Document:

exv10w1

 

Exhibit 10.1

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of June 1, 2005

among

NAVARRE CORPORATION,

as Borrower,

THE OTHER PERSONS PARTY HERETO

THAT ARE DESIGNATED AS CREDIT PARTIES,

THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent, Agent and Lender

GECC CAPITAL MARKETS GROUP, INC.

as Lead Arranger

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	AMOUNT AND TERMS OF CREDIT	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	1.1	 	 	Credit Facilities.
	 	 	2	 
	

	 	 	1.2	 	 	Letters of Credit
	 	 	6	 
	

	 	 	1.3	 	 	Prepayments.
	 	 	6	 
	

	 	 	1.4	 	 	Use of Proceeds
	 	 	9	 
	

	 	 	1.5	 	 	Interest and Applicable Margins
	 	 	9	 
	

	 	 	1.6	 	 	[Intentionally Deleted]
	 	 	12	 
	

	 	 	1.7	 	 	[Intentionally Deleted]
	 	 	12	 
	

	 	 	1.8	 	 	Cash Management Systems
	 	 	12	 
	

	 	 	1.9	 	 	Fees
	 	 	12	 
	

	 	 	1.10	 	 	Receipt of Payments
	 	 	12	 
	

	 	 	1.11	 	 	Application and Allocation of Payments
	 	 	12	 
	

	 	 	1.12	 	 	Loan Account and Accounting
	 	 	13	 
	

	 	 	1.13	 	 	Indemnity
	 	 	14	 
	

	 	 	1.14	 	 	Access
	 	 	15	 
	

	 	 	1.15	 	 	Taxes
	 	 	15	 
	

	 	 	1.16	 	 	Capital Adequacy; Increased Costs; Illegality
	 	 	16	 
	

	 	 	1.17	 	 	Single Loan
	 	 	17	 
	

	 	 	1.18	 	 	Addition of Second Lien Loan
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	CONDITIONS PRECEDENT	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	2.1	 	 	Conditions to the Initial Loans
	 	 	18	 
	

	 	 	2.2	 	 	Further Conditions to Each Loan
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	REPRESENTATIONS AND WARRANTIES	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	3.1	 	 	Corporate Existence; Compliance with Law
	 	 	20	 
	

	 	 	3.2	 	 	Executive Offices, Collateral Locations, FEIN
	 	 	20	 
	

	 	 	3.3	 	 	Corporate Power, Authorization, Enforceable Obligations
	 	 	20	 
	

	 	 	3.4	 	 	Financial Statements and Projections
	 	 	21	 
	

	 	 	3.5	 	 	Material Adverse Effect
	 	 	22	 
	

	 	 	3.6	 	 	Ownership of Property; Liens
	 	 	22	 
	

	 	 	3.7	 	 	Labor Matters
	 	 	22	 
	

	 	 	3.8	 	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness
	 	 	23	 
	

	 	 	3.9	 	 	Government Regulation
	 	 	23	 
	

	 	 	3.10	 	 	Margin Regulations
	 	 	23	 
	

	 	 	3.11	 	 	Taxes
	 	 	24	 
	

	 	 	3.12	 	 	ERISA
	 	 	24	 
	

	 	 	3.13	 	 	No Litigation
	 	 	25	 
	

	 	 	3.14	 	 	Brokers
	 	 	25	 
	

	 	 	3.15	 	 	Intellectual Property
	 	 	25	 
	

	 	 	3.16	 	 	Full Disclosure
	 	 	26	 
	

	 	 	3.17	 	 	Environmental Matters
	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	
i

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	

	 	 	3.18	 	 	Insurance
	 	 	27	 
	

	 	 	3.19	 	 	Deposit and Disbursement Accounts
	 	 	27	 
	

	 	 	3.20	 	 	Government Contracts
	 	 	27	 
	

	 	 	3.21	 	 	Customer and Trade Relations
	 	 	27	 
	

	 	 	3.22	 	 	Agreements and Other Documents
	 	 	27	 
	

	 	 	3.23	 	 	Solvency
	 	 	27	 
	

	 	 	3.24	 	 	[Intentionally Deleted]
	 	 	28	 
	

	 	 	3.25	 	 	Status of Navarre CP, Navarre CLP and Navarre CS
	 	 	28	 
	

	 	 	3.26	 	 	FUNimation Acquisition Agreement
	 	 	28	 
	

	 	 	3.27	 	 	Vendor Advances
	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	FINANCIAL STATEMENTS AND INFORMATION	 	 	28	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	4.1	 	 	Reports and Notices
	 	 	28	 
	

	 	 	4.2	 	 	Communication with Accountants
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	5.1	 	 	Maintenance of Existence and Conduct of Business
	 	 	29	 
	

	 	 	5.2	 	 	Payment of Charges
	 	 	29	 
	

	 	 	5.3	 	 	Books and Records
	 	 	30	 
	

	 	 	5.4	 	 	Insurance; Damage to or Destruction of Collateral
	 	 	30	 
	

	 	 	5.5	 	 	Compliance with Laws
	 	 	31	 
	

	 	 	5.6	 	 	Supplemental Disclosure
	 	 	32	 
	

	 	 	5.7	 	 	Intellectual Property
	 	 	32	 
	

	 	 	5.8	 	 	Environmental Matters
	 	 	32	 
	

	 	 	5.9	 	 	Landlords’ Agreements
	 	 	33	 
	

	 	 	5.10	 	 	Clean Down
	 	 	33	 
	

	 	 	5.11	 	 	Interest Rate Agreements
	 	 	33	 
	

	 	 	5.12	 	 	Further Assurances
	 	 	34	 
	

	 	 	5.13	 	 	Second Lien Loan
	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	NEGATIVE COVENANTS	 	 	34	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	6.1	 	 	Mergers, Subsidiaries, Etc
	 	 	34	 
	

	 	 	6.2	 	 	Investments; Loans and Advances
	 	 	34	 
	

	 	 	6.3	 	 	Indebtedness
	 	 	36	 
	

	 	 	6.4	 	 	Employee Loans and Affiliate Transactions
	 	 	37	 
	

	 	 	6.5	 	 	Capital Structure and Business
	 	 	37	 
	

	 	 	6.6	 	 	Guaranteed Indebtedness
	 	 	38	 
	

	 	 	6.7	 	 	Liens and Related Matters
	 	 	38	 
	

	 	 	6.8	 	 	Sale of Stock and Assets
	 	 	39	 
	

	 	 	6.9	 	 	ERISA
	 	 	39	 
	

	 	 	6.10	 	 	Financial Covenants
	 	 	39	 
	

	 	 	6.11	 	 	Hazardous Materials
	 	 	39	 
	

	 	 	6.12	 	 	Sale-Leasebacks
	 	 	39	 
	

	 	 	6.13	 	 	Cancellation of Indebtedness
	 	 	39	 
	

	 	 	6.14	 	 	Restricted Payments
	 	 	39	 
	

	 	 	6.15	 	 	Change of Corporate Name or Location; Change of Fiscal Year
	 	 	40	 
	

	 	 	6.16	 	 	No Impairment of Intercompany Transfers
	 	 	40	 
	 
	 	 	 	 	 	 	 	 	 	 
	
ii

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	

	 	 	6.17	 	 	No Speculative Transactions
	 	 	40	 
	

	 	 	6.18	 	 	Leases; Real Estate Purchases
	 	 	41	 
	

	 	 	6.19	 	 	Amendments
	 	 	41	 
	

	 	 	6.20	 	 	Navarre CP, Navarre CLP and Navarre CS
	 	 	41	 
	

	 	 	6.21	 	 	Second Lien Credit Agreement
	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	TERM	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	7.1	 	 	Termination
	 	 	41	 
	

	 	 	7.2	 	 	Survival of Obligations Upon Termination of Financing Arrangements
	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT; RIGHTS AND REMEDIES	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	8.1	 	 	Events of Default
	 	 	41	 
	

	 	 	8.2	 	 	Remedies
	 	 	43	 
	

	 	 	8.3	 	 	Waivers by Credit Parties
	 	 	44	 
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT	 	 	44	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	9.1	 	 	Assignment and Participations
	 	 	44	 
	

	 	 	9.2	 	 	Appointment of Agent
	 	 	47	 
	

	 	 	9.3	 	 	Agent’s Reliance, Etc.
	 	 	47	 
	

	 	 	9.4	 	 	GE Capital and Affiliates
	 	 	48	 
	

	 	 	9.5	 	 	Lender Credit Decision
	 	 	48	 
	

	 	 	9.6	 	 	Indemnification
	 	 	48	 
	

	 	 	9.7	 	 	Successor Agent
	 	 	49	 
	

	 	 	9.8	 	 	Setoff and Sharing of Payments
	 	 	49	 
	

	 	 	9.9	 	 	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert	 	 	50	 
	

	 	 	9.10	 	 	Intercreditor Agreement
	 	 	52	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	SUCCESSORS AND ASSIGNS	 	 	52	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	10.1	 	 	Successors and Assigns
	 	 	52	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	53	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	11.1	 	 	Complete Agreement; Modification of Agreement
	 	 	53	 
	

	 	 	11.2	 	 	Amendments and Waivers
	 	 	53	 
	

	 	 	11.3	 	 	Fees and Expenses
	 	 	54	 
	

	 	 	11.4	 	 	No Waiver
	 	 	56	 
	

	 	 	11.5	 	 	Remedies
	 	 	56	 
	

	 	 	11.6	 	 	Severability
	 	 	56	 
	

	 	 	11.7	 	 	Conflict of Terms
	 	 	56	 
	

	 	 	11.8	 	 	Confidentiality
	 	 	56	 
	

	 	 	11.9	 	 	GOVERNING LAW
	 	 	57	 
	

	 	 	11.10	 	 	Notices
	 	 	58	 
	

	 	 	11.11	 	 	Section Titles
	 	 	58	 
	

	 	 	11.12	 	 	Counterparts
	 	 	58	 
	

	 	 	11.13	 	 	WAIVER OF JURY TRIAL
	 	 	58	 
	

	 	 	11.14	 	 	Press Releases and Related Matters
	 	 	59	 
	

	 	 	11.15	 	 	Reinstatement
	 	 	59	 
	 
	 	 	 	 	 	 	 	 	 	 
	
iii

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	

	 	 	11.16	 	 	Advice of Counsel
	 	 	59	 
	

	 	 	11.17	 	 	No Strict Construction
	 	 	59	 
	

	 	 	11.18	 	 	Compliance with Federal Law
	 	 	59	 
	

	 	 	11.19	 	 	Customer Identification – USA Patriot Act Notice
	 	 	60	 
	 
	 	 	 	 	 	 	 	 	 	 
	12.	 	AMENDMENT AND RESTATEMENT	 	 	60	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	12.1	 	 	Interrelationship with the Existing Credit Agreement
	 	 	60	 
	

	 	 	12.2	 	 	Confirmation of Existing Obligations
	 	 	60	 

iv

 

INDEX OF APPENDICES

	 	 	 	 	 
	Annex A (Recitals)

	 	-
	 	Definitions
	Annex B (Section 1.2)

	 	-
	 	Letters of Credit
	Annex C (Section 1.8)

	 	-
	 	Cash Management System
	Annex D (Section 2.1(a))

	 	-
	 	Closing Checklist
	Annex E (Section 4.1(a))

	 	-
	 	Financial Statements and
Projections – Reporting
	Annex F (Section 4.1(b))

	 	-
	 	Collateral Reports
	Annex G (Section 6.10)

	 	-
	 	Financial Covenants
	Annex H (Section 9.9(a))

	 	-
	 	Lenders’ Wire Transfer Information
	Annex I (Section 11.10)

	 	-
	 	Notice Addresses
	Annex J (from Annex A-

Commitments definition)

	 	-
	 	Commitments as of Closing Date
	 
	 	 	 	 
	Exhibit 1.1(a)(i)

	 	-
	 	Form of Notice of Revolving Credit Advance
	Exhibit 1.1(a)(ii)

	 	-
	 	Form of Revolving Note
	Exhibit 1.1(b)(ii)

	 	-
	 	Form of Swing Line Note
	Exhibit 1.1(c)(i)

	 	-
	 	Form of Term B Note
	Exhibit 1.1(d)(i)

	 	-
	 	Form of Term C Note
	Exhibit 1.5(e)

	 	-
	 	Form of Notice of Conversion/Continuation
	Exhibit 9.1(a)

	 	-
	 	Form of Assignment Agreement
	Exhibit B-1

	 	-
	 	Application for Standby Letter of Credit
	Schedule 1.1

	 	-
	 	Agent’s Representatives
	Disclosure Schedule 3.1

	 	-
	 	Type of Entity; State of Organization
	Disclosure Schedule 3.2

	 	-
	 	Executive Offices, Collateral Locations, FEIN
	Disclosure Schedule 3.4

	 	-
	 	Financial Statement Exceptions
	Disclosure Schedule 3.4(a)

	 	-
	 	Financial Statements
	Disclosure Schedule 3.4(b)

	 	-
	 	Projections
	Disclosure Schedule 3.4(c)

	 	-
	 	Pro Forma
	Disclosure Schedule 3.6

	 	-
	 	Real Estate and Leases
	Disclosure Schedule 3.7

	 	-
	 	Labor Matters
	Disclosure Schedule 3.8

	 	-
	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock
	Disclosure Schedule 3.11

	 	-
	 	Tax Matters
	Disclosure Schedule 3.12

	 	-
	 	ERISA Plans
	Disclosure Schedule 3.13

	 	-
	 	Litigation
	Disclosure Schedule 3.15

	 	-
	 	Intellectual Property
	Disclosure Schedule 3.17

	 	-
	 	Hazardous Materials
	Disclosure Schedule 3.18

	 	-
	 	Insurance
	Disclosure Schedule 3.19

	 	-
	 	Deposit and Disbursement Accounts
	Disclosure Schedule 3.20

	 	-
	 	Government Contracts
	Disclosure Schedule 3.22

	 	-
	 	Material Agreements
	Disclosure Schedule 3.27

	 	-
	 	Vendor Advances
	Disclosure Schedule 5.1

	 	-
	 	Trade Names
	Disclosure Schedule 6.3

	 	-
	 	Indebtedness
	Disclosure Schedule 6.4(a)

	 	-
	 	Transactions with Affiliates
	 
	 	 	 	 
	
v

 

 

	 	 	 	 	 
	Disclosure Schedule 6.7

	 	-
	 	Existing Liens
	 
	 	 	 	 
	
vi

 

 

     This THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of June
1, 2005, by and among NAVARRE CORPORATION, a Minnesota corporation (“Borrower”), the Credit
Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its
individual capacity, “GE Capital”), for itself, as Lender, and as Agent for Lenders, and
the other Lenders signatory hereto from time to time.

RECITALS

     WHEREAS, Borrower, the other Credit Parties signatory thereto, Agent and the Lenders signatory
thereto are parties to that certain Second Amended and Restated Credit Agreement dated as of May
11, 2005 (as amended or otherwise modified prior to the date hereof, the “Existing Credit
Agreement”);

     WHEREAS, Borrower has requested that Lenders extend a revolving credit facility and a term
credit facility to Borrower of up to One Hundred Sixty Five Million Dollars ($165,000,000) in the
aggregate for the purposes of (a) funding the FUNimation Acquisition pursuant to Section
2.1(g) hereof, (b) providing working capital financing for Borrower and Capital Expenditures
for Borrower as permitted hereunder, (c) providing funds for other general corporate purposes of
Borrower and (d) providing funds for other purposes permitted hereunder; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to Borrower of up to such
amount upon the terms and conditions set forth herein;

     WHEREAS, Borrower has agreed to secure all of its obligations under the Loan Documents by
granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon all
of its existing and after-acquired personal and real property;

     WHEREAS, the Credit Parties signatory hereto (other than Borrower) have agreed to guarantee
the Obligations and to grant to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon all of their existing and after-acquired personal and real property to secure the
Obligations; and

     WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in
Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of
construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, “Appendices”) hereto, or expressly identified
to this Agreement, are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as part of the
Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto agree to amend and
restate the Existing Credit Agreement in its entirety as set forth herein:

 

 

1. AMOUNT AND TERMS OF CREDIT

     1.1 Credit Facilities.

     (a) Revolving Credit Facility.

          (i) Subject to the terms and conditions hereof, each Revolving Lender agrees to make
available to Borrower from time to time until the Commitment Termination Date its Pro Rata
Share of advances (each, a “Revolving Credit Advance”). The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving
Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and
not joint. Until the Commitment Termination Date, Borrower may from time to time borrow,
repay and reborrow under this Section 1.1(a); provided, that the amount of
any Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability
at such time. Borrowing Availability may be further reduced by Reserves imposed by Agent
in its reasonable credit judgment for reasons relating to any Credit Party, any Credit
Party’s business or industry and/or the Agent’s ability to collect or realize the full
value of any Collateral. Each Revolving Credit Advance shall be made on notice by Borrower
to one of the representatives of Agent identified in Schedule 1.1 at the address
specified therein. Any such notice must be given no later than (1) 11:00 a.m. (Chicago
time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index
Rate Loan, or (2) 11:00 a.m. (Chicago time) on the date which is 3 Business Days prior to
the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a
“Notice of Revolving Credit Advance”) must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit and such other information as may be
required by Agent. If Borrower desires to have the Revolving Credit Advances bear interest
by reference to a LIBOR Rate, it must comply with Section 1.5(e).

          (ii) Except as provided in Section 1.12, Borrower shall execute and deliver to
each Revolving Lender a note to evidence the Revolving Loan Commitment of that Revolving
Lender. Each note shall be in the principal amount of the Revolving Loan Commitment of the
applicable Revolving Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a “Revolving Note” and, collectively, the
“Revolving Notes”). Each Revolving Note shall represent the obligation of Borrower
to pay the amount of Revolving Lender’s Revolving Loan Commitment or, if less, such
Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving
Credit Advances to Borrower together with interest thereon as prescribed in Section
1.5. The entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.

     (b) Swing Line Facility.

          (i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice of
Revolving Credit Advance. Subject to the terms and conditions

2

 

hereof, the Swing Line Lender may, in its discretion, make available from time to time
until the Commitment Termination Date advances (each, a “Swing Line Advance”) in
accordance with any such notice. The provisions of this Section 1.1(b) shall not
relieve Revolving Lenders of their obligations to make Revolving Credit Advances under
Section 1.1(a); provided that if the Swing Line Lender makes a Swing Line Advance
pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving
Credit Advance that otherwise may be made by Revolving Credit Lenders pursuant to such
notice. The aggregate amount of Swing Line Advances outstanding shall not exceed at any
time the lesser of (A) the Swing Line Commitment and (B) Borrowing Availability (“Swing
Line Availability”). Until the Commitment Termination Date, Borrower may from time to
time borrow, repay and reborrow under this Section 1.1(b). Each Swing Line Advance
shall be made pursuant to a Notice of Revolving Credit advance delivered by Borrower to
Agent in accordance with Section 1.1(a). Any such notice must be given no later
than 11:00 a.m. (Chicago time) on the Business Day of the proposed Swing Line Advance.
Unless the Swing Line Lender has received at least one Business Day’s prior written notice
from Requisite Lenders instructing it not to make a Swing Line Advance, the Swing Line
Lender shall, notwithstanding the failure of any condition precedent set forth in
Sections 2.2, be entitled to fund that Swing Line Advance, and to have such
Revolving Lender make Revolving Credit Advances in accordance with Section
1.1(b)(iii) or purchase participating interests in accordance with Section
1.1(b)(iv). Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrower shall repay
the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.

          (ii) Borrower shall execute and deliver to the Swing Line Lender a promissory note to
evidence the Swing Line Commitment. Such note shall be in the principal amount of the
Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in
the form of Exhibit 1.1(b)(ii) (the “Swing Line Note”). The Swing Line
Note shall represent the obligation of Borrower to pay the amount of the Swing Line
Commitment or, if less, the aggregate unpaid principal amount of all Swing Line Advances
made to Borrower together with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the Swing Line Loan and all other noncontingent Obligations shall
be immediately due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.

          (iii) The Swing Line Lender, at any time and from time to time in its sole and
absolute discretion but at least once per week, may on behalf of Borrower (and Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each
Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to
Borrower (which shall be an Index Rate Loan) in an amount equal to that Revolving Lender’s
Pro Rata Share of the principal amount of the Swing Line Loan (the “Refunded Swing Line
Loan”) outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures
of Section 1.1(b)(iv) shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit

3

 

Advance are then satisfied, each Revolving Lender shall disburse directly to Agent,
its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior
to 2:00 p.m. (Chicago time), in immediately available funds on the Business Day next
succeeding the date that notice is given. The proceeds of those Revolving Credit Advances
shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Swing
Line Loan.

          (iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant
to Section 1.1(b)(iii), one of the events described in Sections 8.1(h) or
8.1(i) has occurred, then, subject to the provisions of Section 1.1(b)(v)
below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have
been made for the benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its Pro Rata Share of
such Swing Line Loan. Upon request, each Revolving Lender shall, prior to 2:00 p.m.
(Chicago time) in immediately available funds on the Business Day next succeeding the date
such request is made, promptly transfer to the Swing Line Lender, in immediately available
funds, the amount of its participation interest.

          (v) Each Revolving Lender’s obligation to make Revolving Credit Advances in accordance
with Section 1.1(b)(iii) and to purchase participation interests in accordance with
Section 1.1(b)(iv) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other
right that such Revolving Lender may have against the Swing Line Lender, Borrower or any
other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing. If any Revolving
Lender does not make available to Agent or the Swing Line Lender, as applicable, the
amount required pursuant to Sections 1.1(b)(iii) or 1.1(b)(iv), as the case may be,
the Swing Line Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Index Rate thereafter.

     (c) Term Loan B.

          (i) Each Term B Lender previously made a term loan (collectively, the “Term Loan B”)
on the Prior Closing Date to Borrower in the amount of such Term B Lender’s Term Loan B Commitment
at such time. On the Closing Date, all the proceeds of the Term Loan C shall be used to repay a
portion of the Term Loan B then outstanding (to be applied against amounts otherwise required to be
repaid on May 11, 2011). Each Term Loan B then remaining outstanding is evidenced by a promissory
note substantially in the form of Exhibit 1.1(c)(i) (each a “Term B Note” and
collectively the “Term B Notes”), and, except as provided in Section 1.12, Borrower
shall execute and deliver a Term B Note to each applicable Term B Lender. Each Term B Note shall
represent the obligation of Borrower to pay the amount loaned by each Term B Lender pursuant to
such Term B Lender’s Term Loan B Commitment, together

4

 

with interest thereon as prescribed in Section 1.5. Amounts repaid on Term Loan B may
not be reborrowed.

          (ii) Borrower shall repay the Term Loan B in twenty four (24) consecutive quarterly
installments on the first day of each Fiscal Quarter set forth below:

	 	 	 	 	 
	Payment	 	Installment	 
	  Dates	 	Amounts	 
	July 1, 2005
	 	$	1,250,000	 
	October 1, 2005
	 	$	1,250,000	 
	January 1, 2006
	 	$	1,250,000	 
	April 1, 2006
	 	$	1,250,000	 
	 
	 	 	 	 
	July 1, 2006
	 	$	1,250,000	 
	October 1, 2006
	 	$	1,250,000	 
	January 1, 2007
	 	$	1,250,000	 
	April 1, 2007
	 	$	1,250,000	 
	 
	 	 	 	 
	July 1, 2007
	 	$	1,250,000	 
	October 1, 2007
	 	$	1,250,000	 
	January 1, 2008
	 	$	1,250,000	 
	April 1, 2008
	 	$	1,250,000	 
	 
	 	 	 	 
	July 1, 2008
	 	$	1,250,000	 
	October 1, 2008
	 	$	1,250,000	 
	January 1, 2009
	 	$	1,250,000	 
	April 1, 2009
	 	$	1,250,000	 
	 
	 	 	 	 
	July 1, 2009
	 	$	1,250,000	 
	October 1, 2009
	 	$	1,250,000	 
	January 1, 2010
	 	$	1,250,000	 
	April 1, 2010
	 	$	1,250,000	 
	 
	 	 	 	 
	July 1, 2010
	 	$	1,250,000	 
	October 1, 2010
	 	$	1,250,000	 
	January 1, 2011
	 	$	1,250,000	 
	April 1, 2011
	 	$	1,250,000	 

          The then remaining unpaid principal balance of Term Loan B shall be due on May 11, 2011.

          (iii) Notwithstanding Section 1.1(c)(ii), the aggregate outstanding principal balance
of the Term Loan B shall be due and payable in full in immediately available funds on the
Commitment Termination Date, if not sooner paid in full.

5

 

          (iv) Each payment of principal with respect to the Term Loan B shall be paid to Agent for the
ratable benefit of each Term B Lender making a Term Loan B, ratably in proportion to each such Term
B Lender’s respective Term Loan B Commitment.

     (d) Term Loan C.

          (i) Subject to the terms and conditions hereof, each Term C Lender agrees to make a term loan
(collectively, the “Term Loan C” and together with the Term Loan B, the “Term
Loans”) on the Closing Date to Borrower in the amount of such Term C Lender’s Term Loan C
Commitment. The obligations of each Term C Lender hereunder shall be several and not joint. Each
such Term Loan C shall be evidenced by a promissory note substantially in the form of Exhibit
1.1(d)(i) (each a “Term C Note” and collectively the “Term C Notes”), and,
except as provided in Section 1.12, Borrower shall execute and deliver a Term C Note to
each applicable Term C Lender. Each Term C Note shall represent the obligation of Borrower to pay
the amount loaned by each Term C Lender pursuant to such Term C Lender’s Term Loan C Commitment,
together with interest thereon as prescribed in Section 1.5. Amounts repaid on Term Loan C
may not be reborrowed.

          (ii) Borrower shall repay the principal amount of the Term Loan in a single installment on
November 11, 2011, if not sooner paid in full.

          (iii) Notwithstanding Section 1.1(c)(ii), the aggregate outstanding principal balance
of the Term Loan C shall be due and payable in full in immediately available funds on the
Commitment Termination Date, if not sooner paid in full.

          (iv) Each payment of principal with respect to the Term Loan C shall be paid to Agent for the
ratable benefit of each Term C Lender making a Term Loan C, ratably in proportion to each such Term
C Lender’s respective Term Loan C Commitment.

     (e) Reliance on Notices. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume that
each Person executing and delivering any notice in accordance herewith was duly authorized, unless
the responsible individual acting thereon for Agent has actual knowledge to the contrary.

     1.2 Letters of Credit. Subject to and in accordance with the terms and conditions
contained herein and in Annex B, Borrower shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of
Borrower.

     1.3 Prepayments.

     (a) Voluntary Prepayments; Reductions in Revolving Loan Commitments. Borrower may at
any time on at least five (5) days’ prior written notice to Agent voluntarily prepay all or part of
the Term Loan B; provided that any such prepayments shall be in a minimum amount of
$5,000,000 and integral multiples of $250,000 in excess of such amount.
Borrower shall not voluntarily prepay the Term Loan C until the Revolving Loans and the Term

6

 

Loan B have been repaid in full, all commitments to make Revolving Loans hereunder have terminated
and all then outstanding Letters of Credit have been cash collateralized or otherwise satisfied in
accordance with Annex B hereunder. In addition, Borrower may at any time on at least 5
days’ prior written notice to Agent permanently reduce (but not terminate) the Revolving Loan
Commitment; provided that (A) any such reductions shall be in a minimum amount of
$3,000,000 and integral multiples of $250,000 in excess of such amount, (B) the Revolving Loan
Commitment shall not be reduced to an amount less than the amount of the Revolving Loan
outstanding, and (C) after giving effect to such reductions, Borrower shall comply with Section
1.3(b)(i). Borrower may at any time on at least ten 10 days’ prior written notice to Agent
terminate the Revolving Loan Commitment; provided that upon such termination all Loans and
other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations
shall be cash collateralized or otherwise satisfied in accordance with Annex B hereto. Any
voluntary prepayment of any Term Loan and voluntary prepayment and any reduction or termination of
the Revolving Loan Commitment must be accompanied by the payment of any LIBOR funding breakage
costs in accordance with Section 1.13(b). Upon any such reduction or termination of the
Revolving Loan Commitment, Borrower’s right to request Revolving Credit Advances, or request that
Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be; provided that a
permanent reduction of the Revolving Loan Commitment shall require a corresponding pro rata
reduction in the L/C Sublimit. Each notice of partial prepayment shall designate the Loan or other
Obligations to which such prepayment is to be applied; provided that any partial
prepayments of any Term Loan made by Borrower shall be applied to prepay the scheduled installments
of the applicable Term Loans in inverse order of maturity.

