obtain Bankruptcy Court approval to pay such
  fees and expenses upon Plan confirmation shall not cause a termination of the
  UCC Stipulation, so long as such fees and expenses are paid on the Effective
  Date.)

  
	
   

  	
   

  	
   

  
	
  Non-Solicitation

  	
   

  	
  This summary of terms is not and shall not be deemed
  to be a solicitation for votes in favor of any Chapter 11 plan or for consent
  to the Plan and, if applicable, a Propco-only plan (collectively, the “Plans”)
  in contravention of applicable non-bankruptcy law or section 1125(b) of the
  Bankruptcy Code.  Notwithstanding
  anything to the contrary contained herein, the acceptance of any person shall
  not be solicited until, and any obligation to support confirmation of the
  Plans is expressly conditioned on, the receipt by such person of the Plans
  and a copy of the disclosure statements that shall have previously been
  approved by the Bankruptcy Court, after notice and a hearing, as containing
  adequate information as required by section 1125 of the Bankruptcy Code.  Notwithstanding the foregoing provisions,
  nothing in this summary of terms or any related definitive documentation
  shall require any person to take any action prohibited by the Bankruptcy
  Code, the Securities Act of 1933, as amended, the Securities Exchange Act of
  1934, as amended, any rule or regulations promulgated under any of the
  foregoing, any 

  

 

20

 

	
   

  	
   

  	
  other applicable law or regulation or any order or
  direction of any court or any state or federal governmental authority.

  
	
   

  	
   

  	
   

  
	
  Confidentiality

  	
   

  	
  The
  terms and conditions of this summary of terms, the identities of participants
  in discussions relating hereto and the existence of such discussions are
  confidential and no party receiving a copy hereof shall disclose any of the foregoing
  to anyone; provided, however, that such parties may disclose
  such information to their respective legal and financial advisors as
  necessary in connection with their evaluation of the proposed terms; provided,
  further, that such advisors are informed of the confidential nature of
  such information and instructed to comply with the non-disclosure provisions
  hereof. Notwithstanding the foregoing, the Debtors shall be permitted to file
  this document with the Bankruptcy Court, and the confidentiality obligations
  provided herein will be of no further effect after this document is so filed.

  

 

21

 

Exhibit A

 

·                  The Opco
Unsecured Creditors and, possibly, participating lenders (“Mezzanine
Creditors”) under the Prepetition Mezzanine Loans (as such term is defined
in the Plan) would form a domestic C corporation or limited liability company
taxable as a corporation (“Blockerco”) to hold the New Propco Holdco
Warrants and any New Propco Holdco Equity. 
There may be more than one Blockerco entity established, each of which
shall be considered as “Blockerco” hereunder.

 

·                  The New Propco Holdco Warrants and rights to
acquire New Propco Holdco Equity in the Propco Rights Offering would be issued
directly to Blockerco; Blockerco would issue mirror warrants and rights to
acquire equity in Blockerco to the Opco Unsecured Creditors; similar
arrangements may be implemented for Mezzanine Creditors based on their rights
to purchase equity in New Propco Holdco.

 

·                  Blockerco would function as the Put Party,
subject to the Put Parties duly executing and delivering a mirror commitment to
acquire equity in Blockerco to fund Blockerco’s commitment.

 

·                  Blockerco would have the right to raise
funds, on a pro rata basis (it being understood that shareholders of Blockerco
would be required to subscribe for their pro rata percentage of these
securities), for purchase of New Propco Holdco Equity through issuance of debt
or warrants (to purchase Blockerco’s underlying New Propco Holdco Equity) for
cash (provided that the Put Parties agree on such capital structure).

 

·                  No numerical
limit or restriction on non-U.S. holders of Blockerco.

 

·                  Blockerco would
agree that any equity held by it in New Propco Holdco would be voted only in
the respective amounts so directed by the individual holders of equity in
Blockerco.

 

·                  Reasonable
administrative costs of the single principal Blockerco entity (including annual
state corporate franchise fees, the costs of preparing reports to holders,
preparing tax returns and dealing with warrant exercises, transfers, etc.
but excluding the costs associated with any tax mitigation strategies) would be
reimbursed by New Propco Holdco up to an amount to be agreed upon in the
definitive documents.  The costs
associated with any additional Blockerco entities shall not be borne by New
Propco Holdco.

 

·                  An Opco
Unsecured Creditor or Mezzanine Creditor would be required to provide a
representation at the time of its commitment and on the Effective Date, that it
has no present plan or intention as of such date (i) to exercise the New
Propco Holdco Warrants (it being understood that an intent to exercise if the
strike price is in the money due to increases in equity value after the
Effective Date shall not be considered a present plan or intention), subject to
future reexamination during the exercise period thereof based upon then current
value information or (ii) to acquire any New Propco Holdco Equity (either
directly or through Blockerco) or any interest in Blockerco from any other
holder thereof (it being understood that an intent to acquire in the event of
an opportunity arising after the Effective Date that is not part of a
commitment, arrangement or understanding existing prior to the Effective Date
shall not be considered a present plan or intention).

 

22

 

·                  Any Opco
Unsecured Creditor or Mezzanine Creditor who would directly own 5 percent or
more in value of the stock of Blockerco (“Large Investor”) would be
required to provide the following:

 

·                  A representation that, based on the Large
Investor’s Actual Knowledge (as defined below), the Equity List (as defined
below) identifies any equity interest through which such Large Investor could
own, through Colony funds to be identified or Axon Rising Sun, LLC, any stock
of Opco (for purposes of Section 267 of the Code and the Treasury
regulations promulgated thereunder).

 

·                  A representation that the Large Investor has
provided the Clearinghouse (i) a list accurately reflecting its records of
record owners owning a direct interest of 5% or more of the Large Investor and (ii) to
the Actual Knowledge of the Large Investor, the list provided in (i) above
(expanded at the time the representation is made, to the extent necessary, to
reflect any additional persons in (x) or (y) below) identifies (x) any
record owners of 5 percent or more of such Large Investor and (y) any
Upper-Tier 5% Investors (as defined below) of such Large Investor.  In applying the foregoing, for any Large
Investor that is a mutual fund, relying upon the precise name of the account
registration for each record owner and for any Large Investor that is a
partnership, such ownership being measured using K-1 reporting criteria, and it
being understood that any flaw in the Large Investor’s records shall not
constitute a breach hereof.

 

·                  A representation that the Large Investor has
provided the Clearinghouse a list (the “Equity List”) accurately
reflecting its records of all equity interests in other persons directly held
by the Large Investor (except for any wholly-owned subsidiaries which do not
own any direct or indirect equity interests in any other person (other than any
equity interest in another such direct or indirect wholly-owned subsidiary)).

 

·                  A Large Investor’s ability to acquire New
Propco Holdco Equity (other than Blockerco warrants or equity acquired upon
exercise of the Blockerco warrants) would be conditioned upon verification by
Ernst & Young LLP or such other nationally recognized accounting or
financial advisory or consulting firm acceptable to Fidelity, OakTree,
Serengeti, Debtors and FG/Propco (the “Clearinghouse”) that, based
solely on information received from all the Large Investors and the Small
Investors (as defined below), and assuming such information is true, correct
and complete, there is no evidence that (i) the Large Investor owns,
directly or indirectly, any interest in the stock of Opco for purposes of Section 267
of the Code and (ii) any of the Upper-Tier 5% Investors of such Large
Investor own, directly or indirectly (for purposes of Section 267 of the
Code, applying the limitations in Section 267(e)(3)(A) and (B) of
the Code), 5 percent or more in value of the stock of Blockerco (it being
understood that the Clearinghouse has no obligation to independently determine
the identities of Upper-Tier 5% Investors of such Large Investor).

 

·                  To the extent
the Clearinghouse can verify item (i), but not item (ii), the Large Investor
would have the right (but not the obligation) to invest if it provides the
Clearinghouse any and all information that the Clearinghouse may request
(including representations from any Upper-Tier 5% Investor), necessary for the
Clearinghouse to verify that an Upper-Tier 5% Investor will not be treated as
an owner of both Opco and New Propco Holdco for purposes of Section 267 of
the Code.

 

23

 

·                  To the extent
the Clearinghouse determines that a Large Investor owns an interest in the
stock of Opco for purposes of Section 267 of the Code (an “Overlapping
Large Investor”) and that ownership percentage can be determined based on
the information in the possession of the Clearinghouse, the Large Investor
would be entitled to acquire New Propco Holdco Equity (without the requirement
of making the first representation set forth above) if the Debtors and
FG/Propco Lenders determine, in their sole discretion, that an investment
by such Overlapping Large Investor will not cause the same persons to own more
than 50 percent in the value of the stock of Opco and more than 50 percent of
the capital interest or the profits interest in New Propco Holdco within the
meaning of Section 267 of the Code.  If there is more than one
Overlapping Large Investor (or another potential investor that creates an
overlap), the Debtors and FG/Propco Lenders may make such determination on an
individual basis using whatever criteria they deem reasonable (including,
without limitation, the percentage ownership of the Overlapping Large Investor
or other investor, the quality of the information used to determine such
percentage ownership, and the likelihood of such percentage ownership increasing
between the time of such determination and the Effective Date).

 

·                  Any Opco
Unsecured Creditor or Mezzanine Creditor who would directly own less than 5
percent in value of the stock of Blockerco (“Small Investor”) would be
required to provide the following:

 

·                  (i) A representation that such Small
Investor does not own directly 5 percent or more in value of the stock of
Blockerco and, (ii) (A) a list accurately reflecting its records of
all equity interests in other persons directly held by the Small Investor
(except for any wholly-owned subsidiaries which do not own any direct or
indirect equity interests in any other person (other than any equity interest
in another such direct or indirect wholly-owned subsidiary)) and a
representation that, based on the Small Investor’s Actual Knowledge, such list
identifies any equity interests through which such Small Investor could own
stock of Blockerco (for purposes of Section 267 of the Code, applying the
limitations in Section 267(e)(3)(A) and (B) of the Code), or (B) a
representation that to the Actual Knowledge of the Small Investor, such Small
Investor does not own indirectly (for purposes of Section 267 of the Code,
applying the limitations in Section 267(e)(3)(A) and (B) of the
Code) 5 percent or more in value of the stock of Blockerco.

 

·                  A representation that the Small Investor has
provided the Clearinghouse (i) a list accurately reflecting its records of
record owners owning a direct interest of 5% or more of the Small Investor and (ii) to
the Actual Knowledge of the Small Investor, the list provided in (i) above
(expanded at the time the representation is made, to the extent necessary, to
reflect any additional persons in (x) or (y) below) identifies (x) any
record owners of 5 percent or more of such Small Investor and (y) any
Upper-Tier 5% Investors of that Small Investor. 
In applying the foregoing, for any Small Investor that is a mutual fund,
relying upon the precise name of the account registration for each record owner
and for any Small Investor that is a partnership, such ownership is measured
using K-1 reporting criteria and it being understood that any flaw in the Small
Investor’s records shall not constitute a breach hereof.

 

24

 

·                  A Small Investor’s ability to acquire New
Propco Holdco Equity (other than Blockerco warrants or equity acquired upon
exercise of the Blockerco warrants) would be conditioned upon verification by
the Clearinghouse that, based solely on information received from all the Large
Investors and the Small Investors, and assuming such information is true,
correct and complete, there is no evidence that any of the Upper-Tier 5%
Investors of such Small Investor own, directly or indirectly (for purposes of Section 267
of the Code, applying the limitations in Section 267(e)(3)(A) and (B) of
the Code), 5 percent or more in value of the stock of Blockerco (it being
understood that the Clearinghouse has no obligation to independently determine
the identities of Upper-Tier 5% Investors of such Small Investor).

 

·                  To the extent
the Clearinghouse cannot so verify, the Small Investor would have the right
(but not the obligation) to invest if it provides the Clearinghouse any and all
information that the Clearinghouse may request (including representations from
any Upper-Tier 5% Investor), necessary for the Clearinghouse to verify that an
Upper-Tier 5% Investor will not be treated as an owner of both Opco and New
Propco Holdco for purposes of Section 267 of the Code.

 

·                  To the extent
the Clearinghouse determines that an Upper-Tier 5% Investor of a
Small Investor owns an interest in the stock of Opco for purposes of Section 267
of the Code (an “Overlapping Upper-Tier 5% Investor of the Small
Investor”) and that ownership percentage can be determined based on the
information in the possession of the Clearinghouse, the Upper-Tier 5%
Investor of the Small Investor would be entitled to acquire New Propco
Holdco Equity (without the requirement of making the first representation set
forth above) if the Debtors and FG/Propco Lenders determine, in their sole
discretion, that an investment by such Overlapping Upper-Tier 5% Investor
of the Small Investor will not cause the same persons to own more than 50
percent in the value of the stock of Opco and more than 50 percent of the capital
interest or the profits interest in New Propco Holdco within the meaning of Section 267
of the Code.  If there is more than one Overlapping Upper-Tier 5%
Investor of the Small Investor (or another potential investor that creates
an overlap), the Debtors and FG/Propco Lenders may make such determination on
an individual basis using whatever criteria they deem reasonable (including,
without limitation, the percentage ownership of the Overlapping Upper-Tier 5%
Investor of the Small Investor or other investor, the quality of the
information used to determine such percentage ownership, and the likelihood of
such percentage ownership increasing between the time of such determination and
the Effective Date.)

 

·                  Any Large
Investor’s or Small Investor’s ability to invest may be conditioned on entering
into a confidentiality and non-disclosure agreement with the Clearinghouse, and
executing a hold-harmless letter and, if such Large Investor or Small Investor
is a client of the Clearinghouse, a conflict waiver provided by the
Clearinghouse, all based on customary terms.

 

·                  A Large
Investor or a Small Investor shall only be required to provide the
Clearinghouse the information set forth in this Exhibit A (including, without
limitation, the identity of any person or any investment) if the Clearinghouse
first agrees in form and substance reasonably satisfactory to such Large
Investor or Small Investor, to keep all such information confidential.  Absent written consent

 

25

 

from
the relevant Large Investor or Small Investor, the Clearinghouse shall not
request information of or regarding (i) a person owning 5% or more of a
Large Investor or a Small Investor or (ii) an Upper-Tier 5% Investor of a
Large Investor or a Small Investor by contacting a person described in clause (i) or
clause (ii) of this sentence based on information supplied by the Large
Investor or Small Investor, but instead all requests for information of or regarding
such a person shall be submitted directly and solely to the relevant Large
Investor or Small Investor.

 

·                  For purposes of
Exhibit A, (i) Actual Knowledge means actual knowledge (without duty
of inquiry, investigation or validation) of the appropriate persons who would
normally be responsible for maintaining such information (it being understood
that in the case of the Fidelity funds, such person will be the person
executing such definitive documents), and such persons will be identified in
the definitive documents and (ii) Upper-Tier 5% Investor means a person
owning an indirect beneficial interest of 5% or more of a Large Investor or
Small Investor as the case may be.

 

·                  The
representations and information described above will be required to be provided
(i) in the case of a Blockerco Put Party, at the time of its commitment
and (ii) in the case of any other Large Investor or Small Investor, at the
time it elects to purchase equity in Blockerco. 
All Large Investors and Small Investors will be required to reaffirm
such representations and information as of the Effective Date.  To the extent the required representations or
verifications cannot be made on the Effective Date for whatever reason, the
parties shall enter into appropriate escrow or other arrangements to permit
funding pending confirmation of such information and if such representations or
verifications cannot be finalized for whatever reason, the investment shall be
rescinded and any funds shall be returned to such Blockerco Put Party and such
Blockerco Put Party shall have no liability as a result thereof other than the
return of any Put Premium in the case of a breach of, or failure to make, a
representation or verification to the extent such return is required under “Pricing
in Propco Rights Offering; Put Premium.”

 

26Exhibit 10.1

 

 

 

 

 

CREDIT AGREEMENT

 

 

dated as of

 

 

July 30, 2010

 

 

among

 

 

VIRTUSA CORPORATION,

as Borrower,

 

INSOURCE HOLDINGS, INC.

and

INSOURCE, LLC,

as Loan Parties

 

 

The Lenders Party Hereto

 

 

and

 

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.2.

  	
  Classification of Loans and
  Borrowings

  	
  19

  
	
  SECTION 1.3.

  	
  Terms Generally

  	
  19

  
	
  SECTION 1.4.

  	
  Accounting Terms; GAAP

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  THE CREDITS

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  Revolving Commitments

  	
  20

  
	
  SECTION 2.2.

  	
  Loans and Borrowings

  	
  20

  
	
  SECTION 2.3.

  	
  Requests for Revolving Borrowings

  	
  20

  
	
  SECTION 2.4.

  	
  [Section intentionally
  omitted

  	
  21

  
	
  SECTION 2.5.

  	
  Swingline Loans

  	
  21

  
	
  SECTION 2.6.

  	
  Letters of Credit

  	
  22

  
	
  SECTION 2.7.

  	
  Funding of Borrowings

  	
  25

  
	
  SECTION 2.8.

  	
  Interest Elections

  	
  26

  
	
  SECTION 2.9.

  	
  Termination of Commitments

  	
  27

  
	
  SECTION 2.10.

  	
  Repayment and Amortization
  of Loans; Evidence of Debt

  	
  28

  
	
  SECTION 2.11.

