Document:

exv10w1

 

EXHIBIT 10.1

 

ACQUISITION AGREEMENT

by and between

TEKELEC

and

GENBAND Inc.

dated as of March 20, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	Section 1.1 Certain Definitions
	 	 	1	 
	Section 1.2 Terms Generally
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II. PURCHASE AND SALE
	 	 	11	 
	Section 2.1 Purchase and Sale of Purchased Equity
	 	 	11	 
	Section 2.2 Purchase and Sale of Purchased Assets
	 	 	11	 
	Section 2.3 Excluded Assets.
	 	 	13	 
	Section 2.4 Assumed Liabilities
	 	 	14	 
	Section 2.5 Excluded Liabilities
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III. PURCHASE PRICE AND CLOSING
	 	 	15	 
	Section 3.1 Consideration
	 	 	15	 
	Section 3.2 Closing
	 	 	17	 
	Section 3.3 Deliveries by Seller at the Closing
	 	 	17	 
	Section 3.4 Deliveries by Buyer
	 	 	18	 
	Section 3.5 Allocation of Consideration
	 	 	19	 
	 
	 	 	 	 
	ARTICLE IV. RELATED MATTERS
	 	 	20	 
	Section 4.1 Books and Records of the Business
	 	 	20	 
	Section 4.2 Distributions
	 	 	20	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	20	 
	Section 5.1 Organization
	 	 	21	 
	Section 5.2 Authorization
	 	 	21	 
	Section 5.3 Purchased Equity
	 	 	21	 
	Section 5.4 Ownership of the Purchased Equity
	 	 	22	 
	Section 5.5 Consents and Approvals; No Violations
	 	 	22	 
	Section 5.6 Financial Statements
	 	 	22	 
	Section 5.7 Product Warranties and Product Liability
	 	 	23	 
	Section 5.8 Absence of Material Adverse Changes
	 	 	23	 
	Section 5.9 Title, Ownership and Related Matters, Sufficiency of Assets
	 	 	24	 
	Section 5.10 Leases
	 	 	25	 
	Section 5.11 Intellectual Property
	 	 	25	 
	Section 5.12 Litigation
	 	 	27	 
	Section 5.13 Compliance with Applicable Law; Permits
	 	 	27	 
	Section 5.14 Certain Contracts and Arrangements
	 	 	28	 
	Section 5.15 Labor Relations
	 	 	29	 
	Section 5.16 Employee Benefit Plans; ERISA
	 	 	30	 
	Section 5.17 Taxes
	 	 	30	 
	Section 5.18 Accounts Receivable
	 	 	33	 

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	 	 	Page	 
	Section 5.19 Environmental Matters
	 	 	33	 
	Section 5.20 Insurance
	 	 	34	 
	Section 5.21 Certain Fees
	 	 	34	 
	Section 5.22 Banks; Powers of Attorney; Guarantees
	 	 	34	 
	Section 5.23 Customers and Suppliers
	 	 	34	 
	Section 5.24 Related Party Transactions
	 	 	35	 
	Section 5.25 Investment Representation
	 	 	35	 
	Section 5.26 Disclaimer of Other Representations and Warranties
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VI. [INTENTIONALLY LEFT BLANK]
	 	 	35	 
	 
	 	 	 	 
	ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	35	 
	Section 7.1 Organization
	 	 	35	 
	Section 7.2 Capitalization and Voting Rights
	 	 	36	 
	Section 7.3 Authorization
	 	 	37	 
	Section 7.4 Valid Issuance of Buyer Investment Shares
	 	 	37	 
	Section 7.5 Subsidiaries
	 	 	37	 
	Section 7.6 Governmental Consents
	 	 	37	 
	Section 7.7 Offering
	 	 	38	 
	Section 7.8 Litigation
	 	 	38	 
	Section 7.9 Intellectual Property
	 	 	38	 
	Section 7.10 Compliance with Other Instruments
	 	 	41	 
	Section 7.11 Certain Contracts and Arrangements
	 	 	41	 
	Section 7.12 Permits
	 	 	42	 
	Section 7.13 Disclosure
	 	 	42	 
	Section 7.14 Registration Rights
	 	 	42	 
	Section 7.15 Corporate Documents
	 	 	42	 
	Section 7.16 Title to Property and Assets
	 	 	42	 
	Section 7.17 Buyer Financial Statements
	 	 	43	 
	Section 7.18 Absence of Material Adverse Changes
	 	 	43	 
	Section 7.19 Employee Benefit Plans; ERISA
	 	 	44	 
	Section 7.20 Tax Returns, Payments and Elections
	 	 	46	 
	Section 7.21 Insurance
	 	 	46	 
	Section 7.22 Minute Books
	 	 	47	 
	Section 7.23 Labor Agreements and Actions; Employee Compensation
	 	 	47	 
	Section 7.24 Investment Company Status
	 	 	47	 
	Section 7.25 Brokers
	 	 	47	 
	 
	 	 	 	 
	ARTICLE VIII. COVENANTS
	 	 	47	 
	Section 8.1 Conduct of the Business
	 	 	47	 
	Section 8.2 Access to Information
	 	 	48	 
	Section 8.3 Consents
	 	 	49	 
	Section 8.4 Reasonable Efforts
	 	 	50	 
	Section 8.5 Covenant to Satisfy Conditions
	 	 	50	 

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	 	 	Page	 
	Section 8.6 Public Announcements
	 	 	50	 
	Section 8.7 Use of “Tekelec” Name
	 	 	50	 
	Section 8.8 Employees; Employee Benefits
	 	 	50	 
	Section 8.9 Certain Tax Matters
	 	 	52	 
	Section 8.10 Exclusivity
	 	 	56	 
	Section 8.11 Investor Rights Agreement
	 	 	57	 
	Section 8.12 Notice of Developments
	 	 	58	 
	Section 8.13 Remittances of Receivables
	 	 	58	 
	Section 8.14 Bulk Transfer Laws
	 	 	58	 
	Section 8.15 Covenant Not to Solicit
	 	 	58	 
	Section 8.16 Shared Contracts
	 	 	58	 
	Section 8.17 Non-Development Agreement
	 	 	59	 
	Section 8.18 Seller’s Anti-Anti-Dilution Rights
	 	 	59	 
	Section 8.19 Certain Post-Closing Covenants of Buyer
	 	 	59	 
	Section 8.20 Facilities Consolidation Costs
	 	 	61	 
	 
	 	 	 	 
	ARTICLE IX. CONDITIONS TO OBLIGATIONS OF THE PARTIES
	 	 	61	 
	Section 9.1 Conditions to Each Party’s Obligation
	 	 	61	 
	Section 9.2 Conditions to Obligations of Seller
	 	 	61	 
	Section 9.3 Conditions to Obligations of Buyer
	 	 	62	 
	 
	 	 	 	 
	ARTICLE X. TERMINATION; AMENDMENT; WAIVER
	 	 	63	 
	Section 10.1 Termination
	 	 	63	 
	Section 10.2 Procedure and Effect of Termination
	 	 	64	 
	Section 10.3 Reimbursement Fee
	 	 	64	 
	 