     (b) Mandatory Prepayments.

          (i) If at any time the outstanding balances of the Revolving Loan and the Swing Line
Loan exceed the Maximum Amount, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding Revolving Credit
Advances, Borrower shall provide cash collateral for the Letter of Credit Obligations in
the manner set forth in Annex B to the extent required to eliminate such excess.

          (ii) Immediately upon receipt by any Credit Party of any proceeds of any asset
disposition (excluding proceeds of asset dispositions permitted by Section 6.8(a),
but including any sale of Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly attributable to such
transaction and payable by Borrower in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior Liens (to the
extent such Liens constitute Permitted Encumbrances hereunder (but excluding, in any event,
Liens securing obligations under the Second Lien Credit Agreement)), if any, and (D) an
appropriate reserve for income taxes in
accordance with GAAP in connection therewith. Any such prepayment shall be applied in
accordance with Section 1.3(c).

7

 

          (iii) If Borrower issues or incurs any Indebtedness (other than Indebtedness permitted
under Section 6.3 hereof), no later than the Business Day following the date of
receipt of the proceeds thereof, Borrower shall prepay the Loans in an amount equal to all
such proceeds, net of underwriting discounts and commissions and other reasonable costs
paid to non-Affiliates in connection therewith. If Borrower issues Stock, no later than
the Business Day following the date of receipt of the proceeds thereof, Borrower shall
prepay the Loans in an amount equal fifty percent (50%) of such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).

          (iv) Borrower shall prepay the Obligations on the date that is ten (10) days after the
earlier of (A) the date on which Borrower’s annual audited Financial Statements for the
immediately preceding Fiscal Year (commencing with the Fiscal Year ending on or about March
31, 2006) are delivered pursuant to Annex E or (B) the date on which such annual
audited Financial Statements were required to be delivered pursuant to Annex E, in
an amount equal to seventy-five percent (75%) of Excess Cash Flow for the immediately
preceding Fiscal Year; provided, however, that if the Leverage Ratio as of
the last day of any Fiscal Year is less than 2.00:1, the percentage set forth above shall
be reduced to fifty percent (50%) of the Excess Cash Flow from such Fiscal Year. Any
prepayments from Excess Cash Flow paid pursuant to this clause (iv) shall be
applied in accordance with Section 1.3(c). Each such prepayment shall be
accompanied by a certificate signed by Borrower’s chief financial officer certifying the
manner in which Excess Cash Flow and the resulting prepayment were calculated, which
certificate shall be in form and substance satisfactory to Agent.

          (v) Any and all proceeds of “key man” life insurance (whether such proceeds arise by
reason of death benefit, at maturity, surrendering the policy and receiving the surrender
value thereof or otherwise) shall be immediately used to prepay the Obligations in an
amount equal to such proceeds (which shall be applied in accordance with Section
1.3(c)).

          (vi) If Borrower incurs any Indebtedness permitted by Section 6.3(a)(xii)
hereof, the Borrower shall cause the lenders thereof to send the proceeds thereof directly
to the Agent and, notwithstanding anything contained herein or otherwise that would require
(i) an application of such proceeds to any other amounts owing or outstanding hereunder or
under any other Loan Document or (ii) a pro rata application of such proceeds to any
amounts outstanding hereunder, such proceeds shall be used to prepay the Term Loan C.

     (c) Application of Certain Mandatory Prepayments. Any prepayments made by Borrower
pursuant to Sections 1.3(b)(ii), (b)(iii), (b)(iv) or (b)(v) above shall be applied as
follows: first, to Fees and reimbursable expenses of Agent then due and payable pursuant to
any of the Loan Documents; second, to interest then due and payable on the Term Loan B;
third, to prepay the scheduled principal installments of the Term Loan B in inverse order of maturity,
until the Term Loan B has been prepaid in full; fourth, to interest then due and payable on
the Swing Line Loan; fifth, to the principal balance of the Swing Line Loan until the same
has been

8

 

repaid in full; sixth, to interest then due and payable on the Revolving Credit
Advances; seventh, to the outstanding principal balance of Revolving Credit Advances until
the same has been paid in full; eighth, to any Letter of Credit Obligations, to provide
cash collateral therefor in the manner set forth in Annex B, until all such Letter of
Credit Obligations have been fully cash collateralized in the manner set forth in Annex B;
ninth, to Obligations under Interest Rate Agreements which the Agent has agreed in writing
relate to Term Loan B (pro rata, based upon the amount thereof); tenth, to accrued and
unpaid interest with respect to Term Loan C; eleventh, to the principal amount of Term Loan
C until the Term Loan C has been prepaid in full; twelfth, to Obligations under Interest
Rate Agreements (pro rata, based upon the amount thereof); and thirteenth, pro
rata to all other Obligations then due and owing. None of the Revolving Loan Commitment or
the Swing Line Commitment shall be permanently reduced by the amount of any such prepayments.

     (d) Application of Prepayments from Insurance Proceeds and Condemnation Proceeds.
Prepayments from insurance or condemnation proceeds in accordance with Section 5.4(c),
shall be applied as follows: insurance proceeds from casualties or losses to cash or Inventory
shall be applied first, to the Swing Line Loans and second, to the Revolving Credit Advances and
insurance or condemnation proceeds from casualties or losses to Equipment, Fixtures and Real Estate
shall be applied as set forth in Section 1.3(c). Neither the Revolving Loan Commitment nor
the Swing Line Loan Commitment shall be permanently reduced by the amount of any such prepayments.

     (e) No Implied Consent. Nothing in this Section 1.3 shall be construed to
constitute Agent’s or any Lender’s consent to any transaction that is not permitted by other
provisions of this Agreement or the other Loan Documents.

     1.4 Use of Proceeds.

     Under the Existing Credit Agreement, Borrower was permitted to use proceeds of the Term Loan B
on the Prior Closing Date to fund the FUNimation Acquisition and to pay fees, costs and expenses
associated with the Related Transactions in an aggregate amount not to exceed $4,500,000. On and
after the Closing Date, Borrower shall utilize the proceeds of the Term Loan B solely for the
financing of Borrower’s ordinary working capital, Capital Expenditures as permitted hereunder, and
for other general corporate purposes. Borrower shall utilize the proceeds of the (i) Term Loan C
solely to repay a portion of Term Loan B and (ii) Revolving Loan and the Swing Line Loan solely for
the financing of Borrower’s ordinary working capital, Capital Expenditures as permitted hereunder,
and for other general corporate purposes.

     1.5 Interest and Applicable Margins.

     (a) Borrower shall pay interest to Agent, for the ratable benefit of Lenders in accordance
with the various Loans being made by each Lender, in arrears on each applicable Interest Payment
Date, at the following rates: (i) with respect to the Revolving Credit Advances,
the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of
Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on
the aggregate Revolving Credit Advances outstanding from time to time; (ii) with

9

 

respect to the
Term Loan B, the Index Rate plus the Applicable Term Loan B Index Margin per annum or, at the
election of Borrower, the applicable LIBOR Rate plus the Applicable Term Loan B LIBOR Margin per
annum, (iii) with respect to the Term Loan C, the Index Rate plus the Applicable Term Loan C Index
Margin per annum or, at the election of Borrower, the applicable LIBOR Rate plus the Applicable
Term Loan C LIBOR Margin per annum and (iv) with respect to the Swing Line Loan, the Index Rate
plus the Applicable Revolver Index Margin per annum.

     The Applicable Margins are as follows:

	 	 	 	 	 
	Applicable Revolver Index Margin
	 	 	2.25	%
	 
	 	 	 	 
	Applicable Revolver LIBOR Margin
	 	 	3.50	%
	 
	 	 	 	 
	Applicable Term Loan B Index Margin
	 	 	2.50	%
	 
	 	 	 	 
	Applicable Term Loan B LIBOR Margin
	 	 	3.75	%
	 
	 	 	 	 
	Applicable Term Loan C Index Margin
	 	 	4.50	%
	 
	 	 	 	 
	Applicable Term Loan C LIBOR Margin
	 	 	5.75	%
	 
	 	 	 	 
	Applicable L/C Margin
	 	 	3.50	%

     (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the
maturity thereof will be extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.

     (c) All computations of Fees calculated on a per annum basis and interest shall be made by
Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the
period for which such interest and Fees are payable. The Index Rate is a floating rate determined
for each day. Each determination by Agent of an interest rate and Fees hereunder shall be final,
binding and conclusive on Borrower, absent manifest error.

     (d) So long as an Event of Default has occurred and is continuing under Section 8.1(a),
(h) or (i), or so long as any other Default or Event of Default has occurred and is continuing
and at the election of Agent (or upon the written request of Requisite Lenders) confirmed by
written notice from Agent to Borrower, the interest rates applicable to the Loans and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest
or the rate of such Fees otherwise applicable hereunder (“Default Rate”), and all
outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations.
Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such
Default or Event of Default until that Default or Event of Default is cured or waived and
shall be payable upon demand.

10

 

     (e) Subject to the conditions precedent set forth in Section 2.2, Borrower shall have
the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Loans (other than the Swing Line Loan) from Index Rate
Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of
LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to
the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any
Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after
the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans having
the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be
in a minimum amount of $1,000,000 and integral multiples of $500,000 in excess of such amount. Any
such election must be made by 11:00 a.m. (Chicago time) on the 3rd Business Day prior to (1) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR
Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower
wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in
such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m. (Chicago
time) on the 3rd Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default has occurred and is continuing or the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must make such election
by notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice of
Conversion/Continuation”) in the form of Exhibit 1.5(e). Notwithstanding anything to
the contrary contained herein or otherwise, unless otherwise agreed by the Agent, until the earlier
of (i) such time as (a) the primary syndication relating to the Credit Agreement has been completed
(as determined by the Agent) and (b) the Borrower has entered into the Interest Rate Agreements
required, pursuant to Section 5.11, to be entered into on or prior to the date which is 90
days after the Prior Closing Date or (ii) June 30, 2005, no Loan may be made as, or converted to, a
LIBOR Loan.

     (f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a court
of competent jurisdiction determines in a final order that the rate of interest payable hereunder
exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”),
then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate. Thereafter, interest hereunder shall be paid
at the rate(s) of interest and in the manner provided in Sections 1.5(a) through (e),
unless and until the rate of interest again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply. In no event shall the total interest received by any Lender pursuant
to the terms hereof exceed the amount that such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at
a daily rate equal to the Maximum Lawful Rate divided by the number of days in
the year in which such calculation is made. If, notwithstanding the provisions of this
Section 1.5(f), a court of competent jurisdiction shall finally determine that a Lender has
received interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by

11

 

applicable law, promptly apply such excess in the order specified in Section
1.11 and thereafter shall refund any excess to Borrower or as a court of competent
jurisdiction may otherwise order.

     1.6 [Intentionally Deleted]

     1.7 [Intentionally Deleted]

     1.8 Cash Management Systems. On or prior to the Closing Date, Borrower will establish
and will maintain until the Termination Date, the cash management systems described in Annex
C (the “Cash Management Systems”).

     1.9 Fees.

     (a) Borrower shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee
Letter, at the times specified for payment therein.

     (b) As additional compensation for the Revolving Lenders, Borrower shall pay to Agent, for the
ratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrower’s non-use of
available funds in an amount equal to one half of one percent (0.5%) per annum (calculated on the
basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the
Maximum Amount (as it may be reduced from time to time) and (y) the average for the period of the
daily closing balances of the Revolving Loan and the Swing Line Loan outstanding during the period
for which the such Fee is due.

     (c) Borrower shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of
Credit Fee as provided in Annex B.

     1.10 Receipt of Payments. Borrower shall make each payment under this Agreement not
later than 2:00 p.m. (Chicago time) on the day when due in immediately available funds in Dollars
to the Collection Account. All payments (including prepayments) to be made by Borrower on account
of principal, interest and fees shall be made without defense, set-off or counterclaim (except as
provided in Section 1.15). For purposes of computing interest and Fees and determining Borrowing
Availability as of any date, all payments shall be deemed received on the first Business Day
following the Business Day on which immediately available funds therefor are received in the
Collection Account prior to 2:00 p.m. Chicago time. Payments received after 2:00 p.m. Chicago time
on any Business Day or on a day that is not a Business Day shall be deemed to have been received on
the following Business Day.

     1.11 Application and Allocation of Payments.

     (a) So long as no Event of Default has occurred and is continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be applied, first, to the
Swing Line Loan and, second, to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shall
be applied as determined by Borrower, subject to the provisions of Section 1.3(a); and (iv)
mandatory prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d). All
payments and prepayments applied to a particular Loan shall be applied ratably

12

 

to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to any other payment, and as
to all payments made when an Event or Default has occurred and is continuing or following the
Commitment Termination Date, Borrower hereby irrevocably waives the right to direct the application
of any and all payments received from or on behalf of Borrower, and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply any and all such payments
against the Obligations as Agent may deem advisable notwithstanding any previous entry by Agent in
the Loan Account or any other books and records (and Agent and each Lender agrees with the Agent
and each other Lender that notwithstanding anything to the contrary contained herein or otherwise,
each payment made (i) when an Event or Default has occurred and is continuing and the maturity of
all or any portion of the Obligations has been accelerated or (ii) following the Commitment
Termination Date, shall be applied as follows: first, to Fees and reimbursable expenses of
Agent then due and payable pursuant to any of the Loan Documents; second, to accrued and
unpaid interest with respect to the Loans (other than Term Loan C) (pro rata, based upon the
amount thereof); third, to the principal amount of the Obligations outstanding (other than
Term Loan C or Obligations under one or more Interest Rate Agreements) and to cash collateralize
outstanding Letters of Credit (pro rata among all such Obligations, based upon the principal amount
thereof or the outstanding face amount of such Letters of Credit, as applicable) (and with respect
to amounts applied to Term Loan B, to the scheduled installments thereof in inverse order of
maturity), fourth, to Obligations under Interest Rate Agreements which the Agent has agreed
in writing relate to Term Loan B (pro rata, based upon the amount thereof); fifth, to
accrued and unpaid interest with respect to Term Loan C; sixth, to the principal amount of
Term Loan C; seventh, to Obligations under Interest Rate Agreements (pro rata, based upon
the amount thereof); and eighth, to any other Obligations then due and owing (pro rata,
based upon the amount thereof).

     (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance
on behalf of Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and principal, other than
principal of the Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts as and when due,
even if the amount of such charges would exceed Borrowing Availability at such time. At Agent’s
option and to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.

     1.12 Loan Account and Accounting. Agent shall maintain a loan account (the “Loan
Account”) on its books to record: all Advances and the Term Loans, all payments made by
Borrower, and all other debits
and credits as provided in this Agreement with respect to the Loans or any other Obligations.
All entries in the Loan Account shall be made in accordance with Agent’s customary accounting
practices as in effect from time to time. The balance in the Loan Account, as recorded on Agent’s
most recent printout or other written statement, shall, absent manifest error, be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrower; provided that any
failure to so record or any error in so recording shall not limit or otherwise affect Borrower’s
duty to pay the Obligations. Agent shall render to Borrower a monthly accounting of transactions
with respect to the Loans setting forth the balance of the Loan Account for the immediately
preceding month. Unless Borrower notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within 90 days after the date thereof, each
and every such accounting shall,

13

 

absent manifest error, be deemed final, binding and conclusive on
Borrower in all respects as to all matters reflected therein. Only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.

     1.13 Indemnity.

     (a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and
hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and representatives (each, an
“Indemnified Person”), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any appeal) that may be
instituted or asserted against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, “Indemnified Liabilities”); provided, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that
any such suit, action, proceeding, claim, damage, loss, liability or expense results from that
Indemnified Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT
OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF
ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

     (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)
any LIBOR Loans are repaid in whole or in part prior to the last day of any
applicable LIBOR Period (whether that repayment is made pursuant to any provision of this
Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or
otherwise); (ii) Borrower shall default in payment when due of the principal amount of or interest
on any LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall request a
termination of any borrowing, conversion into or continuation of LIBOR Loans after Borrower has
given notice requesting the same in accordance herewith; or (iv) Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice thereof in accordance herewith, then
Borrower shall indemnify and hold harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing. Such indemnification shall include
any loss (including loss of margin) or expense arising from the reemployment of funds obtained by
it or from fees payable to terminate deposits from which

14

 

such funds were obtained. For the purpose
of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to
have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at
the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable
to the relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR Loans
in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this subsection. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as
practicable under the circumstances, each Lender shall provide Borrower with its written
calculation of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing within 10 Business
Days of receipt thereof, specifying the basis for such objection in detail.

     1.14 Access. Each Credit Party that is a party hereto shall, during normal business
hours, from time to time upon 5 Business Day’s prior notice as frequently as Agent determines to be
appropriate: (a) provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect, audit and
make extracts from any Credit Party’s books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or Event of Default has
occurred and is continuing or if access is necessary to preserve or protect the Collateral as
determined by the Agent, each such Credit Party shall provide such access to Agent and to each
Lender at all times and without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrower shall provide Agent and each Lender with access to its
suppliers and customers. Each Credit Party shall make available to Agent and its counsel, as
quickly as is possible under the circumstances, originals or copies of all books and records that
Agent may reasonably request. Each Credit Party shall deliver any document or instrument necessary
for Agent, as it may from time to time request, to obtain records from any service bureau or other
Person that maintains records for such Credit Party, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by such Credit Party.
Agent will give Lenders at least 5 days’ prior notice (10 days’ prior notice for any audit to be
commenced during the period from and including October 1 through and
including January 15) of regularly scheduled audits. Representatives of other Lenders may
accompany Agent’s representatives on regularly scheduled audits at no charge to Borrower.

     1.15 Taxes.

     (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance
with this Section 1.15, free and clear of and without deduction for any and all present or
future Taxes. If Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Notes, (i) the sum payable shall be increased as much as shall
be necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.15) Agent or Lenders, as applicable, receive
an amount equal to the sum they would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full amount

15

 

deducted to the relevant
taxing or other authority in accordance with applicable law. Within 30 days after the date of any
payment of Taxes, Borrower shall furnish to Agent the original or a certified copy of a receipt
evidencing payment thereof. Agent and Lenders shall not be obligated to return or refund any
amounts received pursuant to this Section.

     (b) Each Credit Party that is a signatory hereto shall indemnify and, within 10 days of demand
therefor, pay Agent and each Lender for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 1.15) paid by Agent or such Lender,
as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally asserted.

     (c) Each Lender organized under the laws of a jurisdiction outside the United States (a
“Foreign Lender”) as to which payments to be made under this Agreement or under the Notes
are exempt from United States withholding tax under an applicable statute or tax treaty shall
provide to Borrower and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or
other applicable form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender’s entitlement to such exemption (a “Certificate of
Exemption”). Any foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and Agent prior to becoming a Lender hereunder. No
foreign Person may become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.

     1.16 Capital Adequacy; Increased Costs; Illegality.

     (a) If any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any request or directive
regarding capital adequacy, reserve requirements or similar requirements (whether or not having the
force of law), in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender and thereby reducing the rate of
return on such Lender’s capital as a consequence of its obligations hereunder, then Borrower shall
from time to time upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.

     (b) If, due to either (i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining any Loan, then Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be conclusive and binding on Borrower for all

16

 

purposes, absent manifest error. Each
Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, the affected Lender shall, to the extent
not inconsistent with such Lender’s internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.16(b).

     (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) shall make it
unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for
any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another
branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its
Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make or to make or to
continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith prepay
in full all outstanding LIBOR Loans owing to such Lender, together with interest accrued thereon,
unless Borrower, within 5 Business Days after the delivery of such notice and demand,
converts all LIBOR Loans into Index Rate Loans.

     (d) Within 15 days after receipt by Borrower of written notice and demand from any Lender (an
“Affected Lender”) for payment of additional amounts or increased costs as provided in
Sections 1.15(a), 1.16(a) or 1.16(b), Borrower may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no Default or Event of
Default has occurred and is continuing, Borrower, with the consent of Agent, may obtain, at
Borrower’s expense, a replacement Lender (“Replacement Lender”) for the Affected Lender,
which Replacement Lender must be reasonably satisfactory to Agent. If Borrower obtains a
Replacement Lender within 90 days following notice of its intention to do so, the Affected Lender
must sell and assign its Loans and Commitments to such Replacement Lender for an amount equal to
the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees
with respect thereto through the date of such sale; provided, that Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled
to receive under this Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower’s notice of intention to replace such
Affected Lender. Furthermore, if Borrower gives a notice of intention to replace and does not so
replace such Affected Lender within 90 days thereafter, Borrower’s rights under this Section
1.16(d) shall terminate and Borrower shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).

     1.17 Single Loan. All Loans to Borrower and all of the other Obligations of Borrower
arising under this Agreement and the other Loan Documents shall constitute one general obligation
of Borrower secured, until the Termination Date, by all of the Collateral.

     1.18 Addition of Second Lien Loan. Borrower shall, if requested by Agent, and to the
extent consistent with that certain letter agreement dated as of the Closing Date

17

 

between Borrower
and GE Capital, enter into the Second Lien Credit Agreement (and such other documents as are
requested with respect thereto) and utilize commercially reasonable efforts with respect thereto.

2. CONDITIONS PRECEDENT

     2.1 Conditions to the Initial Loans. No Lender shall be obligated to make any Loan or
incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or provided for in a
manner satisfactory to Agent, or waived in writing by Agent and Requisite Lenders:

     (a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, Borrower, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent shall reasonably
request in connection with the transactions contemplated by this Agreement and the other Loan
Documents, including all those listed in the Closing Checklist attached hereto as Annex D,
each in form and substance reasonably satisfactory to Agent.

     (b) Approvals. Agent shall have received (i) satisfactory evidence that the Credit
Parties have obtained all required consents and approvals of all Persons including all requisite
Governmental Authorities, to the execution, delivery and performance of this Agreement and the
other Loan Documents and the consummation of the Related Transactions or (ii) an officer’s
certificate in form and substance reasonably satisfactory to Agent affirming that no such consents
or approvals are required.

     (c) Payment of Fees. Borrower shall have paid the Fees required to be paid on the
Closing Date in the respective amounts specified in Section 1.9 (including the Fees
specified in the GE Capital Fee Letter), and shall have reimbursed Agent for all fees, costs and
expenses of closing presented as of the Closing Date.

     (d) Capital Structure: Other Indebtedness. The capital structure of each Credit Party
and the terms and conditions of all Indebtedness of each Credit Party shall be acceptable to Agent
in its sole discretion.

     (e) Due Diligence. Agent shall have completed its business and legal due diligence
with results reasonably satisfactory to Agent.

     (f) Consummation of Related Transactions. Agent shall have received fully executed
copies of the FUNimation Acquisition Documents and final and complete copies of each of the other
Related Transactions Documents, each of which shall be in full force and effect in form and
substance reasonably satisfactory to Agent. The FUNimation Acquisition and the other Related
Transactions shall have been consummated in accordance with the terms of the FUNimation Acquisition
Documents and the other Related Transactions Documents, the purchase price for the FUNimation
Acquisition shall not exceed (i) $100,400,000 cash, (ii) shares of Borrower common Stock not to be
less than 1,495,216 or greater than 1,827,486 and (iii) $17,000,000 earnout payments (subject to
post-closing purchase price adjustments in

18

 

accordance with the terms of Section 1.4 of the
FUNimation Purchase Agreement in an aggregate amount not to exceed $5,000,000).

     (g) Total Indebtedness. After giving effect to the Loans and the Related Transactions
and the payment of all fees and expenses in connection therewith, the aggregate Indebtedness (other
than deferred obligations owing in respect of the FUNimation Acquisition) of Borrower and its
Subsidiaries on a consolidated basis shall not exceed $140,505,000.

     (h) Cash and/or Cash Equivalents. After giving effect to the Loans and the Related
Transactions and the payment of all fees and expenses in connection therewith (on a pro forma
basis, with no Revolving Advances outstanding, trade payables being paid currently, expenses and
liabilities being paid in the ordinary course of business, without acceleration of sales and
without deterioration of working capital), Borrower and its Subsidiaries on a consolidated basis
shall have unrestricted cash and/or Cash Equivalents on hand or on deposit at a bank or financial
institution acceptable to Agent of at least $35,000,000 in the aggregate.

     2.2 Further Conditions to Each Loan. Except as otherwise expressly provided herein,
no Lender shall be obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or
incur any Letter of Credit Obligation, if, as of the date thereof:

     (a) any representation or warranty by any Credit Party contained herein or in any other Loan
Document is untrue or incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement, and Agent or Requisite Lenders have determined not to
make such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is untrue or incorrect;

     (b) any event or circumstance having a Material Adverse Effect has occurred since the date
hereof as determined by the Requisite Lenders, and Agent or Requisite Lenders
have determined not to make such Advance, convert or continue any Loan as a LIBOR Loan or
incur such Letter of Credit Obligation as a result of the fact that such event or circumstance has
occurred;

     (c) any Default or Event of Default has occurred and is continuing or would result after
giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent or
Requisite Lenders shall have determined not to make any Advance, convert or continue any Loan as a
LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of
Default;

     (d) after giving effect to any Advance (or the incurrence of any Letter of Credit
Obligations), the outstanding principal amount of the Revolving Loan would exceed the Maximum
Amount less the then outstanding principal amount of the Swing Line Loan; or

     (e) Borrower shall have paid all Fees owing and payable to GE Capital, Agent and Lenders as of
such date under this Agreement and the GE Capital Fee Letter.

19

 

The request and acceptance by Borrower of the proceeds of any Advance, the incurrence of any Letter
of Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shall
be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrower that
the conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrower of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.

3. REPRESENTATIONS AND WARRANTIES

     To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit
Parties executing this Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.

     3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a corporation,
limited liability company or limited partnership duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation or organization set forth
in Disclosure Schedule (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so qualified would not result
in exposure to losses, damages or liabilities in excess of $50,000; (c) has the requisite power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its business as now,
heretofore and proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals from or by, and has
made all material filings with, and has given all material notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and conduct; (e) is in
compliance with its charter and bylaws or partnership or operating agreement, as applicable; and
(f) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax
and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

     3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date, each
Credit Party’s name as it appears in official filings in its state of incorporation or
organization, state of incorporation or organization, organization type, organization number, if
any, issued by its state incorporation or organization, and the current location of each Credit
Party’s chief executive office and the warehouses and premises at which any Collateral is located
are set forth in Disclosure Schedule (3.2), and none of such locations has changed within
12 months preceding the Closing Date. In addition, Disclosure Schedule (3.2) lists the
federal employer identification number of each Credit Party.

     3.3 Corporate Power, Authorization, Enforceable Obligations. The execution, delivery
and performance by each Credit Party of the Loan Documents to which it is a party and the creation
of all Liens provided for therein: (a) are within such Person’s power; (b) have been duly
authorized by all necessary corporate, limited liability company or limited partnership action; (c)
do not contravene any provision of such Person’s charter, bylaws or

20

 

partnership or operating
agreement as applicable; (d) do not violate any law or regulation, or any order or decree of any
court or Governmental Authority; (e) do not conflict with or result in the breach or termination
of, constitute a default under or accelerate or permit the acceleration of any performance required
by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f) do not result in the
creation or imposition of any Lien upon any of the property of such Person other than those in
favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not
require the consent or approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made or complied
with prior to the Closing Date. Each of the Loan Documents shall be duly executed and delivered by
each Credit Party that is a party thereto and each such Loan Document shall constitute a legal,
valid and binding obligation of such Credit Party enforceable against it in accordance with its
terms.