  	
  Prepayment of Loans

  	
  28

  
	
  SECTION 2.12.

  	
  Fees

  	
  29

  
	
  SECTION 2.13.

  	
  Interest

  	
  29

  
	
  SECTION 2.14.

  	
  Alternate Rate of Interest

  	
  30

  
	
  SECTION 2.15.

  	
  Increased Costs

  	
  31

  
	
  SECTION 2.16.

  	
  Break Funding Payments

  	
  32

  
	
  SECTION 2.17.

  	
  Taxes

  	
  32

  
	
  SECTION 2.18.

  	
  Payments Generally; Allocation of
  Proceeds; Sharing of Set-offs

  	
  34

  
	
  SECTION 2.19.

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
  36

  
	
  SECTION 2.20.

  	
  Defaulting Lenders

  	
  37

  
	
  SECTION 2.21.

  	
  Returned Payments

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPRESENTATIONS AND WARRANTIES

  	
  38

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  Organization; Powers

  	
  38

  
	
  SECTION 3.2.

  	
  Authorization; Enforceability

  	
  38

  
	
  SECTION 3.3.

  	
  Governmental Approvals; No
  Conflicts

  	
  39

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 3.4.

  	
  Financial Condition; No Material
  Adverse Change

  	
  39

  
	
  SECTION 3.5.

  	
  Properties

  	
  39

  
	
  SECTION 3.6.

  	
  Litigation and Environmental
  Matters

  	
  39

  
	
  SECTION 3.7.

  	
  Compliance with Laws and
  Agreements

  	
  40

  
	
  SECTION 3.8.

  	
  Investment Company Status

  	
  40

  
	
  SECTION 3.9.

  	
  Taxes

  	
  40

  
	
  SECTION 3.10.

  	
  ERISA

  	
  40

  
	
  SECTION 3.11.

  	
  Disclosure

  	
  40

  
	
  SECTION 3.12.

  	
  Material Agreements

  	
  41

  
	
  SECTION 3.13.

  	
  Solvency

  	
  41

  
	
  SECTION 3.14.

  	
  Insurance

  	
  41

  
	
  SECTION 3.15.

  	
  Capitalization and Subsidiaries

  	
  41

  
	
  SECTION 3.16.

  	
  Security Interest in Collateral

  	
  41

  
	
  SECTION 3.17.

  	
  Employment Matters

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  CONDITIONS

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
  Effective Date

  	
  42

  
	
  SECTION 4.2.

  	
  Each Credit Event

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  AFFIRMATIVE COVENANTS

  	
  44

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
  Financial Statements; and Other
  Information

  	
  45

  
	
  SECTION 5.2.

  	
  Notices of Material Events

  	
  46

  
	
  SECTION 5.3.

  	
  Existence; Conduct of Business

  	
  46

  
	
  SECTION 5.4.

  	
  Payment of Obligations

  	
  47

  
	
  SECTION 5.5.

  	
  Maintenance of Properties

  	
  47

  
	
  SECTION 5.6.

  	
  Books and Records; Inspection
  Rights

  	
  47

  
	
  SECTION 5.7.

  	
  Compliance with Laws

  	
  47

  
	
  SECTION 5.8.

  	
  Use of Proceeds

  	
  47

  
	
  SECTION 5.9.

  	
  Insurance

  	
  47

  
	
  SECTION 5.10.

  	
  Depository Banks

  	
  48

  
	
  SECTION 5.11.

  	
  Cash Collateral

  	
  48

  
	
  SECTION 5.12.

  	
  Additional Collateral; Further
  Assurances

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  NEGATIVE COVENANTS

  	
  49

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
  Indebtedness

  	
  49

  
	
  SECTION 6.2.

  	
  Liens

  	
  49

  
	
  SECTION 6.3.

  	
  Fundamental
  Changes

  	
  49

  
	
  SECTION 6.4.

  	
  Investments, Loans, Advances,
  Guarantees and Acquisitions

  	
  50

  
	
  SECTION 6.5.

  	
  Swap Agreements

  	
  50

  
	
  SECTION 6.6.

  	
  Restricted Payments; Certain
  Payments of Indebtedness

  	
  50

  
	
  SECTION 6.7.

  	
  Transactions with Affiliates

  	
  50

  
	
  SECTION 6.8.

  	
  Restrictive Agreements

  	
  51

  
	
  SECTION 6.9.

  	
  Amendment of Material Documents;
  Fiscal Year

  	
  51

  
	
  SECTION 6.10.

  	
  Financial Covenants

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  EVENTS OF DEFAULT

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  THE ADMINISTRATIVE AGENT

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  MISCELLANEOUS

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
  Notices

  	
  57

  
	
  SECTION 9.2.

  	
  Waivers; Amendments

  	
  58

  
	
  SECTION 9.3.

  	
  Expenses; Indemnity; Damage
  Waiver

  	
  60

  
	
  SECTION 9.4.

  	
  Successors and Assigns

  	
  62

  
	
  SECTION 9.5.

  	
  Survival

  	
  65

  
	
  SECTION 9.6.

  	
  Counterparts; Integration;
  Effectiveness

  	
  65

  
	
  SECTION 9.7.

  	
  Severability

  	
  65

  
	
  SECTION 9.8.

  	
  Right of Setoff

  	
  65

  
	
  SECTION 9.9.

  	
  Governing Law; Jurisdiction;
  Consent to Service of Process

  	
  66

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  66

  
	
  SECTION 9.11.

  	
  Headings

  	
  67

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
  67

  
	
  SECTION 9.13.

  	
  Several Obligations; Nonreliance;
  Violation of Law

  	
  68

  
	
  SECTION 9.14.

  	
  USA PATRIOT Act

  	
  68

  
	
  SECTION 9.15.

  	
  Disclosure

  	
  68

  
	
  SECTION 9.16.

  	
  Appointment for Perfection

  	
  68

  
	
  SECTION 9.17.

  	
  Interest Rate Limitation

  	
  69

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  LOAN GUARANTY

  	
  69

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
  Guaranty

  	
  69

  
	
  SECTION 10.2.

  	
  Guaranty of Payment

  	
  69

  
	
  SECTION 10.3.

  	
  No Discharge or Diminishment of
  Loan Guaranty

  	
  69

  
	
  SECTION 10.4.

  	
  Defenses Waived

  	
  70

  
	
  SECTION 10.5.

  	
  Rights of Subrogation

  	
  70

  
	
  SECTION 10.6.

  	
  Reinstatement; Stay of
  Acceleration

  	
  71

  
	
  SECTION 10.7.

  	
  Information

  	
  71

  
	
  SECTION 10.8.

  	
  Termination

  	
  71

  
	
  SECTION 10.9.

  	
  Taxes

  	
  71

  
	
  SECTION 10.10.

  	
  Maximum Liability

  	
  71

  
	
  SECTION 10.11.

  	
  Contribution

  	
  72

  
	
  SECTION 10.12.

  	
  Liability Cumulative

  	
  72

  

 

iv

 

SCHEDULES:

 

Commitment
Schedule

Schedule
3.5 — Properties

Schedule
3.6 — Disclosed Matters

Schedule
3.9 — Taxes

Schedule
3.14 — Insurance

Schedule
3.15 — Capitalization and Subsidiaries

Schedule
6.1 — Existing Indebtedness

Schedule
6.2 — Existing Liens

Schedule
6.4 — Existing Investments

Schedule
6.9 — Existing Restrictions

 

EXHIBITS:

 

Exhibit A
— Form of Assignment and Assumption

Exhibit B
— Form of Compliance Certificate

Exhibit C —  Joinder Agreement

 

i

 

CREDIT AGREEMENT

 

CREDIT AGREEMENT dated as of July 30, 2010 (as it may be amended
or modified from time to time, this “Agreement”), among Virtusa
Corporation, a Delaware corporation having its chief executive office at 2000
West Park Drive, Westborough, Massachusetts 
01581, as Borrower, the other Loan Parties party hereto, the Lenders
party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

 

The parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

SECTION 1.1.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“Account” has the meaning assigned to such term in the Security
Agreement.

 

“Account Debtor” means any Person obligated on an Account.

 

“Adjusted EBITDA” means, for any period, Borrower’s Consolidated
Operating Income plus GAAP depreciation and amortization, non-cash stock-based
compensation and other non-cash charges for such period.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar
Borrowing for any Interest Period or for any CBFR Borrowing, an interest rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.

 

“Adjusted One Month LIBOR Rate” means, an interest rate per
annum equal to the sum of (i) 2.5% per annum plus (ii) the Adjusted
LIBO Rate for a one month Interest Period on such day (or if such day is not a
Business Day, the immediately preceding Business Day); provided that, for the
avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the
rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or
substitute page) at approximately 11:00 a.m. London time on such day
(without any rounding).

 

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its
capacity as administrative agent for the Lenders hereunder.

 

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

 

“Affiliate” means, with respect to a specified 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.

 

1

 

“Aggregate Credit Exposure” means, at any time, the aggregate
Credit Exposure of all the Lenders.

 

“Alternate Base Rate” means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the
Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (c) the
Adjusted LIBO Rate for a one month Interest Period on such day (or if such day
is not a Business Day, the immediately preceding Business Day) plus 1%,
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day
shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or
on any successor or substitute page) at approximately 11:00 a.m. London
time on such day (without any rounding). 
Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective
from and including the effective date of such change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“Applicable Percentage” means, with respect to any Lender, (a) with
respect to Revolving Loans and LC Exposure, a percentage equal to a fraction
the numerator of which is such Lender’s Revolving Commitment and the
denominator of which is the aggregate Revolving Commitment of all Revolving Lenders
(if the Revolving Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon such Lender’s share of the aggregate
Revolving Exposures at that time); provided that in the case of Section 2.20
when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving
Commitment shall be disregarded in the calculation, and (b) with respect
to the Aggregate Credit Exposure, a percentage based upon its share of the
Aggregate Credit Exposure and the unused Commitments; provided that in the case
of Section 2.20 when a Defaulting Lender shall exist, any such
Defaulting Lender’s Commitment shall be disregarded in the calculation.

 

“Applicable Rate” means, with respect to any CBFR Loan, 0.00%;
and with respect to any Eurodollar Revolving Loan, 2.00%.

 

“Approved Fund” has the meaning assigned to such term in Section 9.4.

 

“Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.4), and accepted by the
Administrative Agent, in the form of Exhibit A or any other form
approved by the Administrative Agent.

 

“Audited Financial Statement” has the meaning assigned to such
term in Section 3.4.

 

“Availability Period” means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.

 

“Available Revolving Commitment” means, at any time, the
Revolving Commitment then in effect minus the
Revolving Exposure of all Revolving Lenders at such time.

 

“Banking
Services” means each and any of the following bank services provided to any
Loan Party by Chase or any of its Affiliates: (a) credit cards for
commercial customers (including, without limitation, “commercial credit cards”
and purchasing cards), (b) stored value 

 

2

 

cards
and (c) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items,
overdrafts and interstate depository network services).

 

“Banking
Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

 

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

 

“Borrower” means Virtusa Corporation, a Delaware corporation.

 

“Borrower’s Business” means the providing of information
technology services, including consulting, technology implementation and
application outsourcing services on a world-wide basis.

 

“Borrowing” means Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans,
as to which a single Interest Period is in effect.

 

“Borrowing Request” means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.2.

 

“Business Day” means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term “Business Day” shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
interbank market.

 

“Capital
Expenditures” means, without duplication, any expenditure for fixed or
capital assets, expenditures for internally developed software, leasehold
improvements, capital leases, installment purchases of machinery and equipment,
acquisitions of real estate and other similar expenditures including (i) in
the case of a purchase, the entire purchase price, whether or not paid during
the fiscal period in question, (ii) in the case of a capital lease,
the capitalized amount (as determined under GAAP) of the obligations under such
lease to pay rent and other amounts, and (iii) expenditures respect to any construction in
progress account of the Borrower.

 

“Capital Lease Obligations” of any Person means the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Cash Flow Exclusion” means all of the following (i) short
term intercompany payments in the ordinary course of business from Borrower to
its Subsidiaries and affiliates, (ii)

 

3

 

up to $32,500,000 in distributions to Borrower’s foreign Subsidiaries
for acquisitions which conform to Permitted Acquisition requirements and (iii) up
to $10,000,000 representing a non-cash reclassification of an Account due from
Borrower’s UK Subsidiary to Borrower as an equity investment by borrower in
such UK Subsidiary.

 

“CB Floating Rate” means the higher of (i) the
Prime Rate, and (ii) the Adjusted One Month LIBOR Rate for a one month
Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day).  Any
change in the CB Floating Rate due to a change in the Prime Rate or the
Adjusted One Month LIBOR Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Adjusted One Month LIBOR
Rate, respectively.

 

“CBFR”, when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the CB Floating Rate.

 

“Change in Control” means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of
the SEC thereunder as in effect on the date hereof), of Equity Interests representing
more than 50% of the aggregate ordinary voting power represented by the issued
and outstanding Equity Interests of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of
the Borrower by Persons who were neither (i) nominated by the board of
directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the Borrower or any Subsidiary shall cease to own, free and clear of
all Liens or other encumbrances, all of the outstanding Equity Interests of
Virtusa Securities Corporation and Virtusa UK Ltd.

 

“Change in Law” means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender
or the Issuing Bank (or, for purposes of Section 2.15(b), by any
lending office of such Lender or by such Lender’s or the Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.

 

“Chase” means JPMorgan Chase Bank, N.A., a national banking
association, in its individual capacity, and its successors.

 

“Class”, when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing are Revolving
Loans or another type of Loan.  As of the
initial date of this Credit Agreement, all Loans or Borrowings are Revolving
Loans only.

 

“Code” means the Internal Revenue Code of 1986, as amended from
time to time.

 

“Collateral” means any and all property owned, leased or
operated by a Person covered by the Collateral Documents and any and all other
property of any Loan Party, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or 

 

4

 

Lien
in favor of the Administrative Agent, on behalf of itself and the Lenders, to
secure the Secured Obligations.

 

“Collateral Documents” means, collectively, the Security
Agreement, the Pledge Agreement and any other documents granting a Lien upon
the Collateral as security for payment of the Secured Obligations.

 

“Commercial LC Exposure” means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding commercial Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements relating
to commercial Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time.  The
Commercial LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the total Commercial LC Exposure at such time.

 

“Commitment” means, with respect to each Lender, such Lender’s
Revolving Commitment.  The initial amount
of each Lender’s Commitment is set forth on the Commitment Schedule, or
in the Assignment and Assumption pursuant to which such Lender shall have
assumed its Commitment, as applicable.

 

“Commitment Schedule” means the Schedule attached hereto
identified as such.

 

“Consolidated Operating Income” means, for any fiscal period,
the consolidated operating income of the Borrower and its Subsidiaries for such
period, as determined in accordance with GAAP.

 

“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.

 

“Credit Exposure” means, as to any Lender at any time, such
Lender’s Revolving Exposure at such time.

 

“Current Ratio” means, at any date, the ratio of the current
assets of the Borrower and its Subsidiaries on such date to the current
liabilities of the Borrower and its Subsidiaries on such date, all determined
on a consolidated basis in accordance with GAAP.

 

“Default” means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.

 

“Defaulting Lender”
means any Lender, as determined by the Administrative Agent, that has (a) failed
to fund any portion of its Loans or participations in Letters of Credit within
three Business Days of the date required to be funded by it hereunder, (b) notified
the Borrower, the Administrative Agent, the Issuing Bank or any Lender in
writing that it does not intend to comply with any of its funding obligations
under this Agreement or has made a public statement to the effect that it does
not intend to comply with its funding obligations under this Agreement or under
other agreements in which it commits to extend credit, (c) failed, within 

 

5

 

three Business Days after request by the Administrative
Agent, to confirm that it will comply with the terms of this Agreement relating
to its obligations to fund prospective Loans and participations in then
outstanding Letters of Credit, (d) otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid
by it hereunder within three Business Days of the date when due, unless the
subject of a good faith dispute, or (e) (i) become or is insolvent or
has a parent company that has become or is insolvent or (ii) become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in
any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in
any such proceeding or appointment.

 

“Disclosed Matters” means the actions, suits and proceedings and
the environmental matters disclosed in Schedule 3.06.

 

“dollars” or “$” refers to lawful money of the United
States of America.

 

“EDGAR System” means the Electronic Data Gathering Analysis and
Retrieval System owned and operated by the United States Securities and
Exchange Commission or any replacement system.

 

“Effective Date” means the date on which the conditions
specified in Section 4.1 are satisfied (or waived in accordance
with Section 9.2).

 

“Environmental Laws” means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.

 

“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
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.

 

“Equity Interests” means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, as amended from time to time.

 

6

 

“ERISA Affiliate” means any trade or business (whether or not
incorporated) that, together with a Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect
to a Plan (other than an event for which the 30-day notice period is waived);
(b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence
by the Borrower or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.

 

“Eurodollar”, when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to such term in
Article VII.

 

“Excluded Taxes” means, with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction 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 of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by a
Borrower under Section 2.19(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Foreign Lender’s failure to comply with Section 2.17(f),
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 the Borrower with respect to such
withholding tax pursuant to Section 2.17(a).