	 	 	 	 
	ARTICLE XI. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
	 	 	64	 
	Section 11.1 Survival of Representations, Warranties and Agreements
	 	 	64	 
	Section 11.2 Seller’s Agreement to Indemnify
	 	 	65	 
	Section 11.3 Buyer’s Agreement to Indemnify
	 	 	67	 
	Section 11.4 Notice of Claims
	 	 	68	 
	Section 11.5 General Limitations; Exclusive Remedy
	 	 	68	 
	Section 11.6 Third-Party Indemnification
	 	 	68	 
	 
	 	 	 	 
	ARTICLE XII. MISCELLANEOUS
	 	 	69	 
	Section 12.1 Fees and Expenses
	 	 	69	 
	Section 12.2 Further Assurances
	 	 	69	 
	Section 12.3 Notices
	 	 	70	 
	Section 12.4 Severability
	 	 	71	 
	Section 12.5 Binding Effect; Assignment
	 	 	71	 
	Section 12.6 No Third-Party Beneficiaries
	 	 	71	 
	Section 12.7 Interpretation
	 	 	71	 
	Section 12.8 Jurisdiction and Consent to Service
	 	 	71	 
	Section 12.9 Attorneys’ Fees
	 	 	72	 

iii

 

	 	 	 	 	 
	 	 	Page	 
	Section 12.10 Governing Law
	 	 	72	 
	Section 12.11 Specific Performance
	 	 	72	 
	Section 12.12 Entire Agreement
	 	 	72	 
	Section 12.13 Amendment, Modification and Waiver
	 	 	72	 
	Section 12.14 Counterparts
	 	 	73	 

iv

 

	 	 	 
	Schedules
	 
	 	 
	Schedule 1.1(a)

	 	Santera Products
	Schedule 1.1(b)

	 	Taqua Products
	Schedule 1.1(c)(i)

	 	Seller Knowledge
	Schedule 1.1(c)(ii)

	 	Buyer Knowledge
	Schedule 1.1(d)

	 	Transferred Intellectual Property
	Schedule 1.1(e)

	 	Transferred Technology
	Schedule 1.1(f)

	 	VocalData Products
	Schedule 2.2(a)(i)

	 	Assigned Customer Agreements
	Schedule 2.2(a)(ii)

	 	Other Business Contracts
	Schedule 2.2(c)

	 	Receivables
	Scheduled 2.2(d)

	 	Personal Property
	Schedule 2.2(e)

	 	Trademarks
	Schedule 2.3(a)

	 	Excluded Assets
	Schedule 2.5(a)

	 	Excluded Liabilities
	Schedule 8.8(a)

	 	Restructuring Schedule
	Section 8.16

	 	Shared Contracts
	Schedule 8.17

	 	Part Numbers of Products
	 
	 	 
	Seller Disclosure Schedule
	 
	 	 
	Schedule 5.1

	 	Subsidiaries
	Schedule 5.6

	 	Unaudited Financial Statements
	Schedule 5.7

	 	Product Warranties and Guarantees
	Schedule 5.8(d)

	 	Absence of Material Adverse Changes
	Schedule 5.9

	 	Title, Ownership and Related Matters
	Schedule 5.10(a)

	 	Leases for Real Property
	Schedule 5.11(b)

	 	Certain Contracts Related to Business Intellectual Property or Business Technology
	Schedule 5.11(f)(i)

	 	Registered Intellectual Property
	Schedule 5.11(f)(ii)

	 	Actions or Claims Related to Registered Intellectual Property Rights
	Schedule 5.11(g)

	 	Intellectual Property Claims
	Schedule 5.11(i)

	 	Licensed Intellectual Property
	Schedule 5.12

	 	Litigation
	Schedule 5.14

	 	Certain Contracts and Arrangements
	Schedule 5.15

	 	Business Employees
	Schedule 5.16(a)

	 	Employee Benefit Plans
	Schedule 5.16(c)

	 	Certain Contribution Matters
	Schedule 5.17(a)

	 	Tax Return
	Schedule 5.17(b)

	 	Payment of Taxes
	Schedule 5.17(d)

	 	Tax Deficiencies
	Schedule 5.17(i)

	 	Tax Jurisdictions
	Schedule 5.20

	 	Insurance Policies
	Schedule 5.22

	 	Banks, Powers of Attorney; Guarantees

v

 

	 	 	 
	Schedule 5.23(a)

	 	Customers and Suppliers
	Schedule 5.24

	 	Related Party Transactions
	 
	 	 
	Exhibits
	 	 
	Exhibit A

	 	Form of Patent Assignment
	Exhibit B

	 	Form of Trademark Assignment
	Exhibit C

	 	Form of Escrow Agreement
	Exhibit D

	 	Form of General Assignment, Assumption Agreement, and Bill of Sale
	Exhibit E

	 	Form of Legal Opinion of Seller’s Counsel
	Exhibit F

	 	Form of Legal Opinion of Buyer’s Counsel

vi

 

ACQUISITION AGREEMENT

     THIS ACQUISITION AGREEMENT (this “Agreement”) is made and entered into as of March 20,
2007, by and between Tekelec, a California corporation (“Seller”), and GENBAND Inc., a
Delaware corporation (“Buyer”). Capitalized terms used herein shall have the respective
meanings given to them in Article I.

RECITALS

     A. The Companies are directly engaged in, and Seller is, among other things, engaged in, the
Business.

     B. Seller desires to sell, transfer and assign to Buyer, and Buyer desires to purchase and
accept from Seller, (i) all of the issued and outstanding membership interest (the “Santera
Interest”) of Santera Systems LLC, a Delaware limited liability company and wholly owned
subsidiary of Seller (“Santera”), (ii) all of the issued and outstanding capital stock of
Taqua, Inc., a Delaware corporation and wholly owned subsidiary of Seller (“Taqua” and,
together with Santera, the “Companies” and each a “Company”), which capital stock
is comprised of one share of Common Stock, par value $0.01 per share, of Taqua (the “Taqua
Share”), and (iii) the Purchased Assets, including that portion of the Business that previously
was conducted through VocalData, Inc., all in consideration of the Purchase Price and the
assumption by Buyer of the Assumed Liabilities, and all on the terms and conditions set forth
herein and in the Transaction Documents.

     C. Concurrently with the execution of this Agreement, Seller and Buyer are entering into the
License Agreement and the Transition Services Agreement.

     NOW THEREFORE, in consideration of the premises and the respective representations,
warranties, covenants, agreements and conditions set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

          Section 1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the respective meanings set forth below:

          “Affiliate” shall have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended; provided, further, that for
purposes of this definition, “control” shall mean the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the ownership of voting
securities, by Contract, or otherwise.

          “Agreement” has the meaning set forth in the preamble of this Agreement.

 

 

          “Assigned Customer Agreements” has the meaning set forth in Section 2.2(a)(i) hereof.

          “Assumed Liabilities” has the meaning set forth in Section 2.4.

          “BayPackets Issuance” has the meaning set forth in Section 3.1(a)(i).