     3.4 Financial Statements and Projections. Except for the Projections and except as
described in Disclosure Schedule 3.4, all Financial Statements concerning Borrower and its
Subsidiaries that are referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and normal year-end audit adjustments)
and present fairly in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for the periods then
ended.

     (a) Financial Statements. The following Financial Statements attached hereto as
Disclosure Schedule (3.4(a)) have been delivered on the date hereof:

          (i) The audited consolidated and consolidating balance sheets at March 31, 2004 and the
related statements of income and cash flows of Borrower and its Subsidiaries for the Fiscal 2004
then ended, certified by Ernst & Young, LLP.

          (ii) The unaudited balance sheet(s) at March 31, 2005 and the related statement(s) of income
and cash flows of Borrower and its Subsidiaries for the twelve month period then ended.

     (b) Projections. The Projections delivered on the date hereof and attached hereto as
Disclosure Schedule (3.4(b)) have been prepared by Borrower in light of the past operations
of its businesses, and reflect projections for the five year period beginning on April 1, 2005 on a
month-by-month basis for the first year and on a year-by-year basis thereafter. The Projections
are based upon estimates and assumptions stated therein, all of which Borrower believes to be
reasonable and fair in light of current conditions and current facts known to Borrower and, as of
the Closing Date, reflect Borrower’s good faith and reasonable estimates of the future financial
performance of Borrower and of the other information projected therein for the period set forth
therein.

     (c) Pro Forma. The Pro Forma delivered on the date hereof and attached hereto as
Disclosure Schedule (3.4(c)) was prepared by Borrower giving pro forma effect to
the Related Transactions, was based on the unaudited consolidated and consolidating balance sheets

21

 

of Borrower and its
Subsidiaries dated March 31, 2005 and of the unaudited balance sheets of the
FUNimation Companies dated December 31, 2004, and was prepared in accordance with GAAP, with only
such adjustments thereto as would be required in accordance with GAAP.

     3.5 Material Adverse Effect. Between March 31, 2004 and the Closing Date, (a) no
Credit Party has incurred any obligations, contingent or noncontingent liabilities, liabilities for
Charges, long-term leases or unusual forward or long-term commitments that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or has become binding
upon any Credit Party’s assets and no law or regulation applicable to any Credit Party has been
adopted that has had or could reasonably be expected to have a Material Adverse Effect, and (c) no
Credit Party is in default and to the best of Borrower’s knowledge no third party is in default
under any material contract, lease or other agreement or instrument, that alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Between March 31, 2004 and the
Closing Date no event has occurred, that alone or together with other events, could reasonably be
expected to have a Material Adverse Effect.

     3.6 Ownership of Property; Liens. As of the Closing Date, the real estate (“Real
Estate”) listed in Disclosure Schedule (3.6) constitutes all of the real property
owned, leased, subleased, or used by any Credit Party. Each Credit Party owns good and marketable
fee simple title to all of its owned Real Estate, and valid and marketable leasehold interests in
all of its leased Real Estate, all as described on Disclosure Schedule (3.6), and copies of
all such leases or a summary of terms
thereof reasonably satisfactory to Agent have been delivered to Agent. Disclosure
Schedule (3.6) further describes any Real Estate with respect to which any Credit Party is a
lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has good and
marketable title to, or valid leasehold interests in, all of its personal property and assets. As
of the Closing Date, none of the properties and assets of any Credit Party are subject to any Liens
other than Permitted Encumbrances, and there are no facts, circumstances or conditions known to
any Credit Party that may result in any Liens (including Liens arising under Environmental Laws)
other than Permitted Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and other documents,
and has duly effected all recordings, filings and other actions necessary to establish, protect and
perfect such Credit Party’s right, title and interest in and to all such Real Estate and other
properties and assets. Disclosure Schedule (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party’s Real Estate has suffered any material damage by
fire or other casualty loss that has not heretofore been repaired and restored in all material
respects to its original condition or otherwise remedied. As of the Closing Date, all material
permits required to have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and used have been
lawfully issued and are in full force and effect.

     3.7 Labor Matters. As of the Closing Date (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b)
hours worked by and payment made to employees of each Credit Party comply with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to such matters; (c)
all payments due from any Credit Party for employee health and welfare

22

 

insurance have been paid or
accrued as a liability on the books of such Credit Party; (d) except as set forth in Disclosure
Schedule (3.7), no Credit Party is a party to or bound by any collective bargaining agreement,
management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement (and
true and complete copies of any agreements described on Disclosure Schedule (3.7) have been
delivered to Agent); (e) there is no organizing activity involving any Credit Party pending or, to
any Credit Party’s knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party’s knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of employees of any Credit Party
has made a pending demand for recognition; and (g) except as set forth in Disclosure Schedule
(3.7), there are no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the employment or
termination of employment by any Credit Party of any individual.

     3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Except
as set forth in Disclosure Schedule (3.8), as of the Closing Date, no Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. All of the issued and outstanding Stock of
each Credit Party is owned by each of the Stockholders and in the amounts set forth in
Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule (3.8), there
are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem any of its Stock or
other equity securities or any Stock or other equity securities of its Subsidiaries. All
outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date
(except for the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)).

     3.9 Government Regulation. No Credit Party is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as
such terms are defined in the Investment Company Act of 1940. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any
other federal or state statute that restricts or limits its ability to incur Indebtedness or to
perform its obligations hereunder. The making of the Loans by Lenders to Borrower, the incurrence
of the Letter of Credit Obligations on behalf of Borrower, the application of the proceeds thereof
and repayment thereof and the consummation of the Related Transactions will not violate any
provision of any such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

     3.10 Margin Regulations. No Credit Party is engaged, nor will it engage, principally
or as one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the
Federal Reserve Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin Stock”). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase

23

 

or carry any Margin
Stock or for any other purpose that might cause any of the Loans or other extensions of credit
under this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U or
X of the Federal Reserve Board. No Credit Party will take or permit to be taken any action that
might cause any Loan Document to violate any regulation of the Federal Reserve Board.

     3.11 Taxes. All tax returns, reports and statements, including information returns,
required by any Governmental Authority to be filed by any Credit Party have been filed with the
appropriate Governmental Authority and all Charges have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such
fine, penalty, interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). Proper and accurate amounts have been
withheld by each Credit Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such withholdings have
been timely paid to the respective Governmental Authorities. Disclosure 
Schedule (3.11) sets forth as of the Closing Date those taxable years for which any
Credit Party’s tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in connection with such audit,
or otherwise currently outstanding. Except as described in Disclosure Schedule (3.11), no
Credit Party has executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their respective predecessors are liable
for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each
Credit Party’s knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed or
been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting
method or otherwise, which would have a Material Adverse Effect.

     3.12 ERISA.

     (a) Disclosure Schedule (3.12) lists all Plans and separately identifies all Pension
Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all
Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of the latest form.
IRS/DOL 5500-series for each such Plan have been delivered to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to qualify under Section
401 of the IRC, the trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would cause the loss of such
qualification or tax-exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA
Affiliate has failed to make any contribution or pay any amount due as required by either Section
412 of the IRC or Section 302 of ERISA or the terms of any such Plan. Neither any Credit Party nor
ERISA Affiliate has engaged in a “prohibited transaction,” as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the
IRC.

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     (b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has any
Unfunded Pension Liability; (ii) no ERISA Event or event described in Section 4062(e) of ERISA with
respect to any Title IV Plan has occurred or is reasonably expected to occur; (iii) there are no
pending, or to the knowledge of any Credit Party, threatened claims (other than claims for benefits
in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or
any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has
incurred or reasonably expects to incur any liability as a result of a complete or partial
withdrawal from a Multiemployer Plan; (v) within the last five years no Title IV Plan of any Credit
Party or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that
term is used in Section 404(b)(1) of ERISA, nor has any Title IV Plan of any Credit Party or ERISA
Affiliate (determined at any time within the past five years) with Unfunded Pension Liabilities
been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of
ERISA) of any Credit Party or ERISA Affiliate; (vi) except in the case of any ESOP, Stock of all
Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market value as of the latest
valuation date of any Plan; and (vii) no liability under any
Title IV Plan has been satisfied with the purchase of a contract from an insurance company
that is not rated AAA by the Standard & Poor’s Corporation or an equivalent rating by another
nationally recognized rating agency.

     3.13 No Litigation. No action, claim, lawsuit, demand, investigation or proceeding is
now pending or, to the knowledge of any Credit Party, threatened against any Credit Party, before
any Governmental Authority or before any arbitrator or panel of arbitrators (collectively,
“Litigation”), (a) that challenges any Credit Party’s right or power to enter into or
perform any of its obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that has a reasonable
risk of being determined adversely to any Credit Party and that, if so determined, could reasonably
be expected to have a Material Adverse Effect (other than the litigation between Borrower and
ValueVision Media, Inc. that has been previously publicly disclosed by Borrower (“ValueVision
Litigation”). Except as set forth on Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or threatened that seeks damages in excess of $100,000 or
injunctive relief against, or alleges criminal misconduct of, any Credit Party.

     3.14 Brokers. No broker or finder acting on behalf of any Credit Party or Affiliate
thereof brought about the obtaining, making or closing of the Loans or the Related Transactions,
and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any
finder’s or brokerage fees in connection therewith.

     3.15 Intellectual Property. As of the Closing Date, each Credit Party owns or has
rights to use all Intellectual Property necessary to continue to conduct its business as now or
heretofore conducted by it or proposed to be conducted by it, and each Patent, Trademark, Copyright
and License is listed, together with application or registration numbers, as applicable, in
Disclosure Schedule (3.15). Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other Person in any material
respect. Except as set forth in Disclosure Schedule (3.15), no Credit Party is aware of
any infringement claim by any other Person with respect to any Intellectual Property.

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     3.16 Full Disclosure. No information contained in this Agreement, any of the other
Loan Documents, any Projections, Financial Statements, Pro Forma or Collateral Reports or other
written reports from time to time delivered hereunder or any written statement furnished by or on
behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading in light of the
circumstances under which they were made. Projections from time to time delivered hereunder are or
will be based upon the estimates and assumptions stated therein, all of which Borrower believed at
the time of delivery to be reasonable and fair in light of current conditions and
current facts known to Borrower as of such delivery date, and reflect Borrower’s good faith
and reasonable estimates of the future financial performance of Borrower and of the other
information projected therein for the period set forth therein. The Liens granted to Agent, on
behalf of itself and Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein, subject, as to priority,
only to Permitted Encumbrances. After giving effect to the Related Transactions, no default or
event of default under or with respect to any of the Related Transactions Documents has occurred
and is continuing.

     3.17 Environmental Matters.

     (a) Except as set forth in Disclosure Schedule (3.17), as of the Closing Date: (i) the
Credit Parties are and have been in compliance with all Environmental Laws, except for such
noncompliance that would not result in Environmental Liabilities which could reasonably be expected
to exceed $100,000; (ii) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where the failure to so
obtain or comply with such Environmental Permits would not result in Environmental Liabilities that
could reasonably be expected to exceed $100,000, and all such Environmental Permits are valid,
uncontested and in good standing; (iii) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely
to result in any Environmental Liabilities of such Credit Party which could reasonably be expected
to exceed $100,000, and no Credit Party has permitted any current or former tenant or occupant of
the Real Estate to engage in any such operations; (iv) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages,
penalties, fines, costs or expenses in excess of $25,000 or injunctive relief against, or that
alleges criminal misconduct by, any Credit Party; (v) no notice has been received by any Credit
Party identifying it as a “potentially responsible party” or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified as a “potentially
responsible party” under CERCLA or analogous state statutes; and (vi) the Credit Parties have
provided to Agent copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each case relating to
any Credit Party.

     (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not
ever been, in control of any of the Real Estate or any Credit Party’s affairs, and

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(ii) does not
have the capacity through the provisions of the Loan Documents or otherwise to influence any Credit
Party’s conduct with respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.

     3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as
well as a summary of the terms of each such policy.

     3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists all
banks and other financial institutions at which any Credit Party maintains deposit or other
accounts as of the Closing Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account number therefor.

     3.20 Government Contracts. Except as set forth in Disclosure Schedule (3.20),
as of the Closing Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party’s Accounts are subject to the Federal Assignment of
Claims Act (31 U.S.C. Section 3727) or any similar state or local law.

     3.21 Customer and Trade Relations. As of the Closing Date, there exists no actual or,
to the knowledge of any Credit Party, threatened termination or cancellation of, or any material
adverse modification or change in: the business relationship of any Credit Party with any
customer or group of customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business relationship of any
Credit Party with any supplier material to its operations.

     3.22 Agreements and Other Documents. As of the Closing Date, each Credit Party has
provided to Agent or its counsel, on behalf of Lenders, accurate and complete copies (or summaries)
of all of the following agreements or documents to which it is subject and each of which is listed
in Disclosure Schedule (3.22): supply agreements and purchase agreements involving
transactions in excess of $2,000,000 per annum; agreements relating to Vendor Advances in excess of
$2,000,000; leases of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other payments in excess of $1,000,000 per annum; licenses and permits held
by the Credit Parties, the absence of which could be reasonably likely to have a Material Adverse
Effect; instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness of such
Credit Party and any Lien granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or options to
purchase equity securities of such Credit Party.

     3.23 Solvency. Both before and after giving effect to (a) the Loans and Letter of
Credit Obligations to be made or incurred on the Closing Date or such other date as Loans and
Letter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of the
proceeds of such Loans pursuant to the instructions of Borrower, (c) the FUNimation Acquisition and
the consummation of the other Related Transactions, and (d) the

27

 

payment and accrual of all
transaction costs in connection with the foregoing, each Credit Party is and will be Solvent.

     3.24 [Intentionally Deleted].

     3.25 Status of Navarre CP, Navarre CLP and Navarre CS. None of Navarre CP, Navarre
CLP and Navarre CS has engaged in any business or incurred any Indebtedness or any other
liabilities (except in connection with its corporate formation, the Related Transactions Documents
and this Agreement).

     3.26 FUNimation Acquisition Agreement. As of the Closing Date, Borrower has delivered
to Agent a complete and correct copy of the FUNimation Purchase Agreement and all other FUNimation
Acquisition Documents. No Credit Party and no other Person party thereto is in default in the
performance or compliance with any provisions thereof. The FUNimation Acquisition Documents comply
with, and the FUNimation Acquisition has been consummated in accordance with, all applicable laws.
The FUNimation Acquisition Documents are in full force and effect as of the Closing Date and has
not been terminated, rescinded or withdrawn. All requisite approvals by Governmental Authorities
having jurisdiction over Sellers (as defined in the FUNimation Purchase Agreement), any Credit
Party and other Persons referenced therein, with respect to the transactions contemplated by the
FUNimation Purchase Agreement, have been obtained, and no such approvals impose any conditions to
the consummation of the transactions contemplated by the FUNimation Purchase Agreement or to the
conduct by any Credit Party of its business thereafter. To the best of each Credit Party’s
knowledge, none of the Seller’s representations or warranties in the FUNimation Acquisition
Documents contain any untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading. Each of the representations and warranties given by each
applicable Credit Party in the FUNimation Acquisition Documents is true and correct in all material
respects. Notwithstanding anything contained in the FUNimation Acquisition Documents to the
contrary, such representations and warranties of the Credit Parties are incorporated into this
Agreement by this Section 3.26 and shall, solely for purposes of this Agreement and the
benefit of Agent and Lenders, survive the consummation of the FUNimation Acquisition.

     3.27 Vendor Advances. As of the Closing Date, Disclosure Schedule 3.27 sets
forth an accurate listing of all outstanding Vendor Advances.

4. FINANCIAL STATEMENTS AND INFORMATION

     4.1 Reports and Notices.

     (a) Each Credit Party executing this Agreement hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information at the times, to the
Persons and in the manner set forth in Annex E.

     (b) Each Credit Party executing this Agreement hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver to Agent or to Agent and

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Lenders, as
required, the various Collateral Reports at the times, to the Persons and in the manner set forth
in Annex F.

     4.2 Communication with Accountants. Each Credit Party executing this Agreement
authorizes (a) Agent and (b) so long as an Event of Default has occurred and is continuing, each
Lender, to communicate directly with the partner in charge of such Credit Party’s audit at such
Credit Party’s independent certified public accountants, and authorizes and shall instruct those
accountants and advisors to communicate to Agent and each Lender information relating to any Credit
Party with respect to the business, results of operations and financial condition of any Credit
Party.

5. AFFIRMATIVE COVENANTS

     Each Credit Party executing this Agreement jointly and severally agrees as to all Credit
Parties that from and after the date hereof and until the Termination Date:

     5.1 Maintenance of Existence and Conduct of Business. Each Credit Party shall: do or
cause to be done all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises; continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; at all times maintain, preserve and protect all of
its assets and properties used or useful in the conduct of its business, and keep the same in good
repair, working order and condition in all material respects (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry practices; and transact
business only in such corporate and trade names as are set forth in Disclosure Schedule
(5.1).

     5.2 Payment of Charges.

     (a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause to
be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it,
its income and profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its employees, (ii)
lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or
rental charges payable to warehousemen and bailees, in each case, before any thereof shall become
past due.

     (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges, Taxes or claims described in Section 5.2(a); provided, that
(i) adequate reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing
payment of the Obligations and such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such
Charges, (iii) none of the Collateral becomes subject to forfeiture or loss as a result of
such contest, (iv) such Credit Party shall promptly pay or discharge such contested Charges, Taxes
or claims and all additional charges, interest, penalties and expenses, if any, and shall deliver
to

29

 

Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to such Credit Party or the conditions set forth in
this Section 5.2(b) are no longer met, and (v) Agent has not advised Borrower in writing
that Agent reasonably believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.

     5.3 Books and Records. Each Credit Party shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all financial transactions,
are made in accordance with GAAP and on a basis consistent with the Financial Statements attached
as Disclosure Schedule (3.4(a)).

     5.4 Insurance; Damage to or Destruction of Collateral.

     (a) The Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on the date hereof or
otherwise in form and amounts and with insurers reasonably acceptable to Agent. Such policies of
insurance (or the loss payable and additional insured endorsements delivered to Agent) shall
contain provisions pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If
any Credit Party at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required above or to pay all premiums relating thereto, Agent may at any time
or times thereafter obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto that Agent deems advisable. Agent shall have no obligation
to obtain insurance for any Credit Party or pay any premiums therefor. By doing so, Agent shall
not be deemed to have waived any Default or Event of Default arising from any Credit Party’s
failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys’ fees, court costs and other charges related thereto, shall be payable on
demand by Borrower to Agent and shall be additional Obligations hereunder secured by the
Collateral.

     (b) Agent reserves the right at any time upon any change in any Credit Party’s risk profile
(including any change in the product mix maintained by any Credit Party or any laws affecting the
potential liability of such Credit Party) to require additional forms and limits of insurance to,
in Agent’s reasonable opinion, adequately protect both Agent’s and Lender’s interests in all or any
portion of the Collateral and to ensure that each Credit Party is protected by insurance in amounts
and with coverage customary for its industry. If reasonably requested by Agent, each Credit Party
shall deliver to Agent from time to time a report of a reputable insurance broker, reasonably
satisfactory to Agent, with respect to its insurance policies.

     (c) Borrower shall deliver to Agent, in form and substance reasonably satisfactory to Agent,
endorsements to (i) all “All Risk” and business interruption insurance naming Agent, on behalf of
itself and Lenders, as loss payee, and (ii) all general liability and
other liability policies naming Agent, on behalf of itself and Lenders, as additional insured.
Borrower irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Default or Event of Default has occurred and is continuing or
the anticipated insurance proceeds exceed $1,000,000, as Borrower’s true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under

30

 

such “All Risk”
policies of insurance, endorsing the name of Borrower on any check or other item of payment for the
proceeds of such “All Risk” policies of insurance and for making all determinations and decisions
with respect to such “All Risk” policies of insurance. Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower shall
promptly notify Agent of any loss, damage, or destruction to the Collateral in the amount of
$250,000 or more, whether or not covered by insurance. After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance with Section
1.3(d), or permit or require Borrower to use such money, or any part thereof, to replace,
repair, restore or rebuild the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds could not
reasonably be expected to have a Material Adverse Effect and such insurance proceeds do not exceed
$1,000,000 in the aggregate, Agent shall permit Borrower to replace, restore, repair or rebuild the
property; provided that if Borrower has not completed or entered into binding agreements to
complete such replacement, restoration, repair or rebuilding within 180 days of such casualty,
Agent may apply such insurance proceeds to the Obligations in accordance with Section
1.3(d). All insurance proceeds that are to be made available to Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan (which application shall not result in a permanent reduction of the
Revolving Loan Commitment) and upon such application, Agent shall establish a Reserve against the
Borrowing Availability in an amount equal to the amount of such proceeds so applied. All insurance
proceeds made available to any Credit Party that is not a Borrower to replace, repair, restore or
rebuild Collateral shall be deposited in a cash collateral account. Thereafter, such funds shall
be made available to Borrower to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (i) Borrower shall request a Revolving Credit Advance be made to Borrower in
the amount requested to be released; (ii) so long as the conditions set forth in Section
2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance or Agent shall
release funds from the cash collateral account; and (iii) in the case of insurance proceeds applied
against the Revolving Loan, the Reserve established with respect to such insurance proceeds shall
be reduced by the amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be applied in accordance
with Section 1.3(d).

     (d) On or prior to the date which is 90 days after the Closing Date, the Borrower shall obtain
a “key man” life insurance policy on Gen Fukunaga in an amount of not less than $5,000,000. The
Borrower shall cause “key man” insurance on Eric Paulson in an amount not less than $1,000,000 and
the “key man” policy on Gen Fukunaga required pursuant to the preceding sentence to (i) be
maintained at all times until the Termination Date, (ii) be in form and substance, and issued by an
insurance company, satisfactory to the Agent, (iii) name
the Agent as the beneficiary thereof and (iv) be collaterally assigned to the Agent pursuant
to documentation satisfactory to the Agent.

     5.5 Compliance with Laws. Each Credit Party shall comply with all federal, state,
local and foreign laws and regulations applicable to it (including, without limitation, rules and
regulations of the Securities and Exchange Commission requiring the filing

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of certain financial and
other information or materials), including those relating to ERISA and labor matters and
Environmental Laws and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

     5.6 Supplemental Disclosure. From time to time as may be reasonably requested by
Agent (which request will not be made more frequently than once each year absent the occurrence and
continuance of a Default or an Event of Default), the Credit Parties shall supplement each
Disclosure Schedule hereto, or any representation herein or in any other Loan Document, with
respect to any matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such Disclosure Schedule or as
an exception to such representation or that is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case
of any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately
marked to show the changes made therein); provided that (a) no such supplement to any such
Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure
Schedule or representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to representations and
warranties that relate solely to the Closing Date.

     5.7 Intellectual Property. Each Credit Party will conduct its business and affairs
without infringement of or interference with any Intellectual Property of any other Person in any
material respect.

     5.8 Environmental Matters. Each Credit Party shall and shall cause each Person within
its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with
all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably
be expected to have a Material Adverse Effect; (b) implement any and all investigation,
remediation, removal and response actions that are appropriate or necessary to maintain the value
and marketability of the Real Estate or to otherwise comply with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any
of its Real Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above,
to, from or about any Real Estate that is reasonably likely to
result in Environmental Liabilities in excess of $25,000; and (d) promptly forward to Agent a
copy of any order, notice, request for information or any communication or report received by such
Credit Party in connection with any such violation or Release or any other matter relating to any
Environmental Laws or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $50,000, in each case whether or not the Environmental
Protection Agency or any Governmental Authority has taken or threatened any action in connection
with any such violation, Release or other matter. If Agent at any time has a reasonable basis to
believe that there may be a violation of any Environmental Laws or Environmental Permits by any
Credit Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a

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Material Adverse Effect, then each Credit Party shall, upon
Agent’s written request (i) cause the performance of such environmental audits including subsurface
sampling of soil and groundwater, and preparation of such environmental reports, at Borrower’s
expense, as Agent may from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in form and substance
reasonably acceptable to Agent, and (ii) permit Agent or its representatives to have access to all
Real Estate for the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrower shall reimburse Agent
for the costs of such audits and tests and the same will constitute a part of the Obligations
secured hereunder.

     5.9 Landlords’ Agreements. Each Credit Party shall obtain a landlord’s agreement,
mortgagee agreement and bailee letter as applicable, from the lessor of each leased property,
mortgagee of owned property or bailee with respect to any warehouse, processor or converter
facility or other location where Collateral is stored or located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in
form and substance to Agent. After the Closing Date, no real property or warehouse space shall be
leased by any Credit Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date without the prior written consent of Agent or,
unless and until a satisfactory landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Each Credit Party shall timely and fully pay and
perform its obligations under all leases and other agreements with respect to each leased location
or public warehouse where any Collateral is or may be located. To the extent permitted hereunder,
if any Credit Party proposes to acquire a fee ownership interest in Real Estate after the Closing
Date, it shall first provide to Agent a mortgage or deed of trust granting Agent a first priority
Lien on such Real Estate, together with environmental audits, mortgage title insurance commitment,
real property survey, local counsel opinion(s), and, if required by Agent, supplemental casualty
insurance and flood insurance, and such other documents, instruments or agreements reasonably
requested by Agent, in each case, in form and substance reasonably satisfactory to Agent.

     5.10 Clean Down The Borrower shall cause the aggregate outstanding principal amount of Revolving Credit
Advances to be zero at all times for at least one consecutive thirty day period from and including
April 1 until and including June 30 of each year.

     5.11 Interest Rate Agreements. On or prior to the date which is 90 days after the
Prior Closing Date, Borrower shall enter into, and shall at all times thereafter until the
Termination Date maintain, Interest Rate Agreements providing for interest rate protection (1) for
an aggregate amount of 50% of the principal amount of the outstanding Term Loans (and if the Second
Lien Credit Agreement has been executed and delivered at the time Interest Rate Agreements we
entered into, the principal amount owing thereunder), (2) for a maximum interest rate reasonably
satisfactory to the Agent, (3) for a term expiring no earlier than two (2) years after the Prior
Closing Date and (4) with other terms and conditions reasonably satisfactory to Agent.

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     5.12 Further Assurances. Each Credit Party executing this Agreement agrees that it
shall and shall cause each other Credit Party to, at such Credit Party’s expense and upon request
of Agent, duly execute and deliver, or cause to be duly executed and delivered, to Agent such
further instruments and do and cause to be done such further acts as may be necessary or proper in
the reasonable opinion of Agent to carry out more effectively the provisions and purposes of this
Agreement or any other Loan Document.

     5.13 Second Lien Loan. Promptly upon execution thereof, Borrower shall deliver to Agent a
complete and correct copy of the Second Lien Credit Agreement and all related documents (including
all schedules, exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith).

6. NEGATIVE COVENANTS

     Each Credit Party executing this Agreement jointly and severally agrees as to all Credit
Parties that from and after the date hereof until the Termination Date:

     6.1 Mergers, Subsidiaries, Etc. Without the prior written consent of the Requisite
Lenders (which consent may be provided or withheld in the Requisite Lender’s sole discretion), no
Credit Party shall directly or indirectly, by operation of law or otherwise, (a) form or acquire
any Subsidiary, (b) merge with, consolidate with, acquire all or substantially all of the assets or
Stock of, or otherwise combine with or acquire, any Person, or (c) other than purchases of
Inventory and licenses of Intellectual Property, in each case in the ordinary course of business
consistent with practices as in effect on the date hereof, purchase assets from any Person if (i)
such purchase is not a Capital Expenditure or (ii) the amount paid for such purchase does not
reduce the EBITDA, during the period such purchase is made and by the amount paid for such
purchase, of the Credit Party which makes such purchase.