 

“Federal Funds Effective Rate” means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as

 

7

 

published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is
a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

 

“Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or controller or Vice President of Tax and
Treasury of a Borrower.

 

“Foreign Lender” means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

 

“Funding Accounts” has the meaning assigned to such term in Section 4.1(h).

 

“Funded Debt” means all Indebtedness on account of borrowed
money including direct borrowings, Capital Lease Obligations, Letter of Credit
obligations, synthetic lease obligations and obligations under asset
securitization programs, but excluding therefrom Indebtedness owing by the Borrower
to an Affiliate.

 

“FX Exposure” means the amount determined by the Lenders to be
the Lenders’ foreign exchange risk exposure with respect to FX Transactions
based upon the Lender’s “value at risk” model as it may change from time to
time.  Each Lender shall use reasonable
efforts to provide to the Borrower a summary of Borrower’s FX Exposure within
30 days of the end of each calendar quarter.

 

“FX Guaranteed Obligations” has the meaning assigned to such
term in Section 2.5.

 

“FX Transactions” means the notional amount (calculated in
dollars) of any transactions arranged or facilitated by any Lender and/or any
of its Affiliates on behalf of the Borrower and/or its Subsidiaries involving
the purchase or sale of foreign currencies either on a current or deferred
basis.

 

“GAAP” means generally accepted accounting principles in the
United States of America.

 

“Governmental Authority” means the government of the United
States of America, any other nation or 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.

 

“Guarantee” of or by any Person (the “guarantor”) means
any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct

 

8

 

or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit
or letter of guaranty issued to support such Indebtedness or obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.

 

“Guaranteed Obligations” has the meaning assigned to such term
in Section 10.1.

 

“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.

 

“Home Page” means the Borrower’s corporate home page on the
World Wide Web accessible through the Internet via the universal resource
locator (URL) identified as http://www.virtusa.com or such other universal
resource locator that it shall designate in writing to the Agent as its
corporate home page on the World Wide Web.

 

“Indebtedness” of any Person means, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person, (i) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of
credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Election Request” means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.7.

 

9

 

“Interest
Expense” means, with reference to any period, total interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and
its Subsidiaries for such period with respect to all outstanding Indebtedness
of the Borrower and its Subsidiaries (including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers’
acceptance financing and net costs under Swap Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance
with GAAP), calculated on a consolidated basis for the Borrower and its
Subsidiaries for such period in accordance with GAAP.

 

“Interest Payment Date” means (a) with respect to any CBFR
Loan, the first Business Day of each calendar month  and the Maturity Date, and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than one months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of one
months’ duration after the first day of such Interest Period and the Maturity
Date.

 

“Interest Period” means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two or
three months thereafter, as the Borrower may elect; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the
case of a Eurodollar Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (ii) any Interest Period pertaining
to a Eurodollar Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

 

“Inventory” has the meaning assigned to such term in the
Security Agreement.

 

“Investment” means, as applied to the Borrower and its
Subsidiaries, the purchase or acquisition of any share of capital stock,
partnership interest, evidence of indebtedness or other Equity Interest of any
other Person (including any Subsidiary), any loan, advance or extension of
credit (excluding Accounts Receivable arising in the ordinary course of
business) to, or contribution to the capital of, any other Person (including
any Subsidiary), any real estate held for sale or investment, any securities or
commodities futures contracts held, any other investment in any other Person
(including any Subsidiary), and the making of any commitment or acquisition of
any option to make an Investment.

 

“Issuing Bank” means Chase, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2.6(i).  The Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.

 

10

 

“Joinder Agreement” has the meaning assigned to such term in Section 5.11.

 

“LC Disbursement” means a payment made by the Issuing Bank
pursuant to a Letter of Credit.

 

“LC Exposure” means, at any time, the sum of the Commercial LC
Exposure and the Standby LC Exposure. 
The LC Exposure of any Revolving Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

 

“Lenders” means the Persons listed on the Commitment Schedule
and any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any letter of credit issued pursuant to
this Agreement.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or
on any successor or substitute page of such Service, or any successor to
or substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. 
In the event that such rate is not available at such time for any
reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing
for such Interest Period shall be the rate (rounded upwards, if necessary, to
the next 1/16 of 1%) at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.

 

“Lien” means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.

 

“Loan Documents” means this Agreement, any promissory notes
issued pursuant to the Agreement, any Letter of Credit applications, the
Collateral Documents, any Loan Guaranty whether now or hereafter existing, the
FX Documents, any Swap Agreement, and all other agreements, instruments,
documents and certificates identified in Section 4.1 executed and
delivered to, or in favor of, the Administrative Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments, contracts,
notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Loan Party, or any
employee of any Loan Party, and delivered to the Administrative Agent or any
Lender in connection with the Agreement or the transactions contemplated
thereby.  Any reference in the Agreement
or any other Loan Document to a Loan Document shall include all 

 

11

 

appendices,
exhibits or schedules thereto, and all amendments, restatements, supplements or
other modifications thereto, and shall refer to the Agreement or such Loan
Document as the same may be in effect at any and all times such reference
becomes operative.

 

“Loan Guarantor” means InSource Holdings, Inc. and
InSource, LLC.

 

“Loan Guaranty” means each
separate Guarantee, in form and substance satisfactory to the Administrative
Agent, delivered by each US based and incorporated Subsidiary of the Borrower
established after the date hereof as such Guarantee may be amended or modified
and in effect from time to time.

 

“Loan Parties” means the Borrower, the Borrower’s hereafter
established US Subsidiaries (excluding Virtusa Securities Corporation or any
successor or assigns) and any other Person who becomes a party to this
Agreement pursuant to a Joinder Agreement and their successors and assigns.

 

“Loans” means the loans and advances made by the Lenders
pursuant to this Agreement.

 

“Material Adverse Effect” means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of any Loan Party to perform any of its obligations under the Loan
Documents to which it is a party, (c) the Collateral, or the
Administrative Agent’s Liens (on behalf of itself and the Lenders) on the
Collateral or the priority of such Liens.

 

“Material Indebtedness” means Indebtedness (other than the Loans
and Letters of Credit), or obligations in respect of one or more Swap
Agreements, of any one or more of the Borrower and its US Subsidiaries in an
aggregate principal amount exceeding $3,000,000.  For purposes of determining Material
Indebtedness, the “obligations” of the Borrower or any Subsidiary in respect of
any Swap Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that such Borrower or such Subsidiary would
be required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date” means July 31, 2013, or any earlier date on
which this Agreement is terminated 
pursuant to the terms hereof.

 

“Maximum Liability” has the meaning assigned to such term in Section 10.10.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

 

“Net
Proceeds” means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in
respect of any non-cash proceeds (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable
or purchase price adjustment receivable or otherwise, but excluding any
interest payments), but only as and when received, (ii) in the case of a
casualty, 

 

12

 

insurance
proceeds and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of
(i) all reasonable fees and out-of-pocket expenses paid to third parties
(other than Affiliates) in connection with such event, (ii) in the case of
a sale, transfer or other disposition of an asset (including pursuant to a sale
and leaseback transaction or a casualty or a condemnation or similar proceeding),
the amount of all payments required to be made as a result of such event to
repay Indebtedness (other than Loans) secured by such asset or otherwise
subject to mandatory prepayment as a result of such event and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) and the amount
of any reserves established to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event occurred or the
next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by a Financial Officer).

 

“Non-Paying Guarantor” has the meaning
assigned to such term in Section 10.11.

 

“Obligated Party” has the meaning
assigned to such term in Section 10.02.

 

“Obligations” means the aggregate outstanding principal balance
of and interest and premium on the Loans (including, without limitation,
interest accruing at the then applicable rate provided herein after the
maturity of the Loans and interest accruing at the then applicable rate
provided herein after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower and its Subsidiaries, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other obligations
of the Borrower and its Subsidiaries to the Lenders and the Lenders’ Affiliates
of every kind and description pursuant to or in connection with the Loan
Documents, including without limitation, the Guarantees, the Guaranteed
Obligations, the FX Guaranteed Obligations, Swap Obligations  and FX Transactions, deposit accounts, cash
management accounts and services, hedging transactions, interest rate caps,
collars and similar interest rate protection products, and all other banking
products and services, direct or indirect, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising, regardless
of how they arise or by what agreement or instrument, if any, in each case
whether on account of principal interest, premium, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise 
and including obligations to perform acts and refrain from taking action
as well as obligations to pay money.

 

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

 

“Participant” has the meaning set forth in Section 9.4.

 

“Paying Guarantor” has the meaning
assigned to such term in Section 10.11.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.

 

“Permitted Acquisition” means an acquisition of the business
assets or Equity Interests of a Person by the Borrower and/or its Subsidiaries
which satisfies all of the following

 

13

 

requirements: (i) the business acquired is engaged in the Borrower’s
Business or in related or similar business, (ii) the acquisition is not a
hostile acquisition (i.e. the board of directors or governing body of the
acquired business has consented to the acquisition by the Borrower), (iii) the
Borrower is in compliance with all of the provisions of the Credit Agreement
including without limitation the financial covenants contained in Section 6.13
both before and after giving effect to the proposed acquisition.

 

Permitted Encumbrances.  Any of the following: (i) encumbrances
in favor of the Lenders to secure the Obligations; (ii) encumbrances
existing as of the date of this Credit Agreement or as disclosed in the 2010
Annual Report or otherwise disclosed in Schedule 6.1 hereto; (iii) encumbrances
securing Indebtedness to the extent such Indebtedness is permitted by Section 7.1 of this
Credit Agreement; (iv) liens for taxes, fees, assessments and other
governmental charges to the extent that payment of the same may be postponed or
is not required in accordance with the provisions
of Section 5.4; (v) landlords’ and lessors’
liens in respect of rent not in default or liens in respect of pledges or
deposits under workmen’s compensation, unemployment insurance, social security
laws, or similar legislation (other than ERISA) or in connection with appeal
and similar bonds incidental to litigation; mechanics’, warehouseman’s,
laborers’ and materialmen’s and similar liens, if the obligations secured by
such liens are not then delinquent; liens securing the performance of bids,
tenders, contracts (other than for the payment of money); and liens securing
statutory obligations or surety, indemnity, performance or other similar bonds
incidental to the conduct of the Borrower’s or a Subsidiary’s business in the
ordinary course and that do not in the aggregate materially detract from the
value of its property or materially impair the use thereof in the operation of
its business; (vi) judgment liens securing judgments that (1) are not
fully covered by insurance, and (2) shall not have been in existence for a
period longer than 60 days after the creation thereof or, if a stay of execution shall have been obtained, for a period longer than 60 days after the
expiration of such stay; (vii) rights of lessors under capital leases to
the extent such capital leases are permitted hereunder; (viii) easements,
rights of way, restrictions and other similar charges or Liens relating to real
property and not interfering in
a material way with the ordinary
conduct of the Borrower’s Business; and (ix)  liens constituting a
renewal, extension or replacement of any
Permitted Encumbrance.

 

Permitted Indebtedness.  Any of the following: (i) the
Obligations; (ii) Indebtedness (other than Obligations) existing as of the
date of this Credit Agreement or as disclosed in the 2010 Annual Report or as
otherwise  disclosed on Schedule 6.1
hereto but not any increase in the principal amounts thereof nor any renewals
or refinancings thereof; (iii) Indebtedness for taxes, assessments or
governmental charges to the extent that payment therefore shall at the time not
be required to be made in accordance with Section 5.4; (iv) current
trade liabilities on open account for the purchase price of services, materials
and supplies incurred by the Borrower or its Subsidiaries in the ordinary
course of business (not as a result of borrowing), so long as all of such open
account Indebtedness shall be promptly paid and discharged when due or in
conformity with customary trade terms and practices, except for any such open
account Indebtedness which is being contested in good faith by the Borrower or
its Subsidiaries, as to which adequate reserves required by GAAP have been
established and are being maintained and as to which no Lien has been placed on
any property of the Borrower or its Subsidiaries; (v) other Indebtedness
incurred in the ordinary course of business, including asset securitization
facilities and letters of credit not issued under this Credit Agreement, and renewals
and refinancings thereof, provided that such Indebtedness under this clause (v) does
not exceed 

 

14

 

$20,000,000
in the aggregate at any time outstanding; (vi) Guarantees by the Borrower
of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the
Borrower or any other Subsidiary, provided that (i) the
Indebtedness so Guaranteed is Permitted Indebtedness, (ii) Guarantees by
the Borrower or any Subsidiary that is a Loan Party of Indebtedness of any
Subsidiary that is not a Loan Party shall be subject to Section 6.4
and (iii) Guarantees permitted under this clause (vi) shall be
subordinated to the Secured Obligations of the applicable Subsidiary on the
same terms as the Indebtedness so Guaranteed is subordinated to the Secured
Obligations; and (vii) Indebtedness existing by and among the Borrower and
its Subsidiaries as set forth in Schedule 3.18 annexed hereto or as
otherwise disclosed in the 2010 Annual Report.

 

“Permitted Restricted Payment” means any loan, advance,
extension of credit or other payment by and between the Borrower and any
Subsidiary at a time when there is no continuing Default and  the making of which does not result in an
Event of Default under this Credit Agreement.

 

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

 

“Plan” means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of
which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

 

“Pledge Agreement” means that certain Stock Pledge Agreement,
dated as of the date hereof, between the Borrower and the Administrative Agent,
for the benefit of the Administrative Agent and the Lenders, as the same may be
amended, restated or otherwise modified from time to time.

 

“Prime Rate” means the rate of interest per annum publicly
announced from time to time by Chase as its prime rate at its offices at 270
Park Avenue in New York City; each change in the Prime Rate shall be effective
from and including the date such change is publicly announced as being
effective.

 

“Projections” has the meaning assigned to such term in Section 5.1(f).

 

“Qualified Investments” means, as applied to the Borrower and
its Subsidiaries, Investments made in accordance with the requirements of
Borrower’s investment policy as set forth from time to time by the Borrower’s
Board of Directors.

 

“Register” has the meaning set forth in Section 9.04.

 

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

 

“Report” means reports prepared by the Administrative Agent or
another Person showing the results of appraisals, field examinations or audits
pertaining to the Borrower’s assets 

 

15

 

from information furnished by or on behalf of the Borrower, after the
Administrative Agent has exercised its rights of inspection pursuant to this
Agreement, which Reports may be distributed to the Lenders by the
Administrative Agent.

 

“Required Lenders” means, at any time, Lenders having Credit
Exposure and unused Commitments representing more than 50% of the sum of the
total Credit Exposure and unused Commitments at such time.

 

“Requirement of Law” means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, 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.

 

“Restricted Payment” means, other than a Permitted Restricted
Payment, any dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests in the 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 Equity
Interests in the Borrower or any option, warrant or other right to acquire any
such Equity Interests in the Borrower.

 

“Revolving Commitment” means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum possible aggregate amount of such Lender’s Revolving
Exposure hereunder, as such commitment may be reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each  Lender’s Revolving Commitment is set forth on
the Commitment Schedule, or in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Revolving Commitment, as
applicable.  The initial aggregate amount
of the Lenders’ Revolving Commitments is $3,000,000.

 

“Revolving
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and its LC
Exposure.

 

“Revolving
Lender” means, as of any date of determination, a Lender with a Revolving
Commitment or, if the Revolving Commitments have terminated or expired, a
Lender with Revolving Exposure.

 

“Revolving Loan” means a Loan made pursuant to Section 2.01(a).

 

“S&P” means Standard & Poor’s Ratings Services, a
division of The McGraw Hill Companies, Inc.

 

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

 

“Secured Obligations” means all Obligations, together with all (i) Banking
Services Obligations and (ii) Swap Obligations owing to one or more
Lenders or their respective

 

16

 

Affiliates; provided that at or prior to the time that
any transaction relating to such Swap Obligation is executed, the Lender party
thereto (other than Chase) shall have delivered written notice to the Administrative
Agent that such a transaction has been entered into and that it constitutes a
Secured Obligation entitled to the benefits of the Collateral Documents.

 

“Security Agreement” means that certain Security Agreement,
dated as of the date hereof, between the Borrower and the Administrative Agent,
for the benefit of the Administrative Agent and the Lenders, and any other
pledge or security agreement entered into, after the date of this Agreement by
any other Loan Party (as required by this Agreement or any other Loan
Document), or any other Person, as the same may be amended, restated or
otherwise modified from time to time.

 

“Senior Funded Debt” means Funded Debt excluding the
Subordinated Indebtedness.

 

“Senior Funded Debt to Adjusted EBITDA Ratio” means the ratio of
the Borrower’s Senior Funded Debt to its Adjusted EBITDA, on a consolidated
basis.

 

“Standby LC Exposure” means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding standby Letters of Credit at such
time plus (b) the aggregate amount of all LC Disbursements relating to
standby Letters of Credit that have not yet been reimbursed by or on behalf of
the Borrower at such time.  The Standby
LC Exposure of any Revolving Lender at any time shall be its Applicable
Percentage of the total Standby LC Exposure at such time.

 

“Statutory Reserve Rate” means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board to which the Administrative Agent is
subject with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board).  Such reserve percentages
shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D or any comparable
regulation.  The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change
in any reserve percentage.

 

“Subordinated Indebtedness” of a Person means any Indebtedness
of such Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Administrative Agent.