          “Business” shall mean Seller’s Switching Solutions Group business as conducted on the
date of this Agreement, comprised of the development, manufacture, sale, marketing, support and
services performed by the Companies and Seller related primarily to the Santera Products, the Taqua
Products, and/or the VocalData Products.

          “Business Employees” has the meaning set forth in Section 5.15.

          “Business Intellectual Property” means the Transferred Intellectual Property and the
Licensed Intellectual Property taken together.

          “Business Technology” means the Transferred Technology and the Licensed Technology
taken together.

          “Buyer” has the meaning set forth in the preamble of this Agreement.

          “Buyer Disclosure Schedule” has the meaning set forth in the introductory paragraph of
Article VII.

          “Buyer Flexible Benefit Plan” has the meaning set forth in Section 8.8(f).

          “Buyer Financial Statements” has the meaning set forth in Section 7.17(a).

          “Buyer Indemnitees” has the meaning set forth in Section 11.2(a).

          “Buyer Intellectual Property” has the meaning set forth in Section 7.9(a).

          “Buyer Investment Shares” has the meaning set forth in Section 3.1(a).

          “Buyer Licensed Intellectual Property” has the meaning set forth in Section 7.9(c).

          “Buyer Material Adverse Effect” means a material adverse effect on the business,
results of operations or financial condition of Buyer, taken as a whole, or on ability of Buyer to
consummate the transactions contemplated by this Agreement, other than changes (a) relating to
generally applicable economic conditions or to the industry in which the Buyer operates; (b)
resulting from the execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, including without limitation direct effects of compliance with the terms of
this Agreement, including expenses incurred by Buyer and its Affiliates in consummating the
transactions contemplated by this Agreement; or (c) relating to the public announcement of this
Agreement or the transactions contemplated by this Agreement.

2

 

          “Buyer Software Programs” has the meaning set forth in Section 7.9(h).

          “Buyer Transaction Documents” has the meaning set forth in Section 7.3.

          “Cash” means cash and cash equivalents (including marketable securities and short-term
investments) calculated in accordance with GAAP.

          “Change of Control” has the meaning set forth in Section 3.1(c)(ii).

          “Closing” has the meaning set forth in Section 3.2.

          “Closing Date” has the meaning set forth in Section 3.2.

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

          “Common Stock” has the meaning set forth in Section 5.3.

          “Company” and “Companies” have the meaning set forth in the recitals to this
Agreement.

          “Confidentiality Agreement” has the meaning set forth in Section 8.2(c).

          “Contract” means any contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, license, commitment or other arrangement, understanding, undertaking or
obligation, whether written or oral.

          “Co-Sale Agreement” means that certain Ninth Amended and Restated First Refusal and
Co-Sale Agreement among Buyer and certain securityholders of Buyer, as amended, and to which the
Seller shall become a party on the Closing Date.

          “Damages” has the meaning set forth in Section 11.2(a).

          “Dilution Protection Right” has the meaning set forth in Section 3.1(a).

          “Dilution Protection Shares” has the meaning set forth in Section 3.1(a).

          “Disclosure Schedule” has the meaning set forth in Article V.

          “Distributions” has the meaning set forth in Section 4.2.

          “Employee” has the meaning set forth in Section 8.8(b).

          “End Time” has the meaning set forth in Section 8.10(b).

          “Environmental Laws” has the meaning set forth in Section 5.19(a).

          “Environmental Permits” has the meaning set forth in Section 5.19(b).

3

 

          “Equity Securities” means (a) with respect to any corporation, all shares, interests,
participations or other equivalents of capital stock of such corporation, however designated, (b)
with respect to any limited liability company, all limited liability company interests, membership
interests or other equity interests in such limited liability company and (c) with respect to any
partnership, all partnership interests or other equity interests in such partnership.

          “ERISA” has the meaning set forth in Section 5.16(a).

          “ERISA Affiliate” has the meaning set forth in Section 5.16(a).

          “Escrow Agreement” has the meaning set forth in Section 3.3(i).

          “Escrowed Shares” has the meaning set forth in Section 3.1(b).

          “Excluded Assets” has the meaning set forth in Section 2.3.

          “Excluded Liabilities” has the meaning set forth in Section 2.4.

          “GAAP” means generally accepted accounting principles, as in effect in the United
States from time to time, applied on a basis consistent with the accounting methods, principles or
practices, policies and standards of Seller or Buyer, as applicable.

          “GenBand Common Stock” has the meaning set forth in Section 7.2(a)(ii).

          “General Assignment and Bill of Sale” has the meaning set forth in Section 3.3(k).

          “Governmental Authority” means any federal, state, provincial or local government or
governmental regulatory body and any of their respective subdivisions, agencies, instrumentalities,
authorities or tribunals.

          “Hazardous Substances” has the meaning set forth in Section 5.19(a).

          “H-S-R Act” has the meaning set forth in Section 5.5.

          “Income Taxes” has the meaning set forth in Section 5.17(l)(i).

          “Indebtedness” of any Person means (1) indebtedness for borrowed money of such person
(including any long-term or short-term portions thereof) and (2) any indebtedness secured by the
assets of, or guaranteed by, such Person or evidenced by a note, bond, letter of credit, indenture
or similar instrument; provided, however, that Indebtedness shall not be deemed to
include accounts payable incurred in the ordinary course of business.

          “Indemnifying Party” has the meaning set forth in Section 11.4(a).

          “Indemnity Period” has the meaning set forth in Section 11.1(b).

4

 

          “Injured Party” has the meaning set forth in Section 11.4(a).

          “Intellectual Property Rights” means any or all of the following and all statutory
and/or common law rights anywhere in the world, excluding any and all moral rights of authors which
are incapable of assignment or transfer under applicable law, in, arising out of, or associated
therewith: (i) all Patents; (ii) all inventions (whether patentable or not), invention disclosures
and improvements, all trade secrets, proprietary information, know how and technology; (iii) all
works of authorship, including derivative works, within the meaning of the United States Copyright
Act, 17 U.S.C. §§ 101 et seq., copyrights, mask works, copyright and mask work registrations and
applications therefor; (iv) all industrial designs and any registrations and applications therefor;
(v) all Trademarks; (vi) all databases and data collections (including knowledge databases,
customer lists and customer databases); (vii) all rights in Software; (viii) all other rights in or
to any Technology; (ix) any similar, corresponding or equivalent rights to any of the foregoing;
(x) all goodwill associated with any of the foregoing; and (xi) the right and power to assert,
defend and recover title thereto and the right to sue for and recover damages for past, present and
future infringement, misuse, misappropriation or other violation thereof.

          “Inventory” has the meaning set forth in Section 2.2(b).

          “Investors’ Rights Agreement” means that certain Ninth Amended and Restated Investors’
Rights Agreement among Buyer and certain securityholders of Buyer, as amended, and to which the
Seller shall become a party on the Closing Date.

          “IRS” has the meaning set forth in Section 5.16(b).