     6.2 Investments; Loans and Advances. No Credit Party shall make or permit to exist
any investment in, or make, accrue or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or otherwise, except that:
(a) Borrower, Encore Software, BCI Eclipse, FUNimation Productions and FUNimation Store may hold
investments comprised of notes payable, or stock or other securities issued by Account Debtors to
Borrower, Encore Software, BCI Eclipse, FUNimation Productions and FUNimation Store, as applicable
pursuant to negotiated agreements with respect to settlement of such Account Debtor’s Accounts in
the ordinary course of business, so long as the aggregate amount of such Accounts so settled by
Borrower, Encore Software, BCI Eclipse, FUNimation Productions and FUNimation Store does not exceed
$500,000 in the aggregate outstanding at any time (in the aggregate for Borrower, Encore Software,
BCI Eclipse, FUNimation Productions and FUNimation Store combined); (b) each Credit Party may
maintain its existing equity investments in its Subsidiaries as of the Closing Date; (c) Borrower
may maintain Eligible Certificate of Deposits; (d) so long as no Default or Event of Default has
occurred and is continuing and there is no outstanding Revolving Loan balance, Borrower may make
investments, subject to Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the benefit of Lenders, in (i)
marketable direct obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition thereof,

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(ii)
commercial paper maturing no more than one year from the date of creation thereof and currently
having the highest rating obtainable from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from the date
of creation thereof issued by (A) the Business Bank, a Minnesota corporation, or (B) commercial
banks incorporated under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $300,000,000 and having a senior unsecured rating of
“A” or better by a nationally recognized rating agency (an “A Rated Bank”), (iv) time
deposits maturing no more than 30 days from the date of creation thereof with A Rated Banks and (v)
mutual funds that invest solely in one or more of the investments described in clauses (i) through
(iv) above; (e) Credit Parties may make Vendor Advances as long as the aggregate amount of Net
Vendor Advances made during any Fiscal Year does not at any time during such Fiscal Year exceed (i)
for each Fiscal Year ending on or prior to March 31, 2007, $15,000,000, (ii) for each Fiscal Year
ending after March 31, 2007 but on or prior to March 31, 2009, $16,500,000 and (iii) for each
Fiscal Year thereafter, $17,500,000 (provided, that the amount set forth for any Fiscal
Year shall be increased by the lesser of (x) $3,000,000 or (y) the maximum Net Vendor Advances
which were, pursuant to this Section, permitted to be made during the then immediately preceding
Fiscal Year less the actual amount of Net Vendor Advances made during such immediately
preceding Fiscal Year; (f) advances by a Credit Party to its employees expressly permitted by
Section 6.4(b) hereof; (g) (1) loans from the Borrower to Encore outstanding on the Closing
Date in an aggregate principal amount not to exceed $7,900,000 may exist and (2) the Borrower may
make additional loans to Encore Software in an aggregate outstanding principal amount not to
exceed, at any time, $15,000,000; (h) (1) loans from the Borrower to BCI Eclipse outstanding on the
Closing Date in an aggregate principal amount not to exceed $12,330,000 may exist and (2) the
Borrower may make additional loans to BCI Eclipse in an aggregate outstanding principal amount not
to exceed, at any time, $10,000,000; (i) the Borrower may (i) make one or more loans (each a
“Mix & Burn Loan”) to Mix & Burn, Inc., a Minnesota corporation (“Mix & Burn”)
pursuant to that certain Amended and Restated Discretionary Revolving Loan Agreement and that certain Second
Discretionary Revolving Loan Agreement, each dated as of June 29, 2004, between the Borrower and
Mix & Burn and those certain Amended and Restated Promissory Note, Promissory Note, each dated as
of June 29, 2004, Promissory Note, dated on or about October 18, 2004, by Mix & Burn in favor of
Borrower, and any additional promissory notes executed from time to time by Mix & Burn in favor of
Borrower (each a “Mix & Burn Promissory Note”), as long as (a) the aggregate principal
amount of all such Mix & Burn Loans does not exceed $3,500,000, (b) the Mix & Burn Loans are fully
secured by fully perfected first priority Liens in and to all or substantially all of the assets of
Mix & Burn pursuant to that certain Amended and Restated Security Agreement dated as of June 29,
2004 between the Borrower and Mix & Burn (the “Mix & Burn Security Agreement”), and (c)
Borrower has granted to Agent, for itself and the benefit of Lenders, fully perfected first
priority Liens, pursuant to documentation in form and substance satisfactory to Agent, in and to
the Mix & Burn Promissory Notes, the Liens granted to Borrower under the Mix & Burn Security
Agreement, all of the
Stock owned by Borrower from time to time in Mix & Burn whether (1) Borrower
has acquired such Stock as a result of the conversion of the Mix & Burn Promissory Notes into
equity, (2) consisting of warrants issued by Mix & Burn in favor of the Borrower in connection with
the Mix & Burn Loans or (3) Borrower has acquired such Stock in any other manner, (ii) own Stock in
Mix & Burn issued to Borrower for no additional consideration in connection with the Mix & Burn
Loans, (iii) convert the obligations relating to

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the Mix & Burn Loans into Stock of Mix & Burn and
own such Stock on terms and subject to conditions satisfactory to Agent; (j) the Borrower may make
loans or advances to FUNimation Productions in an aggregate outstanding principal amount not to
exceed, at any time, $15,000,000; (k) the Borrower may make loans or advances to FUNimation Store
in an aggregate outstanding principal amount not to exceed, at any time, $1,500,000; (l) the
Borrower may make (and permit to exist) capital contributions to Navarre CP, Navarre CLP and
Navarre CS (i) on the Prior Closing Date, as long as each of such Persons used all of the proceeds
thereof on the Prior Closing Date to pay the cash portion of the Purchase Price (as defined in the
FUNimation Purchase Agreement) due on the Prior Closing Date and (ii) thereafter, as long as each
of such Persons uses all of the proceeds thereof on the date received to either make a payment due
pursuant to Section 1.4 of the FUNimation Purchase Agreement or make a Performance Payment
(as defined in the FUNimation Purchase Agreement); (m) a Subsidiary of the Borrower may make loans
to the Borrower pursuant to cash management procedures consistent with the Borrower’s cash
management procedures in existence on the Closing Date; (n) a loan by the Borrower to Eric Paulson
pursuant to Eric Paulson’s employment agreement in an aggregate principal amount not to exceed
$400,000 may exist and (o) the Credit Parties may make other investments not exceeding $100,000 in
the aggregate at any time outstanding.

     6.3 Indebtedness.

     (a) No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except
(without duplication) (i) Indebtedness secured by purchase money security interests and Capital
Leases permitted in Section 6.7(c), (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and liabilities to the extent
they are permitted to remain unfunded under applicable law, (iv) existing Indebtedness described in
Disclosure Schedule (6.3) and refinancings thereof or amendments or modifications thereof
that do not have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and that are otherwise on terms and
conditions no less favorable to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified, (v) Indebtedness permitted
pursuant to Section 6.2(i) hereof, (vi) Indebtedness of Encore Software to the Borrower, as
long as (a) the related loans to Encore from the Borrower are permitted pursuant to Section
6.2(g) and (b) such Indebtedness is evidenced by an intercompany note, in form and substance
satisfactory to Agent, and such intercompany note has been delivered and endorsed to Agent, (vii)
Indebtedness of BCI Eclipse to the Borrower, as long as (a) the related loans to BCI Eclipse from
the Borrower are permitted pursuant to Section 6.2(h), and (b) such Indebtedness is
evidenced by an intercompany note, in form and substance satisfactory to Agent, and such
intercompany note has been delivered and endorsed to Agent, (viii) Indebtedness of FUNimation
Productions to the Borrower, as long as (a) the related loans to FUNimation Productions from the
Borrower are permitted pursuant to Section 6.2(j), and (b) such Indebtedness is evidenced
by an intercompany note, in form and substance satisfactory to Agent, and such intercompany note
has been delivered and endorsed to Agent, (ix) Indebtedness of FUNimation Store to the Borrower, as
long as (a) the related loans to FUNimation Store from the Borrower are permitted pursuant to
Section 6.2(k), and (b) such Indebtedness is evidenced by an intercompany note, in form and
substance satisfactory to Agent, and such intercompany note has been delivered and endorsed to
Agent, (x) Indebtedness of a Subsidiary of the Borrower to the Borrower as long as (a) the related
loans are permitted pursuant to Section 6.2(m) and (b) such Indebtedness is evidenced by

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an
intercompany note, in form and substance satisfactory to Agent, and such intercompany note has been
delivered and endorsed to Agent, (xi) obligations for Performance Payments (as defined in the
FUNimation Purchase Agreement) or similar payment obligations incurred by the Borrower, Navarre CP,
Navarre CLP and/or Navarre CS in connection with the FUNimation Acquisition in an aggregate amount
not to exceed $17,000,000 and (xii) Indebtedness under the Second Lien Credit Agreement in an
aggregate principal amount not to exceed $25,000,000, as long as the proceeds thereof are used to
prepay the Term Loan C in accordance with Section 1.3(b)(vi) hereof.

     (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount payable in respect of any
Indebtedness, other than (i) the Obligations; (ii) Indebtedness (other than Indebtedness under the
Second Lien Credit Agreement) secured by a Permitted Encumbrance if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Sections 6.8(b) or
(c); (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing
thereof in accordance with Section 6.3(a)(iv); (iv) other Indebtedness (other than
Indebtedness under the Second Lien Credit Agreement) not in excess of $250,000; and (v) as
otherwise permitted in Section 6.14.

     6.4 Employee Loans and Affiliate Transactions.

     (a) No Credit Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to the reasonable
requirements of such Credit Party’s business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm’s length transaction with
a Person not an Affiliate of such Credit Party. In addition, if any such transaction or series of
related transactions involves payments in excess of $100,000 in the
aggregate, the terms of these transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are described in Disclosure Schedule
(6.4(a)).

     (b) No Credit Party shall enter into any lending or borrowing transaction with any employees
of any Credit Party, except loans to its respective employees on an arm’s-length basis in the
ordinary course of business consistent with past practices for travel and entertainment expenses,
relocation costs and similar purposes and stock option financing up to a maximum of $100,000 to any
employee and up to a maximum of $500,000 in the aggregate at any one time outstanding.

     6.5 Capital Structure and Business. No Credit Party shall (a) make any changes in any
of its business objectives, purposes or operations that could in any way adversely affect the
repayment of the Loans or any of the other Obligations or could reasonably be expected to have or
result in a Material Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance or sale of any shares of Stock, warrants
or other securities convertible into Stock or any revision of the terms of its outstanding Stock;
provided, that the Borrower may issue or sell its Stock for cash so long as (i) the proceeds
thereof are applied in prepayment of the Obligations as required by Section 1.3(b)(iii),
and (ii) no Change of Control occurs after giving effect thereto, or (c) amend its charter or
bylaws in a manner that would adversely affect Agent or Lenders or such Credit

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Party’s duty or
ability to repay the Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or businesses reasonably related thereto.

     6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume or permit to
exist any Guaranteed Indebtedness except (a) by endorsement of instruments or items of payment for
deposit to the general account of any Credit Party, (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is expressly permitted by this
Agreement, (c) for Guaranteed Indebtedness incurred by Borrower pursuant to that certain Limited
Guaranty, dated as of July 22, 2004, by Borrower in favor of BMG Music, a New York general
partnership guaranteeing certain Indebtedness of Mix & Burn as set forth is such Limited Guaranty
as in effect as of the date thereof.

     6.7 Liens and Related Matters. (a) No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens
in existence on the date hereof and summarized on Disclosure Schedule (6.7) securing
Indebtedness described on Disclosure Schedule (6.3) and permitted refinancings, extensions
and renewals thereof, including extensions or renewals of any such Liens; provided that the
principal amount so secured is not increased and the Lien does not attach to any other property;
(c) Liens created after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness with respect to
Equipment and Fixtures acquired
by any Credit Party in the ordinary course of business, involving the incurrence of an
aggregate amount of purchase money Indebtedness and Capital Lease Obligations of not more than
$250,000 outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is incurred within 20
days following such purchase and does not exceed 100% of the purchase price of the subject assets);
and (d) Liens securing obligations under the Second Lien Credit Agreement, as long as the principal
amount thereof is Indebtedness permitted pursuant to Section 6.3(a)(xii) and such Liens do
not attach to any assets that are not subject to Liens securing the Obligations. In addition, no
Credit Party shall become a party to any agreement, note, indenture or instrument, or take any
other action, that would prohibit the creation of a Lien on any of its properties or other assets
in favor of Agent, on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon the assets that are
subject thereto.

     (b) The Credit Parties shall not, and shall not cause or permit their Subsidiaries to,
directly or indirectly enter into or assume any agreement (other than the Loan Documents or the
Second Lien Credit Agreement and related documents) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired and other than (i)
provisions restricting subletting or assignment under any lease governing a leasehold interest or
lease of personal property and (ii) restrictions on assignments or sublicensing of licensed
Intellectual Property.

     (c) Except as provided herein or in the Second Lien Credit Agreement and related documents,
the Credit Parties shall not, and shall not cause or permit their Subsidiaries to, directly or
indirectly create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to (1)

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pay dividends
or make any other distribution on any of such Subsidiary’s Stock owned by a Credit Party, (2) pay
any Indebtedness owed to any Credit Party, (3) make loans or advances to any Credit Party, or (4)
transfer any of its property or assets to any Credit Party.

     6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey, assign or
otherwise dispose of any of its properties or other assets, including the Stock of any of its
Subsidiaries (whether in a public or a private offering or otherwise) or any of its Accounts, other
than (a) the sale of Inventory in the ordinary course of business, and (b) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party’s business and having an appraised value
not exceeding $100,000 in any single transaction or $500,000 in the aggregate in any Fiscal Year.
With respect to any disposition of assets or other properties permitted pursuant to clause
(b) above, subject to Section 1.3(b), Agent agrees on reasonable prior written notice
to release its Lien on such assets or other properties in order to permit the applicable Credit
Party to effect such disposition and shall execute and deliver to Borrower, at Borrower’s expense,
appropriate UCC-3 termination statements and other releases as reasonably requested by Borrower.

     6.9 ERISA No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to
occur an event that could result in the imposition of a Lien under Section 412 of the IRC or
Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such ERISA
Event could reasonably be expected to have a Material Adverse Effect.

     6.10 Financial Covenants. Borrower shall not breach or fail to comply with any of the
Financial Covenants.

     6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect, or form the basis for any Environmental Liabilities
under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value
or marketability of any of the Real Estate or any of the Collateral, other than such violations or
Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect.

     6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its assets.

     6.13 Cancellation of Indebtedness. No Credit Party shall cancel any claim or debt
owing to it, except for reasonable consideration negotiated on an arm’s-length basis and in the
ordinary course of its business consistent with past practices.

     6.14 Restricted Payments. No Credit Party shall make any Restricted Payment, except
(a) dividends and distributions by Subsidiaries of Borrower paid to Borrower, (b) employee loans
permitted under Section 6.4(b),(c) on any day, the Borrower may repurchase the Borrower’s
own shares of common stock, as long as (i) at the time of such repurchase and after giving effect
thereto, no Default or Event of Default has occurred and is continuing, (ii)

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after giving effect to
such repurchase, the Borrowing Availability shall be at least $15,000,000 and (iii) the aggregate
consideration paid for all such repurchases during any consecutive twelve month period does not
exceed $250,000, (d) payment of Earnout Amounts (under and as defined in the BCI Eclipse Purchase
Agreement as in effect on November 5, 2003) as long as (i) at the time of such payment and after
giving effect thereto, no Default or Event of Default has occurred and is continuing, (ii) after
giving effect to such payment, the Borrowing Availability shall be at least $20,000,000, (iii) the
Borrower has demonstrated to the Agent’s reasonable satisfaction that the average daily Borrowing
Availability for the 30-day period preceding such payment was at least $20,000,000 and (iv) prior
to such payment the Borrower has delivered evidence satisfactory to the Agent demonstrating that,
had such payment been made on the last day of the then most recently
completed Fiscal Quarter, Borrower would have been in compliance with the financial covenants
set forth on Annex G to the Credit Agreement as of the end of such Fiscal Quarter, and (e)
payment of Performance Payments (under, as defined in and in accordance with the FUNimation
Purchase Agreement) in an aggregate amount not to exceed $17,000,000.

     6.15 Change of Corporate Name or Location; Change of Fiscal Year. No Credit Party
shall (a) change its name as it appears in official filings in the state of its incorporation or
other organization, (b) change its chief executive office, principal place of business, corporate
offices or warehouses or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation or other
organization, or (e) change its state of incorporation or organization, in each case without at
least 30 days prior written notice to Agent and after Agent’s written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has been completed or
taken, and provided that any such new location shall be in the continental United States.
Without limiting the foregoing, no Credit Party shall change its name, identity or corporate
structure in any manner that might make any financing or continuation statement filed in connection
herewith seriously misleading as such term is defined in and/or used in the Code or any other then
applicable provision of the Code except upon prior written notice to Agent and Lenders and after
Agent’s written acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of
Lenders, in any Collateral, has been completed or taken. No Credit Party shall change its Fiscal
Year.

     6.16 No Impairment of Intercompany Transfers. No Credit Party shall directly or
indirectly enter into or become bound by any agreement, instrument, indenture or other obligation
(other than this Agreement and the other Loan Documents) that could directly or indirectly
restrict, prohibit or require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.

     6.17 No Speculative Transactions. No Credit Party shall engage in any transaction
involving commodity options, futures contracts or similar transactions, except solely to hedge
against fluctuations in the prices of commodities owned or purchased by it and the values of
foreign currencies receivable or payable by it and interest swaps, caps or collars.

40

 

     6.18 Leases; Real Estate Purchases. No Credit Party shall enter into any operating
lease for Equipment or Real Estate, if the aggregate of all such operating lease payments payable
in any year for Borrower on a consolidated basis would exceed $250,000. No Credit Party shall
purchase a fee simple ownership interest in Real Estate.

     6.19 Amendments. Without the prior written consent of the Requisite Lenders, the
Borrower shall not enter into any amendment, supplement, restatement, other modification or waiver
with respect to any of the Minnesota Sale-Leaseback Documents or the FUNimation Acquisition
Documents.

     6.20 Navarre CP, Navarre CLP and Navarre CS. Each of Navarre CP, Navarre CLP and
Navarre CS shall not engage in any trade or business, own any assets (other than Stock of
FUNimation Productions and FUNimation Store) or incur any Indebtedness or Guaranteed Indebtedness
(other than the Obligations).

     6.21 Second Lien Credit Agreement. The Borrower shall not enter into the Second Lien
Credit Agreement unless the Second Lien Intercreditor Agreement is simultaneously executed and
delivered. The Borrower shall not amend, supplement or otherwise modify the Second Lien Credit
Agreement or the related documents in a manner which would violate the Second Lien Intercreditor
Agreement.

7. TERM

     7.1 Termination. The financing arrangements contemplated hereby shall be in effect
until the Commitment Termination Date, and the Loans and all other Obligations shall be
automatically due and payable in full on such date.

     7.2 Survival of Obligations Upon Termination of Financing Arrangements. Except as
otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of the Credit Parties or the rights of Agent and
Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is required after the Commitment
Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or binding upon the Credit
Parties, and all rights of Agent and each Lender, all as contained in the Loan Documents, shall not
terminate or expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the provisions
of Section 11, the payment obligations under Sections 1.15 and 1.16, and the
indemnities contained in the Loan Documents shall survive the Termination Date.

8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

     8.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default” hereunder:

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     (a) Borrower (i) fails to make any payment of principal of, or interest on, or Fees owing in
respect of, the Loans or any of the other Obligations when due and payable, or (ii) fails to pay or
reimburse Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document
within 10 days following Agent’s demand for such reimbursement or payment of expenses.

     (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of
Sections 1.4, 1.8, 5.4(a) or 6, or any of the provisions set forth in Annexes C or
G, respectively.

     (c) Borrower fails or neglects to perform, keep or observe any of the provisions of
Section 4 or any provisions set forth in Annexes E or F, respectively, and the same
shall remain unremedied for 5 days or more.

     (d) Any Credit Party fails or neglects to perform, keep or observe any other provision of this
Agreement or of any of the other Loan Documents (other than any provision embodied in or covered by
any other clause of this Section 8.1) and the same shall remain unremedied for 45 days or
more.

     (e) A default or breach occurs under any other agreement, document or instrument to which any
Credit Party is a party that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess
of $250,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts
owing to all creditors under any combined or syndicated credit arrangements), or (ii) causes, or
permits any holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause,
Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of $250,000 in the aggregate
to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or
cash collateral to be demanded in respect thereof, in each case, regardless of whether such default
is waived, or such right is exercised, by such holder or trustee;

     (f) The liabilities arising from the ValueVision Litigation (excluding interest payable with
respect thereto and litigation costs relating to the ValueVision Litigation (but including
attorney’s fees)) exceed $3,000,000 in the aggregate.

     (g) Assets of any Credit Party with a fair market value of $100,000 or more are attached,
seized, levied upon or subjected to a writ or distress warrant, or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors of any Credit Party and
such condition continues for 30 days or more.

     (h) A case or proceeding is commenced against any Credit Party seeking a decree or order in
respect of such Credit Party (i) under the Bankruptcy Code or any other
applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such
Credit Party or for any substantial part of any such Credit Party’s assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or proceeding shall
remain

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undismissed or unstayed for 60 days or more or a decree or order granting the relief sought
in such case or proceeding by a court of competent jurisdiction.

     (i) Any Credit Party (i) files a petition seeking relief under the Bankruptcy Code or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or
fails to contest in a timely and appropriate manner to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party
or for any substantial part of any such Credit Party’s assets, (iii) makes an assignment for the
benefit of creditors, or (iv) takes any action in furtherance of any of the foregoing, or (v)
admits in writing its inability to, or is generally unable to, pay its debts as such debts become
due.

     (j) A final judgment or judgments for the payment of money in excess of $100,000 in the
aggregate at any time are outstanding against one or more of the Credit Parties and the same are
not, within 30 days after the entry thereof, discharged or execution thereof stayed or bonded
pending appeal, or such judgments are not discharged prior to the expiration of any such stay.

     (k) Any material provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Credit 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), or any Lien created under any Loan
Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted
herein or therein) in any of the Collateral purported to be covered thereby.

     (l) Any Change of Control occurs.

     (m) Any event occurs, whether or not insured or insurable, as a result of which
revenue-producing activities cease or are substantially curtailed at any facility of Borrower
generating more than 10% of Borrower’s revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than 30 days.

     8.2 Remedies.

     (a) If any Default or Event of Default has occurred and is continuing, Agent may (and at the
written request of the Requisite Lenders shall), without notice, suspend the Revolving Loan
facility with respect to additional Advances and/or the incurrence of additional Letter of Credit
Obligations, whereupon any additional Advances and additional Letter of Credit Obligations shall be
made or incurred in Agent’s sole discretion (or in the sole discretion of the Requisite Lenders, if
such suspension occurred at their direction) so long as such Default or
Event of Default is continuing. If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of Requisite Lenders shall), without notice
except as otherwise expressly provided herein, increase the rate of interest applicable to the
Loans and the Letter of Credit Fees to the Default Rate.

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     (b) If any Event of Default has occurred and is continuing, Agent may (and at the written
request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility
with respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii)
declare all or any portion of the Obligations, including all or any portion of any Loan to be
forthwith due and payable, and require that the Letter of Credit Obligations be cash collateralized
as provided in Annex B, all without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower and each other Credit Party; or (iii) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or equity, including
all remedies provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(h) or (i), the Commitments shall be immediately
terminated and all of the Obligations, including the Revolving Loan, shall become immediately due
and payable without declaration, notice or demand by any Person.

     8.3 Waivers by Credit Parties. Except as otherwise provided for in this Agreement or
by applicable law, each Credit Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Agent on which any Credit Party may in any way be liable, and hereby ratifies
and confirms whatever Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent’s taking possession or control of, or to Agent’s replevy, attachment or levy upon, the
Collateral or any bond or security that might be required by any court prior to allowing Agent to
exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and
exemption laws.

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

     9.1 Assignment and Participations.

     (a) Subject to the terms of this Section 9.1, any Lender may make an assignment to a
Qualified Assignee of, or sale of participations in, at any time or times, the Loan Documents,
Loans, Letter of Credit Obligations and any Commitment or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties thereunder. Any
assignment by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the execution of an
assignment agreement (an “Assignment Agreement” substantially in the form attached hereto
as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory to, and
acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be assigned to it for its own
account, for investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have Commitments in an
amount at least equal to $1,000,000 and the assigning Lender shall have retained Commitments
in an amount at least equal to $1,000,000; (iv) include a payment to Agent of an assignment fee of
$3,500. In the case of an assignment by a Lender under this Section 9.1, the assignee
shall have, to the extent of such assignment, the same rights, benefits and obligations as all
other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitments or assigned portion thereof from and after the date of such

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assignment.
Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation
of Borrower to the assignee and that the assignee shall be considered to be a “Lender”. In all
instances, each Lender’s liability to make Loans hereunder shall be several and not joint and shall
be limited to such Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrower and Borrower shall, upon the request of Agent or such Lender, execute new
Notes in exchange for the Notes, if any, being assigned. Notwithstanding the foregoing provisions
of this Section 9.1(a), any Lender may at any time pledge the Obligations held by it and
such Lender’s rights under this Agreement and the other Loan Documents to a Federal Reserve Bank,
and any lender that is an investment fund may assign the Obligations held by it and such Lender’s
rights under this Agreement and the other Loan Documents to another investment fund managed by the
same investment advisor; provided, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender’s obligations hereunder or under any other Loan Document.

     (b) In addition to the other rights provided in this Section 9.1, each Lender may, (x) with
notice to the Agent, grant to an SPV the option to make all or any part of any Loan that such
Lender would otherwise be required to make hereunder (and the exercise of such option by such SPV
and the making of Loans pursuant thereto shall satisfy the obligation of such Lender to make such
Loans hereunder) and such SPV may assign to such Lender the right to receive payment with respect
to any Obligation and (y) without notice to or consent from the Agent or the Borrower, (i) sell
participations to one or more Persons in or to all or a portion of its rights and obligations under
the Loan Documents (including all its rights and obligations with respect to the Term Loans,
Revolving Loans and Letters of Credit) and (ii) transfer its rights to receive payments hereunder
to one or more Affiliates (a “Transferee”); provided, however, that,
whether as a result of any term of any Loan Document or of such grant, participation or transfer,
(i) no such SPV, participant or Transferee shall have a commitment, or be deemed to have made an
offer to commit, to make Loans hereunder, and, except as provided in the applicable option
agreement, none shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s
rights and obligations, and the rights and obligations of the Loan Parties and the secured parties
towards such Lender under any Loan Document shall remain unchanged and each other party hereto
shall continue to deal solely with such Lender, which shall remain the registered holder of the
Obligations, except that (A) each such participant and SPV shall be entitled to the benefit of
Sections 1.15 and 1.16, but only to the extent such participant or SPV delivers the tax
forms such Lender is required to collect pursuant hereto and then only to the extent of any amount
to which such Lender would be entitled in the absence of any such grant or participation and (B)
each such SPV may receive other payments that would otherwise be made to such Lender with respect
to Loans funded by such SPV to the extent provided in the applicable option agreement and set forth
in a notice provided to the Agent by such SPV and such Lender, provided, however,
that in no case (including pursuant to clause (A) or (B) above) shall an SPV,
participant or Transferee have the right to enforce any of the terms of any Loan Document, and
(iii) the consent of such
SPV, participant or Transferee shall not be required (either directly, as a restraint on such
Lender’s ability to consent hereunder or otherwise) for any amendments, waivers or consents with
respect to any Loan Document or to exercise or refrain from exercising any powers or rights such
Lender may have under or in respect of the Loan Documents (including the right to enforce or direct
enforcement of the Obligations), except with respect to an SPV or a participant for those described
in clauses 11.2(c)(ii) or (iii) with respect to amounts, or dates fixed for payment

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of
amounts, to which such participant or SPV would otherwise be entitled and, in the case of
participants, except for those described in Section 11.2(c)(ii) or (iii) (or amendments,
consents and waivers with respect to Section 11.2(c)(ii) or (iii) the release of all or
substantially all of the Collateral). No party hereto shall institute against any SPV grantee of
an option pursuant to this clause (b) any bankruptcy, reorganization, insolvency,
liquidation or similar proceeding, prior to the date that is one year and one day after the payment
in full of all outstanding commercial paper of such SPV; provided, however, that
each Lender having designated an SPV as such agrees to indemnify each Indemnitee against any
liability that may be incurred by, or asserted against, such Indemnitee as a result of failing to
institute such proceeding (including a failure to get reimbursed by such SPV for any such
liability). The agreement in the preceding sentence shall survive the termination of the
Commitments and the payment in full of the Obligations.