 

“subsidiary” means, with respect to any Person, any corporation,
association, joint stock company, business trust, partnership, limited
liability company or other similar organization of which more than 50% of the ordinary voting power for
the election of a majority of the members of the board of directors or other
governing body of such entity is held or controlled by such Person or a
subsidiary of such Person; or any other such organization the management of
which is directly or indirectly controlled by such Person or a subsidiary of
such

 

17

 

Person through the exercise of voting power or otherwise; or any joint
venture, whether incorporated or not, in which such Person has more than a 50%
ownership interest.

 

“Subsidiary” means any direct or indirect subsidiary of the
Borrower or a Loan Party, as applicable.

 

“Swap Agreement” means any
agreement with respect to any swap, forward, future or derivative transaction
or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan
providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Swap Agreement.

 

“Swap Obligations” of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
Swap Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.

 

“Taxes” means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.

 

“Total Indebtedness” means, at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP.

 

“Transactions” means the execution, delivery and performance by
the Borrower of this Agreement, the borrowing of Loans and other credit
extensions, the use of the proceeds thereof and the issuance of Letters of
Credit hereunder.

 

“2010 Annual Report” means the Borrower’s Annual Report on Form 10-K
for the fiscal year ended March 31, 2010, as filed with the SEC.

 

“Type”, when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the CB
Floating Rate.

 

“UCC” means the Uniform Commercial Code as in effect from time
to time in the State of New York or any other state the laws of which are required
to be applied in connection with the issue of perfection of security interests.

 

“UK Subsidiary” means Virtusa UK Ltd.

 

“Unliquidated Obligations” means, at any time, any Secured
Obligations (or portion thereof) that are contingent in nature or unliquidated
at such time, including any Secured Obligation that is: (i) an obligation
to reimburse a bank for drawings not yet made under a letter 

 

18

 

of
credit issued by it; (ii) any other obligation (including any guarantee)
that is contingent in nature at such time; or (iii) an obligation to
provide collateral to secure any of the foregoing types of obligations.

 

“Unused Fee” shall have the meaning assigned to such term in Section 2.12.

 

“US Subsidiaries” means Virtusa Securities Corporation, InSource
Holdings, Inc., InSource, LLC and any future subsidiaries of Borrower
or any Subsidiary formed in the United States of America.

 

“Withdrawal Liability” means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of
ERISA.

 

SECTION 1.2.  Classification of Loans
and Borrowings.  For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g.,
a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and
Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and
referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g.,
a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).

 

SECTION 1.3.  Terms Generally.  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 (a) any
definition of or reference to any agreement, instrument or other document
herein 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), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) 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.

 

SECTION 1.4.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that it requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the
date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such 

 

19

 

provision shall be interpreted on the basis of GAAP
as in effect and applied immediately before such change shall have become
effective until  such notice shall have
been withdrawn or such provision amended in accordance herewith.

 

ARTICLE 2

THE CREDITS

 

SECTION 2.1.  Revolving Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make (a) Revolving Loans to the Borrower
from time to time during the Availability Period in an aggregate principal
amount that will not result in such Lender’s Revolving Exposure exceeding such
Lender’s Revolving Commitment.  Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.2.  Loans and Borrowings.  (a) Each Loan shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the
Lenders ratably in accordance with their respective Commitments of the
applicable Class.

 

(b)           Subject to Section 2.14, each Revolving Borrowing
shall be comprised entirely of CBFR Loans or Eurodollar Loans as the Borrower
may request in accordance herewith, provided that all Borrowings made on
the Effective Date must be made as CBFR Borrowings but may be converted into
Eurodollar Borrowings in accordance with Section 2.08. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.

 

(c)           At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than $500,000.  CBFR Revolving Borrowings may be in any
amount.

 

(d)           Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.

 

SECTION 2.3.  Requests for Revolving
Borrowings.  To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request either in writing (delivered by hand or facsimile) in a form approved
by the Administrative Agent and signed by the Borrower or by telephone (a) in
the case of a Eurodollar Borrowing, not later than noon  New York time, on the date of the proposed
Borrowing or (b) in the case of an CBFR Borrowing, not later than 10:00 a.m.,
New York time, two (2) Business Days before the date of the proposed
Borrowing; provided that any such notice of a CBFR Revolving Borrowing
to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may
be given not later than 9:00 a.m., New York time, on the date of the
proposed Borrowing.  Each such 

 

20

 

telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.01:

 

(i)  the aggregate amount of the requested Borrowing and a
breakdown of the separate wires comprising such Borrowing;

 

(ii)  the date of such Borrowing, which shall be a Business Day;

 

(iii)  whether such Borrowing is to be a CBFR Borrowing or a
Eurodollar Borrowing; and

 

(iv)  in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period.”

 

If no election as to the Type of Revolving Borrowing is specified, then
the requested Revolving Borrowing shall be a CBFR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent shall
advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

SECTION 2.4.  [Section intentionally
omitted]

 

SECTION 2.5. Guaranty of FX Transactions of Subsidiaries. (a) The
Borrower hereby absolutely and unconditionally Guarantees, as a guaranty of
payment and performance and not merely as a guaranty of collection, prompt
payment when due, whether at stated maturity, by required prepayment, upon
acceleration, demand or otherwise, and at all times thereafter, of any and all
obligations and liabilities of any nature whatsoever arising in connection with
the FX Transactions payable by each Subsidiary of Borrower, it successors and
assigns, to the Lenders and/or their respective Affiliates (the “FX
Guaranteed Obligations”), regardless of how evidenced or documented,
whether now existing or hereafter created, originally contracted with a Lender
and/or one of its respective Affiliates or with any other Person, secured or
unsecured, direct or indirect, absolute or contingent, matured or unmatured.

 

(b)           With respect to the FX Guaranteed Obligations, the
Borrower waives (a) acceptance of the guaranty of the Guaranteed
Obligations created hereby and proof of reliance by the Administrative Agent and
the Lenders hereon in creating the FX Guaranteed Obligations; (b) presentment,
protest, demand for payment and notice of dishonor; (c) notice of any
other nature whatsoever; (d) any requirement that the Administrative Agent
or any Lender take any action whatsoever (including demand for payment and
legal action) with respect to any other Person or any other guarantor; and (e) all
legal and equitable defenses which may be available to a guarantor or surety.

 

21

 

SECTION 2.6.  Letters of Credit.  (a) General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the Availability
Period.  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

 

(b)           Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrower shall hand deliver or facsimile (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (prior to 9:00 am, New
York time, at least three Business Days prior to the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of
a Letter of Credit, or identifying the Letter of Credit to be amended, renewed
or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this
Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed the total Revolving Commitments, (ii)
the Standby LC Exposure shall not exceed $3,000,000, (iii) the Commercial LC
Exposure shall not exceed $3,000,000 and (iv) the total Revolving
Exposures shall not exceed the total Revolving Commitments.

 

(c)           Expiration
Date.  Each Letter of Credit shall expire
at or prior to the close of business on the earlier of (i) the date one
year after the date of the issuance of such Letter of Credit (or, in the case
of any renewal or extension thereof, one year after such renewal or extension)
and (ii) the date that is five Business Days prior to the Maturity Date.

 

(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Revolving Lenders, the
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from the Issuing Bank, a participation in such Letter of Credit
equal to such Lender’s Applicable Percentage of the aggregate amount available
to be drawn under such Letter of Credit. 
In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable
Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed
by the Borrower on the date due as provided in paragraph (e) of this Section,
or of any reimbursement payment required to be refunded to the Borrower for any
reason.  Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of 

 

22

 

Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

 

(e)           Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 11:00 a.m., New York time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of
such LC Disbursement prior to 9:00 a.m., New York time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 11:00 a.m., New York time, on (i) the Business Day
that the Borrower receives such notice, if such notice is received prior to
9:00 a.m., New York time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided
that the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.3 that such payment be financed
with a CBFR Revolving Borrowing in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting CBFR Revolving Borrowing.  If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice,
each Revolving Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.7 with respect to Loans made by such Lender
(and Section 2.7 shall apply, mutatis  mutandis, to
the payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders.  Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant
to this paragraph, the Administrative Agent shall distribute such payment to
the Issuing Bank or, to the extent that Revolving Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders
and the Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of CBFR Revolving Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

(f)            Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the 

 

23

 

Borrower’s
obligations hereunder.  Neither the
Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to
excuse the Issuing Bank from liability to the Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank’s failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination.  In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

(g)           Disbursement
Procedures.  The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by facsimile) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.

 

(h)           Interim
Interest.  If the Issuing Bank shall make
any LC Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to CBFR
Revolving Loans; provided that, if the Borrower fails to reimburse such
LC Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.13(d) shall apply.  Interest
accrued pursuant to this paragraph shall be for the account of the Issuing
Bank, except that interest accrued on and after the date of payment by any
Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.

 

(i)            Replacement
of the Issuing Bank.  The Issuing
Bank may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the 

 

24

 

Revolving
Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

 

(j)            Cash
Collateralization.   If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required  Lenders (or, if the maturity of the Loans has
been accelerated, Revolving Lenders with LC Exposure representing greater than
50% of the total LC Exposure) demanding the deposit of cash collateral pursuant
to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Revolving Lenders (the “LC Collateral Account”), an amount
in cash equal to 100% of the LC Exposure as of such date plus accrued and
unpaid interest thereon; provided that the obligation to deposit such
cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article VII.  Such deposit shall be held by the Administrative
Agent as collateral for the payment and performance of the Secured
Obligations.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account and the Borrower hereby grants the Administrative
Agent a security interest in the LC Collateral Account.  Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in
such account.  Moneys in such account
shall be applied by the Administrative Agent to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other Secured Obligations.  If the
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all such Defaults have been cured or waived.

 

SECTION 2.7.  Funding of Borrowings.  (a) 
Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 1:00
p.m., New York time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders in an amount equal
to such Lender’s Applicable Percentage. 
The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to the Funding 

 

25

 

Account(s); provided that CBFR Revolving
Loans made to finance the reimbursement of an LC Disbursement as provided in Section
2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.

 

(b)           Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to CBFR Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

SECTION 2.8.  Interest Elections.  (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case
of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.

 

(b)           To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.3 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. 
Each such telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or facsimile to the Administrative
Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.

 

(c)           Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.2:

 

(i)            the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);

 

26

 

(ii)           the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;

 

(iii)          whether the resulting Borrowing is to be a CBFR Borrowing
or a Eurodollar Borrowing; and

 

(iv)          if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.

 

If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month’s duration.

 

(d)           Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.

 

(e)           If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to a CBFR
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing
and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted
to an CBFR Borrowing at the end of the Interest Period applicable thereto.

 

SECTION 2.9.  Termination of Commitments.

 

(a)           Subject
to the terms of Section 5.11, the Borrower may at any time terminate the
Commitments upon (i) the payment in full of all outstanding Loans, together
with accrued and unpaid interest thereon and on any Letters of Credit, (ii) the
cancellation and return of all outstanding Letters of Credit (or alternatively,
with respect to each such Letter of Credit, the furnishing to the
Administrative Agent of a cash deposit (or at the discretion of the
Administrative Agent a back up standby letter of credit satisfactory to the
Administrative Agent) equal to 100% of the LC Exposure as of such date), (iii)
the cancellation of all FX Transactions (or alternatively, with respect to each
such FX Transaction, the furnishing to the Administrative Agent of a cash
deposit equal to 100% of the FX Exposure as of such date), (iv) the payment in
full of the accrued and unpaid fees, including applicable prepayment fee (if
any), and (v) the payment in full of all reimbursable expenses and other
Obligations together with accrued and unpaid interest thereon.

 

(b)           The
Borrower shall notify the Administrative Agent of any election to terminate the
Commitments under paragraph (b) of this Section at least three Business
Days prior to the effective date of such termination, specifying such election
and the effective date thereof.  Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of 

 

27

 

the
contents thereof.  Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if
such condition is not satisfied.  Any
termination of the Commitments shall be permanent.

 

SECTION 2.10.  Repayment and
Amortization of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally
promises to pay (i) to the Administrative Agent for the account of each Lender
the then unpaid principal amount of each Revolving Loan on the Maturity Date.

 

(b)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

 

(c)           The
Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

 

(d)           The
entries made in the accounts maintained pursuant to paragraph (c) or (d) of
this Section shall be prima  facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure
of any Lender or the Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrower to
repay the Loans in accordance with the terms of this Agreement.

 

(e)           Any
Lender may request that Loans made by it be evidenced by a promissory
note.  In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

SECTION 2.11.  Prepayment of Loans.  (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to prior notice in accordance with paragraph (f) of this Section.

 

(b)           In
the event and on such occasion that the total Revolving Exposure exceeds the
aggregate Revolving Commitments the Borrower shall prepay the Revolving Loans
and/or LC Exposure in an aggregate amount equal to such excess.

 

(c)           The
Borrower shall notify the Administrative Agent by telephone (confirmed by
facsimile) of any prepayment hereunder (i) in the case of prepayment of a 

 

28

 

Eurodollar
Revolving Borrowing, not later than 10:00 a.m., New York time, three Business
Days before the date of prepayment, or (ii) in the case of prepayment of an CBFR
Revolving Borrowing, not later than 10:00 a.m., New York time, one Business Day
on the date of prepayment.  Each such
notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.9,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.9.  Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof.   Each
partial prepayment of any Revolving Borrowing shall be in an amount that would
be permitted in the case of an advance of a Revolving Borrowing of the same
Type as provided in Section 2.2. 
Each prepayment of a Revolving Borrowing shall be applied ratably to the
Revolving Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

 

SECTION 2.12.  Fees.  (a) The Borrower agrees to pay (i) to the
Administrative Agent, for its own account, an annual administration fee of
$5,000 during the Availability Period, and (ii) 0.25% of the average daily
unused portion of the Available Revolving Commitment (“Unused Fee”),
payable quarterly in arrears, (iii) to the Issuing Bank a fronting fee, which
shall accrue at the rate of 1.50% per annum on the average daily amount of the
LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Commitments and
the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank’s standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder.  Administration fees, Unused Fees and fronting
fees accrued through and including the last day of each calendar month shall be
payable on the first Business Day of each January, April, July and October
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date
on which the Revolving Commitments terminate and any such fees accruing after
the date on which the Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand.  All fronting fees and Unused Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed.

 

(b)           The
Borrower agrees to pay to the Administrative Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.

 

(c)           All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees
payable to it) for distribution, in the case of participation fees, to the
Lenders.  Fees paid shall not be
refundable under any circumstances.

 

SECTION 2.13.  Interest.  (a) The Loans comprising each
CBFR Borrowing shall bear interest at the CB Floating Rate plus the
Applicable Rate.

 

29

 

(b)           The
Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

 

(c)           Notwithstanding
the foregoing, during the occurrence and continuance of an Event of Default,
the Administrative Agent or the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 9.2 requiring
the consent of “each Lender affected thereby” for reductions in interest
rates), declare that (i) all Loans shall bear interest at 2% plus the rate
otherwise applicable to such Loans as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount outstanding hereunder,
such amount shall accrue at 2% plus the rate applicable to such fee or other
obligation as provided hereunder.

 

(d)           Accrued
interest on each Loan (for CBFR Loans, accrued through the last day of the
prior calendar month) shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Commitments; provided that (i)
interest accrued pursuant to paragraph (d) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an CBFR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

 

(e)           All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the CB Floating Rate shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and in each case
shall be payable for the actual number of days elapsed.  The applicable CB Floating Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

SECTION 2.14.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

 

(a)           the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for such Interest Period; or

 

(b)           the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(or Lender) of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower
and the Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer 

 

30

 

exist, (i) any Interest Election Request that requests the conversion
of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a
Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request
requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an
CBFR Borrowing.

 

SECTION 2.15.  Increased Costs.  (a) If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

 

(ii)           impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
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 Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

 

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

 

(c)           A
certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company,
as the case may be, as specified in paragraph (a) or (b) of this Section
shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)           Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the 

 

31

 

Issuing
Bank’s right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or the Issuing Bank pursuant to
this Section for any increased costs or reductions incurred more than 270 days
prior to the date that such Lender or the Issuing Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided  further that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.9 and is revoked in accordance therewith), or
(d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.18, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to
such event.  In the case of a Eurodollar
Loan, such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error.  The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

SECTION 2.17.  Taxes.  (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)           In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

32

 

(c)           The
Borrower shall indemnify the Administrative Agent, each Lender and the Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) 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 such payment or liability delivered to
the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.

 

(d)           Each
Lender and the Issuing Bank shall indemnify the Borrower and the Administrative
Agent, within 10 days after written demand therefor, against any and all Taxes
and any and all related losses, claims, liabilities, penalties, interest and
reasonable expenses (including the fees, charges and disbursements of any
counsel for the Borrower or the Administrative Agent) incurred by or asserted
against the Borrower or the Administrative Agent by any Governmental Authority
as a result of the failure by such Lender or the Issuing Bank, as the case may
be, to deliver, or as a result of the inaccuracy, inadequacy or deficiency of,
any documentation required to be delivered to the Borrower or the
Administrative Agent pursuant to Section 2.17(f).  Each Lender and the Issuing Bank hereby authorizes
the Administrative Agent to set off and apply any and all amounts at any time
owing to such Lender or the Issuing Bank, as the case may be, under this
Agreement or any other Loan Document against any amount due to the
Administrative Agent under this Section 2.17(d).