          “Laws” means any federal, state, provincial or local statute, law, ordinance, decree,
order, injunction, rule, directive, or regulation of any government or quasi-governmental authority
(domestic or foreign), and includes rules and regulations of any regulatory or self-regulatory
authority compliance with which is required by law.

          “Leases” has the meaning set forth in Section 5.10.

          “Legal Proceeding” has the meaning set forth in Section 5.12.

          “License Agreement” shall mean that certain License Agreement entered into as of the
date of this Agreement between Buyer, on the one hand, and Seller, on the other hand, which License
Agreement shall become effective upon the Closing.

          “Licensed Intellectual Property” means all Intellectual Property Rights owned or
otherwise licensable by Seller, other than the Transferred Intellectual Property, which were used
by one or more of Seller and the Companies in the operation of the Business prior to the Closing,
and which would be infringed by the operation of the Business by Buyer and the Companies
immediately after the Closing as conducted by Seller and the Companies prior to the Closing.

          “Licensed Technology” means the Technology owned or otherwise licensable by Seller,
other than the Transferred Technology, which was used by one or more of Seller and the

5

 

Companies in the operation of the Business prior to the Closing, and which would be infringed
by the operation of the Business by Buyer and the Companies immediately after the Closing as
conducted by Seller and the Companies prior to the Closing.

          “Lien” means any lien, pledge, mortgage, deed of trust, security interest,
attachment, levy, hypothecation, encumbrance, conditional sale agreement, reservation, title
restriction or retention, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction, security arrangement or limitation whatsoever.

          “Material Adverse Effect” means a material adverse effect on the business, results of
operations or financial condition of the Business, taken as a whole or on the ability of Seller to
consummate the transactions contemplated by this Agreement, other than changes (a) relating to
generally applicable economic conditions or to the industry in which the Business is operated (b)
resulting from the execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, including without limitation direct effects of compliance with the terms of
this Agreement, including expenses incurred by Seller and its Affiliates in consummating the
transactions contemplated by this Agreement; or (c) relating to the public announcement of this
Agreement or the transactions contemplated by this Agreement.

          “Most Recent Balance Sheet” has the meaning set forth in Section 5.6.

          “Non-Income Taxes” has the meaning set forth in Section 5.17(l)(ii).

          “Notice of Claim” has the meaning set forth in Section 11.4(a).

          “Option Plan” has the meaning set forth in Section 7.2(c).

          “Patents” means patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part thereof.

          “Permits” has the meaning set forth in Section 5.13(b).

          “Permitted Liens” has the meaning set forth in Section 5.9(d).

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

          “Plan” has the meaning set forth in Section 5.16(a).

          “Plano Facilities” shall mean the facilities of the Business located at 3601 E. Plano
Parkway, Plano Texas and 3605 E. Plano Parkway, Plano Texas.

          “Plano Lease Assignment” shall mean a written Assignment of Lease and Consent by and
among Buyer, Seller and Industrial Property Fund V, LP, in form and substance reasonably and
mutually acceptable to each of Buyer and Seller, pursuant to which, among other

6

 

things, Seller shall assign to Buyer all of Seller’s right, title and interest in and to that
certain Industrial Lease Agreement dated April 18, 2000 between Industrial Property Fund V, LP and
Seller, as amended by that certain (i) First Amendment to Industrial Lease Agreement dated June 15,
2000, (ii) Second Amendment to Industrial Lease Agreement dated effective as of August 21, 2000 and
(iii) Third Amendment to Industrial Lease Agreement dated effective as of January 1, 2004, pursuant
to which Seller leases from Industrial Property Fund V, LP the premises commonly known as Suite
100, 3605 Plano Parkway, Plano, Texas

          “Plano Sublease Assignment” shall mean a written Sublease Agreement between Seller,
on the one hand, and Buyer, on the other hand, in form and substance reasonably and mutually
acceptable to each of Buyer and Seller, pursuant to which, among other things, Seller shall
sublease to Buyer through December 31, 2013, for a monthly base rent to be agreed to by the parties
between signing and Closing covering approximately thirty-four thousand (34,000) square feet in
the premises commonly known as Suite 100, 3601 East Plano Parkway, Plano, Texas, which premises
are currently leased by Seller pursuant to that certain Lease dated June 15, 2004 between Seller
and Cabot Industrial Properties, L.P., as amended by that certain (i) First Amendment to Lease
dated October 26, 2004, (ii) Second Amendment to Lease dated March 2005 and (iii) Third Amendment
to Lease dated October 12, 2006.

          “Post-Closing Tax Period” has the meaning set forth in 5.17(l)(iii).

          “Potential Financings” has the meaning set forth in Section 3.1(a)(2).

          “Pre-Closing Tax Period” has the meaning set forth in Section 5.17(l)(iv).

          “Products” means the Santera Products, the Taqua Products and the VocalData Products.

          “PTO” means the United States Patent and Trademark Office, and any successor thereto.

          “Purchase Price” has the meaning set forth in Section 3.1.

          “Purchased Assets” has the meaning set forth in Section 2.2.

          “Purchased Equity” means, together, the Santera Interest and the Taqua Share.

          “Reasonable Efforts” means with respect to a given goal or obligation, the efforts
that a reasonable person in the position of the promisor would use under the circumstances so as to
achieve the goal as expeditiously as reasonably possible; provided, however, that
Reasonable Efforts does not require a material expenditure of funds or the incurrence of a material
liability on the part of the obligated party and does not require such party to take actions that
would result in a material adverse change in the benefits to such party of this Agreement and the
transactions contemplated hereby.

7

 

          “Registered Intellectual Property” means Patents; Trademark registrations and
applications for Trademark registrations; copyright registrations and applications for copyright
registrations; and Internet domain names.

          “Related Person” has the meaning set forth in Section 5.24.

          “[R]elates primarily to the Products...” and/or “is used by Seller primarily in the
Business...” (or similar language) means that the subject is used in the Products or in the
operation of the Business proportionately more than it is used with respect to all other products
or in the operation of all other businesses, collectively, of Seller and its Subsidiaries (other
than Santera, Taqua and Seller’s former Vocal Data subsidiary).

          “Restated Certificate” has the meaning set forth in Section 7.2(a)(i).

          “Review Period” has the meaning set forth in Section 4.1(b).

          “Santera” has the meaning set forth in the recitals to this Agreement.

          “Santera Interest” has the meaning set forth in the recitals to this Agreement.

          “Santera Products” means the products of the Business described on Schedule
1.1(a).

          “Securities Act” has the meaning set forth in Section 5.25.

          “Seller” has the meaning set forth in the preamble of this Agreement.

          “Seller Flexible Benefit Plan” has the meaning set forth in Section 8.8(f).

          “Seller Indemnitees” has the meaning set forth in Section 11.3.

          “Series A Stock” has the meaning set forth in Section 7.2(a)(i).

          “Series B Stock” has the meaning set forth in Section 7.2(a)(i).

          “Series C Stock” has the meaning set forth in Section 7.2(a)(i).

          “Shared Contracts” has the meaning set forth in Section 8.16.