     (c) Except as expressly provided in this Section 9.1, no Lender shall, as between
Borrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Loans, the Notes or other Obligations owed to such Lender.

     (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation, including the execution
and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and the preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Each Credit Party executing this Agreement
shall certify the correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by it and all other
information provided by it and included in such materials, except that any Projections delivered by
Borrower shall only be certified by Borrower as having been prepared by Borrower in compliance with
the representations contained in Section 3.4(c).

     (e) A Lender may furnish any information concerning Credit Parties in the possession of such
Lender from time to time to assignees and participants (including prospective assignees and
participants); provided that such Lender shall obtain from assignees or participants
confidentiality covenants substantially equivalent to those contained in Section 11.8.

     (f) So long as no Event of Default has occurred and is continuing, no Lender shall assign or
sell participations in any portion of its Loans or Commitments to a potential Lender or
participant, if, as of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under Section
1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).

     (g) In addition to the other rights provided in this Section 9.1, each Lender may grant a
security interest in, or otherwise assign as collateral, any of its rights under this Agreement,
whether now owned or hereafter acquired (including rights to payments of principal or interest on
the Loans), to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve
Board), without notice to the Agent or (B) any holder of, or trustee for the benefit of the holders
of, such Lender’s securities by notice to the Agent; provided, however, that

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no
such holder or trustee, whether because of such grant or assignment or any foreclosure thereon
(unless such foreclosure is made through an assignment in accordance with clause (a)
above), shall be entitled to any rights of such Lender hereunder and no such Lender shall be
relieved of any of its obligations hereunder.

     9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all
Lenders as Agent under this Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and no Credit Party nor any
other Person shall have any rights as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any Credit Party or any other
Person. Agent shall have no duties or responsibilities except for those expressly set forth in
this Agreement and the other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender.
Except as expressly set forth in this Agreement and the other Loan Documents, Agent shall not have
any duty to disclose, and shall not be liable for failure to disclose, any information relating to
any Credit Party or any of their respective Subsidiaries or any Account Debtor that is communicated
to or obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent nor any of
its Affiliates nor any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection herewith or therewith, except for
damages caused by its or their own gross negligence or willful misconduct.

     If Agent shall request instructions from Requisite Lenders, or all affected Lenders with
respect to any act or action (including failure to act) in connection with this Agreement or any
other Loan Document, then Agent shall be entitled to refrain from such act or taking such action
unless and until Agent shall have received instructions from Requisite Lenders or all affected
Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any action hereunder or
under any other Loan Document (a) if such action would, in the opinion of Agent, be contrary to law
or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion
of Agent, expose Agent to Environmental Liabilities or (c) if Agent shall not first be indemnified
to its satisfaction against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the instructions of Requisite
Lenders or all affected Lenders, as applicable.

     9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement or the other Loan Documents,
except for damages caused by its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer

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thereof signed by
such payee and in form reasonably satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect
of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper party or parties.

     9.4 GE Capital and Affiliates. With respect to its Commitments and Loans hereunder,
GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents
as any other Lender and may exercise the same as though it were not Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to, invest in, and generally engage in any
kind of business with, any Credit Party, any of their Affiliates and any Person who may do business
with or own securities of any Credit Party or any such Affiliate, all as if GE Capital were not
Agent and without any duty to account therefor to Lenders. GE Capital and its Affiliates may
accept fees and other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. GE Capital and its
affiliates may also make Loans under the Second Lien Credit Agreement and/or act as agent
thereunder. Each Lender acknowledges and waives the potential conflict of interest between GE
Capital as a Lender holding interests in the Loans and GE Capital as Agent and GE Capital as lender
and/or agent under the Second Lien Credit Agreement.

     9.5 Lender Credit Decision. Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the Financial Statements referred to
in Section 3.4(a) and such other documents and information as it has deemed appropriate,
made its own credit and financial analysis of the Credit Parties and its own decision to enter into
this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under this Agreement.
Each Lender acknowledges the potential conflict of interest of each other Lender as a result of
Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any
claim based upon, such conflict of interest.

     9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed
by Credit Parties and without limiting the obligations of Borrower hereunder), ratably according to
their respective Aggregate Pro Rata Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or

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disbursements of any kind
or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any action taken or
omitted to be taken by Agent in connection therewith; provided, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent’s gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and
each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Credit
Parties.

     9.7 Successor Agent. Agent may resign at any time by giving not less than 30 days’
prior written notice thereof to Lenders and Borrower. Upon any such resignation, the Requisite
Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a
commercial bank or financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof and has a combined
capital and surplus of at least $300,000,000. If no successor Agent has been appointed pursuant to
the foregoing, within 30 days after the date such notice of resignation was given by the resigning
Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform
all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be unreasonably withheld or
delayed; provided that such approval shall not be required if a Default or an Event of
Default has occurred and is continuing. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent.
Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor Agent
or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall continue. After any
resigning Agent’s resignation hereunder, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.

     9.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights, upon the occurrence
and during the continuance of any Event of Default and subject to Section 9.9(f), each
Lender is hereby authorized at any time or from time to time, without notice to any Credit Party or
to any other Person, any such notice being hereby expressly waived, to offset and to appropriate
and to apply any and all balances held by it at any of its offices for the account of Borrower or
any Guarantor (regardless of whether such balances are then due to Borrower or any

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Guarantor) and
any other properties or assets at any time held or owing by that Lender or that holder to or for
the credit or for the account of Borrower or any Guarantor against and on account of any of the
Obligations that are not paid when due. Any Lender exercising a right of setoff or otherwise
receiving any payment on account of the Obligations in excess of its Aggregate Pro Rata Share
thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations
in each such other Lender’s or holder’s Aggregate Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Aggregate Pro Rata Shares, (other than offset
rights exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16). Each Lender’s
obligation under this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata Share of the Swing Line
Loans under Section 1.1. Borrower and each Guarantor agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in
excess of its Aggregate Pro Rata Share of the Obligations and may sell participations in such
amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in
the Loans made or other Obligations held by other Lenders or holders may exercise all rights of
offset, bankers’ lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other Obligations in the
amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset
amount or payment otherwise received is thereafter recovered from the Lender that has exercised the
right of offset, the purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.

     9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

     (a) Advances; Payments.

          (i) Revolving Lenders shall refund or participate in the Swing Line Loan in accordance with
clauses (iii) and (iv) of Section 1.1(b). If the Swing Line Lender
declines to make a Swing Line Loan or if Swing Line Availability is zero, Agent shall notify
Revolving Lenders, promptly after receipt of a Notice of Revolving Advance and in any event prior
to 1:00 p.m. (Chicago time) on the date such Notice of Revolving Advance is received, by telecopy,
telephone or other similar form of transmission. Each Revolving Lender shall make the amount of
such Lender’s Pro Rata Share of such Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent’s account as set forth in Annex H not later than 3:00 p.m.
(Chicago time) on the requested funding date, in the case of an Index Rate Loan and not later than
11:00 a.m. (Chicago time) on the requested funding date in the case of a LIBOR Loan. After receipt
of such wire transfers (or, in the Agent’s sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving Credit Advance to Borrower.
All payments by each Revolving Lender shall be made without setoff, counterclaim or deduction of
any kind.

          (ii) On the 2nd Business Day of each calendar week or more frequently at Agent’s election
(each, a “Settlement Date”), Agent shall advise each Lender by telephone, or telecopy of
the amount of such Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of
Lenders with respect to each applicable Loan. Provided that each

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Lender has funded all payments
and Advances required to be made by it and purchased all participations required to be purchased by
it under this Agreement and the other Loan Documents as of such Settlement Date, Agent shall pay to
each Lender such Lender’s Pro Rata Share of principal, interest and Fees paid by Borrower since the
previous Settlement Date for the benefit of such Lender on the Loans held by it. To the extent
that any Lender (a “Non-Funding Lender”) has failed to fund all such payments and Advances
or failed to fund the purchase of all such participations, Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender’s Pro Rata Share of all payments received from
Borrower. Such payments shall be made by wire transfer to such Lender’s account (as specified by
such Lender in Annex H or the applicable Assignment Agreement) not later than 1:00 p.m.
(Chicago time) on the next Business Day following each Settlement Date.

     (b) Availability of Lender‘s Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance available to Agent
on each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such Revolving
Lender when due, Agent will be entitled to recover such amount on demand from such Revolving Lender
without setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly notify Borrower
and Borrower shall immediately repay such amount to Agent. Nothing in this Section 9.9(b)
or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Revolving Lender to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrower may have against any
Revolving Lender as a result of any default by such Revolving Lender hereunder. To the extent that
Agent advances funds to Borrower on behalf of any Revolving Lender and is not reimbursed therefor
on the same Business Day as such Advance is made, Agent shall be entitled to retain for its account
all interest accrued on such Advance until reimbursed by the applicable Revolving Lender.

     (c) Return of Payments.

          (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that
a related payment has been or will be received by Agent from Borrower and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.

          (ii) If Agent determines at any time that any amount received by Agent under this Agreement
must be returned to Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to
such Lender, together with interest at such rate, if any, as Agent is required to pay to Borrower
or such other Person, without setoff, counterclaim or deduction of any kind.

     (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any Revolving
Credit Advance or any payment required by it hereunder, or to purchase any participation in any
Swing Line Loan to be made or purchased by it on the date specified therefor

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shall not relieve any
other Lender (each such other Revolving Lender, an “Other Lender”) of its obligations to
make such Advance or purchase such participation on such date, but neither any Other Lender nor
Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance, purchase a
participation or make any other payment required hereunder. Notwithstanding anything set forth
herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or
with respect to any Loan Document or constitute a “Lender”, or a “Revolving Lender” (or be included
in the calculation of “Requisite Lenders” hereunder) for any voting or consent rights under or with
respect to any Loan Document. At Borrower’s request, Agent or a Person acceptable to Agent shall
have the right with Agent’s consent and in Agent’s sole discretion (but shall have no obligation)
to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at
Agent’s request, sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Loans held by such
Non-Funding Lender and all accrued interest and fees with respect thereto through the date of sale,
such purchase and sale to be consummated pursuant to an executed Assignment Agreement.

     (e) Dissemination of Information. Agent shall use reasonable efforts to provide
Lenders with any notice of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which Agent has actually become
aware and with notice of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s gross negligence or willful misconduct. Lenders acknowledge
that Borrower is required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall have no duty to
provide the same to Lenders.

     (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any
action to protect or enforce its rights arising out of this Agreement or the Notes (including
exercising any rights of setoff) without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the direction or with the
consent of Agent or Requisite Lenders.

     9.10 Intercreditor Agreement. Agent is authorized to execute and deliver the Second
Lien Intercreditor Agreement with the initial lenders and/or agent under the Second Lien Credit
Agreement, and each Lender by making or purchasing an interest in any Commitment or Loan at any
time shall be deemed to have agreed to be bound by such agreement.

10. SUCCESSORS AND ASSIGNS

     10.1 Successors and Assigns. This Agreement and the other Loan Documents shall be
binding on and shall inure to the benefit of each Credit Party, Agent, Lenders and their respective
successors and assigns (including, in the case of any Credit Party, a debtor-in-possession on
behalf of such Credit Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights,

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benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express written consent of
Agent and Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by
any Credit Party without the prior express written consent of Agent and Lenders shall be void. The
terms and provisions of this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms and provisions of this
Agreement or any of the other Loan Documents.

11. MISCELLANEOUS

     11.1 Complete Agreement; Modification of Agreement. The Loan Documents constitute the
complete agreement between the parties with respect to the subject matter thereof and may not be
modified, altered or amended except as set forth in Section 11.2. Any letter of interest,
commitment letter or fee letter (other than the GE Capital Fee Letter) or confidentiality
agreement, if any, between any Credit Party and Agent or any Lender or any of their respective
Affiliates, predating this Agreement and relating to a financing of substantially similar form,
purpose or effect shall be superseded by this Agreement.

     11.2 Amendments and Waivers.

     (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan Document, or any consent
to any departure by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrower, and by Requisite Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and 
(c) below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.

     (b) No amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement that waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit Obligations
shall be effective unless the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary, no waiver or
consent with respect to any Default or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 unless the same shall be in writing and signed by Agent, Requisite
Lenders and Borrower.

     (c) No amendment, modification, termination or waiver shall, unless in writing and signed by
Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’s
Commitment (which action shall be deemed to directly affect all Lenders); (ii) reduce the principal
of, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of
any affected Lender; (iii) extend any scheduled payment date (other than payment dates of mandatory
prepayments under Section 1.3(b)(ii)-(iv) or final maturity date of the principal amount of
any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release

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any Guaranty or, except as otherwise
permitted herein or in the other Loan Documents, release, or permit any Credit Party to sell or
otherwise dispose of, any Collateral with a value exceeding $1,000,000 in the aggregate (which
action shall be deemed to directly affect all Lenders); (vi) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive this Section
11.2 or the definitions of the term “Requisite Lenders” insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of Agent or L/C Issuer under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent or L/C Issuer, as the case may
be, in addition to Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without the written
concurrence of the holder of that Note. No notice to or demand on any Credit Party in any case
shall entitle such Credit Party or any other Credit Party to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder of the
Notes at the time outstanding and each future holder of the Notes.

     (d) If, in connection with any proposed amendment, modification, waiver or termination (a
“Proposed Change”) requiring the consent of all affected Lenders, the consent of more than
50% of the affected Lenders is obtained, but the consent of other Lenders whose consent is required
is not obtained (any such Lender whose consent is not obtained as described in this sentence below
being referred to as a “Non-Consenting Lender”), then, so long as Agent
is not a Non-Consenting Lender, at Borrower’s request Agent, or a Person reasonably acceptable
to Agent, shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have
no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent’s request, sell and assign to Agent or such Person, all of the
Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all
Loans held by the Non-Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.

     (e) Upon payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations), termination of the Commitments and a release of all claims against
Agent and Lenders, and so long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements, mortgage releases
and other documents necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

     11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all fees, costs and
expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants
and auditors) and (ii) Agent (and, with respect to clauses (c) and (d) below, all Lenders)
for all fees, costs and expenses, including the reasonable fees, costs and expenses of

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counsel or
other advisors (including environmental and management consultants and appraisers) incurred in
connection with the negotiation, preparation and filing and/or recordation of the Loan Documents
and incurred in connection with:

     (a) the forwarding to Borrower or any other Person on behalf of Borrower by Agent of the
proceeds of any Loan (including a wire transfer fee of $25 per wire transfer);

     (b) any amendment, modification or waiver of, or consent with respect to, or termination of,
any of the Loan Documents or Related Transactions Documents or advice in connection with the
syndication and administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;

     (c) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent,
any Lender, any Credit Party or any other Person and whether as a party, witness or otherwise) in
any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed
or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in connection with a case commenced
by or against any or all of the Credit Parties or any other Person that may be obligated to Agent
by virtue of the Loan Documents, including any such litigation, contest, dispute, suit, proceeding
or action arising in connection with any work-out or restructuring of the Loans during the pendency
of one or more Events of Default; provided that in the case of reimbursement of counsel for
Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;
provided, further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit,
proceeding or action to the extent any of the foregoing results from such Person’s gross
negligence or willful misconduct;

     (d) any attempt to enforce any remedies of Agent or any Lender against any or all of the
Credit Parties or any other Person that may be obligated to Agent or any Lender by virtue of any of
the Loan Documents, including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events of Default;
provided, that in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;

     (e) any workout or restructuring of the Loans during the pendency of one or more Events of
Default; and

     (f) efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe
or assess any of the Credit Parties or their respective affairs, and (iii) verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral;

including, as to each of clauses (a) through (f) above, all reasonable attorneys’ and other
professional and service providers’ fees arising from such services and other advice, assistance or
other representation, including those in connection with any appellate proceedings, and all
expenses, costs, charges and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of which shall
be

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payable, on demand, by Borrower to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of accountants,
environmental advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred
in connection with the performance of such legal or other advisory services.

     11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to require
strict performance by the Credit Parties of any provision of this Agreement or any other Loan
Document shall not waive, affect or diminish any right of Agent or such Lender thereafter to demand
strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same or of a different type. Subject to the provisions of
Section 11.2, none of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the other Loan Documents
and no Default or Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and the applicable required Lenders
and directed to Borrower specifying such suspension or waiver.

     11.5 Remedies Agent’s and Lenders’ rights and remedies under this Agreement shall be cumulative and
nonexclusive of any other rights and remedies that Agent or any Lender may have under any other
agreement, including the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.

     11.6 Severability. Wherever possible, each provision of this Agreement and the other
Loan Documents shall be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement or any other Loan Document shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Agreement or such other Loan Document.

     11.7 Conflict of Terms. Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement conflicts with any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

     11.8 Confidentiality. Agent and each Lender agree to use commercially reasonable efforts
(equivalent to the efforts Agent or such Lender applies to maintain the confidentiality of its own
confidential information) to maintain as confidential all confidential information provided to them
by the Credit Parties and designated as confidential following receipt thereof, except that Agent
and each Lender may disclose such information (a) to Persons employed or engaged by Agent or such
Lender; (b) to any bona fide assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant

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may disclose such information to
Persons employed or engaged by them as described in clause (a) above); (c) as required or
requested by any Governmental Authority or reasonably believed by Agent or such Lender to be
compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the
advise of Agent’s or such Lender’s counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any Litigation to which Agent
or such Lender is a party; (f) that ceases to be confidential through no fault of Agent or any
Lender; (g) to a Person that is an investor or prospective investor in a Securitization that agrees
that its access to information regarding the Borrower and the Loans is solely for purposes of
evaluating an investment in such Securitization; or (h) to a Person that is a trustee, collateral
manager, servicer, noteholder or secured party in a Securitization in connection with the
administration, servicing and reporting on the assets serving as collateral for such
Securitization. For purposes of this Section, “Securitization” means a public or private
offering by a Lender or any of its Affiliates or their respective successors and assigns, of
securities which represent an interest in, or which are collateralized, in whole or in part, by the
Loans.

     11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE
LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS
AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, CITY OF CHICAGO, ILLINOIS SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY AND; PROVIDED,
FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT
SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND

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OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES
THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL
RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

     11.10 Notices. Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other parties, or whenever any of the
parties desires to give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and 3 Business Days after deposit in the United
States Mail, registered or certified mail, return receipt requested, with proper postage prepaid,
(b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such
telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United
States Mail as otherwise provided in this Section 11.10); (c) 1 Business Day after deposit
with a reputable overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address (or
facsimile number) as may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled to receive such notice.
Failure or delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or Agent) designated in
Annex I to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.

     11.11 Section Titles. The Section titles and Table of Contents contained in this
Agreement are and shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.

     11.12 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one agreement.

     11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT
PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT,
LENDERS

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AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

     11.14 Press Releases and Related Matters Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will
in the future issue any press releases or other public disclosure using the name of GE Capital or
its affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions
Documents without at least 2 Business Days’ prior notice to GE Capital and without the prior
written consent of GE Capital unless (and only to the extent that) such Credit Party or Affiliate
is required to do so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement. Agent or such Lender shall
provide a draft of any such tombstone or similar advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right to provide to
industry trade organizations information necessary and customary for inclusion in league table
measurements.

     11.15 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or
any significant part of any Credit Party’s assets, and shall continue to be effective or to be
reinstated, as the case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.
In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned,
the Obligations shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

     11.16 Advice of Counsel. Each of the parties represents to each other party hereto
that it has discussed this Agreement and, specifically, the provisions of Sections 11.9 and
11.13, with its counsel.

     11.17 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

     11.18 Compliance with Federal Law. Each Credit Party shall (a) ensure, and cause each
Subsidiary to ensure, that no Person who owns a controlling interest in or otherwise controls such
Credit Party or such Subsidiary is or shall be listed on the Specially Designated Nationals and
Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury or included in any Executive

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Orders, (b) not use or permit the use of the
proceeds of the Loans to violate any of the foreign asset control regulations of OFAC or any
enabling statute or Executive Order relating thereto, and (c) comply, and cause each Subsidiary to
comply, with all applicable Bank Secrecy Act laws and regulations, as amended.

     11.19 Customer Identification – USA Patriot Act Notice. Each Lender and the Agent
(for itself and not on behalf of any other party) hereby notifies the Credit Parties that, pursuant
to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October
26, 2001 (the “Patriot Act”), it is required to obtain, verify and record information that
identifies the Credit Parties, which information includes the name and address of the Credit
Parties and other information that will allow such Lender or the Agent, as applicable, to identify
the Credit Parties in accordance with the Patriot Act.

12. AMENDMENT AND RESTATEMENT

     12.1 Interrelationship with the Existing Credit Agreement. As stated in the preamble
hereof, this Agreement is intended to amend and restate the provisions of the Existing Credit
Agreement and, except as expressly modified herein, (x) all of the terms and provisions of the
Existing Credit Agreement shall continue to apply for the period prior to the Closing Date,
including any determinations of payment dates, interest rates, Events of Default or any amount that
may be payable to Agent or the Lenders, (y) the Obligations under the Existing Credit Agreement
shall continue to be paid or prepaid on or prior to the Closing Date, and shall from and after the
Closing Date continue to be owing and be subject to the terms of this Agreement and (z) this
Agreement shall not be deemed to evidence or result in a novation or repayment of the Revolving
Loans under the Existing Credit Agreement and reborrowing hereunder, but Obligations under the
Existing Credit Agreement and Liens securing payment and performance thereof shall in all respects
be continuing as Obligations under this Agreement and Liens securing payment and performance
thereof. All references in the other Loan Documents and the Loan Documents executed in connection
with the Existing Credit Agreement to (i) the Existing Credit Agreement or the “Credit Agreement”
shall be deemed to include references to this Agreement and (ii) the “Lenders” or a “Lender” or to
the “Agent” shall mean such terms as defined in this Agreement. All Obligations of the Borrower
under the Existing Credit Agreement shall be governed by this Agreement from and after the Closing
Date. The Loan Documents delivered in connection with this Agreement shall supersede the
corresponding Loan Documents delivered in connection with the Existing Credit Agreement. The Loan
Documents executed in connection with the Existing Credit Agreement that are not superseded by
corresponding Loan Documents executed and delivered in connection with this Agreement shall remain
in full force and effect. All references to the Existing Credit Agreement in the Loan Documents
executed in connection with the Existing Credit Agreement that are not expressly superseded by
deliveries of such new Loan Documents shall be deemed to refer to this Agreement.

     12.2 Confirmation of Existing Obligations. Borrower acknowledges and agrees that as
of close of business on May 31, 2005, the outstanding principal balance of (i) the Revolving Credit
Advances outstanding under the Existing Credit Agreement was $0 and (ii)

60

 

the Term Loan B
outstanding under the Existing Credit Agreement was $140,000,000, and that in each case Borrower
has no defense, counterclaim or setoff with respect to the payment thereof.

[Signature Pages Follow]

61

 

     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

	 	 	 	 	 
	 	 	NAVARRE CORPORATION, as Borrower
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL
	 	 	CORPORATION, as Agent and Lender
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Duly Authorized Signatory

[Signature Page to Third Amended and Restated Credit Agreement]

S-1

 

     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above
by below Persons in their capacity as Credit Parties not as Borrower.

	 	 	 	 	 
	 	 	ENCORE SOFTWARE, INC., as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

	 	 	 	 	 
	 	 	BCI ECLIPSE COMPANY, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

	 	 	 	 	 
	 	 	FUNIMATION PRODUCTIONS LTD., as Credit Party
	 
	 	 	 	 
	

	 	By:
	 	Navarre CP, LLC, its General Partner
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

	 	 	 	 	 
	 	 	FUNIMATION STORE LTD., as Credit Party
	 
	 	 	 	 
	

	 	By:
	 	Navarre CS, LLC, its General Partner
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

	 	 	 	 	 
	 	 	NAVARRE CP, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

	 	 	 	 	 
	 	 	NAVARRE CLP, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Third Amended and Restated Credit Agreement]

S-2

 

	 	 	 	 	 
	 	 	NAVARRE CS, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Third Amended and Restated Credit Agreement]

S-3

 

	 	 	 	 	 
	 	 	GMAC COMMERCIAL FINANCE LLC, as Lender
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Third Amended and Restated Credit Agreement]

S-4

 

ANNEX A (Recitals)

to

CREDIT AGREEMENT

DEFINITIONS

          Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere
in the Loan Documents) the following respective meanings and all references to Sections, Exhibits,
Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or
Annexes of or to the Agreement:

          “Account Debtor” means any Person who may become obligated to any Credit Party under,
with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a
payment intangible).

          “Accounting Changes” has the meaning ascribed thereto in Annex G.

          “Accounts” means all “accounts,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations evidenced by Chattel
Paper or Instruments), (including any such obligations that may be characterized as an account or
contract right under the Code), (b) all of each Credit Party’s rights in, to and under all purchase
orders or receipts for goods or services, (c) all of each Credit Party’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation
incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel
under a charter or other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit Party), (e) all
healthcare insurance receivables, and (f) all collateral security of any kind, now or hereafter in
existence, given by any Account Debtor or other Person with respect to any of the foregoing.

          “Advance” means any Revolving Credit Advance or Swing Line Advance, as the context may
require.

          “Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary,
5% or more of the Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with such Person, (c)
each of such Person’s officers, directors, joint venturers and partners and (d) in the case of
Borrower, the immediate family members, spouses and lineal descendants of individuals who are
Affiliates of Borrower. For the purposes of this definition, “control” of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of its
management

Annex A-1

 

or policies, whether through the ownership of voting securities, by contract or otherwise;
provided, however, that the term “Affiliate” shall specifically exclude
Agent and each Lender.

          “Agent” means GE Capital in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.7.

          “Agreement” means the Third Amended and Restated Credit Agreement dated as of the
Closing Date by and among Borrower, the other Credit Parties party thereto, GE Capital, as Agent
and Lender and the other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

          “Aggregate Pro Rata Share” means, as to any Lender, the percentage obtained by
dividing (i) the aggregate Commitments (or, with respect to any Commitment which has terminated,
the outstanding principal balance of the applicable Loans) of such Lender by (ii) the aggregate
Commitments (or, with respect to any Commitment which has terminated, the outstanding principal
balance of the applicable Loans) of all Lenders.

          “Appendices” has the meaning ascribed to it in the recitals to the Agreement.

          “Applicable L/C Margin” means the per annum fee, from time to time in effect, payable
with respect to outstanding Letter of Credit Obligations as determined by reference to Section
1.5(a).

          “Applicable Margins” means collectively the Applicable L/C Margin, the Applicable
Revolver Index Margin, the Applicable Term Loan B Index Margin, the Applicable Term Loan C Index
Margin, the Applicable Revolver LIBOR Margin, the Applicable Term Loan B LIBOR Margin and the
Applicable Term Loan C LIBOR Margin.

          “Applicable Revolver Index Margin” means the per annum interest rate margin from time
to time in effect and payable in addition to the Index Rate applicable to the Revolving Loan, as
determined by reference to Section 1.5(a).

          “Applicable Revolver LIBOR Margin” means the per annum interest rate from time to time
in effect and payable in addition to the LIBOR Rate applicable to the Revolving Loan, as determined
by reference to Section 1.5(a).

          “Applicable Term Loan B Index Margin” means the per annum interest rate from time to
time in effect and payable in addition to the Index Rate applicable to the Term Loan B, as
determined by reference to Section 1.5(a).