 

(e)           As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.

 

(f)            Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

 

(g)           If the Administrative Agent or a Lender
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 the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section 2.17,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.17 with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent
or such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, that
the Borrower, 

 

33

 

upon the request of the Administrative Agent or such
Lender, agree to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

 

SECTION 2.18.  Payments Generally;
Allocation of Proceeds; Sharing of Set-offs.  (a) The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 2:00 p.m., New York
time, on the date when due, in immediately available funds, without set-off or
counterclaim.  Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, 44th Floor, New York, New York, except payments to be made
directly to the Issuing Bank expressly provided herein and except that payments
pursuant to Sections 2.17, 2.16, 2.17 and 9.03
shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder shall
be made in dollars.

 

(b)           Any
proceeds of Collateral received by the Administrative Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or
other sum payable under the Loan Documents (which shall be applied as specified
by the Borrower), or (B) a mandatory prepayment (which shall be applied in
accordance with Section 2.11) or (ii) after an Event of
Default has occurred and is continuing and the Administrative Agent so elects
or the Required Lenders so direct, such funds shall be applied ratably first, to pay any fees,
indemnities, or expense reimbursements including amounts then due to the
Administrative Agent and the Issuing Bank from the Borrower (other than in
connection with Banking Services or Swap Obligations), second, to pay
any fees or expense reimbursements then due to the Lenders from the Borrower
(other than in connection with Banking Services or Swap Obligations), third,
to pay interest then due and payable on the Loans ratably, fourth, to
prepay principal on the Loans and unreimbursed LC Disbursements ratably, fifth,
to pay an amount to the Administrative Agent equal to one hundred percent
(100%) of the aggregate undrawn face amount of all outstanding Letters of
Credit and the aggregate amount of any unpaid LC Disbursements and FX Exposure,
to be held as cash collateral for such Obligations, sixth, to payment of
any amounts owing with respect to Banking Services and Swap Obligations, and seventh,
to the payment of any other Secured Obligation due to the Administrative Agent
or any Lender by the Borrower.  Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrower, or unless a Default is in existence,
neither the Administrative Agent nor any Lender shall apply any payment which
it receives to any Eurodollar Loan of a Class, except (a) on the expiration date of
the Interest Period applicable to any such Eurodollar Loan or (b) in the
event, and only to the extent, that there are no outstanding CBFR Loans of the
same Class and, in any such event, the 

 

34

 

Borrower shall pay the
break funding payment required in accordance with Section 2.17. The
Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the Secured Obligations.

 

(c)           At
the election of the Administrative Agent, all payments of principal, interest,
LC Disbursements, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for fees and expenses pursuant to Section 9.03),
and other sums payable under the Loan Documents, may be paid from the proceeds
of Borrowings made hereunder whether made following a request by the Borrower
pursuant to Section 2.3 or a deemed request as provided in this Section or
may be deducted from any deposit account of the Borrower maintained with the
Administrative Agent.  The Borrower
hereby irrevocably authorizes (i) the Administrative Agent to make a
Borrowing for the purpose of paying each payment of principal, interest and
fees as it becomes due hereunder or any other amount due under the Loan
Documents and agrees that all such amounts charged shall constitute Loans and
that all such Borrowings shall be deemed to have been requested pursuant to Section 2.3,
and (ii) the Administrative Agent to charge any deposit account of the
Borrower maintained with the Administrative Agent for each payment of principal,
interest and fees as it becomes due hereunder or any other amount due under the
Loan Documents.

 

(d)           If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or participations in LC Disbursements resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements of other Lenders to the extent necessary
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 Loans and participations in LC Disbursements; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by
a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The 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 the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

 

(e)           Unless
the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Administrative Agent for the
account of the Lenders or the Issuing Bank hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on 

 

35

 

such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders or the Issuing Bank, as the case may be, the amount
due.  In such event, if the Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or Issuing Bank
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

(f)            If
any Lender shall fail to make any payment required to be made by it hereunder,
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), (i) apply any amounts thereafter received by
the Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations hereunder until all such unsatisfied obligations are fully paid
and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and apply any such amounts to, any future funding obligations
of such Lender hereunder; application of amounts pursuant to (i) and (ii) above
shall be made in such order as may be determined by the Administrative Agent in
its discretion.”

 

SECTION 2.19.  Mitigation Obligations;
Replacement of Lenders.

 

(a)           If
any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
then such Lender shall 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, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment).

 

(b)           If
any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender) pursuant to Section 2.17,
or if any Lender becomes a Defaulting Lender, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and
if a Revolving Commitment is being assigned, the Issuing Bank), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for 

 

36

 

compensation
under Section 2.15 or payments required to be made pursuant to Section 2.17,
such assignment will result in a reduction in such compensation or
payments.  A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.

 

SECTION 2.20.  Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender.

 

(a)           fees shall cease
to accrue on the unfunded portion of the Revolving Commitment of such
Defaulting Lender pursuant to Section 2.12(a);

 

(b)           the Commitment and Revolving Credit
Exposure of such Defaulting Lender shall not be included in determining whether
all Lenders or the Required Lenders have taken or may take any action hereunder
(including any consent to any amendment or waiver pursuant to Section 9.2),
provided that any waiver, amendment or modification requiring the consent of
all Lenders or each affected Lender which affects such Defaulting Lender
differently than other affected Lenders shall require the consent of such Defaulting
Lender;

 

(c)           if any LC Exposure exists at the time a Lender becomes a
Defaulting Lender then:

 

(i)            all or any part of such LC Exposure
shall be reallocated among the non-Defaulting Lenders in accordance with their
respective Applicable Percentages but only to the extent (x) the sum of
all non-Defaulting Lenders’ Revolving Credit Exposures plus such Defaulting
Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’
Revolving Commitments and (y) the conditions set forth in Section 4.2
are satisfied at such time; and

 

(ii)           if the
reallocation described in clause (i) above cannot, or can only partially,
be effected, the Borrower shall within one Business Day following notice by the
Administrative Agent cash collateralize such Defaulting Lender’s LC Exposure
(after giving effect to any partial reallocation pursuant to clause (i) above)
in accordance with the procedures set forth in Section 2.06(j) for so
long as such LC Exposure is outstanding;

 

(iii)          if the Borrower
cash collateralizes any portion of such Defaulting Lender’s LC Exposure
pursuant to Section 2.20(c), the Borrower shall not be required to pay any
fees to such Defaulting Lender pursuant to Section 2.12(b) with
respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;

 

(iv)          if the LC Exposure
of the non-Defaulting Lenders is reallocated pursuant to Section 2.20(c),
then the fees payable to the Lenders pursuant to Section 2.12(a) and

 

37

 

Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’
Applicable Percentages; or

 

(v)           if any Defaulting
Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to
Section 2.20(c), then, without prejudice to any rights or remedies
of the Issuing Bank or any Lender hereunder, all letter of credit fees payable
under Section 2.12(b) with respect to such Defaulting Lender’s
LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash
collateralized and/or reallocated;

 

(d)           in the event and on the date that each of the
Administrative Agent, the Borrower and the Issuing Bank agrees that a
Defaulting Lender has adequately remedied all matters that caused such Lender to
be a Defaulting Lender, then the LC Exposure of the other Lenders shall be
readjusted to reflect the inclusion of such Lender’s Revolving Commitment and
on such date such Lender shall purchase at par such of the Loans of the other
Lenders as the Administrative Agent shall determine may be necessary in order
for such Lender to hold such Loans in accordance with its Applicable
Percentage.

 

SECTION 2.21.  Returned Payments.  If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the
Administrative Agent or any Lender is for any reason compelled to surrender
such payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received by
the Administrative Agent or such Lender. 
The provisions of this Section 2.21 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds.  The provisions of this Section 2.21
shall survive the termination of this Agreement.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents and warrants to the Lenders that, except as
otherwise disclosed in the Borrower’s audited financial statements and/or in
the 2010 Annual Report, or as set forth on the schedules attached hereto:

 

SECTION 3.1.  Organization; Powers.  Each of the Loan Parties and each of its U.S.
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

 

SECTION 3.2.  Authorization;
Enforceability.  The Transactions
are within each Loan Party’s organizational powers and have been duly
authorized by all necessary organizational actions and, if required, actions by
equity holders.  The Loan Documents to
which each Loan 

 

38

 

Party is a party have been duly executed and
delivered by such Loan Party and constitute a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law.

 

SECTION 3.3.  Governmental Approvals; No
Conflicts.  The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except for filings necessary to
perfect Liens created pursuant to the Loan Documents, (b) will not violate
any Requirement of Law applicable to any Loan Party or any of its US
Subsidiaries, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or any of
its US Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by any Loan Party or any of its US Subsidiaries,
and (d) will not result in the creation or imposition of any Lien on any
asset of any Loan Party or any of its US Subsidiaries, except Liens created
pursuant to the Loan Documents.

 

SECTION 3.4.  Financial Condition; No
Material Adverse Change.   (a) The
Borrower has heretofore furnished to the Lenders its audited consolidated
financial statements as of and for the fiscal year ended March 31, 2010
(the “Audited Financial Statement”), reported on by the Borrower’s
independent public accountants.  All such
financial statements are prepared in accordance with GAAP applied on a
consistent basis throughout the periods specified and present fairly the financial position of the
Borrower and its Subsidiaries as of such dates and the results of the
operations of the Borrower and its Subsidiaries for such periods in all
material respects.

 

(b)           No
event, change or condition has occurred that has had, or could reasonably be
expected to have, a Material Adverse Effect, since the date of the Audited
Financial Statement.

 

SECTION 3.5.  Properties.  (a) Each of the material leases of the
Borrower or any Subsidiary or material subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by
any party to any such lease or sublease exists. 
Each of the Loan Parties and its Subsidiaries has good and indefeasible
title to, or valid leasehold interests in, all its real and personal property,
free of all Liens other than those permitted by Section 6.2.  As of the Effective Date, the Borrower’s only
material lease of real property pertains to certain space located at 2000 West
Park Drive, Westborough, Massachusetts.

 

(b)           Each
Loan Party and its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property necessary and
material to its business as currently conducted, and the use thereof by
the Loan Parties and its Subsidiaries does not infringe in any material respect
upon the rights of any other Person, and the Loan Parties’ rights thereto are
not subject
to any licensing agreement or similar arrangement.

 

SECTION 3.6.  Litigation and
Environmental Matters.  (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of any Loan Party,
threatened against or affecting the Loan Parties or any of its 

 

39

 

Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve this Agreement or the Transactions.

 

(b)           Except
for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries
has received notice of any claim with respect to any Environmental Liability or
knows of any basis for any Environmental Liability and (ii) and except
with respect to any other matters that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, no Loan
Party nor any of its US Subsidiaries (1) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law or (2) has become
subject to any Environmental Liability.

 

(c)           Since
the date of this Agreement, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.7.  Compliance with Laws and
Agreements.  Each Loan Party
and its Subsidiaries is in compliance with all Requirements of Law applicable
to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  No Default
has occurred and is continuing.

 

SECTION 3.8.  Investment Company Status.  No Loan Party nor any of its Subsidiaries is
an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.

 

SECTION 3.9.  Taxes.  Each Loan Party has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid
or caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
such Loan Party has set aside on its books adequate reserves and (b) no
tax liens have been filed and no claims are being asserted with respect to any
such Taxes.

 

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of such Plan.

 

SECTION 3.11.  Disclosure.  No reports, financial statements,
certificates or other written information furnished by or on behalf of the any
Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document (as modified or
supplemented by other information so furnished) contains any material 

 

40

 

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, the Borrower represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time delivered and, if such projected
financial information was delivered prior to the Effective Date, as of the
Effective Date.

 

SECTION 3.12.  Material Agreements.  The Borrower and its Subsidiaries are not
parties to any material agreements not disclosed in its filings with the SEC.

 

SECTION 3.13.  Solvency.  (a) The Borrower has and, after giving
effect to the Loans, will have, assets (both tangible and intangible) having a
fair saleable value in excess of the amount required to pay the probable
liability on its then-existing debts (whether matured or unmatured, liquidated
or unliquidated, fixed or contingent); the Borrower has and will have access to
adequate capital for the conduct of its business and the discharge of its debts
incurred in connection therewith as such debts mature; the Borrower was not
insolvent immediately prior to the making of the Loans and immediately after
giving effect thereto, the Borrower will not be insolvent.

 

SECTION 3.14.  Insurance.  Schedule 3.14 sets forth a
description of all insurance maintained by or on behalf of the Loan Parties and
the US Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums in respect of such insurance have
been paid.  The Borrower believes that
the insurance maintained by or on behalf of the Borrower and its Subsidiaries
is adequate.

 

SECTION 3.15.  Capitalization and
Subsidiaries.  As of the
Effective Date, the Borrower has no US Subsidiaries other than: Virtusa
Securities Corporation, a Massachusetts corporation, InSource Holdings, Inc.,
a Connecticut corporation, and InSource, LLC, a Connecticut limited liability
company.  All of the issued and
outstanding Equity Interests owned by the Borrower in each of its Subsidiaries
has been (to the extent such concepts are relevant with respect to such
ownership interests) duly authorized and issued and are fully paid and
non-assessable.

 

SECTION 3.16.  Security Interest in
Collateral.  The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, and such Liens constitute perfected and
continuing Liens on the Collateral, securing the Secured Obligations,
enforceable against the applicable Loan Party and all third parties, and having
priority over all other Liens on the Collateral except in the case of (a) Permitted
Encumbrances, to the extent any such Permitted Encumbrances would have priority
over the Liens in favor of the Administrative Agent pursuant to any applicable
law and (b) Liens perfected only by possession (including possession of
any certificate of title) to the extent the Administrative Agent has not
obtained or does not maintain possession of such Collateral.

 

SECTION 3.17.  Employment Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of the Borrower, threatened.

 

41

 

ARTICLE 4

CONDITIONS

 

SECTION 4.1.  Effective Date.  The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.2):

 

(a)           Credit Agreement and Loan Documents.  The Administrative Agent (or its counsel)
shall have received (i) from each party hereto either (A) a
counterpart of this Agreement signed on behalf of such party or (B) written
evidence satisfactory to the Administrative Agent (which may include facsimile
transmission of a signed signature page of this Agreement) that such party
has signed a counterpart of this Agreement and (ii) duly executed copies
of the Loan Documents and such other certificates, documents, instruments and
agreements as the Administrative Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including any promissory notes requested by a Lender pursuant to Section 2.10
payable to the order of each such requesting Lender.

 

(b)           Closing Certificates; Certificate of Incorporation;
Good Standing Certificates.  The
Administrative Agent shall have received (i) a certificate of each Loan
Party, dated the Effective Date and executed by its Secretary or Assistant
Secretary, which shall (A) certify the resolutions of its Board of
Directors, members or other body authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it
is a party, and (C) contain appropriate attachments, including the
certificate or articles of incorporation or organization of each Loan Party and
a true and correct copy of its by-laws or operating, management or partnership
agreement, and (ii) a good standing certificate for each Loan Party from
its jurisdiction of organization.

 

(c)           No Default Certificate.  The Administrative Agent shall have received a certificate, signed by
the chief financial officer and the general counsel of the Borrower, on
the Effective Date (i) stating that no Default has occurred and is continuing,
(ii) stating that the representations and warranties contained in Article III
are true and correct as of such date, and (iii) certifying any other
factual matters as may be reasonably requested by the Administrative Agent.

 

(d)           Fees.  The
Lenders and the Administrative Agent shall have received all fees required to
be paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Effective
Date.  All such amounts will be paid with
proceeds of Loans made on the Effective Date and will be reflected in the 

 

42

 

funding instructions given
by the Borrower to the Administrative Agent on or before the Effective Date.

 

(e)           Lien Searches. 
The Administrative Agent shall have received the results of a recent
lien search in each of the jurisdictions where assets of the Loan Parties are
located, and such search shall reveal no liens on any of the assets of the Loan
Parties except for liens permitted by Section 6.2 or discharged on
or prior to the Effective Date pursuant to a pay-off letter or other
documentation satisfactory to the Administrative Agent.

 

(f)            Pay-Off Letter. 
The Administrative Agent shall have received satisfactory pay-off
letters for all existing Indebtedness to be repaid from the proceeds the
initial Borrowing, confirming that all Liens upon any of the property of the
Loan Parties constituting Collateral will be terminated concurrently with such
payment and all letters of credit issued or guaranteed as part of such
Indebtedness shall have been cash collateralized or supported by a Letter of
Credit.

 

(g)           Funding Accounts. 
The Administrative Agent shall have received a notice setting forth the
deposit account(s) of the Borrower (the “Funding Accounts”) to
which the Lender is authorized by the Borrower to transfer the proceeds of any
Borrowings requested or authorized pursuant to this Agreement.

 

(h)           Pledged Stock; Stock Powers; Pledged Notes.  The Administrative Agent shall have received (i) the
certificates representing the shares of Equity Interests pledged pursuant to
the Pledge Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Security Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by
the pledgor thereof.

 

(i)            Filings, Registrations and Recordings.  Each document (including any Uniform
Commercial Code financing statement) required by the Collateral Documents
or under law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Liens expressly permitted by Section 6.2), shall be in
proper form for filing, registration or recordation.