          “Software” means any computer software and code, including assemblers, applets,
compilers, source code, object code, data (including image and sound data), design tools and user
interfaces, in any form or format, however fixed including source code listings and documentation.

          “Straddle Period” has the meaning set forth in Section 5.17(l)(v).

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          “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company or other entity of which a majority of the voting power of the Equity Securities
or other ownership interests having ordinary voting power to elect a majority of the board of
directors or other similar managing body of such corporation, partnership, limited liability
company or other entity are owned by such Person.

          “Superior Proposal” means a bona fide unsolicited written proposal made by a third
party after the date of this Agreement that if consummated would result in such third party
acquiring the Business in any manner, which the Board of Directors of Seller determines in good
faith (after consultation with Seller’s financial advisor and outside legal counsel) to be (A) more
favorable to Seller and/or the shareholders of Seller from a financial point of view than the
transactions contemplated by this Agreement and the Transaction Documents, and (B) capable of being
completed, taking into account all financial, legal, regulatory and other aspects of the proposal.

          “T6000 Agreement” shall mean a written agreement between Buyer, on the one hand, and
Seller, on the other hand, in form and substance reasonably and mutually acceptable to each of
Buyer and Seller, pursuant to which, among other things:

          (a) for three years following the Closing Date, Buyer shall grant to Seller, without
charge, licenses for the full feature set, including “soft phone” capabilities, of the
VocalData Products (currently identified by Seller as its T6000 product) as required by
Seller during such three-year period for Seller’s internal use only and not for re-sale to
Seller’s customers, plus software upgrades and maintenance and support, provided that Seller
shall pay Buyer’s reasonable and actual out of pocket costs relating to support or
reimbursement for any per user incremental license relating to “soft phone” capabilities,
including travel to Seller’s locations if required; and

          (b) Seller shall serve as a reference customer of Buyer for the VocalData Products
(under whatever identification they may be given by Buyer) and Seller may be identified by
Buyer on its website and its other promotional material as a “Featured Customer”, “Showcase
Customer” or the like, during such three-year period.

          “Taqua” has the meaning set forth in the recitals to this Agreement.

          “Taqua Products” means the products of the Business described on Schedule
1.1(b).

          “Taqua Share” has the meaning set forth in the recitals to this Agreement.

          “Tax” has the meaning set forth in Section 5.17(l)(vi).

          “Tax Return” has the meaning set forth in Section 5.17(l)(vii).

          “Taxing Authority” means any governmental authority (domestic or foreign) responsible
for the administration or collection of any Tax.

9

 

          “Technology” means all information related to, constituting or disclosing, and all
tangible copies, implementations and embodiments in any media of, technology, including all
know-how, show-how, techniques, trade secrets, inventions (whether or not patented or patentable),
ideas, concepts, designs, algorithms, routines, Software, files, databases, works of authorship,
methods or processes.

          “Termination Fee” means a cash payment to Buyer equal to $5,000,000.

          “To the knowledge” and similar phrases shall mean the actual knowledge, without
investigation, of the persons listed on Schedule 1.1(c)(i) in the case of Seller and
Schedule 1.1(c)(ii) in the case of Buyer.

          “Trademarks” means trademarks, service marks, trade names, domain names, logos and
registrations thereof and applications therefor.

          “Transaction Documents” has the meaning set forth in Section 5.2.

          “Transferred Contracts” has the meaning set forth in Section 2.2(a).

          “Transferred Intellectual Property” means all Intellectual Property Rights owned by
Santera and/or Taqua, as well as those particular Intellectual Property Rights owned by Seller
used primarily in the operation of the Business as conducted prior to the Closing. The Transferred
Intellectual Property shall include without limitation the items listed in Schedule 1.1(d).
For purposes of this definition, “used primarily in the operation of the Business” means that the
Intellectual Property Rights relate directly to the Business and were used in the operation of the
Business proportionately more than such Intellectual Property Rights were used in the operation of
all other businesses, collectively, of Seller and its Subsidiaries (other than Santera, Taqua and
Seller’s former VocalData subsidiary).

          “Transferred Technology” means all Technology owned by Santera and/or Taqua, as well
as the particular Technology owned by Seller used primarily in the operation of the Business as
conducted prior to the Closing. The Transferred Technology shall include without limitation the
items listed in Schedule 1.1(e). For purposes of this definition, “used primarily in the
operation of the Business” means that the Technology relates directly to the Business and was used
in the operation of the Business proportionately more than such Technology was used in the
operation of all other businesses, collectively, of Seller and its Subsidiaries (other than
Santera, Taqua and Seller’s former VocalData Subsidiary).

          “Transition Services Agreement” means that certain Transition Services Agreement
entered into as of the date of this Agreement between Buyer, on the one hand, and Seller, on the
other hand, which Transition Services Agreement shall become effective upon the Closing.

          “Unaudited Financial Statements” has the meaning set forth in Section 5.6.

          “Vested Voting Equity” has the meaning set forth in Section 3.1(a).

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          “VocalData” or “VocalData, Inc,” means VocalData, Inc., a Delaware
corporation, which corporation conducted all or a portion of the VocalData Business prior to July
19, 2006, was a wholly owned Subsidiary of Seller immediately prior to July 19, 2006 and merged
with and into Seller on July 19, 2006. “VocalData Business” means Seller’s business of
developing, manufacturing, selling, marketing, supporting and providing services related to the
VocalData Products.

          “VocalData Products” means the products of the Business described on Schedule
1.1(f).

          “Welfare Plan” has the meaning set forth in Section 7.19(e).

     Section 1.2 Terms Generally.

     The definitions in Section 1.1 shall apply equally to both the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation” even if not followed actually by such
phrase unless the context expressly provides otherwise. All references herein to Sections,
paragraphs and Exhibits and Schedules shall be deemed references to Sections or paragraphs of or
Exhibits or Schedules to this Agreement unless the context shall otherwise require. Unless
otherwise expressly defined, terms defined in this Agreement shall have the same meanings when used
in any Exhibit or Schedule. The words “herein,” “hereof,” “hereto” and “hereunder” and other words
of similar import refer to this Agreement as a whole and not to any particular provision of this
Agreement. References herein to “days,” unless otherwise indicated, are to consecutive calendar
days.

ARTICLE II.

PURCHASE AND SALE

     Section 2.1 Purchase and Sale of Purchased Equity. Upon and subject to the terms and
conditions of this Agreement, at the Closing, Seller will sell, transfer, assign and deliver to
Buyer, and Buyer will purchase, acquire and accept from Seller, the Purchased Equity.