          “Applicable Term Loan B LIBOR Margin” means the per annum interest rate from time to
time in effect and payable in addition to the LIBOR Rate applicable to the Term Loan B, as
determined by reference to Section 1.5(a).

          “Applicable Term Loan C Index Margin” means the per annum interest rate from time to
time in effect and payable in addition to the Index Rate applicable to the Term Loan C, as
determined by reference to Section 1.5(a).

Annex A-2

 

          “Applicable Term Loan C LIBOR Margin” means the per annum interest rate from time to
time in effect and payable in addition to the LIBOR Rate applicable to the Term Loan C, as
determined by reference to Section 1.5(a).

          “Approved Fund” means, with respect to any Lender, any Person (other than a natural
Person) that (a) is or will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its business and (b) is
advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other
than an individual) or any Affiliate of any Person (other than an individual) that administers or
manages such Lender.

          “Assignment Agreement” has the meaning ascribed to it in Section 9.1(a).

          “Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. §§ 101 et seq.

          “BCI Eclipse” means BCI Eclipse Company, LLC, a Minnesota limited liability company, a
wholly-owned Subsidiary of Borrower.

          “BCI Eclipse Purchase Agreement” means that certain Asset Purchase Agreement, dated as
of November 3, 2003, by and among Borrower, BCI Eclipse as buyer, BCI Eclipse, LLC, a New York
limited liability company as seller and the Members (as defined therein) named therein (together
with any exhibits, schedules and any other annexes or supplements thereto and as in effect as of
November 3, 2003 and as amended or otherwise modified in a manner not prohibited by the Credit
Agreement.

          “Blocked Accounts” has the meaning ascribed to it in Annex C.

          “Borrower” has the meaning ascribed thereto in the preamble to the Agreement.

          “Borrowing Availability” means as of any date of determination the Maximum Amount,
less the sum of the Revolving Loan and Swing Line Loan then outstanding.

          “Business Day” means any day that is not a Saturday, a Sunday or a day on which banks
are required or permitted to be closed in the States of Illinois and/or New York and in reference
to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.

          “Canadian Dollars” means the lawful currency of Canada.

          “Capital Expenditures” means, with respect to any Person, all expenditures (by the
expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period
for any fixed assets or improvements or for replacements, substitutions or additions thereto, that
have a useful life of more than one year and that are required to be capitalized under GAAP.

          “Capital Lease” means, with respect to any Person, any lease of any property (whether
real, personal or mixed) by such Person as lessee that, in accordance with GAAP,

Annex A-3

 

would be required to be classified and accounted for as a capital lease on a balance sheet of
such Person.

          “Capital Lease Obligation” means, with respect to any Capital Lease of any Person, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a
balance sheet of such lessee in respect of such Capital Lease.

          “Cash Collateral Account” has the meaning ascribed to it Annex B.

          “Cash Equivalents” has the meaning ascribed to it in Annex B.

          “Cash Management Systems” has the meaning ascribed to it in Section 1.8.

          “Change of Control” means any of the following: (a) other than the holders of the
Borrower’s capital Stock as of the Closing Date, any person or group of persons (within the meaning
of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the issued and outstanding shares of capital Stock of the
Borrower having the right to vote for the election of directors of the Borrower under ordinary
circumstances; (b) during any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of the Borrower (together with any new
directors whose election by the board of directors of the Borrower or whose nomination for election
by the Stockholders of the Borrower was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office; or (c) Borrower ceases to own
and control all of the economic and voting rights associated with all of the outstanding capital
Stock of any of its Subsidiaries.

          “Charges” means all federal, state, county, city, municipal, local, foreign or other
governmental taxes (including taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party’s ownership or use of any properties or other assets, or (e) any other aspect of any
Credit Party’s business.

          “Chattel Paper” means any “chattel paper,” as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any Credit Party, wherever
located.

          “Closing Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in connection with the
Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in
the form attached hereto as Annex D.

          “Closing Date” means June 1, 2005.

Annex A-4

 

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

          “Collateral” means the property covered by the Security Agreement, the Mortgages and
the other Collateral Documents and any other property, real or personal, tangible or intangible,
now existing or hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure the Obligations.

          “Collateral Documents” means the Security Agreements, the Guaranties, the Pledge
Agreements, the Mortgages, the Patent Security Agreements, the Trademark Security Agreements, the
Copyright Security Agreements and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.

          “Collateral Reports” means the reports with respect to the Collateral referred to in
Annex F.

          “Collection Account” means that certain account of Agent, account number 502-328-54
in the name of Agent at Deutsche Bank Trust Company Americas in New York, New York ABA No. 021 001
033, or such other account as may be specified in writing by Agent as the “Collection Account.”

          “Commitment Termination Date” means the earliest of (a) May 11, 2010, (b) the date of
termination of Lenders’ obligations to make Advances and to incur Letter of Credit Obligations or
permit existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit
Obligations pursuant to Annex B, and the permanent reduction of the Commitments to zero
dollars ($0).

          “Commitments” shall collectively mean the Revolving Loan Commitment, the Term Loan B
Commitment and the Term Loan C Commitment.

          “Compliance Certificate” has the meaning ascribed to it in Annex E.

          “Concentration Account” has the meaning ascribed to it in Annex C.

Annex A-5

 

          “Contingent Obligation” means, as applied to any Person, any direct or indirect
liability of that Person: (i) with respect to Guaranteed Indebtedness and with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the purpose or intent of the
Person incurring such liability, or the effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be protected (in whole or
in part) against loss with respect thereto; (ii) with respect to any letter of credit issued for
the account of that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (iii) under any foreign exchange contract, currency swap agreement, interest rate swap
agreement (including, without limitation, Interest Rate Agreements) or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations in currency values
or interest rates, (iv) any agreement, contract or transaction involving commodity options or
future contracts, (v) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, or (vi) pursuant to any agreement to
purchase, repurchase or otherwise acquire any obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to maintain the
solvency, financial condition or any balance sheet item or level of income of another. The amount
of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed.

          “Contracts” means all “contracts,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, in any event, including all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Credit Party may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance of any Account.

          “Control Letter” means a letter agreement between Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name of any Credit
Party, (ii) a securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a securities account in
the name of any Credit Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit Party, whereby, among
other things, the issuer, securities intermediary or futures commission merchant disclaims any
security interest in the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the instructions or entitlement
orders of Agent without further consent by the affected Credit Party.

          “Copyright License” means any and all rights now owned or hereafter acquired by any
Credit Party under any written agreement granting any right to use any Copyright or Copyright
registration.

          “Copyright Security Agreements” means the Copyright Security Agreements made in favor
of Agent, on behalf of itself and Lenders, by each applicable Credit Party.

Annex A-6

 

          “Copyrights” means all of the following now owned or hereafter adopted or acquired by
any Credit Party: (a) all copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or territory thereof, or
any other country or any political subdivision thereof, and (b) all reissues, extensions or
renewals thereof.

          “Credit Parties” means Borrower and its Subsidiaries.

          “Currency Exchange Convention” shall mean a procedure as specified from time to time
by Agent to value in Dollars the obligations or assets of the Borrower or its Affiliates that are
originally measured in Canadian Dollars by using the spot price for Canadian Dollars as determined
by Agent in its sole discretion for the preceding business day.

          “Current Assets” means, with respect to any Person, all current assets of such Person
as of any date of determination calculated in accordance with GAAP, but excluding cash, Cash
Equivalents and debts due from Affiliates.

          “Current Liabilities” means, with respect to any Person, all liabilities that should,
in accordance with GAAP, be classified as current liabilities, and in any event shall include all
Indebtedness payable on demand or within one year from any date of determination without any option
on the part of the obligor to extend or renew beyond such year, all accruals for federal or other
taxes based on or measured by income and payable within such year, but excluding the current
portion of long-term debt required to be paid within one year and the aggregate outstanding
principal balances of the Revolving Loan and the Swing Line Loan.

          “Default” means any event that, with the passage of time or notice or both, would,
unless cured or waived, become an Event of Default.

          “Default Rate” has the meaning ascribed to it in Section 1.5(d).

          “Deposit Accounts” means all “deposit accounts” as such term in defined in the Code,
now or hereafter held in the name of any Credit Party.

          “Disbursement Accounts” has the meaning ascribed to it in Annex C.

          “Disclosure Schedules” means the Schedules prepared by Borrower and denominated as
Disclosure Schedules (3.1) through (6.7) in the Index to the Agreement.

          “Documents” means any “documents,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located.

          “Dollar Amount” means, in respect of any amount, the sum of (a) such portion, if any,
of such amount denominated in Dollars; and (b) to the extent that a portion of such amount is
denominated in Canadian Dollars, the amount in Dollars calculated by Lender using the Currency
Exchange Convention in effect on the Business Day of determination (and calculated based upon 97%
of the applicable amount of Canadian Dollars).

Annex A-7

 

          “Dollars” or “$” means lawful currency of the United States of America.

          “EBITDA” means, with respect to any Person for any fiscal period, without duplication,
an amount equal to (a) consolidated net income of such Person for such period, determined in
accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii) interest income,
(iii) gain from extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all securities), and (v) any
other non-cash gains that have been added in determining consolidated net income, in each case to
the extent included in the calculation of net income of such Person for such period in accordance
with GAAP, but without duplication, plus (c) the sum of (i) any provision for income taxes,
(ii) Interest Expense, (iii) loss from extraordinary items for such period, (iv) depreciation and
amortization for such period, (v) amortized debt discount for such period, and (vi) the amount of
any deduction to consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP, but without
duplication. For purposes of this definition, the following items shall be excluded in determining
consolidated net income of a Person: (1) the income (or deficit) of any other Person accrued prior
to the date it became a Subsidiary of, or was merged or consolidated into, such Person or any of
such Person’s Subsidiaries; (2) the income (or deficit) of any other Person (other than a
Subsidiary) in which such Person has an ownership interest, except to the extent any such income
has actually been received by such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the time permitted by
the terms of any contractual obligation or requirement of law applicable to such Subsidiary; (4)
any restoration to income of any contingency reserve, except to the extent that provision for such
reserve was made out of income accrued during such period; (5) any write-up of any asset; (6) any
net gain from the collection of the proceeds of life insurance policies; (7) any net gain arising
from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of
such Person, (8) in the case of a successor to such Person by consolidation or merger or as a
transferee of its assets, any earnings of such successor prior to such consolidation, merger or
transfer of assets, and (9) any deferred credit representing the excess of equity in any Subsidiary
of such Person at the date of acquisition of such Subsidiary over the cost to such Person of the
investment in such Subsidiary.

          “Eligible Certificate of Deposit” means a certificate of deposit (i) in which the
Agent has a first priority perfected security interest subject to no other Liens, (ii) issued by a
Person acceptable to the Agent and (iii) held in an account for which an account control agreement
in form and substance satisfactory to the Agent has been executed and delivered by all parties
thereto.

          “Encore Software” means Encore Software, Inc. (f/k/a Encore Software Corporation), a
Minnesota corporation.

          “Environmental Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any

Annex A-8

 

applicable judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§
6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the
Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et
seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.

          “Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs, investigation and feasibility
study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages,
property damages, natural resource damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute or common law,
including any arising under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal property.

          “Environmental Permits” means all permits, licenses, authorizations, certificates,
approvals or registrations required by any Governmental Authority under any Environmental Laws.

          “Equipment” means all “equipment,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located and, in any event, including all such
Credit Party’s machinery and equipment, including processing equipment, conveyors, machine tools,
data processing and computer equipment, including embedded software and peripheral equipment and
all engineering, processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for
any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights
with respect thereto, and all products and proceeds thereof and condemnation awards and insurance
proceeds with respect thereto.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any regulations promulgated thereunder.

Annex A-9

 

          “ERISA Affiliate” means, with respect to any Credit Party, any trade or business
(whether or not incorporated) that, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

          “ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate, (a) any
event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of
any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c)
the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any
Credit Party or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within 30 days; (g) any other event or condition that
might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for
the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan’s
qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064 of
ERISA.

          “ESOP” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7)
of the IRC.

          “Event of Default” has the meaning ascribed to it in Section 8.1.

          “Excess Cash Flow” means, without duplication, with respect to any period of Borrower
and its Subsidiaries, consolidated net income for such period plus (a) depreciation,
amortization, Interest Expense and writeoffs relating to Vendor Advances, in each case to the
extent deducted in determining consolidated net income for such period, minus (b) Capital
Expenditures during such period (excluding the financed portion thereof) minus (c) Interest
Expense paid or accrued (excluding any original issue discount, interest paid in kind or amortized
debt discount, to the extent included in determining Interest Expense) and scheduled and voluntary
principal payments paid in respect of Funded Debt for such period, plus or minus
(as the case may be), (d) extraordinary gains or losses which are cash items not included in the
calculation of net income for such period, plus (e) taxes deducted in determining
consolidated net income to the extent not paid for in cash for such period, minus (f) the
aggregate amount of Restricted Payments made during such period to the extent permitted solely
pursuant to Section 6.14(c), Section 6.14(d) or Section 6.14(e), in each case to the extent not
deducted in determining consolidated net income for such period plus (g) decreases in
Working Capital of the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP during such period, minus (h) increases in Working Capital of the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP during such period minus (i)
Net Vendor Advances for such period (it being agreed that for the purposes of clauses (h) and (i)
of this definition for the calculation of Excess Cash Flow for the Fiscal Year ending March 31,
2006, the starting amount of Working Capital of the Borrower and its Subsidiaries on a consolidated
basis for such period shall be the

Annex A-10

 

amount of Working Capital of the Borrower and its Subsidiaries on a consolidated basis as of
the Prior Closing Date immediately after giving effect to the consummation of the Related
Transactions).

          “Existing Credit Agreement” has the meaning ascribed to it in the recitals to the
Agreement.

          “Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.

          “Federal Funds Rate” means, for any day, a floating rate equal to the weighted average
of the rates on overnight federal funds transactions among members of the Federal Reserve System,
as determined by Agent in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).

          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

          “Fees” means any and all fees payable to Agent or any Lender pursuant to the Agreement
or any of the other Loan Documents.

          “Financial Covenants” means the financial covenants set forth in Annex G.

          “Financial Statements” means the consolidated and consolidating income statements,
statements of cash flows and balance sheets of Borrower delivered in accordance with Section
3.4 and Annex E.

          “Fiscal Month” means any of the monthly accounting periods of Borrower.

          “Fiscal Quarter” means any of the quarterly accounting periods of Borrower, ending on
March 31, June 30, September 30, and December 31 of each year.

          “Fiscal Year” means any of the annual accounting periods of Borrower ending on March
31 of each year.

          “Fixtures” means all “fixtures” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party.

          “Funded Debt” means, with respect to any Person, without duplication, all Indebtedness
for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and
that by its terms matures more than one year from, or is directly or indirectly renewable or
extendible at such Person’s option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the date of creation
thereof, and specifically including Capital Lease Obligations, current maturities of long-term
debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor,
and also including, in the case of Borrower, the Obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.

Annex A-11

 

          “FUNimation Acquisition” means the acquisition by Navarre CP, Navarre CLP and Navarre
CS of all of the partnership interests in the FUNimation Companies pursuant to and in accordance
with the FUNimation Acquisition Documents.

          “FUNimation Acquisition Documents” means the FUNimation Purchase Agreement and all
other agreements, documents, opinions, certificates and other instruments executed or delivered
pursuant thereto or in connection therewith, each as in effect on the date hereof.

          “FUNimation Companies” means, collectively, FUNimation Productions and FUNimation
Store.

          “FUNimation Purchase Agreement” means that certain Partnership Interest Purchase
Agreement, dated as of January 10, 2005, by and among the Sellers (as defined therein), the Seller
Representative (as defined therein), the FUNimation Companies, Navarre CP, Navarre CLP, Navarre CS
and the Borrower (including all schedules, exhibits, amendments, supplements, modifications and/or
assignments delivered pursuant thereto or in connection therewith), as in effect on the date
hereof.

          “FUNimation Productions” means FUNimation Productions Ltd., a Texas limited
partnership.

          “FUNimation Store” means The FUNimation Store Ltd., a Texas limited partnership.

          “GAAP” means generally accepted accounting principles in the United States of America,
consistently applied, as such term is further defined in Annex G to the Agreement.

          “GE Capital” means General Electric Capital Corporation, a Delaware corporation.

          “GE Capital Fee Letter” means that certain second amended and restated letter, dated
as of the Prior Closing Date, between GE Capital and Borrower with respect to certain Fees to be
paid from time to time by Borrower to GE Capital.

          “General Intangibles” means “general intangibles,” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest
that such Credit Party may now or hereafter have in or under any Contract, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all rights and claims
in or under insurance policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all unearned premiums),

Annex A-12

 

uncertificated securities, chooses in action, deposit, checking and other bank accounts,
rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.

          “Goods” means any “goods” as defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located, including embedded software to the extent included in “goods”
as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals.

          “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

          “Guaranteed Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other
obligation (“primary obligation”) of any other Person (the “primary obligor”) in
any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase
any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss
(other than product warranties given in the ordinary course of business) or (e) indemnify the owner
of such primary obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which such Guaranteed
Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full performance) in respect
thereof.

          “Guaranties” means, that certain Amended and Restated Guaranty dated as of the Prior
Closing Date by and among the Credit Parties signatory thereto and Agent, on behalf of itself and
Lenders, and each other guaranty executed by any Guarantor in favor of Agent and Lenders in respect
of the Obligations.

          “Guarantors” means each Subsidiary of Borrower and each other Person, if any, that
executes a guaranty or other similar agreement in favor of Agent, for itself and the ratable
benefit of Lenders, in connection with the transactions contemplated by the Agreement and the other
Loan Documents.

Annex A-13

 

          “Hazardous Material” means any substance, material or waste that is regulated by, or
forms the basis of liability now or hereafter under, any Environmental Laws, including any material
or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,”
“hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or
phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.

          “Indebtedness” means, with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase price of property
payment for which is deferred 6 months or more, but excluding obligations to trade creditors
incurred in the ordinary course of business that are unsecured and not overdue by more than 6
months unless being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, (c)
all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index Rate as in effect on
the Closing Date) of future rental payments under all synthetic leases, (f) all obligations of such
Person under commodity purchase or option agreements or other commodity price hedging arrangements,
in each case whether contingent or matured, (g) all obligations of such Person under any foreign
exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether contingent or matured, (h)
all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other
assets (including accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (i) ”earnouts” and similar
payment obligations excluding bonus, phantom stock or other similar compensation payments owed to
employees, or officers and incurred in the ordinary course of business, and (j) the Obligations.

          “Indemnified Liabilities” has the meaning ascribed to it in Section 1.13.

          “Indemnified Person” has the meaning ascribed to it in Section 1.13.

          “Index Rate” means, for any day, a floating rate equal to the higher of (i) the rate
publicly quoted from time to time by The Wall Street Journal as the “base rate on corporate
loans posted by at least 75% of the nation’s 30 largest banks” (or, if The Wall Street
Journal ceases quoting a base rate of the type described, the highest per annum rate of
interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent), and (ii) the
Federal Funds Rate plus 50 basis points per annum. Each change in any interest rate provided for
in the Agreement based upon the Index Rate shall take effect at the time of such change in the
Index Rate.

Annex A-14

 

          “Index Rate Loan” means a Loan or portion thereof bearing interest by reference to the
Index Rate.

          “Instruments” means all “instruments,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all promissory notes and other evidences
of indebtedness, other than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

          “Intellectual Property” means any and all Licenses, Patents, Copyrights, Trademarks,
and the goodwill associated with such Trademarks.

          “Interest Expense” means, with respect to any Person for any fiscal period, interest
expense (whether cash or non-cash) of such Person determined in accordance with GAAP for the
relevant period ended on such date, including interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been capitalized on the balance
sheet of such Person.

          “Interest Payment Date” means (a) as to any Index Rate Loan, the first Business Day of
each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of
the applicable LIBOR Period; provided, that in the case of any LIBOR Period greater than
three months in duration, interest shall be payable at three month intervals and on the last day of
such LIBOR Period; and provided further that, in addition to the foregoing, each of
(x) the date upon which all of the Commitments have been terminated and the Loans have been paid in
full and (y) the Commitment Termination Date shall be deemed to be an “Interest Payment
Date” with respect to any interest that has then accrued under the Agreement.

          “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement or similar agreement or arrangement (i) designed to
protect Borrower against fluctuations in interest rates hereunder or under the Second Lien Credit
Agreement, (ii) entered into between Borrower and one or more Lenders and (iii) which the Agent has
acknowledged in writing constitutes an “Interest Rate Agreement” for the purposes of this
Agreement.

          “Inventory” means any “inventory,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, and in any event including inventory,
merchandise, goods and other personal property that are held by or on behalf of any Credit Party
for sale or lease or are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, supplies or materials of
any kind, nature or description used or consumed or to be used or consumed in such Credit Party’s
business or in the processing, production, packaging, promotion, delivery or shipping of the same,
including all supplies and embedded software.

          “Investment Property” means all “investment property” as such term is defined in the
Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all
securities, whether certificated or uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund

Annex A-15

 

shares; (ii) all securities entitlements of any Credit Party, including the rights of such
Credit Party to any securities account and the financial assets held by a securities intermediary
in such securities account and any free credit balance or other money owing by any securities
intermediary with respect to that account; (iii) all securities accounts of any Credit Party; (iv)
all commodity contracts of any Credit Party; and (v) all commodity accounts held by any Credit
Party.

          “IRC” means the Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder.

          “IRS” means the Internal Revenue Service.

          “L/C Issuer” has the meaning ascribed to it in Annex B.

          “L/C Sublimit” has the meaning ascribed to in it Annex B.

          “Lenders” means GE Capital, the other Lenders named on the signature pages of the
Agreement, (and, if any such Person shall decide to assign all or any portion of the Obligations,
such term shall include any assignee of such Person); provided, that for the purposes of
(i) the definitions of “Interest Rate Agreement”, and “Obligations”, (ii) Sections 9.2, 9.3, 9.4,
9.5 and 9.7 of this Agreement and (iii) the granting and perfection of security interests, liens,
mortgages and other encumbrances under or pursuant to one or more Loan Documents, each Qualified
Counterparty shall be deemed to be a Lender (it being agreed that no such Qualified Counterparty
shall have the right to vote on or consent to any matter requiring a vote or consent of one or more
Lenders).

          “Letter of Credit Fee” has the meaning ascribed to it in Annex B.

          “Letter of Credit Obligations” means all outstanding obligations incurred by Agent and
Lenders at the request of Borrower, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by Agent or another L/C Issuer or the
purchase of a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount that may be payable
by Agent or Lenders thereupon or pursuant thereto.

          “Letter of Credit Rights” means “letter-of-credit rights” as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including rights to payment or
performance under a letter of credit, whether or not such Credit Party, as beneficiary, has
demanded or is entitled to demand payment or performance.

          “Letters of Credit” means documentary or standby letters of credit issued for the
account of Borrower by any L/C Issuer, and bankers’ acceptances issued by Borrower, for which Agent
and Lenders have incurred Letter of Credit Obligations.

          “Leverage Ratio” means, as of any date, the ratio of (i) the sum of (x) the average
amount of Revolving Loans for the then immediately preceding 30 day period ending on such date plus
(y) the aggregate amount of all other Indebtedness of the Borrower and its Subsidiaries

Annex A-16

 

on a consolidated basis in accordance with GAAP as of such date to (ii) EBITDA for the four
Fiscal Quarter period ending on such date.

          “LIBOR Business Day” means a Business Day on which banks in the City of London are
generally open for interbank or foreign exchange transactions.

          “LIBOR Loan” means a Loan or any portion thereof bearing interest by reference to the
LIBOR Rate.

          “LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on a
LIBOR Business Day selected by Borrower pursuant to the Agreement and ending one, two or three
months thereafter, as selected by Borrower’s irrevocable notice to Agent as set forth in
Section 1.5(e); provided, that the foregoing provision relating to LIBOR Periods is
subject to the following:

     (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day,
such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the
result of such extension would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day;

     (b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date
shall end 2 LIBOR Business Days prior to such date;

     (c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendar month;

     (d) Borrower shall select LIBOR Periods so as not to require a payment or prepayment of
any LIBOR Loan during a LIBOR Period for such Loan; and

     (e) Borrower shall select LIBOR Periods so that there shall be no more than 5 separate
LIBOR Loans in existence at any one time.

          “LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent equal
to:

     (a) the offered rate for deposits in United States Dollars for the applicable LIBOR
Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second full
LIBOR Business Day next preceding the first day of such LIBOR Period (unless such date is
not a Business Day, in which event the next succeeding Business Day will be used); divided
by

     (b) a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is
2 LIBOR Business Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the Federal

Annex A-17

 

Reserve Board or other Governmental Authority having jurisdiction with respect thereto,
as now and from time to time in effect) for Eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board that are required to
be maintained by a member bank of the Federal Reserve System.

     If such interest rates shall cease to be available from Telerate News Service, the
LIBOR Rate shall be determined from such financial reporting service or other information as
shall be mutually acceptable to Agent and Borrower.

          “License” means any Copyright License, Patent License, Trademark License or other
license of rights or interests now held or hereafter acquired by any Credit Party.

          “Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable law of any
jurisdiction).

          “Litigation” has the meaning ascribed to it in Section 3.13.

          “Loan Account” has the meaning ascribed to it in Section 1.12.

          “Loan Documents” means the Agreement, the Notes, the Collateral Documents, the Master
Standby Agreement, each Interest Rate Agreement and all other agreements, instruments, documents
and certificates identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Credit Party, or any employee of any Credit Party, and delivered to 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
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.

          “Loans” means the Revolving Loan, the Swing Line Loan and the Term Loans.

          “Lock Boxes” has the meaning ascribed to it in Annex C.

          “Margin Stock” has the meaning ascribed to it in Section 3.10.

          “Master Standby Agreement” means the Master Agreement for Standby Letters of Credit
dated as of October 3, 2001 between Borrower, as Applicant, and GE Capital, as Issuer.

          “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or financial or other condition of any Credit Party, (b) Borrower’s

Annex A-18

 

ability to pay any of the Loans or any of the other Obligations in accordance with the terms
of the Agreement, (c) the Collateral or Agent’s Liens, on behalf of itself and Lenders, on the
Collateral or the priority of such Liens, or (d) Agent’s or any Lender’s rights and remedies under
the Agreement and the other Loan Documents. Without limiting the generality of the foregoing, any
event or occurrence adverse to one or more Credit Parties which results or could reasonably be
expected to result in costs and/or liabilities or loss of revenues, individually, or in the
aggregate, to any Credit Party in any 30-day period in excess of the lesser of $ $1,000,000 and 10%
of Borrowing Availability as of any date of determination or 10% of the Maximum Amount at any date
of determination shall constitute a Material Adverse Effect.

          “Maximum Amount” means, as of any date of determination, an amount equal to the
Revolving Loan Commitment of all Lenders as of that date.

          “Minnesota Real Estate” means the Real Estate owned by Borrower located in the County
of Hennepin and the State of Minnesota and as further described on Exhibit A hereto.

          “Minnesota Sale-Leaseback Documents” means that certain Sale, Purchase and Build to
Suit Agreement, dated effective as of August 14, 2003 between Borrower, as seller and NL Ventures
IV, L.P., as buyer, as further amended by the First Amendment to Sale, Purchase and Build to Suit
Agreement dated as of October 9, 2003 among the parties thereto, and all other agreements,
instruments, documents and certificates executed and delivered in connection therewith, as in
effect as of October 9, 2003 and as amended or otherwise modified in a manner permitted hereunder.

          “Mix & Burn” has the meaning ascribed to it in Section 6.2 hereof.

          “Mix & Burn Loan” has the meaning ascribed to it in Section 6.2 hereof.

          “Mix & Burn Promissory Note” has the meaning ascribed to it in Section 6.2
hereof.

          “Mix & Burn Security Agreement” has the meaning ascribed to it in Section 6.2
hereof.

          “Mortgages” means each of the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust, collateral assignments of leases or other real estate security documents
delivered by any Credit Party to Agent on behalf of itself and Lenders with respect to the Real
Property owned by a Credit Party, all in form and substance reasonably satisfactory to Agent.