 

(j)            Insurance. 
The Administrative Agent shall have received evidence of insurance
coverage in form, scope, and substance reasonably satisfactory to the
Administrative Agent and otherwise in compliance with the terms of the Security
Agreement.

 

43

 

(k)           Letter of Credit Application.  The Administrative Agent shall have received
a properly completed letter of credit application (whether standalone or
pursuant to a master agreement, as applicable) if the issuance of a Letter of
Credit will be required on the Effective Date. 
The Borrower shall have executed the Issuing Bank’s master agreement for
the issuance of commercial Letters of Credit.

 

(l)            Tax Withholding. 
The Administrative Agent shall have received a properly completed and
signed IRS Form W-8 or W-9, as applicable, for each Loan Party.

 

(m)          (v) Other Documents.  The Administrative Agent shall have received
such other documents as the Administrative Agent, the Issuing Bank, any Lender
or their respective counsel may have reasonably requested.

 

The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.2)
at or prior to 2:00 p.m., New York time, on August 31, 2010 (and, in
the event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).

 

SECTION 4.2.  Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

 

(a)           The representations and warranties of the Borrower set
forth in this Agreement shall be true and correct on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable.

 

(b)           At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.

 

Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.

 

ARTICLE 5

AFFIRMATIVE COVENANTS

 

Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been
paid in full and all Letters of Credit shall have expired or terminated and all
LC Disbursements shall have been reimbursed, each Loan Party executing this
Agreement covenants and agrees, jointly and severally with all of the Loan
Parties, with the Lenders that:

 

44

 

SECTION 5.1.  Financial Statements; and
Other Information.  The
Borrower will furnish to the Administrative Agent and each Lender:

 

(a)           Via either the EDGAR System or its Home Page, within 120
days after the filing of its Annual Report on Form 10-K for the fiscal
year then ended with the SEC, but no event later than 120 days after the end of
such fiscal year, the financial statements for such fiscal year as contained in
such Annual Report on Form 10-K and, as soon as it shall become available,
the annual report to its holders of Equity Interests for the fiscal year then
ended;

 

(b)           Via either the EDGAR System or its Home Page, within 60
days after the filing of its Quarterly Report on Form 10-Q for the fiscal
quarter then ended with the SEC, but no event later than 60 days after the end
of such fiscal quarter, copies of the financial statements for such fiscal
quarter as contained in its Quarterly Report on Form 10-Q, and, as soon as
it shall become available, a quarterly report to its shareholders for the
fiscal quarter then ended;

 

(c)           Via either the EDGAR System or its Home Page, promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by it with the SEC or any
governmental authority succeeding to any or all of the functions of the SEC;

 

(d)           concurrently with any delivery of financial statements
under clause (a) or (b) or (c) above, a certificate of a
Financial Officer of the Borrower in substantially the form of Exhibit C
(i) certifying, in the case of the financial statements delivered under
clause (a) or (b), as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes, (ii) certifying as to whether a Default has occurred
and, if a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (iii) setting forth
reasonably detailed calculations demonstrating compliance with Section 6.10
and (iv) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such certificate;

 

(e)           concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported
on such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

 

45

 

(f)            as soon as available, but in any event not more than 120
days following the commencement of each fiscal year of the Borrower, the
Borrower’s projections (including a consolidated balance sheet and statements
of income and cash flows) for such fiscal year, in form reasonably satisfactory
to the Administrative Agent (the “Projections”);

 

(g)           promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably request.

 

SECTION 5.2.  Notices of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

 

(a)           Promptly upon becoming aware of the existence of any
condition or event that constitutes a Default, written notice thereof
specifying the nature and duration, thereof and the action being or proposed to
be taken with respect thereto;

 

(b)           Promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the Borrower or any of its Subsidiaries of which they have
notice, the outcome of which would reasonably be expected to have a Material
Adverse Effect on the assets, business or prospects of the Borrower alone or
the Borrower and its Subsidiaries on a consolidated basis, written notice
thereof and the action being or proposed to be taken with respect thereto; and

 

(c)           Promptly after any occurrence or after becoming aware of
any condition affecting the Borrower or any Subsidiary that results in, or
would reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.

 

SECTION 5.3.  Existence; Conduct of
Business.  Each Loan Party
will, and will cause each Subsidiary to, (a) do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, qualifications, licenses, permits, franchises and
governmental authorizations material to the conduct of its business or the
Borrower’s business when taken as a whole, and maintain all requisite authority
to conduct its business in each jurisdiction in which its business is
conducted; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.3
and (b) carry on and conduct its business in substantially the same manner
and in substantially the same fields of enterprise as it is presently
conducted.

 

46

 

SECTION 5.4.  Payment of Obligations.  Each Loan Party will, and will cause
each  Subsidiary to, pay or discharge all
Material Indebtedness and all other material liabilities and obligations,
including Taxes, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) such Loan Party or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.5.  Maintenance of Properties.  Each Loan Party will, and will cause each
Subsidiary to, keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear and damage
by fire or other casualty excepted.

 

SECTION 5.6.  Books and Records;
Inspection Rights.  Each Loan
Party will, and will cause each Subsidiary to, (i) keep proper books of
record and account in which true and complete entries will be made reflecting
all of its and its Subsidiaries business and financial transactions, and (ii) permit
any representatives designated by the Administrative Agent or any Lender
(including employees of the Administrative Agent, any Lender or any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent), upon reasonable written notice, to visit and inspect its properties, to
examine and make extracts from its books and records, including environmental
assessment reports and Phase I or Phase II studies, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested. The Loan Parties
acknowledge that the Administrative Agent, after exercising its rights of
inspection, may prepare and distribute to the Lenders certain Reports
pertaining to the Loan Parties’ assets for internal use by the Administrative
Agent and the Lenders.  In the absence of
a continuing Event of Default, any such examination shall be at the Lender’s
expense, and during the continuance of an Event of Default such examination
shall be at the Borrower’s expense.

 

SECTION 5.7.  Compliance with Laws.  Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its
property , except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.8.  Use of Proceeds.  The proceeds of the Loans will be used only
for general working capital needs and to support Letters of Credit.  No part of the proceeds of any Loan and no
Letter of Credit will be used, whether directly or indirectly, for any purpose
that entails a violation of any of the Regulations of the Board, including
Regulations T, U and X.

 

SECTION 5.9.  Insurance. Each
Loan Party will, and will cause each Subsidiary to, maintain with financially
sound and reputable carriers (a) insurance in such amounts (with no
greater risk retention) and against such risks (including loss or damage by
fire and loss in transit; theft, burglary, pilferage, larceny, embezzlement,
and other criminal activities; business interruption; and general liability)
and such other hazards, as the officers of the Borrower in the exercise of
their reasonable judgment deem to be adequate, as are customary in the industry
for companies of established reputation engaged in the same or similar business
and owning or operating similar properties and as shall be reasonably
satisfactory to the Lenders, and (b) all 

 

47

 

insurance required pursuant to the Collateral
Documents.  The Borrower will furnish to
the Lenders, upon request of the Administrative Agent, information in
reasonable detail as to the insurance so maintained.

 

SECTION 5.10.  Depository Banks.  The Borrower shall use reasonable commercial
efforts to maintain the Administrative Agent as its principal depository bank,
including for the maintenance of operating, administrative, collection
activity, and other deposit accounts for the conduct of its business, including
FX Transactions.  The Administrative
Agent and the Borrower acknowledge that not all of the Borrower’s accounts will
be established with the Administrative Agent as of the Effective Date, but the
Borrower shall use its reasonable commercial efforts to take such actions as
may be necessary to establish and maintain such accounts with the
Administrative Agent as soon as reasonably practicable in the operation of the
Borrower’s Business but in no event later than 365 days following the Effective
Date; provided that, as an express condition to this obligation, the Administrative
Agent’s services and fees on such services are no less favorable (now and on a
continuing basis)  than, or substantially
competitive to, those services and fees, currently being offered and/or
performed by the existing depository bank or offered by competitive banking
institutions at all times.  For the
avoidance of doubt, principal depository bank shall mean the bank at which more
than 50% of operating deposit account balances of Borrower are maintained.

 

SECTION 5.11.  Cash Collateral.
In the event that the Credit Agreement is terminated for any reason and there
are issued and outstanding Letters of Credit and/or open FX Transactions, as a
condition to the Administrative Agent’s agreement to release any of the
Security Documents, the Borrower shall pledge as collateral and deposit with or
deliver to the Administrative Agent, for the benefit of the Issuing Bank for
the outstanding Letters of Credit and the applicable Lenders with respect to
open FX Transactions, cash or deposit account balances in the amount of at
least 100% of the face amount of such Letters of Credit and 100% of the FX
Exposure or, if the Issuing Bank or Lenders, as the case may be, shall agree in
their sole discretion, other credit support; in each case pursuant to
documentation in form and substance satisfactory to the Issuing Bank or
Lenders, as the case may be.

 

SECTION 5.12.  Additional Collateral;
Further Assurances. (a) Subject to applicable law or
restrictions, the Borrower as a Loan Party shall cause each of its US
Subsidiaries formed or acquired after the date of this Agreement in accordance
with the terms of this Agreement to become a Loan Party by executing the
Joinder Agreement set forth as Exhibit C hereto (the “Joinder
Agreement”). Upon execution and delivery thereof, each such Person (i) shall
automatically become a Loan Guarantor hereunder and thereupon shall have all of
the rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will grant Liens to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, in any property of such
Loan Party which constitutes Collateral.

 

(b)           The
Borrower and each US Subsidiary that is a Loan Party will cause 100% of the
issued and outstanding Equity Interests of each of its US Subsidiaries to be
subject at all times to a first priority, perfected Lien in favor of the
Administrative Agent pursuant to the terms and conditions of the Pledge
Agreement or other security documents as the Administrative Agent shall
reasonably request.

 

48

 

(c)           Without
limiting the foregoing, each Loan Party will, and will cause each Subsidiary
to, execute and deliver, or cause to be executed and delivered, to the
Administrative Agent such documents, agreements and instruments, and will take
or cause to be taken such further actions (including the filing and recording
of financing statements, fixture filings, mortgages, deeds of trust and other
documents and such other actions or deliveries of the type required by Section 4.1,
as applicable), which may be required by law or which the Administrative Agent
may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents and to ensure
perfection and priority of the Liens created or intended to be created by the
Collateral Documents, all at the expense of the Loan Parties.

 

ARTICLE 6

NEGATIVE COVENANTS

 

Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable
under any Loan Document have been paid in full and all Letters of Credit have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Loan Parties covenant and agree, jointly and severally, with the Lenders that:

 

SECTION 6.1.  Indebtedness.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except the
Permitted Indebtedness.

 

SECTION 6.2.  Liens.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except for Permitted Encumbrances.

 

SECTION 6.3.  Fundamental Changes;
Disposition of Assets.  (a) The
Borrower and its Subsidiaries shall not: (i) acquire the capital stock or
other Equity Interests or all or
substantially all of the assets of another Person, whether or not
involving a merger or consolidation with such other Person, other than pursuant
to a Permitted Acquisition, and providing that both immediately before and
after giving effect to such acquisition,
no Event of Default shall exist; (ii) merge or consolidate into or with
any other Person, or commence a reorganization, other
than a merger of any Subsidiary
with and into the Borrower, with
the Borrower as the survivor of
such merger, or a merger or consolidation into or with another Person, or a reorganization, in each case, where
the holders of more than 50.0% of the ordinary
voting power for the election of a majority of the members of the board of directors of the Borrower
prior to such transaction retain such power after the transaction; or (iii) liquidate
or dissolve, except that any wholly-owned Subsidiary may liquidate or dissolve.

 

(b)           Neither
the Borrower nor its Subsidiaries shall sell, lease (as lessor) or otherwise dispose
of any assets or properties in excess of $20,000,000 in the aggregate, other than sales of Qualified Investments and inventory and obsolete or worn out equipment, in each case in the ordinary course of business and
consistent with past practices.

 

49

 

(c)           No
Loan Party will, nor will it permit any of its Subsidiaries to, engage in any
business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and businesses
reasonably related thereto.

 

SECTION 6.4.  Investments, Loans,
Advances, and Guarantees. 
Neither the Borrower nor its Subsidiaries shall make or maintain any Investments or
purchase or otherwise acquire any material
amount of assets other than: (i) Investments existing on the date hereof in Subsidiaries; (ii) Qualified
Investments; (iii) Capital Expenditures; (iv) normal trade credit extended in the ordinary course
of business and consistent with prudent business
practice; (v) advances to employees for business related expenses
to be incurred in the ordinary course of business and consistent with past
practices in an amount not to exceed
$1,000,000 in the aggregate outstanding at any one time, provided that advances to any single employee shall not exceed $200,000 in the aggregate;
(vi) Investments in any Subsidiary of the Borrower which is a Cash Flow
Exclusion; and (vii) loans to any
Person (including employees) not in the ordinary course of business not to exceed
$1,000,000 in the aggregate outstanding at any one time.

 

SECTION 6.5.  Swap Agreements.  No Loan Party will, nor will it permit any
Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary
has actual exposure (other than those in respect of Equity Interests of the
Borrower or any of its Subsidiaries), and (b) Swap Agreements entered into
in order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary or (c) any Swap Agreement as permitted by the Borrower’s FX
investment policy, as approved by the audit committee of the Board of
Directors.

 

SECTION 6.6.  Restricted Payments;
Certain Payments of Indebtedness. 
(a) The Borrower shall not pay, make, declare or authorize any
Restricted Payment other than: (i) compensation paid to employees,
officers and directors in the
ordinary course of business and
consistent with prudent business practices; (ii) dividends payable solely in common stock; (iii) dividends paid
by any Subsidiary to the Borrower
or any other Subsidiary; (iv) redemptions of shares of capital stock of the Borrower which are
“restricted securities” (as defined in Rule 144 promulgated under the
Securities Act of 1933) in an
amount not to exceed 5.0% of
the aggregate total voting stock of the Borrower issued and outstanding on a fully diluted basis, and (v) shares
of capital stock of the Borrower withheld or redeemed by Borrower to settle any
applicable tax obligations of a grantee of shares of any equity award
(including without limitation thereof, any shares of restricted stock and any
stock appreciation rights) which arise in connection with the vesting, exercise
or other taxable event with respect to such awards (vi) any stock
repurchase (or similar) program as approved by the Board of Directors for
repurchase of up to an aggregate of $15 million of common stock of the
Borrower.

 

SECTION 6.7.  Transactions with
Affiliates.  No Loan Party
Except as otherwise provided herein, neither the Borrower nor any of its
Subsidiaries will directly or indirectly, enter into any purchase, sale, lease
or other transaction with any Subsidiary or Affiliate except (i) transactions
in the ordinary course of business on terms that are no less favorable to the
Borrower than those which might be obtained at the time in a comparable arm’s
length transaction with any Person who is
not an Affiliate or Subsidiary, including without limitation, 

 

50

 

any transfer pricing, service fee or similar
agreements between or among Borrower and its Affiliates or Subsidiaries, (ii) employment
contracts with senior management of the Borrower entered into in the ordinary
course of business and consistent with prudent business practices and (iii) for the avoidance of doubt,
transactions relating to Restricted Payments permitted under Section 6.4.

 

SECTION 6.8.  Restrictive Agreements.  No Loan Party will, nor will it permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of such Loan Party or any of its
Subsidiaries to create, incur or permit to exist any Lien upon any of its
property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, (ii) the foregoing shall not apply
to restrictions and conditions existing on the date hereof identified on Schedule
6.8 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any
agreement relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment thereof.

 

SECTION 6.9.  Amendment of Material
Documents; Fiscal Year.  No
Loan Party will, nor will it permit any Subsidiary to, amend, modify or waive
any of its rights under any agreement relating to any Subordinated
Indebtedness.  Borrower will not, nor
will it permit any US Subsidiary to, amend or modify its certificate of
incorporation or by-laws to the extent such amendment or modification could
reasonably be expected to have a Material Adverse Effect.  The Borrower and its Subsidiaries shall not
change their March 31 fiscal
year end without the prior written consent of the Required Lenders.

 

SECTION 6.10.  Financial Covenants.

 

(a)           Senior
Funded Debt to Adjusted EBITDA Ratio. 
The Borrower will not permit the Senior Funded Debt to Adjusted EBITDA
Ratio, determined for the trailing twelve month period ending on each fiscal
quarter end, to exceed 1.00 to 1.00.

 

(b)           Current
Ratio.  The Borrower will not permit
the Current Ratio, determined for the trailing twelve month period ending on
each fiscal quarter end, to be greater than 2.00 to 1.00.