     Section 2.2 Purchase and Sale of Purchased Assets. Upon and subject to the terms and
conditions of this Agreement, at the Closing, Seller will sell, transfer, convey, assign and
deliver to Buyer, and Buyer will purchase, acquire and accept from Seller, all of Seller’s right,
title and interest in and to all assets, properties and associated rights (whether tangible or
intangible) that are used or held for use by Seller primarily (except for those assets identified
below as transferring only if they are “solely” related to, associated with, or used in the
Business) for the Business, other than the Excluded Assets, as the same shall exist at and as of
the Closing (collectively, the “Purchased Assets”), free and clear of any and all Liens except
Permitted Liens, comprised of the following assets:

          (a) To the extent allowed under such Contracts, all rights, benefits and claims of Seller
under (i) all Contracts entered into between Seller (or VocalData, Inc. as the predecessor

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of Seller) and customers for the purchase of products and/or services solely of the Business,
including without limitation all open purchase and sales orders and the Contracts identified in
Schedule 2.2(a)(i) (the “Assigned Customer Agreements”), (ii) all Contracts
relating solely to the Business identified in Schedule 2.2(a)(ii), including all Seller
purchase orders to vendors of the Business as of the Closing Date or items acquired for use in the
Business, and (iii) all other Contracts which are entered into by Seller in the ordinary course of
the Business between the date hereof and the Closing Date and which relate solely to the Business
(collectively, the “Transferred Contracts”);

          (b) all inventories of raw materials, work in process, finished products and inventoriable
supplies owned by Seller and used or held for use by Seller solely in the operation of the
Business, whether stored at a Seller location or at a third party location (the
“Inventory”);

          (c) all accounts, notes and other receivables to the extent they relate solely to the
Business, which accounts, notes and other receivables as of the date set forth therein are listed
in Schedule 2.2(c);

          (d) all tangible personal property and interests therein used or held for use primarily in the
Business, comprised of the machinery, equipment and furniture reflected in the Most Recent Balance
Sheet (subject to any Excluded Assets reflected therein) which tangible personal property and
interests therein comprising Purchased Assets are described in Schedule 2.2(d);

          (e) the Trademarks listed in Schedule 2.2(e);

          (f) originals or copies of all material papers and records (in physical, electronic, magnetic
or optical format) in Seller’s care, custody or control to the extent that they relate primarily to
the Business and that are owned by Seller as of the Closing Date, including all material purchasing
and sales records, customer and vendor lists, accounting and financial records, product
documentation, product specifications, marketing requirement documents, software release notes or
orders and documentation relating to maintenance obligations or other Assumed Liabilities, but
excluding minute books, stock transfer records, personnel records and Tax Returns of Seller and its
Subsidiaries other than the Companies;

          (g) that part of the Transferred Intellectual Property Rights that is owned by Seller as of
the Closing Date;

          (h) that part of the Transferred Technology that is owned by Seller as of the Closing Date;

          (i) any insurance proceeds or any claim to any insurance proceeds relating to any damage to or
loss or destruction of any asset which occurs on or after the date of this Agreement and prior to
the Closing, provided that such damaged asset is, or such lost or destroyed asset would have been,
included in the assets being transferred to Buyer hereunder;

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          (j) all other assets reflected and/or described in the Most Recent Balance Sheet that are
owned by Seller and that are used by Seller primarily in the Business, other than assets consumed
or sold since the date of the Most Recent Balance Sheet up to the Closing Date; and

          (k) all prepaid expenses and rights to deposits with third parties to the extent they relate
solely to the Business.

     Section 2.3 Excluded Assets. Notwithstanding anything in Section 2.2 to the contrary,
the following assets of Seller (collectively, the “Excluded Assets”) used in or relating to
the Business shall not be deemed to be Purchased Assets and shall be excluded from the assets
delivered by Seller to Buyer at the Closing:

          (a) those assets that are used by Seller in the Business and that are identified by Seller on
Schedule 2.3(a);

          (b) except as otherwise provided on Schedule 2.3(b), any cash or cash equivalents held
by Seller;

          (c) any claim, cause of action, chose in action, right of recovery of any kind, to the extent
primarily related to any Excluded Liability;

          (d) all interests in real property, whether leased or owned, other than lease interests or
lease agreements included in the Transferred Contracts identified in Schedule 2.2(a)(ii);

          (e) all Licensed Intellectual Property (which shall be licensed to Buyer pursuant to the terms
of the License Agreement);

          (f) all Licensed Technology (which shall be licensed to Buyer pursuant to the terms of the
License Agreement);

          (g) all right, title and interest in and to any Trademarks of Seller other than those listed
on Schedule 2.2(e);

          (h) all Intellectual Property Rights and Technology of Seller other than the Transferred
Intellectual Property and the Transferred Technology;

          (i) the Plans, including the assets thereof;

          (j) all books and records of Seller that do not relate directly to and are not used primarily
in the Business and Seller’s tax returns, tax and financial records and reports and other documents
and records, including without limitation, audit work papers, pertaining to the operation of the
Business that Seller is required by law to retain;

          (k) all life insurance policies on officers and other employees of Seller and all other
insurance policies relating directly to and used or held for use primarily in the operation of

13

 

the Business and rights arising from any refunds due (including, but not limited to,
retrospective premium adjustments) with respect to insurance premium payments;

          (l) to the extent attributable to Taxes referred to in Section 8.9: (A) all refunds or
credits, if any, of Taxes due to or from Seller and any claims therefor; (B) all deposits of Seller
with any Taxing Authority, including without limitation, tax deposits, prepayments and estimated
payments; and (C) any deferred tax assets of Seller;

          (m) rights arising from prepaid expenses, if any, with respect to assets not included in the
Purchased Assets;

          (n) any assets of the Business that are transferred or otherwise disposed of by Seller or
otherwise consumed, liquidated or used up prior to the Closing in the ordinary course of the
Business without violation of this Agreement or, in the case of the Transferred Contracts, that
expire or are terminated prior to the Closing; and

          (o) any assets used or held for use by Seller in connection with businesses other than the
Business.

     Section 2.4 Assumed Liabilities. As of the Closing, Seller shall assign and transfer
to Buyer, and Buyer shall assume, pay and discharge, all obligations and liabilities of Seller to
the extent they relate primarily or solely to the Business, excluding the Excluded Liabilities
(collectively, the “Assumed Liabilities”), including without limitation:

          (a) all obligations of Seller under the Transferred Contracts;

          (b) all accounts payable and other current liabilities of the Business of the type reflected
in the Most Recent Balance Sheet;

          (c) all obligations of Seller to customers (including, but not limited to, all warranty,
support and service obligations) relating to the Business and the Products arising out of or
relating to events and circumstances, including products sold and services performed, prior to or
after Closing; and

          (d) all other liabilities and obligations of Seller expressly assumed by Buyer under this
Agreement.

As of the Closing, Buyer agrees and undertakes to assume the Assumed Liabilities and to duly and
properly satisfy, discharge and perform all such Assumed Liabilities on a timely basis in
accordance with their terms. For the avoidance of doubt, the parties agree that nothing in this
Section 2.4 shall limit or affect Buyer’s indirect assumption of all of the obligations and
liabilities of the Companies as the purchaser of the Purchased Equity at the Closing.

     Section 2.5 Excluded Liabilities. Other than the Assumed Liabilities and except as
set forth in this Agreement, including without limitation in Section 11.3, Buyer shall not assume
by virtue of this Agreement, and shall have no liability or obligation for, any liabilities or
obligations of Seller (collectively, the “Excluded Liabilities”), including:

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          (a) any Indebtedness of the Business existing as of the Closing, except as set forth on
Schedule 2.5(a);

          (b) any liability of Seller for Taxes attributable to the ownership or operation of the
Purchased Assets of the Business for any taxable period or portion thereof ending on or prior to
the Closing;

          (c) any liability or obligations of Seller pertaining exclusively to the Excluded Assets; and

          (d) any liability associated with Seller’s employee stock purchase plan.