          “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made
or been obligated to make, contributions on behalf of participants who are or were employed by any
of them.

          “Navarre CP” means Navarre CP, LLC, a Minnesota limited liability company, which is a
wholly-owned Subsidiary of Borrower.

Annex A-19

 

          “Navarre CLP” means Navarre CLP, LLC, a Minnesota limited liability company, which is
a wholly-owned Subsidiary of Borrower.

          “Navarre CS” means Navarre CS, LLC, a Minnesota limited liability company, which is a
wholly-owned Subsidiary of Borrower.

          “Net Vendor Advances” for any period means the positive difference, if any, between
(i) the aggregate amount of Vendor Advances made during such period minus (ii) the aggregate amount
of repayments (whether made in cash or a reduction an amount otherwise payable by a Credit Party to
the applicable Vendor) made by Vendors (excluding amounts that are written down or written off) in
respect of Vendor Advances made to such Vendors.

          “Non-Funding Lender” has the meaning ascribed to it in Section 9.9(a)(ii).

          “Notes” means, collectively, the Revolving Notes, the Term B Note, the Term C Note and
the Swing Line Note.

          “Notice of Conversion/Continuation” has the meaning ascribed to it in Section
1.5(e).

          “Notice of Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).

          “Obligations” means all loans, advances, debts, liabilities and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or such amounts are liquidated or determinable) owing
by any Credit Party to Agent or any Lender, and all covenants and duties regarding such amounts, of
any kind or nature, present or future, whether or not evidenced by any note, agreement or other
instrument, arising under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), obligations under Interest Rate Agreements, Fees, Charges, expenses, attorneys’ fees
and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.

          “Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right with respect to any invention on which a Patent is
in existence.

          “Patent Security Agreements” means the Patent Security Agreements made in favor of
Agent, on behalf of itself and Lenders, by each applicable Credit Party.

          “Patents” means all of the following in which any Credit Party now holds or hereafter
acquires any interest: (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of the United States
or of any other country, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State or
any other country, and (b) all reissues, continuations, continuations-in-part or extensions
thereof.

Annex A-20

 

          “PBGC” means the Pension Benefit Guaranty Corporation.

          “Pension Plan” means a Plan described in Section 3(2) of ERISA.

          “Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are being contested in
accordance with Section 5.2(b); (b) pledges or deposits of money securing statutory
obligations under workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of money) or leases
to which any Credit Party is a party as lessee made in the ordinary course of business; (d)
inchoate and unperfected workers’, mechanics’ or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e)
carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary
course of business and securing liabilities in an outstanding aggregate amount not in excess of $
$100,000 at any time, so long as such Liens attach only to Inventory; (f) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which any Credit Party is a party; (g)
any attachment or judgment lien not constituting an Event of Default under Section 8.1(j);
(h) zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate
or other minor irregularities in title (including leasehold title) thereto, so long as the same do
not materially impair the use, value, or marketability of such Real Estate; (i) presently existing
or hereafter created Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly
permitted under clauses (b) and (c) of Section 6.7 of the Agreement.

          “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability company, institution,
public benefit corporation, other entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or
department thereof).

          “Plan” means, at any time, an “employee benefit plan,” as defined in Section 3(3) of
ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any Credit Party.

          “Pledge Agreements” means each pledge agreement entered into by any Credit Party in
favor of the Agent and/or the Lenders.

          “Prior Closing Date” means May 11, 2005.

          “Pro Forma” means the unaudited consolidated and consolidating financial statements of
Borrower and its Subsidiaries as of March 31, 2005 after giving pro forma effect to
the Related Transactions.

          “Pro Rata Share” means with respect to all matters relating to any Lender, (a) with
respect to the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, (b) with
respect to the Term Loan B, the percentage obtained by dividing (i) the Term Loan B Commitment of
that Lender by (ii) the aggregate Term Loan B Commitments of all Lenders, as

Annex A-21

 

any such percentages may be adjusted by assignments permitted pursuant to Section 9.1,
(c) with respect to the Term Loan C, the percentage obtained by dividing (i) the Term Loan C
Commitment of that Lender by (ii) the aggregate Term Loan C Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1 (d) with
respect to all Loans, the percentage obtained by dividing (i) the aggregate Commitments of that
Lender by (ii) the aggregate Commitments of all Lenders, and (e) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate
outstanding principal balance of the Loans held by that Lender, by (ii) the outstanding principal
balance of the Loans held by all Lenders.

          “Proceeds” means “proceeds,” as such term is defined in the Code, including (a) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party from
time to time with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral
by any Governmental Authority (or any Person acting under color of governmental authority), (c) any
claim of any Credit Party against third parties (i) for past, present or future infringement of any
Patent or Patent License, or (ii) for past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the Collateral including
claims arising out of the loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed
on account of, other Collateral, including dividends, interest, distributions and Instruments with
respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.

          “Projections” means Borrower’s forecasted consolidated and consolidating: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared on a Subsidiary by Subsidiary or division-by-division basis, if
applicable, and otherwise consistent with the historical Financial Statements of Borrower, together
with appropriate supporting details and a statement of underlying assumptions.

          “Qualified Assignee” means any Lender, any Affiliate of any Lender and, with respect
to any Lender an Approved Fund.

          “Qualified Counterparty” means a Person which (i) is an Affiliate of a Lender and (ii)
has entered into an agreement, in form and substance to the Agent, pursuant to which such Person
has, among other things, appointed the Agent as its agent and agreed to be bound by certain
provisions of the Loan Documents.

          “Qualified Plan” means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.

          “Real Estate” has the meaning ascribed to it in Section 3.6.

Annex A-22

 

          “Refunded Swing Line Loan” has the meaning ascribed to it in Section
1.1(b)(iii).

          “Related Transactions” means (i) the funding of the Term Loan C on the Closing Date,
(ii) the borrowing under the Revolving Loan and the Term Loan B on the Prior Closing Date and (iii)
the FUNimation Acquisition, and the payment of all fees, costs and expenses associated with all of
the foregoing and the execution and delivery of all of the Related Transactions Documents.

          “Related Transactions Documents” means the Loan Documents, the FUNimation Acquisition
Documents, and all other agreements, documents, opinions, certificates and other instruments
executed or delivered pursuant to, or in connection with, the Related Transactions.

          “Release” means any release, threatened release, spill, emission, leaking, pumping,
pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material in the indoor or outdoor environment, including the
movement of Hazardous Material through or in the air, soil, surface water, ground water or
property.

          “Requisite Lenders” means Lenders having more than 50% of the Commitments (or, with
respect to any facility for which the Commitment has been terminated, the outstanding principal
amount of the applicable Loans) of all Lenders.

          “Reserves” means, with respect to the Borrowing Availability of Borrower (a) reserves
established pursuant to Section 5.4(c), and (b) such other reserves against Borrowing
Availability of Borrower that Agent may, in its reasonable credit judgment for reasons relating to
any Credit Party, any Credit Party’s business or industry and/or the Agent’s ability to collect or
realize the full value of any Collateral, establish from time to time. Without limiting the
generality of the foregoing, Reserves established to ensure the payment of accrued Interest
Expenses shall be deemed to be a reasonable exercise of Agent’s credit judgment.

          “Restricted Payment” mean, with respect to any Credit Party (a) the declaration or
payment of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Stock; (b) any payment on account of
the purchase, redemption, defeasance, sinking fund or other retirement of such Credit Party’s Stock
or any other payment or distribution made in respect thereof, either directly or indirectly; (c)
any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on
or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Subordinated Debt; (d) any payment made
to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter outstanding; (e) any
payment of a claim for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party’s Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or other
property to any Stockholder of such Credit Party other than payment of compensation in the ordinary
course of business to Stockholders who are employees of such Credit Party; (g) any payment of
management fees (or other fees of a similar nature) by such

Annex A-23

 

Credit Party to any Stockholder of such Credit Party or its Affiliates, (h) any payment of any
Earnout Amount (as defined in the BCI Eclipse Purchase Agreement) or similar payment pursuant to
the BCI Eclipse Purchase Agreement, and (i) any payment of any Performance Payments (as defined in
the FUNimation Purchase Agreement) or similar payment pursuant to the FUNimation Purchase
Agreement.

          “Retiree Welfare Plan” means, at any time, a Welfare Plan that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant after such
participant’s termination of employment, other than continuation coverage provided pursuant to
Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the
participant.

          “Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a)(i).

          “Revolving Lenders” means, as of any date of determination, Lenders having a Revolving
Loan Commitment.

          “Revolving Loan” means, at any time, the sum of (i) the aggregate amount of Revolving
Credit Advances outstanding to Borrower plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of Borrower. Unless the context otherwise requires, references to
the outstanding principal balance of the Revolving Loan shall include the outstanding balance of
Letter of Credit Obligations.

          “Revolving Loan Commitment” means (a) as to any Revolving Lender, the aggregate
commitment of such Revolving Lender to make Revolving Credit Advances or incur Letter of Credit
Obligations as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Revolving Lender and (b) as to all Revolving Lenders, the aggregate
commitment of all Revolving Lenders to make Revolving Credit Advances or incur Letter of Credit
Obligations, which aggregate commitment shall be Twenty Five Million Dollars ($25,000,000) on the
Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.

          “Revolving Note” has the meaning ascribed to it in Section 1.1(a)(ii).

          “Second Lien Credit Agreement” means a credit agreement entered into by the Borrower,
which is, when entered into, in form and substance reasonably satisfactory to the Agent and the
Requisite Lenders, as amended, restated, supplemented or otherwise modified in a manner permitted
hereby, the proceeds of which are used to prepay the Loans in accordance with Section
1.3(b)(vi).

          “Second Lien Intercreditor Agreement” means an intercreditor agreement, in form and
substance satisfactory to the Agent and the Requisite Lenders, among the Credit Parties, the Agent
and the lenders (and/or the agent) under the Second Lien Credit Agreement, pursuant to which, among
other things, the Liens securing the obligations under the Second Lien Credit Agreement are
subordinated to the Liens securing the Obligations.

          “Security Agreements” means that certain Amended and Restated Security Agreement dated
as of the Prior Closing Date by and among the Credit Parties signatory thereto

Annex A-24

 

and Agent, on behalf of itself and Lenders, and each other Security Agreement to be entered
into by and among Agent, on behalf of itself and Lenders, and any other Credit Party.

          “Software” means all “software” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, other than software embedded in any category of Goods,
including all computer programs and all supporting information provided in connection with a
transaction related to any program.

          “Solvent” means, with respect to any Person on a particular date, that on such date
(a) the fair value of the property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person; (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured liability.

          “SPV” means any special purpose funding vehicle identified as such in a writing by any
Lender to the Agent.

          “Stock” means all shares, options, warrants, general or limited partnership interests,
membership interests or other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934).

          “Stockholder” means, with respect to any Person, each holder of Stock of such Person.

          “Subordinated Debt” means debt which is subordinated to any or all of the
Obligations.”

          “Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which
any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital contribution) of more

Annex A-25

 

than 50% or of which any such Person is a general partner or may exercise the powers of a
general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a
reference to a Subsidiary of the Borrower.

          “Supporting Obligations” means all “supporting obligations” as such term is defined in
the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, or Investment Property.

          “Swing Line Advance” has the meaning ascribed to it in Section 1.1(b)(i).

          “Swing Line Availability” has the meaning ascribed to it in Section 1.1(b)(i).

          “Swing Line Commitment” means, as to the Swing Line Lender, the commitment of the
Swing Line Lender to make Swing Line Advances as set forth on Annex J to the Agreement,
which commitment constitutes a subfacility of the Revolving Loan Commitment of the Swing Line
Lender.

          “Swing Line Lender” means GE Capital.

          “Swing Line Loan” means at any time, the aggregate amount of Swing Line Advances
outstanding to Borrower.

          “Swing Line Note” has the meaning ascribed to it in Section 1.1(b)(ii).

          “Taxes” means taxes, levies, imposts, deductions, Charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Agent
or a Lender by the jurisdictions under the laws of which Agent and Lenders are organized or conduct
business or any political subdivision thereof.

          “Term B Lenders” means those Lenders having Term Loan B Commitments.

          “Term C Lenders” means those Lenders having Term Loan C Commitments.

          “Term Loan B Commitment” means (a) as to any Term B Lender, the commitment of such
Term B Lender to make its Pro Rata Share of the Term Loan B as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender, and (b) as to all
Term B Lenders, the aggregate commitment of all Term B Lenders to make the Term Loan B, which
aggregate commitment shall be One Hundred Fifteen Million Dollars ($115,000,000) on the Closing
Date. After advancing the Term Loan B, each reference to a Term B Lender’s Term Loan B Commitment
shall refer to that Term B Lender’s Pro Rata Share of the outstanding Term Loan B.

          “Term Loan C Commitment” means (a) as to any Term C Lender, the commitment of such
Term C Lender to make its Pro Rata Share of the Term Loan C as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender, and (b) as to all
Term C Lenders, the aggregate commitment of all Term C Lenders to make the Term Loan C, which
aggregate commitment shall be Twenty-Five Million Dollars ($25,000,000) on the Closing Date. After
advancing the Term Loan C, each reference to a Term

Annex A-26

 

C Lender’s Term Loan C Commitment shall refer to that Term C Lender’s Pro Rata Share of the
outstanding Term Loan C.

          “Term B Note” has the meaning assigned to it in Section 1.1(c)(i).

          “Term C Note” has the meaning assigned to it in Section 1.1(d)(i).

          “Termination Date” means the date on which (a) the Loans have been indefeasibly repaid
in full, (b) all other Obligations under the Agreement and the other Loan Documents have been
completely discharged, (c) all Letter of Credit Obligations have been cash collateralized,
cancelled or backed by standby letters of credit in accordance with Annex B, and (d)
Borrower shall not have any further right to borrow any monies under the Agreement.

          “Term Loan” has the meaning assigned to it in Section 1.1(d)(i).

          “Term Loan B” has the meaning assigned to it in Section 1.1(c)(i).

          “Term Loan C” has the meaning assigned to it in Section 1.1(d)(i).

          “Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is
covered by Title IV of ERISA, and that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or were employed by any
of them.

          “Trademark License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right to use any Trademark.

          “Trademark Security Agreements” means the Trademark Security Agreements made in favor
of Agent, on behalf of Lenders, by each applicable Credit Party.

          “Trademarks” means all of the following now owned or hereafter adopted or acquired by
any Credit Party: (a) all trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof; (b) all reissues,
extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.

          “Unfunded Pension Liability” means, at any time, the aggregate amount, if any, of the
sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan
exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent valuation date for each
such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, and (b) for a period of 5 years following a transaction which might reasonably be

Annex A-27

 

expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such transaction.

          “ValueVision Litigation” has the meaning assigned to it in Section 3.13.

          “Vendor” means a Person who (i) supplies goods to any Credit Party which become
Inventory of such Credit Party or (ii) provides a license to permit a Credit Party to sell specific
goods or for specified use of intellectual property.

          “Vendor Advances” shall mean all prepayments, advances, licensing fees or royalties
(i) paid by one or more Credit Parties to one or more Vendors in respect of goods not yet then
provided to a Credit Party and (ii) which are intended to be repaid or earned in the future upon
the sale by a Credit Party of the applicable goods or specified use of intellectual property.

          “Welfare Plan” means a Plan described in Section 3(i) of ERISA.

          “Working Capital” means, with respect to any Person, the difference of (i) the Current
Assets of such Person minus (ii) the Current Liabilities of such Person.

          Rules of construction with respect to accounting terms used in the Agreement or the other Loan
Documents shall be as set forth in Annex G. All other undefined terms contained in any of
the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by
the Code to the extent the same are used or defined therein; in the event that any term is defined
differently in different Articles or Divisions of the Code, the definition contained in Article or
Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as
the same may from time to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.

          Wherever from the context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and neuter genders. The words “including”,
“includes” and “include” shall be deemed to be followed by the words “without limitation”; the word
“or” is not exclusive; references to Persons include their respective successors and assigns (to
the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to the knowledge (or
an analogous phrase) of any Credit Party, such words are intended to signify that such Credit Party
has actual knowledge or awareness of a particular fact or circumstance or that such Credit Party,
if it had exercised reasonable diligence, would have known or been aware of such fact or
circumstance.

Annex A-28

 

ANNEX B (Section 1.2)

to

CREDIT AGREEMENT

LETTERS OF CREDIT

          (a) Issuance. Subject to the terms and conditions of the Agreement, Agent and
Revolving Lenders agree to incur, from time to time prior to the Commitment Termination Date, upon
the request of Borrower and for Borrower’s account, Letter of Credit Obligations by causing Letters
of Credit to be issued by GE Capital or a Subsidiary thereof or a bank or other legally authorized
Person selected by or acceptable to Agent in its sole discretion (each, an “L/C Issuer”)
for Borrower’s account and guaranteed by Agent; provided, that if the L/C Issuer is a
Revolving Lender, then such Letters of Credit shall not be guaranteed by Agent but rather each
Revolving Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be
deemed to have purchased) risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount of all
such Letter of Credit Obligations shall not at any time exceed the least of (i) Five Million
Dollars ($5,000,000) (the “L/C Sublimit”), and (ii) the Maximum Amount less the aggregate
outstanding principal balance of the Revolving Credit Advances and the Swing Line Loan. No such
Letter of Credit shall have an expiry date that is more than one year following the date of
issuance thereof, unless otherwise determined by Agent in its sole discretion, and neither Agent
nor Revolving Lenders shall be under any obligation to incur Letter of Credit Obligations in
respect of, or purchase risk participations in, any Letter of Credit having an expiry date that is
later than the Commitment Termination Date.

          (b)(i) Advances Automatic; Participations. In the event that Agent or any Revolving
Lender shall make any payment on or pursuant to any Letter of Credit Obligation, such payment shall
then be deemed automatically to constitute a Revolving Credit Advance under Section 1.1(a)
of the Agreement regardless of whether a Default or Event of Default has occurred and is continuing
and notwithstanding Borrower’s failure to satisfy the conditions precedent set forth in Section
2, and each Revolving Lender shall be obligated to pay its Pro Rata Share thereof in accordance
with the Agreement. The failure of any Revolving Lender to make available to Agent for Agent’s own
account its Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or in
respect of a Letter of Credit shall not relieve any other Revolving Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof, but no Revolving Lender shall be
responsible for the failure of any other Revolving Lender to make available such other Revolving
Lender’s Pro Rata Share of any such payment.

               (ii) If it shall be illegal or unlawful for Borrower to incur Revolving Credit Advances as
contemplated by paragraph (b)(i) above because of an Event of Default described in Sections
8.1(h) or (i) or otherwise or if it shall be illegal or unlawful for any Revolving Lender to be
deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or
if the L/C Issuer is a Revolving Lender, then (i) immediately and without further action
whatsoever, each Revolving Lender shall be deemed to have irrevocably and unconditionally purchased
from Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal
to such Revolving Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all

Annex B-1

 

Letters of Credit then outstanding and (ii) thereafter, immediately upon issuance of any
Letter of Credit, each Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation in such Revolving Lender’s Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations with respect to such Letter of Credit on the date of such
issuance. Each Revolving Lender shall fund its participation in all payments or disbursements made
under the Letters of Credit in the same manner as provided in the Agreement with respect to
Revolving Credit Advances.

          (c) Cash Collateral. (i) If Borrower is required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement prior to the Commitment Termination Date,
Borrower will pay to Agent for the ratable benefit of itself and Revolving Lenders cash or cash
equivalents acceptable to Agent (“Cash Equivalents”) in an amount equal to 110% of the
maximum amount then available to be drawn under each applicable Letter of Credit outstanding. Such
funds or Cash Equivalents shall be held by Agent in a cash collateral account (the “Cash
Collateral Account”) maintained at a bank or financial institution acceptable to Agent. The
Cash Collateral Account shall be in the name of Borrower and shall be pledged to, and subject to
the control of, Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a security interest
in all such funds and Cash Equivalents held in the Cash Collateral Account from time to time and
all proceeds thereof, as security for the payment of all amounts due in respect of the Letter of
Credit Obligations and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.

          (ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any
reason be outstanding on the Commitment Termination Date, Borrower shall either (A) provide cash
collateral therefor in the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit Obligations, which stand-by letter (or
letters) of credit shall be of like tenor and duration (plus 30 additional days) as, and in an
amount equal to 110% of the aggregate maximum amount then available to be drawn under, the Letters
of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are be satisfactory to Agent in its
sole discretion.

          (iii) From time to time after funds are deposited in the Cash Collateral Account by Borrower,
whether before or after the Commitment Termination Date, Agent may apply such funds or Cash
Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such
order as Agent may elect, as shall be or shall become due and payable by Borrower to Agent and
Lenders with respect to such Letter of Credit Obligations of Borrower and, upon the satisfaction in
full of all Letter of Credit Obligations of Borrower, to any other Obligations then due and
payable.

          (iv) Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any
right to withdraw any of the funds or Cash Equivalents held in the Cash Collateral Account, except
that upon the termination of all Letter of Credit Obligations and the

Annex B-2

 

payment of all amounts payable by Borrower to Agent and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations then due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid to Borrower or as
otherwise required by law. Interest earned on deposits in the Cash Collateral Account shall be for
the account of Agent.

          (d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit of Revolving
Lenders, as compensation to such Lenders for Letter of Credit Obligations incurred hereunder, (i)
all costs and expenses incurred by Agent or any Lender on account of such Letter of Credit
Obligations, and (ii) for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the “Letter of Credit Fee”) in an amount equal to the Applicable L/C
Margin multiplied by the maximum amount available from time to time to be drawn under the
applicable Letter of Credit. Such fee shall be paid to Agent for the benefit of the Revolving
Lenders in arrears, on the first day of each month and on the Commitment Termination Date. In
addition, Borrower shall pay to any L/C Issuer, on demand, such fees (including all per annum
fees), charges and expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is issued.

          (e) Request for Incurrence of Letter of Credit Obligations. Borrower shall give Agent
at least 2 Business Days’ prior written notice requesting the incurrence of any Letter of Credit
Obligation. The notice shall be accompanied by the form of the Letter of Credit (which shall be
acceptable to the L/C Issuer) and a completed Application for Standby Letter of Credit or
Application for Documentary Letter of Credit as applicable in the form Exhibit B-1 or B-2 attached
hereto. Notwithstanding anything contained herein to the contrary, Letter of Credit applications
by Borrower and approvals by Agent and the L/C Issuer may be made and transmitted pursuant to
electronic codes and security measures mutually agreed upon and established by and among Borrower,
Agent and the L/C Issuer.

          (f) Obligation Absolute. The obligation of Borrower to reimburse Agent and Revolving
Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute,
unconditional and irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrower and
Revolving Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following:

     (i) any lack of validity or enforceability of any Letter of Credit or the Agreement or
the other Loan Documents or any other agreement;

     (ii) the existence of any claim, setoff, defense or other right that Borrower or any of
its Affiliates or any Lender may at any time have against a beneficiary or any transferee of
any Letter of Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection with the Agreement,
the Letter of Credit, the transactions contemplated herein or therein

Annex B-3

 

or any unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary for which the Letter of Credit was procured);

     (iii) any draft, demand, certificate or any other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

     (iv) payment by Agent (except as otherwise expressly provided in paragraph (g)(ii)(C)
below) or any L/C Issuer under any Letter of Credit or guaranty thereof against presentation
of a demand, draft or certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;

     (v) any other circumstance or event whatsoever, that is similar to any of the
foregoing; or

     (vi) the fact that a Default or an Event of Default has occurred and is continuing.

          (g) Indemnification; Nature of Lenders’ Duties. (i) In addition to amounts payable as
elsewhere provided in the Agreement, Borrower hereby agrees to pay and to protect, indemnify, and
save harmless Agent and each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys’ fees and allocated
costs of internal counsel) that Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the
failure of Agent or any Lender seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or Governmental
Authority, in each case other than to the extent solely as a result of the gross negligence or
willful misconduct of Agent or such Lender (as finally determined by a court of competent
jurisdiction).

          (ii) As between Agent and any Lender and Borrower, Borrower assumes all risks of the acts and
omissions of, or misuse of any Letter of Credit by beneficiaries of any Letter of Credit. In
furtherance and not in limitation of the foregoing, to the fullest extent permitted by law neither
Agent nor any Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection with the application
for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to demand payment under such Letter of
Credit; provided, that in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made solely as a result of
its gross negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of Credit or guaranty
thereof complies on its face with any applicable requirements for a demand for payment under such

Annex B-4

 

Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they may be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay
in the transmission or otherwise of any document required in order to make a payment under any
Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent’s or any Lender’s rights or powers hereunder or under the
Agreement.

          (iii) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or
indemnities made by Borrower in favor of any L/C Issuer in any letter of credit application,
reimbursement agreement or similar document, instrument or agreement between Borrower and such L/C
Issuer, including an Application and Agreement for Documentary Letter of Credit or a Master
Documentary Agreement and a Master Standby Agreement entered into with Agent.

Annex B-5

 

ANNEX C (Section 1.8)

to

CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

          Borrower shall, and shall cause its Subsidiaries to, establish and maintain the Cash
Management Systems described below:

          (a) On or before the Closing Date and until the Termination Date, Borrower shall (i) establish
lock boxes (“Lock Boxes”) or, at Agent’s discretion, blocked accounts (“Blocked Accounts”)
at one or more of the banks set forth in Disclosure Schedule (3.19), and shall request in
writing and otherwise take such reasonable steps to ensure that all Account Debtors forward payment
directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after the date of receipt
thereof, all cash, checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more Blocked Accounts in Borrower’s name or any such Subsidiary’s name and at a
bank identified in Disclosure Schedule (3.19) (each, a “Relationship Bank”). On or
before the Closing Date, Borrower shall have established a concentration account in its name (the
“Concentration Account”) (which account may be the same as one of the Blocked Accounts) at
the bank that shall be designated as the Concentration Account bank for Borrower in Disclosure
Schedule (3.19) (the “Concentration Account Bank”) (which bank may be one of the
Relationship Banks) which bank shall be reasonably satisfactory to Agent.

          (b) Borrower may maintain, in its name, an account (each a “Disbursement Account” and
collectively, the “Disbursement Accounts”) at a bank acceptable to Agent into which Agent
shall, from time to time, deposit proceeds of Revolving Credit Advances and Swing Line Advances
made to Borrower pursuant to Section 1.1 for use by Borrower in accordance with the
provisions of Section 1.4.

          (c) On or before the Closing Date (or such later date as Agent shall consent to in writing),
the Concentration Account Bank, each bank where a Disbursement Account is maintained and all other
Relationship Banks, shall have entered into tri-party blocked account agreements with Agent, for
the benefit of itself and Lenders, and Borrower and Subsidiaries thereof, as applicable, in form
and substance reasonably acceptable to Agent, which shall become operative on or prior to the
Closing Date. Each such blocked account agreement shall provide, among other things, that (i) all
items of payment deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for returned checks or
other items of payment, and (iii) from and after the Closing Date (A) with respect to banks at
which a Blocked Account is maintained, if such Blocked Account is not also the Concentration
Account, such bank agrees to forward

Annex C-1

 

immediately all amounts in each Blocked Account to the Concentration Account Bank and to
commence the process of daily sweeps from such Blocked Account into the Concentration Account and
(B) with respect to the Concentration Account Bank, such bank agrees to immediately forward all
amounts received in the Concentration Account to the Collection Account through daily sweeps from
such Concentration Account into the Collection Account. Borrower shall not, and shall not cause or
permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements.