 

51

 

ARTICLE 7

EVENTS OF DEFAULT

 

If any of the following events (“Events of Default”) shall
occur:

 

(a)           the Borrower shall fail to pay any principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement or any amount
owing by it with respect to any Obligation when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

 

(b)           the Borrower shall fail to pay any interest or other
amount due on any Loan or any reimbursement obligation in respect of any LC
Disbursement or any amount owing by it with respect to any Obligation, when and
as the same shall become due and payable;

 

(c)           any representation or warranty made or deemed made by or
on behalf of any Loan Party or any Subsidiary in or in connection with this
Agreement or any Loan Document or any amendment or modification thereof or
waiver thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any Loan
Document or any amendment or modification thereof or waiver thereunder, shall
prove to have been materially incorrect when made or deemed made;

 

(d)           any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.1, 5.3,
5.6, 5.10 or in Article VI;

 

(e)           any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
which constitute a default under another Section of this Article), and
such failure shall continue unremedied for a period of 10 days after the
earlier of any Loan Party’s knowledge of such breach or notice thereof from the
Administrative Agent (which notice will be given at the request of any Lender);

 

(f)            any Loan Party or any Subsidiary shall fail to make
any payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due and
payable;

 

(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not
apply to secured 

 

52

 

Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

 

(h)           an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of a Loan Party or any Subsidiary of
any Loan Party or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now
or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party or
any Subsidiary of any Loan Party or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
45 days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

(i)            any Loan Party or any Subsidiary of any Loan Party shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of
this Article, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for such Loan
Party or Subsidiary of any Loan Party or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting
any of the foregoing;

 

(j)            the Borrower or any US Subsidiary shall admit in writing
its inability or fail generally to pay its debts as they become due;

 

(k)           one or more judgments for the payment of money in an
aggregate amount in excess of $3,000,000 in value, the payment of which is not fully covered by insurance in excess of any
deductibles not exceeding $1,000,000 in the aggregate, shall be rendered
against any Loan Party, any Subsidiary of any Loan Party or any combination
thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of any Loan Party or any Subsidiary of any Loan Party
to enforce any such judgment or any Loan Party or any Subsidiary of any Loan
Party shall fail within 30 days to discharge one or more non-monetary judgments
or orders which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, which judgments or orders, in any such case,
are not stayed on appeal or otherwise being appropriately contested in good
faith by proper proceedings diligently pursued;

 

53

 

(l)            an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material Adverse
Effect;

 

(m)          a Change in Control shall occur;

 

(n)           the occurrence of any “default”, as defined in any Loan
Document (other than this Agreement) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement), which default or
breach continues beyond any period of grace therein provided;

 

(o)           the Loan Guaranty shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of the Loan Guaranty, or any Loan Guarantor shall fail to
comply with any of the terms or provisions of the Loan Guaranty to which it is
a party, or any Loan Guarantor shall deny that it has any further liability
under the Loan Guaranty to which it is a party, or shall give notice to such
effect;

 

(p)           any Collateral Document shall for any reason fail to
create a valid and perfected first priority security interest in any Collateral
purported to be covered thereby, except as permitted by the terms of any
Collateral Document, or any Collateral Document shall fail to remain in full force
or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Collateral Document, or any Loan Party
shall fail to comply with any of the terms or provisions of any Collateral
Document; or

 

(q)           any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or
any Loan Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms)

 

then, and in every such event (other than an event with respect to the
Borrower described in clause (h) or (i) of this Article), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times:  (i) terminate the Commitments, and thereupon
the Commitments shall terminate immediately, and (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this
Article, the 

 

54

 

Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower, and the Borrower shall
immediately pledge to the Administrative Agent, for and on behalf of the
Lenders, cash collateral in an amount determined by Lenders to be sufficient to
fully secure any Secured Obligations of the Borrower to the Lenders with
respect any (i) issued Letters of Credit, and (ii) each Lender’s FX
Exposure.  Upon the occurrence and the
continuance of an Event of Default, the Administrative Agent may, and at the
request of the Required Lenders shall, exercise any rights and remedies
provided to the Administrative Agent under the Loan Documents or at law or
equity, including all remedies provided under the UCC.

 

ARTICLE 8

THE ADMINISTRATIVE AGENT

 

Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent
to take such actions on its behalf, including execution of the other Loan
Documents, and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

 

The bank serving as the Administrative 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 the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Loan Parties or any Subsidiary of a Loan Party
or other Affiliate thereof as if it were not the Administrative Agent
hereunder.

 

The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.2),
and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
or any of its Subsidiaries that is communicated to or obtained by the bank
serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.2) or
in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into

 

55

 

(i) any statement, warranty or representation made in or in
connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection with any Loan
Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document,
(iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, (v) the
creation, perfection or priority of Liens on the Collateral or the existence of
the Collateral, or (vi) the satisfaction of any condition set forth in Article IV
or elsewhere in any Loan Document, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

 

The Administrative 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 believed by it to be
genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with
legal counsel (who may be counsel for the 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.

 

The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. 
The Administrative Agent and any such sub-agent may perform any and all
its duties and exercise its rights and powers through their respective Related
Parties.  The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative 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 Administrative Agent.

 

Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a commercial bank or an Affiliate of any such commercial
bank.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article, Section 2.17(d) and
Section 9.3 shall continue in effect for the benefit of such
retiring Administrative 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 it was acting as Administrative Agent.

 

56

 

Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender 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 also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender 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
related agreement or any document furnished hereunder or thereunder.

 

Each Lender hereby agrees that
(a) it has requested a copy of each Report prepared by or on behalf of the
Administrative Agent; (b) the Administrative Agent (i) makes no
representation or warranty, express or implied, as to the completeness or
accuracy of any Report or any of the information contained therein or any
inaccuracy or omission contained in or relating to a Report and (ii) shall
not be liable for any information contained in any Report; (c) the Reports
are not comprehensive audits or examinations, and that any Person performing
any field examination will inspect only specific information regarding the Loan
Parties and will rely significantly upon the Loan Parties’ books and records,
as well as on representations of the Loan Parties’ personnel and that the
Administrative Agent undertakes no obligation to update, correct or supplement
the Reports; (d) it will keep all Reports confidential and strictly for
its internal use, not share the Report with any Loan Party or any other Person
except as otherwise permitted pursuant to this Agreement; and (e) without
limiting the generality of any other indemnification provision contained in
this Agreement, it will pay and protect, and indemnify, defend, and hold
the Administrative Agent and any such other Person preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including reasonable attorney fees) incurred by as the
direct or indirect result of any third parties who might obtain all or part of
any Report through the indemnifying Lender.

 

ARTICLE 9

MISCELLANEOUS

 

SECTION 9.1.  Notices.  (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (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 facsimile, as
follows:

 

(i)   if to
any Loan Party, to the Borrower at:

Virtusa Corporation

2000 West Park Drive

Westborough, MA  01581

Attention: Chief Financial
Officer

Facsimile No: (508) 389-7224

 

(ii)  if to the
Administrative Agent or the Issuing Bank, to JPMorgan Chase Bank, N.A. at:

 

12 Corporate Woods Blvd.

 

57

 

Albany, NY 12211

Attention: Scott McNamara,
Vice President

Facsimile No: 518-433-0295

 

(iii) if to any other
Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.

 

All
such notices and other communications (i) sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received or (ii) sent by facsimile shall be deemed to
have been given when sent, provided 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.

 

(b)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications (including e-mail and internet or intranet
websites) pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II or to
compliance and no Event of Default certificates delivered pursuant to Section 5.01(d) unless
otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower (on
behalf of the Loan Parties) 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. All such notices and other
communications (i) 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 not given during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been given at the opening of business on the next Business Day for the
recipient, and (ii) 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 (b)(i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)           Any
party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.

 

SECTION 9.2.  Waivers; Amendments.  (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Bank and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance of a 

 

58

 

Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether the Administrative Agent, any Lender or
the Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)           Neither
this Agreement nor any other Loan Document nor any provision hereof or thereof
may be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
the Borrower and the Required Lenders or, (ii) in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce or forgive the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon,
or reduce or forgive any interest or fees payable hereunder, without the
written consent of each Lender directly affected thereby, (iii) postpone
any scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any date for the payment of any interest, fees or other Obligations
payable hereunder, or reduce the amount of, waive or excuse any such payment,
or postpone the scheduled date of expiration of any Commitment, without the
written consent of each Lender directly affected thereby, (iv) change Section 2.18(b) or
(d) in a manner that would alter the manner in which payments are
shared, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of “Required Lenders” or any
other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender, (vi) change Section 2.20,
without the consent of each Lender (other than any Defaulting Lender), (vii) release
any Loan Guarantor from its obligation under its Loan Guaranty (except as
otherwise permitted herein or in the other Loan Documents), without the written
consent of each Lender, or (ix) except as provided in clauses (d) and
(e) of this Section or in any Collateral Document, release all or
substantially all of the Collateral, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank
hereunder without the prior written consent of the Administrative Agent or the
Issuing Bank (it being understood that any change to Section 2.20
shall require the consent of the Administrative Agent and the Issuing
Bank).  The Administrative Agent may also
amend the Commitment Schedule to reflect assignments entered into
pursuant to Section 9.04.

 

(c)           The
Lenders hereby irrevocably authorize the Administrative Agent, at its option
and in its sole discretion, to release any Liens granted to the Administrative
Agent by the Loan Parties on any Collateral (i) upon the termination of
the all Commitments, payment and satisfaction in full in cash of all Secured
Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to
each affected Lender, (ii) constituting property being sold or disposed of
if the Loan Party disposing of such property certifies to the Administrative
Agent that the sale or disposition is made in compliance with the terms of this
Agreement (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry), and to the extent that the property
being sold or disposed of constitutes 100% of the Equity Interest of a
Subsidiary, the Administrative Agent is authorized to release any Loan Guaranty
provided by such Subsidiary, (iii) constituting property leased to a Loan
Party under a lease which has expired or been 

 

59

 

terminated
in a transaction permitted under this Agreement, or (iv) as required to
effect any sale or other disposition of such Collateral in connection with any
exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VII.  Except as provided in the preceding sentence,
the Administrative Agent will not release any Liens on Collateral without the
prior written authorization of the Required Lenders.  Any such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Loan Parties in respect
of) all interests retained by the Loan Parties, including the proceeds of any
sale, all of which shall continue to constitute part of the Collateral.

 

SECTION 9.3.  Expenses; Indemnity;
Damage Waiver.  (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in
connection with the syndication and distribution (including, without
limitation, via the internet or through a service such as Intralinks) of the
credit facilities provided for herein, the preparation and administration of
the Loan Documents or any amendments, modifications or waivers of the
provisions of the Loan Documents (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank 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 the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement, collection or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the 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. Expenses being
reimbursed by the Borrower under this Section include, without limiting
the generality of the foregoing, costs and expenses incurred in connection
with:

 

(i)            appraisals
and insurance reviews;

 

(ii)           field
examinations and the preparation of Reports based on the fees charged by a
third party retained by the Administrative Agent or the internally allocated
fees for each Person employed by the Administrative Agent with respect to each
field examination;

 

(iii)          background
checks regarding senior management and/or key investors, as deemed necessary or
appropriate in the sole discretion of the Administrative Agent;

 

(iv)          taxes,
fees and other charges for (A) lien searches and (B) filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Administrative Agent’s Liens;

 

(v)           sums
paid or incurred to take any action required of any Loan Party under the Loan
Documents that such Loan Party fails to pay or take; and

 

60

 

(vi)          forwarding
loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral;

 

provided
however, any expenses incurred under (i), (ii), (iii) or (iv) above
shall not be incurred (or reimbursed by Borrower) more than once every 12
months, unless there has been an Event of Default.

 

All of the foregoing costs and expenses may be charged to the Borrower
as Revolving Loans or to another deposit account, all as described in Section 2.18(c).

 

(b)           The
Borrower shall indemnify the Administrative Agent, the Issuing Bank and each
Lender, 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, penalties, incremental taxes,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by the Issuing Bank 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 the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to the Borrower or any of its Subsidiaries, (iv) the failure of the
Borrower to deliver to the Administrative Agent the required receipts or other
required documentary evidence with respect to a payment made by the Borrower
for Taxes pursuant to Section 2.17, or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory 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, penalties, liabilities or related expenses 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.

 

(c)           To
the extent that the Borrower fails to pay any amount required to be paid by it
to the Administrative Agent, the Issuing Bank under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Administrative Agent
or the Issuing Bank, as the case may be, such Lender’s Applicable Percentage
(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, penalty, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Issuing Bank in its capacity as such.

 

(d)           To
the extent permitted by applicable law, no Loan Party shall assert, and each
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 

 

61

 

of,
in connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.

 

(e)           All
amounts due under this Section shall be payable promptly after written
demand therefor.

 

SECTION 9.4.  Successors and Assigns.  (a) 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
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  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
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this Section)
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           (i)            Subject to the conditions set forth
in paragraph (b)(ii) below, any Lender may 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 at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld) of:

 

(A) the Borrower, provided
that no consent of the Borrower shall be required for an assignment to a
Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default
has occurred and is continuing, any other assignee;

 

(B) the Administrative
Agent; and

 

(C) the Issuing Bank.

 

(ii)         Assignments
shall be subject to the following additional conditions:

 

(A) except in the case
of an assignment to a Lender or an Affiliate of a Lender or an assignment of
the entire remaining amount of the assigning Lender’s Commitment or Loans of
any Class, the amount of the Commitment or 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 to the Administrative Agent)
shall not be less than $1,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of
the Borrower shall be required if an Event of Default has occurred and is
continuing;

 

(B) 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;

 

62

 

(C) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500; and

 

(D) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire in which the assignee designates one or more
Credit Contacts to whom all syndicate-level information (which may contain
material non-public information about the Borrower, the Loan Parties and their
Related Parties or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

 

For
the purposes of this Section 9.04(b), the term “Approved Fund” has
the following meaning:

 

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

 

(iii)          Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto 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 2.15, 2.16, 2.17 and 9.3).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.04
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 paragraph (c) of
this Section.

 

(iv)          The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices 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 Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank 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 the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

 

63

 

(v)           Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register; provided that if either the assigning
Lender or the assignee shall have failed to make any payment required to be
made by it pursuant to Section 2.05, 2.06(d) or (e),
2.07(b), 2.18(d) or 9.03(c), the Administrative Agent
shall have no obligation to accept such Assignment and Assumption and record
the information therein in the Register unless and until such payment shall
have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(c)           (i)            Any Lender may, without the consent
of the Borrower, the Administrative Agent or the Issuing Bank, sell
participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders 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, modification or waiver
described in the first proviso to Section 9.2(b) that affects
such Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.15, 2.16 and 2.17
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.8
as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.

 

(ii)           A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 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 the 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 2.17
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(f) as
though it were a Lender.

 

(d)           Any
Lender may at any time pledge or assign a security interest in all or any portion
of its rights under this Agreement to secure obligations of such Lender,
including 

 

64

 

without
limitation any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of
a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 9.5.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments 
delivered in connection with or pursuant to this Agreement or any other
Loan Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. 
The provisions of Sections 2.15, 2.16, 2.17 and 9.03
and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.

 

SECTION 9.6.  Counterparts; Integration;
Effectiveness.  This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and
any separate letter agreements with respect to fees payable to the
Administrative Agent 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 the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

SECTION 9.7.  Severability.  Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.8.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general 

 

65

 

or special, time or demand, provisional or final) at
any time held and other obligations at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower or such Loan
Guarantor against any of and all the Secured Obligations held by such Lender,
irrespective of whether or not such Lender shall have made any demand under the
Loan Documents and although such obligations may be unmatured.  The applicable Lender shall notify the
Borrower and the Administrative Agent of such set-off or application, provided
that any failure to give or any delay in giving such notice shall not affect
the validity of any such set-off or application under this Section.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

 

SECTION 9.9.  Governing Law;
Jurisdiction; Consent to Service of Process.  (a) The Loan Documents (other than those containing a contrary express
choice of law provision) shall be governed by and construed in accordance with
the laws of the State of New York, but giving effect to federal laws applicable
to national banks.

 

(b)           Each Loan Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any U.S. Federal or New York State court sitting in New York,
New York in any action or proceeding arising out of or relating to any Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by 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 any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or its properties in the courts of any jurisdiction.

 

(c)           Each
Loan Party hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, 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 law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)           Each
party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.1.  Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY 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, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY 

 

66

 

HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY 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 BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (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,
(c) to the extent required by Requirement of Laws or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, 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 (ii)  any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with
the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, the Issuing Bank or
any Lender on a non-confidential basis from a source other than the
Borrower.  For the purposes of this
Section, “Information” means all information received from the Borrower
relating to the Borrower or their business, other than any such information
that is available to the Administrative Agent, the Issuing Bank or any Lender
on a non-confidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower 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 LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 9.12
FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE BORROWER AND ITS AFFILIATES AND  THEIR RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH
MATERIAL NON-

 

67

 

PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE
LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS,
FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE
COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE
LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE
QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES
AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

SECTION 9.13.  Several Obligations;
Nonreliance; Violation of Law. 
The respective obligations of the Lenders hereunder are several and not
joint and the failure of any Lender to make any Loan or perform any of its
obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. Each Lender hereby represents that it is not relying on
or looking to any margin stock for the repayment of the Borrowings provided for
herein.  Anything contained in this
Agreement to the contrary notwithstanding, neither the Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrower in violation of any
Requirement of Law.

 

SECTION 9.14.  USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
names and addresses of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Act.

 

SECTION 9.15.  Disclosure. Each
Loan Party and each Lender hereby acknowledges and agrees that the
Administrative Agent and/or its Affiliates from time to time may hold
investments in, make other loans to or have other relationships with any of the
Loan Parties and their respective Affiliates.