ARTICLE III.

PURCHASE PRICE AND CLOSING

     Section 3.1 Consideration.

     (a) Subject to the terms and conditions of this Agreement, in consideration of the aforesaid
sale, transfer and delivery of the Purchased Equity and the Purchased Assets at the Closing: (i)
Buyer will issue and deliver to Seller, and Seller will acquire from Buyer, such number of shares
of GenBand Common Stock as shall constitute at the Closing 19.99% of the Vested Voting Equity of
Buyer as of that date, after giving effect to such issuance (referred to herein as the “Buyer
Investment Shares”); (ii) Seller shall have the right to receive, in accordance with the
terms and conditions of Section 3.1(c), up to such number of additional shares of GenBand Common
Stock as shall equal the difference between twenty seven million, seven hundred sixty-seven, one
hundred and sixty-eight (27,767,168) and the number of Buyer Investment Shares, as such number of
additional shares may be subject to equitable adjustments for stock splits and comparable events
(such right referred to herein as the “Dilution Protection Right” and such shares referred
to herein as the “Dilution Protection Shares”); and (iii) Buyer shall pay to Seller US
$1,000,000 in cash (referred to herein as the “Cash Consideration”, and (i), (ii), and
(iii), immediately above, shall be referred to collectively as the “Purchase Price”). At
the Closing, and in further consideration for the Purchased Equity and the Purchased Assets, Buyer
will also assume from Seller the Assumed Liabilities. For purpose of this Section 3.1:

          (1) “BayPackets Issuance” means the issuance of shares of GenBand Common Stock
after the Closing Date (either issued directly or deemed issued on an as-converted basis if
Series B Stock is issued) to certain former shareholders of Bay Packets as a result of the
earnout in that certain Agreement and Plan of Merger dated as of August 8, 2006 by and among
Buyer, GB Acquisition, Inc. and BayPackets.

          (2) “Potential Financings” means the issuance by Buyer, after the Closing Date
and through October 1, 2007, of GenBand Common Stock, Series C Stock, a newly-created series
of preferred stock or any other convertible instrument of Buyer, including but not limited
to, any bridge financing, convertible debt or warrant instrument.

15

 

          (3) “Vested Voting Equity” means the total number of votes assigned to all
outstanding voting equity of Buyer in which the holder is fully vested as of that date.

          (b) At the Closing:

          (i) Buyer will issue and deliver to Seller a stock certificate in Seller’s name
evidencing 75% of the Buyer Investment Shares;

          (ii) Buyer will prepare and issue a stock certificate in Seller’s name evidencing 25%
of the Buyer Investment Shares (the “Escrowed Shares”) to be held in accordance with
the Escrow Agreement;

          (iii) Buyer will transfer US $1,000,000 in immediately available funds by wire transfer
to Wells Fargo Bank, Account #4121044671 (ABA #121000248); and

          (iv) Buyer will assume from Seller the Assumed Liabilities.

          (c) Pursuant to the Dilution Protection Right and as additional consideration for the
Purchased Assets and the Purchased Equity, Seller shall be entitled to receive additional shares of
GenBand Common Stock as follows:

          (i) Subject to Section 3.1(c)(iii) and (iv), each October 1 and April 1 following the
Closing (a “Catch-up Date” with the Closing Date being deemed to be the first such
date), Buyer shall issue to Seller the number of shares of GenBand Common Stock equal to (i)
“X” where “X” is calculated as follows: 19.99% multiplied by (X plus the then outstanding
Vested Voting Equity) minus (ii) the number of shares of GenBand Common Stock held
by Seller immediately prior thereto, but only including shares that Seller has received as a
result of this Section 3.1 (i.e., shares issued at Closing pursuant to Section 3.1(a) above
and cumulative shares issued at each Catch-up Date). Within five business days after each
Catch-up Date, Buyer will issue and deliver to Seller a stock certificate in Seller’s name
evidencing the number of Dilution Protection Shares that Seller is entitled to receive on
such date. For purposes of this Section 3.1(c), the date of the BayPackets Issuance and the
closing date or dates of Potential Financings shall each be deemed additional Catch-up
Dates.

          (ii) Subject to Section 3.1(c)(iii), in the event of: (A) the closing of any initial
public offering of Genband Common Stock or (B) any “Change of Control” of Buyer, Buyer shall
issue to Seller, immediately prior to such event, all of the remaining Dilution Protection
Shares. For purposes of this Section, “Change of Control” shall mean either of the
following transactions to which Buyer is a party or is subject:

	 	(1)	 	a merger or consolidation or related series of
transactions in which securities possessing more than 50% of the total
combined voting power of Buyer’s outstanding securities are transferred
to a person

16

 

	 	 	 	or persons different from the persons holding those securities
immediately prior to such transaction or transactions, or
	 
	 	(2)	 	the sale, transfer or other disposition of all
or substantially all of Buyer’s assets in liquidation or dissolution of
Buyer.

          (iii) In no event will Buyer issue to Seller more than: (a) the total number of
Dilution Protection Shares, or (b) except for an issuance pursuant to Section 3.1(c)(ii), a
number of shares on any date if, immediately after such issuance, Seller would own more than
19.99% of Vested Voting Equity. In the event that the issuance of Dilution Protection
Shares to Seller pursuant to Section 3.1(c)(ii) would result in Seller’s owning more than
19.99% of Vested Voting Equity, then such excess shares shall be subject to Section 8.18 of
this Agreement

          (iv) The Dilution Protection Right shall terminate immediately after the total number
of Dilution Protection Shares has been fully issued.

     Section 3.2 Closing. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Bryan Cave LLP, 211 North Broadway,
Suite 3600, St. Louis, Missouri 63102, at 9:00 a.m., local time, on April 20, 2007 or, if the
conditions to the Closing are not then satisfied, on such other date as the parties may agree after
the satisfaction or waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby, which date shall be no later than the third day after the
satisfaction or waiver of such conditions. Notwithstanding the foregoing, at such time as Seller
and Buyer agree that the parties have satisfied their respective obligations to effect the Closing
other than Seller’s obligation to effect the Restructuring, (i) Seller shall effect the
Restructuring and (ii) the Closing shall occur on the fifth day thereafter (or, if such fifth day
is not a business day, on the first business day following such fifth day) or on such other date as
Seller and Buyer may agree. The date of the Closing is sometimes referred to herein as the
“Closing Date.”