          (d) So long as no Default or Event of Default has occurred and is continuing, Borrower may
amend Disclosure Schedule (3.19) to add or replace a Relationship Bank, Lock Box or Blocked
Account or to replace any Concentration Account or any Disbursement Account; provided, that
(i) Agent shall have consented in writing in advance to the opening of such account or Lock Box
with the relevant bank and (ii) prior to the time of the opening of such account or Lock Box,
Borrower or its Subsidiaries, as applicable, and such bank shall have executed and delivered to
Agent a tri-party blocked account agreement, in form and substance reasonably satisfactory to
Agent. Borrower shall close any of its accounts (and establish replacement accounts in accordance
with the foregoing sentence) promptly and in any event within 30 days following notice from Agent
that the creditworthiness of any bank holding an account is no longer acceptable in Agent’s
reasonable judgment, or as promptly as practicable and in any event within 60 days following notice
from Agent that the operating performance, funds transfer or availability procedures or performance
with respect to accounts or Lock Boxes of the bank holding such accounts or Agent’s liability under
any tri-party blocked account agreement with such bank is no longer acceptable in Agent’s
reasonable judgment.

          (e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the Concentration Account
shall be cash collateral accounts, with all cash, checks and other similar items of payment in such
accounts securing payment of the Loans and all other Obligations, and in which Borrower and each
Subsidiary thereof shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to
the Security Agreement.

          (f) All amounts deposited in the Collection Account shall be deemed received by Agent in
accordance with Section 1.10 and shall be applied (and allocated) by Agent in accordance
with Section 1.11. In no event shall any amount be so applied unless and until such amount
shall have been credited in immediately available funds to the Collection Account.

          (g) Borrower shall and shall cause its Affiliates, officers, employees, agents, directors or
other Persons acting for or in concert with Borrower (each a “Related Person”) to (i) hold
in trust for Agent, for the benefit of itself and Lenders, all checks, cash and other items of
payment received by Borrower or any such Related Person, and (ii) within 1 Business Day after
receipt by Borrower or any such Related Person of any checks, cash or other items of payment,
deposit the same into a Blocked Account. Borrower and each Related Person thereof acknowledges and
agrees that all cash, checks or other items of payment constituting proceeds of Collateral are part
of the Collateral. All proceeds of the sale or other disposition of any Collateral, shall be
deposited directly into Blocked Accounts.

Annex C-2

 

ANNEX D (Section 2.1(a))

to

CREDIT AGREEMENT

CLOSING CHECKLIST

[TO BE ATTACHED]

Annex D-1

 

ANNEX E (Section 4.1(a))

to

CREDIT AGREEMENT

FINANCIAL STATEMENTS AND PROJECTIONS — REPORTING

          Borrower shall deliver or cause to be delivered to Agent or to Agent and Lenders, as
indicated, the following:

          (a) Monthly Financials. To Agent and Lenders, within 30 days after the end of each
Fiscal Month (45 days after the end of each Fiscal Month ending on or about March 31, June 30,
September 30 or December 31; provided, however, that with respect to such Fiscal
Months, the Borrower shall deliver to the Agent and the Lenders drafts of the financial statements
otherwise required by this sentence within 30 days after the end of each such Fiscal Month),
financial information regarding Borrower and its Subsidiaries, certified by the Chief Financial
Officer of Borrower, consisting of consolidated and consolidating (i) unaudited balance sheets as
of the close of such Fiscal Month and the related statements of income and cash flows for that
portion of the Fiscal Year ending as of the close of such Fiscal Month and (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained in the Projections
for such Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A) if such month is the last
month of a Fiscal Quarter, a statement in reasonable detail (each, a “Compliance
Certificate”) showing the calculations used in determining compliance with each Financial
Covenant that is tested for a period ending on the last day of such Fiscal Quarter and (B) the
certification of the Chief Financial Officer of Borrower that (i) such financial information
presents fairly in accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrower and its Subsidiaries, on a consolidated and
consolidating basis, in each case as at the end of such Fiscal Month and for that portion of the
Fiscal Year then ended and (ii) any other information presented is true, correct and complete in
all material respects and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default shall have occurred and be continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of Default.

          (b) Operating Plan. To Agent and Lenders, as soon as available, but not later than 30
days before the end of each Fiscal Year, an annual operating plan for Borrower for each of the next
five years, approved by the Board of Directors of Borrower, which for the following Fiscal Year,
(i) includes a statement of all of the material assumptions on which such plan is based, (ii)
includes monthly balance sheets and a monthly budget for the following year and (iii) integrates
sales, gross profits, operating expenses, operating profit, cash flow projections and Borrowing
Availability projections, all prepared on the same basis and in similar detail as that on which
operating results are reported (and in the case of cash flow projections, representing management’s
good faith estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities.

          (c) Annual Audited Financials. To Agent and Lenders, within 75 days after the end of
each Fiscal Year, audited Financial Statements for Borrower and its Subsidiaries on a

Annex E-1

 

consolidated and (unaudited) consolidating basis, consisting of balance sheets and statements
of income and retained earnings and cash flows, setting forth in comparative form in each case the
figures for the previous Fiscal Year, which Financial Statements shall be prepared in accordance
with GAAP and certified without qualification, by an independent certified public accounting firm
of national standing or otherwise acceptable to Agent. Such Financial Statements shall be
accompanied by (i) a statement prepared in reasonable detail showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report from such accounting
firm to the effect that, in connection with their audit examination, nothing has come to their
attention to cause them to believe that a Default or Event of Default has occurred with respect to
the Financial Covenants (or specifying those Defaults and Events of Default that they became aware
of), it being understood that such audit examination extended only to accounting matters and that
no special investigation was made with respect to the existence of Defaults or Events of Default,
(iii) a letter addressed to Agent, on behalf of itself and Lenders, in form and substance
reasonably satisfactory to Agent and subject to standard qualifications required by nationally
recognized accounting firms, signed by such accounting firm acknowledging that Agent and Lenders
are entitled to rely upon such accounting firm’s certification of such audited Financial
Statements, (iv) the annual letters to such accountants in connection with their audit examination
detailing contingent liabilities and material litigation matters, and (v) the certification of the
Chief Executive Officer or Chief Financial Officer of Borrower that all such Financial Statements
present fairly in accordance with GAAP the financial position, results of operations and statements
of cash flows of Borrower and its Subsidiaries on a consolidated and consolidating basis, as at the
end of such Fiscal Year and for the period then ended, and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default has occurred and is
continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event
of Default.

          (d) Management Letters. To Agent and Lenders, within 5 Business Days after receipt
thereof by any Credit Party, copies of all management letters, exception reports or similar letters
or reports received by such Credit Party from its independent certified public accountants.

          (e) Default Notices. To Agent and Lenders, as soon as practicable, and in any event
within 5 Business Days after an executive officer of Borrower has actual knowledge of the existence
of any Default, Event of Default or other event that has had a Material Adverse Effect, telephonic
or telecopied notice specifying the nature of such default or event of default or other event,
including the anticipated effect thereof, which notice, if given telephonically, shall be promptly
confirmed in writing on the next Business Day.

          (f) SEC Filings and Press Releases. To Agent and Lenders, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices and proxy statements
made publicly available by any Credit Party to its security holders; (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority; and (iii) all press releases and other statements made available by
any Credit Party to the public concerning material changes or developments in the business of any
such Person.

Annex E-2

 

          (g) Equity Notices. To Agent, as soon as practicable, copies of all material written
notices given or received by any Credit Party with respect to any Stock of such Person.

          (h) Supplemental Schedules. To Agent, supplemental disclosures, if any, required by
Section 5.6.

          (i) Litigation. To Agent in writing, promptly upon learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks damages in excess of
$100,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the violation of any law
regarding, or seeks remedies in connection with, any Environmental Liabilities; or (vi) involves
any product recall. In addition, within 15 days after the end of each Fiscal Quarter, the Borrower
shall provide the Agent with a summary of all litigation set forth on Disclosure Schedule
3.13 or for which the Agent is otherwise to be notified pursuant to this clause (i).

          (j) Insurance Notices. To Agent, disclosure of losses or casualties required by
Section 5.4.

          (k) Lease Default Notices. To Agent, within 2 Business Days after receipt thereof,
copies of (i) any and all default notices received under or with respect to any leased location or
public warehouse where Collateral is located, and (ii) such other notices or documents as Agent may
reasonably request.

          (l) Lease Amendments. To Agent, within 2 Business Days after receipt thereof, copies
of all material amendments to real estate leases.

          (m) Vendor Advances Disclosure Schedule. To Agent, not later than thirty (30) days
after the end of each Fiscal Quarter a schedule, in form and with such detail as is acceptable to
the Agent listing all outstanding Vendor Advances made by Credit Parties as of the end of such
Fiscal Quarter satisfactory to Agent.

          (n) Second Lien Notices. To Agent, as soon as practicable, copies of all written
notices provided or received by a Credit Party under or with respect to the Second Lien Credit
Agreement and related documents.

          (o) Other Documents. To Agent and Lenders, such other financial and other information
respecting any Credit Party’s business or financial condition as Agent or any Lender shall, from
time to time, reasonably request.

Annex E-3

 

ANNEX F (Section 4.1(b))

to

CREDIT AGREEMENT

COLLATERAL REPORTS

          Borrower shall deliver or cause to be delivered the following:

          (a) To Agent, at the time of delivery of each of the annual Financial Statements delivered
pursuant to Annex E, (i) a listing of government contracts of Borrower subject to the
Federal Assignment of Claims Act of 1940; and (ii) a list of any applications for the registration
of any Patent, Trademark or Copyright filed by any Credit Party with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or agency in the prior
Fiscal Quarter;

          (b) From time to time, if Agent or any Lender determines that obtaining appraisals is
necessary in order to comply with applicable laws, rules or regulations applicable to the Agent or
such Lender, Borrower, at its own expense, shall deliver to Agent such appraisals of its assets as
Agent may request at any time, such appraisals to be conducted by an appraiser, and in form and
substance reasonably satisfactory to Agent; and

          (c) Such other reports, statements and reconciliations with respect to the Collateral or
Obligations of any or all Credit Parties as Agent shall from time to time request in its reasonable
discretion.

Annex E-4

 

ANNEX G (Section 6.10)

to

CREDIT AGREEMENT

FINANCIAL COVENANTS

          Borrower shall not breach or fail to comply with any of the following financial covenants,
each of which shall be calculated in accordance with GAAP consistently applied:

          (a) Maximum Capital Expenditures. Borrower and its Subsidiaries on a consolidated
basis shall not make Capital Expenditures during the following periods that exceed in the aggregate
the amounts set forth opposite each of such periods:

	 	 	 	 	 
	Period	 	Maximum Capital Expenditures per Period
	Fiscal Year ending on or about March 31, 2006
and each Fiscal Year ending thereafter

	 	$	5,000,000	 

          (b) [Intentionally Deleted]

          (c) [Intentionally Deleted]

          (d) Minimum Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall have on
a consolidated basis, as of the last day of the Fiscal Quarter ending on June 30, 2005 and as of
the last day of each Fiscal Quarter thereafter, for the 12 month period then ended, a ratio of (A)
the sum of (i) EBITDA plus (ii) any write-offs, recoupments, amortization or similar
recognition of expenses relating to Vendor Advances to the extent such amounts have reduced EBITDA
for such period, plus (iii) interest income received during such period minus
(iii) Capital Expenditures during such period (other than Capital Expenditures financed other than
with the proceeds of Loans), minus (iv) income taxes paid in cash during such period,
minus (v) if positive, the Net Vendor Advances made during such period to (B) the sum of,
without duplication, (i) the aggregate of all Interest Expense paid or accrued during such period,
plus (ii) scheduled payments of principal with respect to Indebtedness during such period,
plus, (iii) all Restricted Payments made by a Credit Party during such period (other than
Restricted Payments (a) made to another Credit Party or (b) which have caused EBITDA to be reduced
for such period) of at least the ratio set forth below opposite such Fiscal Quarter:

	 	 	 
	Fiscal Quarter Ending	 	Ratio
	June 30, 2005

	 	2.40:1
	September 30, 2005

	 	2.10:1
	December 31, 2005

	 	1.95:1
	March 31, 2006

	 	1.50:1
	June 30, 2006

	 	1.45:1
	September 30, 2006

	 	1.50:1
	December 31, 2006

	 	1.55:1
	March 31, 2007

	 	1.60:1

Annex G-1

 

	 	 	 
	Fiscal Quarter Ending	 	Ratio
	June 30, 2007

	 	1.65:1
	September 30, 2007

	 	1.70:1
	December 31, 2007

	 	1.75:1
	March 31, 2008

	 	1.80:1
	June 30, 2008

	 	1.85:1
	September 30, 2008

	 	1.90:1
	December 31, 2008

	 	2.00:1
	March 31, 2009

	 	2.05:1
	June 30, 2009

	 	2.10:1
	September 30, 2009

	 	2.20:1
	December 31, 2009 and each Fiscal Quarter ending thereafter

	 	2.25:1

          The parties hereto agree that solely for the purposes of this Section (d), for each
Fiscal Quarter set forth below, the amount of clause (A) above or clause (B) above shall be deemed
to be the amount set forth opposite such Fiscal Quarter below under the heading (A) or (B),
respectively:

	 	 	 	 	 	 	 	 	 
	Fiscal Quarter Ending	 	A	 	 	B	 
	March 31, 2005
	 	$	7,051,764	 	 	$	2,461,198	 
	December 31, 2004
	 	$	7,051,764	 	 	$	2,461,198	 
	September 30, 2004
	 	$	7,051,764	 	 	$	2,461,198	 

          In addition, solely for the purposes of this clause (d), the (i) amount of clause (A) above
for April 2005 shall be deemed to be the actual amount calculated for April 2005, minus
$430,706 and (ii) the amount of clause (B) above for April 2005 shall be deemed to be $820,399.

          (e) Adjusted Fixed Charge Coverage Ratio. Borrower and its Subsidiaries shall have on
a consolidated basis, as of the last day of the Fiscal Quarter ending on June 30, 2005 and as of
the last day of each Fiscal Quarter thereafter, for the 12 month period then ended, a ratio of (A)
the sum of (i) EBITDA plus (ii) any write-offs, recoupments, amortization or similar
recognition of expenses relating to Vendor Advances to the extent such amounts have reduced EBITDA
for such period, plus (iii) interest income received during such period minus
(iii) Capital Expenditures during such period (other than Capital Expenditures financed other than
with the proceeds of Loans), minus (iv) income taxes paid in cash during such period,
minus (v) if positive, the Net Vendor Advances made during such period to (B) the sum of,
without duplication, (i) the aggregate of all Interest Expense paid or accrued during such period,
plus (ii) scheduled payments of principal with respect to Indebtedness during such period,
plus, (iii) all Restricted Payments made by a Credit Party during such period (other than
Restricted Payments (a) made to another Credit Party or (b) which have caused EBITDA to be reduced
for such period), plus (iv) all Performance Payments (as defined in the FUNimation Purchase
Agreement) and other similar payments, of at least the ratio set forth below opposite such Fiscal
Quarter:

Annex G-2

 

	 	 	 
	Fiscal Quarter Ending	 	Ratio
	June 30, 2005

	 	2.30:1
	September 30, 2005

	 	2.00:1
	December 31, 2005

	 	1.90:1
	March 31, 2006

	 	1.45:1
	June 30, 2006

	 	1.05:1
	September 30, 2006

	 	1.10:1
	December 31, 2006

	 	1.15:1
	March 31, 2007

	 	1.15:1
	June 30, 2007

	 	1.20:1
	September 30, 2007

	 	1.20:1
	December 31, 2007

	 	1.25:1
	March 31, 2008

	 	1.25:1
	June 30, 2008

	 	1.30:1
	September 30, 2008

	 	1.35:1
	December 31, 2008

	 	1.35:1
	March 31, 2009

	 	1.40:1
	June 30, 2009

	 	2.00:1
	September 30, 2009

	 	2.10:1
	December 31, 2009

	 	2.20:1
	March 31, 2010 and each Fiscal Quarter ending thereafter

	 	2.25:1

          The parties hereto agree that solely for the purposes of this Section (e), for each
Fiscal Quarter set forth below, the amount of clause (A) above or clause (B) above shall be deemed
to be the amount set forth opposite such Fiscal Quarter below under the heading (A) or (B),
respectively:

	 	 	 	 	 	 	 	 	 
	Fiscal Quarter Ending	 	A	 	 	B	 
	March 31, 2005
	 	$	7,051,764	 	 	$	2,461,198	 
	December 31, 2004
	 	$	7,051,764	 	 	$	2,461,198	 
	September 30, 2004
	 	$	7,051,764	 	 	$	2,461,198	 

          In addition, solely for the purposes of this clause (e), the (i) amount of clause (A) above
for April 2005 shall be deemed to be the actual amount calculated for April 2005, minus
$430,706 and (ii) the amount of clause (B) above for April 2005 shall be deemed to be $820,399.

          (f) Indebtedness to EBITDA. Borrower and its Subsidiaries shall have on a
consolidated basis, as of the last day of each Fiscal Quarter a Leverage Ratio of not greater than
the ratio set forth below opposite such Fiscal Quarter:

Annex G-3

 

	 	 	 
	Fiscal Quarter Ending	 	Ratio
	June 30, 2005

	 	3.10:1
	September 30, 2005

	 	3.10:1
	December 31, 2005

	 	3.10:1
	March 31, 2006

	 	3.20:1
	June 30, 2006

	 	2.85:1
	September 30, 2006

	 	2.75:1
	December 31, 2006

	 	2.70:1
	March 31, 2007

	 	2.65:1
	June 30, 2007

	 	2.25:1
	September 30, 2007

	 	2.15:1
	December 31, 2007

	 	2.10:1
	March 31, 2008

	 	2.05:1
	June 30, 2008

	 	1.80:1
	September 30, 2008

	 	1.75:1
	December 31, 2008

	 	1.70:1
	March 31, 2009

	 	1.65:1
	June 30, 2009

	 	1.40:1
	September 30, 2009

	 	1.35:1
	December 31, 2009

	 	1.30:1
	March 31, 2010 and each Fiscal Quarter ending thereafter

	 	1.25:1

          The parties hereto agree that solely for the purposes of this clause (f), for each Fiscal
Quarter set forth below, the EBITDA of the Borrower and its Subsidiaries shall be deemed to be the
amount set forth opposite such Fiscal Quarter set forth below:

	 	 	 	 	 
	Fiscal Quarter Ending	 	EBITDA	 
	March 31, 2005
	 	$	12,165,938	 
	December 31, 2004
	 	$	12,165,938	 
	September 30, 2004
	 	$	12,165,938	 

          In addition, solely for the purposes of this clause (f) EBITDA for the month of April 2005
shall mean the actual EBITDA for the month of April 2005 plus $1,141,439.

          Unless otherwise specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall
in no way be construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a change in the calculation of the financial covenants, standards
or terms used in the Agreement or any other Loan Document, then Borrower, Agent and Lenders agree
to enter into negotiations in order to amend such provisions

Annex G-4

 

of the Agreement so as to equitably reflect such Accounting Changes with the desired result
that the criteria for evaluating Borrower’s and its Subsidiaries’ financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. “Accounting Changes” means (i)
changes in accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower’s certified public accountants; (iii)
purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of reserves pursuant
thereto and any subsequent reversal (in whole or in part) of such reserves; and (iv) the reversal
of any reserves established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to the Prior Closing Date (including capitalization of
costs and expenses or payment of pre-Prior Closing Date liabilities) shall be treated as expenses
in the period the expenditures are made and deducted as part of the calculation of EBITDA in such
period. If Agent, Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change with respect thereto
has been implemented, any reference to GAAP contained in the Agreement or in any other Loan
Document shall, only to the extent of such Accounting Change, refer to GAAP, consistently applied
after giving effect to the implementation of such Accounting Change. If Agent, Borrower and
Requisite Lenders cannot agree upon the required amendments within 30 days following the date of
implementation of any Accounting Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms in accordance with the Agreement
and the other Loan Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change. For purposes of Section 8.1, a breach of a Financial Covenant contained
in this Annex G shall be deemed to have occurred as of any date of determination by Agent
or as of the last day of any specified measurement period, regardless of when the Financial
Statements reflecting such breach are delivered to Agent.

Annex G-5

 

ANNEX H (Section 9.9(a))

to

CREDIT AGREEMENT

LENDERS’ WIRE TRANSFER INFORMATION

	 	 	 
	Name:
	 	General Electric Capital Corporation
	Bank:
	 	Deutsche Bank Trust Company Americas
	 
	 	New York, New York
	ABA #:
	 	021001033
	Account #:
	 	50232854
	Account Name:
	 	GECC/CAF Depository
	Reference:
	 	CFN5947

Annex H-1

 

ANNEX I (Section 11.10)

to

CREDIT AGREEMENT

NOTICE ADDRESSES

	(A)  	If to Agent or GE Capital, at

General Electric Capital Corporation

500 West Monroe Street

17th Floor

Chicago, Illinois 60661

Attention: Navarre Account Manager

Telecopier No.: (312) 463-3855

Telephone No.: (312) 463-2336
	 
	   	with copies to:
	 
	   	Latham & Watkins

5800 Sears Tower

Chicago, Illinois 60606

Attention: Jeffrey G. Moran

Telecopier No.: 312-993-9767

Telephone No.: 312-876-7700
	 
	   	and
	 
	   	General Electric Capital Corporation

201 High Ridge Road

Stamford, Connecticut 06927-5100

Attention: Corporate Counsel-Commercial Finance

Telecopier No.: (203) 316-7889

Telephone No.: (203) 316-7552
	 
	(B)  	If to Borrower or any Credit Party, at

Navarre Corporation

7400 49th Avenue North

New Hope, MN 55428

Attention: CFO

Telecopier No.: 763-504-1107

Telephone No.: 763-971-2770

Annex I-1

 

ANNEX J (from Annex A
– Commitments definition)

to

CREDIT AGREEMENT

Lenders:

General Electric Capital Corporation:

Revolving Loan Commitment

(including a Swing Line Commitment
of $5,000,0000)

$25,000,000

Term Loan B Commitment:

$100,000,000

Term Loan C Commitment:

$25,000,000

GMAC Commercial Finance LLC

Revolving Loan Commitment

$0

Term Loan B Commitment:

$15,000,000

Term Loan C Commitment:

$0

Annex J-1exv10w2

 

Exhibit 10.2

LIMITED WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This LIMITED WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Waiver”) is
entered into as of this ___day of June, 2005, by NAVARRE CORPORATION, a Minnesota corporation
(“Borrower”), the Credit Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as agent (the “Agent”) for itself and the Lenders under and as
defined in the Credit Agreement (as hereinafter defined), and the Lenders. Unless otherwise
specified herein, capitalized terms used in this Waiver shall have the meanings ascribed to them by
the Credit Agreement.

RECITALS

     WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have entered into that
certain Second Amended and Restated Credit Agreement, dated as of May 11, 2005 (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”);
and

     WHEREAS, the Agent and the Lenders have agreed to waive certain provisions of the Credit
Agreement as herein set forth.

     NOW THEREFORE, in consideration of the foregoing recital, mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agent and Lenders hereby agree as follows:

SECTION 1. Limited Waivers. The Agent and Lenders hereby waive any breach or violation of
Section 3.4 of the Credit Agreement and any Default or Event of Default arising solely as a
result thereof, solely to the extent arising from the fact that the financial statements referenced
in Sections 3.4(a) and 3.4(b) do not reflect expenses relating to (i) deferred compensation
relating to an employment agreement with Eric Paulson for the Fiscal Year ending March 31, 2004 ,
the Fiscal Quarter ending June 30, 2004 or the Fiscal Quarter ending March 31, 2005, as long as the
aggregate amount thereof does not exceed $1,500,000 for the Fiscal Year ending March 31, 2004,
$2,200,000 for the Fiscal Quarter ending June 30, 2004 and $400,000 for the Fiscal Quarter ending
March 31, 2005 or (ii) the restatement of a tax benefit as additional paid-in capital during the
Fiscal Quarter ending December 31, 2004, as long as the aggregate amount thereof does not exceed
$2,500,000. 

SECTION 2. Effectiveness. The effectiveness of this Waiver is subject to the satisfaction
of each the following conditions precedent:

     (a) this Waiver shall have been duly executed and delivered by the Borrower, the Credit
Parties, the Agent and each Lender; and

     (b) the representations and warranties contained herein shall be true and correct in all
respects.

SECTION 3. Representations and Warranties. In order to induce the Agent and each Lender
to enter into this Waiver, each Credit Party hereby represents and warrants to the Agent

 

 

and each Lender, which representations and warranties shall survive the execution and delivery of
this Waiver, that:

     (a) all of the representations and warranties contained in the Credit Agreement and in each
Loan Document are true and correct as of the date hereof after giving effect to this Waiver, except
to the extent that any such representations and warranties expressly relate to an earlier date;

     (b) the execution, delivery and performance by such Credit Party of this Waiver has been duly
authorized by all necessary corporate action required on its part and this Waiver, and the Credit
Agreement is the legal, valid and binding obligation of such Credit Party enforceable against such
Credit Party in accordance with its terms, except as its enforceability may be affected by the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting the rights or remedies of creditors generally;

     (c) neither the execution, delivery and performance of this Waiver by such Credit Party, the
performance by such Credit Party of the Credit Agreement nor the consummation of the transactions
contemplated hereby does or shall contravene, result in a breach of, or violate (i) any provision
of any Credit Party’s certificate or articles of incorporation or bylaws or other similar
documents, or agreements, (iii) any law or regulation, or any order or decree of any court or
government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or
other instrument to which any Credit Party or any of its Subsidiaries is a party or by which any
Credit Party or any of its Subsidiaries or any of their property is bound, except in any such case
to the extent such conflict or breach has been waived herein or by a written waiver document, a
copy of which has been delivered to Agent on or before the date hereof; and

     (d) no Default or Event of Default has occurred and is continuing.

SECTION 4. Reference to and Effect Upon the Credit Agreement.

     (a) Except as specifically set forth above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed; and

     (b) The waiver set forth herein is effective solely for the purposes set forth herein and
shall be limited precisely as written, and shall not be deemed to (i) be a consent to any
amendment, waiver or modification of any other term or condition of the Credit Agreement or any
other Loan Document, (ii) operate as a waiver or otherwise prejudice any right, power or remedy
that the Agent or the Lenders may now have or may have in the future under or in connection with
the Credit Agreement or any other Loan Document or (iii) constitute a waiver of any provision of
the Credit Agreement or any Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Waiver, each reference in the Credit Agreement to “this Agreement”, “herein”,
“hereof” and words of like import and each reference in the Credit Agreement and the Loan Documents
to the Credit Agreement shall mean the Credit Agreement as amended hereby. This Waiver shall be
construed in connection with and as part of the Credit Agreement.

2

 

SECTION 5. Costs And Expenses. As provided in Section 11.3 of the Credit
Agreement, the Borrower agrees to reimburse Agent for all fees, costs, and expenses, including the
reasonable fees, costs, and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with this Waiver.

SECTION 6. GOVERNING LAW. THIS WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ILLINOIS.

SECTION 7. Headings. Section headings in this Waiver are included herein for convenience
of reference only and shall not constitute part of this Waiver for any other purposes.

SECTION 8. Counterparts. This Waiver may be executed in any number of counterparts, each
of which when so executed shall be deemed an original, but all such counterparts shall constitute
one and the same instrument.

(signature page follows)

3

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Waiver as of the date
first written above.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	NAVARRE CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and a
Lender
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	GMAC COMMERCIAL FINANCE LLC, as a Lender
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Limited Waiver to Credit Agreement]

S-1

 

     IN WITNESS WHEREOF, this Waiver has been duly executed as of the date first written above by
below Persons in their capacity as Credit Parties and not as a Borrower.

	 	 	 	 	 
	 	 	ENCORE SOFTWARE, INC., as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	BCI ECLIPSE COMPANY, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	FUNIMATION PRODUCTIONS LTD., as Credit Party
	 
	 	 	 	 
	

	 	By:
	 	Navarre CP, LLC, its General Partner
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	FUNIMATION STORE LTD., as Credit Party
	 
	 	 	 	 
	

	 	By:
	 	Navarre CS, LLC, its General Partner
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	NAVARRE CP, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	NAVARRE CLP, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Limited Waiver to Credit Agreement]

S-2

 

	 	 	 	 	 
	 	 	NAVARRE CS, LLC, as Credit Party
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

[Signature Page to Limited Waiver to Credit Agreement]

S-3

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