 

SECTION 9.16. 
Appointment for Perfection.  Each Lender hereby appoints
each other Lender as its agent for the purpose of perfecting Liens, for the
benefit of the Administrative Agent and the Lenders, in assets which, in
accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession.  Should any
Lender (other than the Administrative Agent) obtain possession of any such
Collateral, such Lender shall notify the Administrative Agent thereof, and,
promptly upon the Administrative Agent’s request therefor shall deliver such
Collateral to the Administrative Agent or otherwise deal with such Collateral
in accordance with the Administrative Agent’s instructions.

 

68

 

SECTION 9.17.  Interest Rate Limitation.
 Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

 

ARTICLE 10

LOAN GUARANTY(1)

 

SECTION 10.1.  Guaranty.  Each Loan Guarantor (other than those that
have delivered a separate Guaranty) hereby agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to the
Lenders, the prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of the Secured
Obligations and all costs and expenses including, without limitation, all court
costs and attorneys’ and paralegals’ fees (including allocated costs of
in-house counsel and paralegals) and expenses paid or incurred by the
Administrative Agent, the Issuing Bank and the Lenders in endeavoring to
collect all or any part of the Secured Obligations from, or in prosecuting any
action against, the Borrower, any Loan Guarantor or any other guarantor of all
or any part of the Secured Obligations (such costs and expenses, together with
the Secured Obligations, collectively the “Guaranteed Obligations”).
Each Loan Guarantor further agrees that the Guaranteed Obligations may be
extended or renewed in whole or in part without notice to or further assent
from it, and that it remains bound upon its guarantee notwithstanding any such
extension or renewal. All terms of this Loan Guaranty apply to and may be enforced by or on
behalf of any domestic or foreign branch or Affiliate of any Lender that
extended any portion of the Guaranteed Obligations.

 

SECTION 10.2.  Guaranty of Payment.  This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the
Administrative Agent, the Issuing Bank or any Lender to sue the Borrower, any
Loan Guarantor, any other guarantor, or any other person obligated for all or
any part of the Guaranteed Obligations (each, an “Obligated Party”), or
otherwise to enforce its payment against any collateral securing all or any
part of the Guaranteed Obligations.

 

SECTION 10.3.  No Discharge or
Diminishment of Loan Guaranty. 
(a) Except as otherwise provided for herein, the obligations of
each Loan Guarantor hereunder are unconditional and absolute and not subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release,
extension, renewal, settlement, surrender, alteration, or compromise of any of
the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any 

 

(1) 
Please note
that this Loan Guaranty should only be used to bind the Loan Parties as it is
missing representations and setoff language that is covered elsewhere in the
Credit Agreement.  Use a separate
guaranty for non-Loan Party guarantors and foreign Subsidiary guarantors.

 

69

 

Obligated Party, or their assets or any resulting
release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Loan Guarantor may
have at any time against any Obligated Party, the Administrative Agent, the
Issuing Bank, any Lender, or any other person, whether in connection herewith
or in any unrelated transactions.

 

(b)           The obligations of each Loan Guarantor hereunder are not
subject to any defense or setoff, counterclaim, recoupment, or termination
whatsoever by reason of the invalidity, illegality, or unenforceability of any
of the Guaranteed Obligations or otherwise, or any provision of applicable law
or regulation purporting to prohibit payment by any Obligated Party, of the
Guaranteed Obligations or any part thereof.

 

(c)           Further, the obligations of any Loan Guarantor hereunder
are not discharged or impaired or otherwise affected by: (i) the failure
of the Administrative Agent, the Issuing Bank or any Lender to assert any claim
or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement
to any provision of any agreement relating to the Guaranteed Obligations; (iii) any
release, non-perfection, or invalidity of any indirect or direct security for
the obligations of the Borrower for all or any part of the Guaranteed
Obligations or any obligations of any other guarantor of or other person liable
for any of the Guaranteed Obligations; (iv) any action or failure to act
by the Administrative Agent, the Issuing Bank or any Lender with respect to any
collateral securing any part of the Guaranteed Obligations; or (v) any
default, failure or delay, willful or otherwise, in the payment or performance
of any of the Guaranteed Obligations, or any other circumstance, act, omission
or delay that might in any manner or to any extent vary the risk of such Loan
Guarantor or that would otherwise operate as a discharge of any Loan Guarantor
as a matter of law or equity (other than the indefeasible payment in full in
cash of the Guaranteed Obligations).

 

SECTION 10.4.  Defenses Waived.  To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any Loan Guarantor, other
than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any person against any
Obligated Party, or any other person. 
Each Loan Guarantor confirms that it is not a surety under any state law
and shall not raise any such law as a defense to its obligations
hereunder.  The Administrative Agent may,
at its election, foreclose on any Collateral held by it by one or more judicial
or nonjudicial sales, accept an assignment of any such Collateral in lieu of
foreclosure or otherwise act or fail to act with respect to any collateral
securing all or a part of the Guaranteed Obligations, compromise or adjust any
part of the Guaranteed Obligations, make any other accommodation with any
Obligated Party or exercise any other right or remedy available to it against
any Obligated Party, without affecting or impairing in any way the liability of
such Loan Guarantor under this Loan Guaranty except to the extent the
Guaranteed Obligations have been fully and indefeasibly paid in cash.  To the fullest extent permitted by applicable
law, each Loan Guarantor waives any defense arising out of any such election
even though that election may operate, pursuant to applicable law, to impair or
extinguish any right of reimbursement or subrogation or other right or remedy
of any Loan Guarantor against any Obligated Party or any security.

 

SECTION 10.5.  Rights of Subrogation.  No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until the Loan Parties and the Loan Guarantors have
fully performed all their obligations to the Administrative Agent, the Issuing
Bank and the Lenders.

 

70

 

SECTION 10.6.  Reinstatement; Stay of
Acceleration.  If at any time
any payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, each Loan Guarantor’s obligations
under this Loan Guaranty with respect to that payment shall be reinstated at
such time as though the payment had not been made and whether or not the
Administrative Agent, the Issuing Bank and the Lenders are in possession of
this Loan Guaranty. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.

 

SECTION 10.7.  Information.  Each Loan Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each Loan Guarantor assumes and incurs under this Loan
Guaranty, and agrees that neither the Administrative Agent, the Issuing Bank
nor any Lender shall have any duty to advise any Loan Guarantor of information
known to it regarding those circumstances or risks.

 

SECTION 10.8.  Termination.  The Lenders may continue to make loans or
extend credit to the Borrower based on this Loan Guaranty until five days after
it receives written notice of termination from any Loan Guarantor.  Notwithstanding receipt of any such notice,
each Loan Guarantor will continue to be liable to the Lenders for any
Guaranteed Obligations created, assumed or committed to prior to the fifth day
after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any
part of that Guaranteed Obligations.

 

SECTION 10.9.  Taxes.  All payments of the Guaranteed Obligations
will be made by each Loan Guarantor free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if any Loan
Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Guarantor
shall make such deductions and (iii) such Loan Guarantor shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

SECTION 10.10.  Maximum Liability.  The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law,
or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Loan Guarantor under this Loan Guaranty would otherwise be held or determined
to be avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other
provision of this Loan Guaranty to the contrary, the amount of such liability
shall, without any further action by the Loan Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Loan Guarantor’s “Maximum Liability”.  This Section with respect to the Maximum
Liability of each Loan Guarantor is intended solely to preserve the rights of
the Lenders to the maximum extent not subject to avoidance under applicable
law, and no Loan Guarantor nor any other person or entity shall have any right
or claim under this Section with respect to such Maximum Liability, except
to the extent necessary so that the obligations of any Loan Guarantor hereunder
shall not be rendered voidable under applicable law. Each Loan Guarantor agrees
that the Guaranteed Obligations may at any time and from time to time exceed
the Maximum Liability of each Loan Guarantor without impairing this Loan
Guaranty or affecting the rights and remedies of the 

 

71

 

Lenders hereunder, provided that,
nothing in this sentence shall be construed to increase any Loan Guarantor’s
obligations hereunder beyond its Maximum Liability.

 

SECTION 10.11.  Contribution.  In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or
shall suffer any loss as a result of any realization upon any collateral
granted by it to secure its obligations under this Loan Guaranty, each other
Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute to such
Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable
Percentage” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For purposes of this Article X,
each Non-Paying Guarantor’s “Applicable Percentage” with respect to any
such payment or loss by a Paying Guarantor shall be determined as of the date
on which such payment or loss was made by reference to the ratio of (i) such
Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Loan Guarantors
hereunder (including such Paying Guarantor) as of such date (without giving
effect to any right to receive, or obligation to make, any contribution
hereunder), or to the extent that a Maximum Liability has not been determined
for any Loan Guarantor, the aggregate amount of all monies received by such
Loan Guarantors from the Borrower after the date hereof (whether by loan,
capital infusion or by other means). 
Nothing in this provision shall affect any Loan Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Loan
Guarantor’s Maximum Liability).  Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of
the Guaranteed Obligations.  This
provision is for the benefit of both the Administrative Agent, the Issuing
Bank, the Lenders and the Loan Guarantors and may be enforced by any one, or
more, or all of them in accordance with the terms hereof.

 

SECTION 10.12.  Liability Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Administrative Agent, the
Issuing Bank and the Lenders under this Agreement and the other Loan Documents
to which such Loan Party is a party or in respect of any obligations or
liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

[remainder of page intentionally
left blank; signature pages follow]

 

72

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  VIRTUSA
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Ranjan Kalia

  
	
   

  	
  Name:
  Ranjan Kalia

  
	
   

  	
  Title:
  SVP and CFO

  
	
   

  	
   

  
	
   

  	
  OTHER LOAN PARTIES:

  
	
   

  	
   

  
	
   

  	
  INSOURCE
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/Ranjan
  Kalia

  
	
   

  	
  Name:
  Ranjan Kalia

  
	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  
	
   

  	
  INSOURCE,
  LLC

  
	
   

  	
   

  
	
   

  	
  By:
  InSource Holdings, Inc

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Ranjan Kalia

  
	
   

  	
  Name:
  Ranjan Kalia

  
	
   

  	
  Title:
  Treasurer

  

 

1

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually, as Administrative Agent and Issuing Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Scott A. McNamara

  
	
   

  	
   

  	
  Name:
  Scott A. McNamara

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Scott A. McNamara

  
	
   

  	
   

  	
  Name:
  Scott A. McNamara

  
	
   

  	
   

  	
  Title:  Vice President

  

 

2

 

COMMITMENT
SCHEDULE

 

	
  Lender

  	
   

  	
  Revolving

  Commitment

  	
   

  	
  Commitment

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  

 

 

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”)
is dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee] (the “Assignee”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

 

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as
contemplated below (i) all of the Assignor’s rights and obligations in its
capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any letters of credit and guarantees included in such facilities)
and (ii) to the extent permitted to be assigned under applicable law, all
claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing, including contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned
pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [and
  is an Affiliate/Approved Fund of [identify Lender](2)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:
                                         ,
  as the administrative agent under the Credit Agreement

  

 

(2) 
Select as applicable.

 

 

	
  5.

  	
   

  	
  Credit
  Agreement:

  	
   

  	
  The
  Credit Agreement dated as of
                
  among Virtusa Corporation, the Lenders parties thereto, JPMorgan Chase Bank,
  N.A., as Administrative Agent, and the other lenders parties thereto

  

 

 

6.                                       Assigned
Interest:

 

	
  Facility
  Assigned(3)

  	
   

  	
  Aggregate Amount of

  Commitment/Loans 

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans(4)

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

Effective
Date:                             
      , 20      
[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE
OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The
Assignee agrees to deliver to the Administrative Agent a completed Administrative
Questionnaire in which the Assignee designates on or more Credit Contacts to
whom all syndicate-level information (which may contain material non-public
information about the Borrower, the Loan Parties and their Related Parties or
their respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and
applicable laws, including Federal and state securities laws.

 

The
terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  

 

(3) 
Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Revolving
Commitment,” “Term Loan Commitment,” etc.)

(4) 
Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

 

	
  [Consented
  to and](5) Accepted:

  
	
   

  
	
  [NAME
  OF ADMINISTRATIVE AGENT], as

  
	
  Administrative Agent

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  [Consented
  to:](6)

  
	
   

  
	
  [NAME
  OF RELEVANT PARTY]

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  

 

(5) 
To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

(6) 
To be added only if the consent of the Borrower and/or other parties (e.g.
Issuing Bank) is required by the terms of the Credit Agreement.

 

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and
Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a
copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section       
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is
a Foreign Lender, attached to the Assignment and Assumption is any
documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.

 

2.   Payments.    From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.  General Provisions.
This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns.  This

 

 

Assignment
and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment and Assumption by facsimile shall be
effective as delivery of a manually executed counterpart of this Assignment and
Assumption.  This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of
the State of New York.

 

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

To:                              The Lenders
parties to the

Credit Agreement Described Below

 

This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of
                 ,
2010 (as amended, modified, renewed or extended from time to time, the “Agreement”)
among  Virtusa Corporation (the “Borrower”),
the other Loan Parties, the Lenders party thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent for the Lenders and as the Issuing Bank.  Unless otherwise defined herein, capitalized
terms used in this Compliance Certificate have the meanings ascribed thereto in
the Agreement.

 

THE UNDERSIGNED HEREBY
CERTIFIES THAT:

 

1.     I am the duly elected                   
of the Borrower;

 

2.     I have reviewed the terms
of the Agreement and I have made, or have caused to be made under my
supervision, a detailed review of the transactions and conditions of the
Borrower and its Subsidiaries during the accounting period covered by the
attached financial statements [for quarterly or
monthly financial statements add: and such financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes];

 

3.   The examinations described in
paragraph 2 did not disclose, except as set forth below, and I have no
knowledge of (i) the existence of any condition or event which constitutes
a Default during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate or (ii) any
change in GAAP or in the application thereof that has occurred since the date
of the audited financial statements referred to in Section 3.4 of the
Agreement;

 

4.   I hereby certify that no Loan
Party has changed (i) its name, (ii) its chief executive office, (iii) principal
place of business, (iv) the type of entity it is or (v) its state of
incorporation or organization without having given the Agent the notice
required by the Security Agreement; and

 

5.   Schedule I attached
hereto sets forth financial data and computations evidencing the Borrower’s
compliance with certain covenants of the Agreement, all of which data and
computations are true, complete and correct.

 

 

Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the (i) nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event or (i) the
change in GAAP or the application thereof and the effect of such change on the
attached financial statements:

 

 

 

The foregoing certifications, together with the computations set forth
in Schedule I and Schedule II hereto and the financial statements delivered
with this Certificate in support hereof, are made and delivered this     
day of         ,
      .

 

	
   

  	
  VIRTUSA
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

SCHEDULE I

 

Compliance as of
                  ,
         with

Provisions of     and       of

the Agreement

 

 

EXHIBIT C

 

JOINDER AGREEMENT

 

THIS
JOINDER AGREEMENT (this “Agreement”), dated as of
                    ,
        , 20    ,
is entered into between
                                                                ,
a                                   
(the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its capacity as
administrative agent (the “Administrative Agent”) under that certain
Credit Agreement, dated as of
                      ,
    , 2010 among VIRTUSA CORPORATION, a Delaware corporation
(the “Borrower”), the Loan Parties party thereto, the Lenders party
thereto and the Administrative Agent (as the same may be amended, modified,
extended or restated from time to time, the “Credit Agreement”).  All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit Agreement.

 

The
New Subsidiary and the Administrative Agent, for the benefit of the Lenders,
hereby agree as follows:

 

1.             The New Subsidiary hereby
acknowledges, agrees and confirms that, by its execution of this Agreement, the
New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and
a “Loan Guarantor” for all purposes of the Credit Agreement and shall have all
of the obligations of a Loan Party and a Loan Guarantor thereunder as if it had
executed the Credit Agreement.  The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement,
including without limitation (a) all of the representations and warranties
of the Loan Parties set forth in Article III of the Credit Agreement, (b) all
of the covenants set forth in Articles V and VI of the Credit Agreement, and (c) all
of the guaranty obligations set forth in Article X of the Credit
Agreement.  Without limiting the
generality of the foregoing terms of this paragraph 1, the New Subsidiary,
subject to the limitations set forth in Section 10.10 of the Credit
Agreement, hereby guarantees, jointly and severally with the other Loan
Guarantors, to the Administrative Agent and the Lenders, as provided in Article X
of the Credit Agreement, the prompt payment and performance of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) strictly in accordance with the terms
thereof and agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and
severally together with the other Loan Guarantors, promptly pay and perform the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.

 

2.             If required, the New Subsidiary is,
simultaneously with the execution of this Agreement, executing and delivering
such Collateral Documents (and such other documents and instruments) as
requested by the Administrative Agent in accordance with the Credit Agreement.

 

 

3.             The address of the New Subsidiary
for purposes of Section 9.1 of the Credit Agreement is as follows:

 

 

 

4.             The New Subsidiary hereby waives
acceptance by the Administrative Agent and the Lenders of the guaranty by the
New Subsidiary upon the execution of this Agreement by the New Subsidiary.

 

5.             This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the same instrument.

 

6.             THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

IN
WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed by its authorized officer, and the Administrative Agent, for the
benefit of the Lenders, has caused the same to be accepted by its authorized
officer, as of the day and year first above written.

 

	
   

  	
  [NEW
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Acknowledged
  and accepted:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as Administrative

  
	
   

  	
   

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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