     Section 3.3 Deliveries by Seller at the Closing. At the Closing, Seller will deliver
or cause to be delivered to Buyer (unless delivered previously) the following:

          (a) The Purchased Assets;

          (b) The certificates (or similar evidence of ownership) representing the Purchased Equity,
accompanied by duly executed instruments of transfer which, in the case of the Taqua Share, shall
be a stock power duly executed in blank or a duly executed stock transfer form;

          (c) The resignation of the Managing Member of Santera;

          (d) The resignations of the officers requested by Buyer and of the members of the Board of
Directors of Taqua;

          (e) The limited liability company records of Santera;

17

 

          (f) The corporate records of Taqua in Seller’s possession at Closing;

          (g) The Patent Assignment form attached hereto as Exhibit A, and the Trademark
Assignment form attached hereto as Exhibit B;

          (h) The Escrow Agreement to be entered into as of the Closing Date among Buyer, Seller and the
escrow agent, in the form attached hereto as Exhibit C (the “Escrow Agreement,” subject to
reasonable changes requested by the escrow agent), duly executed by Seller;

          (i) The General Assignment, Assumption Agreement and Bill of Sale to be entered into as of the
Closing Date between Seller and Buyer, in the form attached hereto as Exhibit D (the
“General Assignment and Bill of Sale”), duly executed by Seller;

          (j) Certificates dated within five days prior to the Closing Date issued by the Secretary of
State of the State of Delaware certifying that each of Santera and Taqua has legal existence and is
in good standing in the State of Delaware;

          (k) A certificate dated the Closing Date executed by the Secretary or any Assistant Secretary
of Seller certifying: (i) the names of the officers of Seller authorized to sign this Agreement and
the other agreements, documents and instruments executed by Seller pursuant hereto, together with
the true signatures of such officers; and (ii) as to copies of resolutions adopted by the Board of
Directors of Seller authorizing the appropriate officers of Seller to execute and deliver this
Agreement and all agreements, documents and instruments executed by Seller pursuant hereto, and to
consummate the transactions contemplated hereby and thereby, and that such resolutions are still in
effect and have not been amended, modified, rescinded or revoked;

          (l) A legal opinion of Seller’s counsel, in substantially the form attached hereto as
Exhibit E, duly executed by Seller’s counsel;

          (m) Counterpart signature pages of the Investors’ Rights Agreement and the Co-Sale Agreement,
duly executed by Seller;

          (n) The Plano Lease Assignment duly executed by Seller;

          (o) The Plano Sublease Assignment duly executed by Seller;

          (p) The T6000 Agreement duly executed by Seller; and

          (q) All other documents, instruments and writings required to be delivered by Seller at or
prior to the Closing pursuant to this Agreement or otherwise reasonably required by Buyer in
connection herewith; provided, however, that in no event shall the consent of any
third party under any Contract be deemed to be such a required delivery.

     Section 3.4 Deliveries by Buyer. At the Closing, Buyer will deliver or cause to be
delivered to Seller (unless previously delivered) the following:

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          (a) The Purchase Price as described in 3.1(a) above;

          (b) A certificate dated within five days prior to the Closing Date issued by the Secretary of
State of the State of Delaware certifying that Buyer has legal existence and is in good standing in
the State of Delaware;

          (c) The Escrow Agreement (as defined in Section 3.3(i)) duly executed by Buyer;

          (d) The General Assignment and Bill of Sale duly executed by Buyer;

          (e) A legal opinion of Buyer’s counsel, in substantially the form attached hereto as
Exhibit F, duly executed by Buyer’s counsel;

          (f) A certificate dated the Closing Date executed by the Secretary of Buyer certifying: (i)
the names of the officers of Buyer authorized to sign this Agreement and the other agreements,
documents and instruments executed by Buyer pursuant hereto, together with the true signatures of
such officers; and (ii) as to copies of resolutions adopted by the Board of Directors of Buyer
authorizing the appropriate officers of Buyer to execute and deliver this Agreement and all
agreements, documents and instruments executed by Buyer pursuant hereto, and to consummate the
transactions contemplated hereby and thereby, and that such resolutions are still in effect and
have not been amended, modified, rescinded or revoked;

          (g) Counterpart signature pages of the Investors Rights Agreement and the Co-Sale Agreement,
duly executed by Buyer;

          (h) The Plano Lease Assignment duly executed by Buyer;

          (i) The Plano Sublease Assignment duly executed by Buyer;

          (j) The T6000 Agreement duly executed by Buyer; and

          (k) All other documents, instruments or writings required to be delivered by Buyer at or prior
to the Closing pursuant to this Agreement or otherwise reasonably required by Seller in connection
herewith.

     Section 3.5 Allocation of Consideration. An allocation of the consideration paid
hereunder among the Santera Interest, the Taqua Share and the Purchased Assets shall be mutually
agreed to in good faith by Seller and Buyer prior to the Closing (the “Purchase Price
Allocation”), but in any event the Parties agree that the Cash Consideration will be applied in
its entirety to the sale of the Taqua Share. The Purchase Price Allocation shall be prepared in a
manner consistent with all applicable Laws. Seller and Buyer agree that all Tax Returns will be
filed consistently with the Purchase Price Allocation, subject to adjustment (if any) as aforesaid,
and to not take any position inconsistent therewith unless required to do so by applicable Law.
Seller and Buyer shall promptly inform one another in writing of any challenge by any Taxing
Authority to any allocation made pursuant to this Section 3.5 and agree to consult with and keep

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one another informed with respect to the status of, and any material discussion, proposal or
submission with respect to, any such challenge.

ARTICLE IV.

RELATED MATTERS

     Section 4.1 Books and Records of the Business.

          (a) Seller agrees to deliver to Buyer at or as soon as practicable after the Closing, as
requested by Buyer, all books and records of the Business (including correspondence, memoranda,
books of account, personnel and payroll records and the like), provided that Seller may
retain an electronic copy and/or a photocopy of all such books and records.

          (b) Buyer shall not, for a period (the “Review Period”) of seven years after the
Closing Date or such longer period as retention thereof is required by applicable law or by any
record retention agreements entered into with any Taxing Authority, dispose of or destroy any of
the business records and files of the Business relating to the period prior to the Closing Date
without first offering to turn over possession thereof to Seller by written notice to Seller at
least ninety (90) days prior to the proposed date of such disposition or destruction. During the
Review Period, Buyer shall permit, and shall take such actions as may be necessary to cause any of
its successors or assigns to permit, Seller and its authorized representatives to have reasonable
access to, and examine and make copies of, all such books and records as reasonably requested by
Seller at Seller’s expense.

          (c) After the Closing, Buyer shall make available to Seller during normal business hours, upon
written request, any of Buyer’s or the Companies’ respective personnel whose assistance or
participation is reasonably required by Seller or any of its Affiliates (i) in locating and
obtaining any books and records of the Business or the Companies for legitimate business purposes
of Seller, or (ii) in anticipation of, or preparation for, existing or future litigation or other
matters or proceedings in which Seller or any of its Affiliates is involved. Seller shall promptly
reimburse Buyer for the reasonable out-of-pocket expenses incurred by Buyer in performing the
foregoing.

     Section 4.2 Distributions. The parties agree that at or prior to the Closing, Seller,
on the one hand, and the Companies, on the other hand, shall settle all intercompany amounts owed
to each other by way of dividend, distribution or otherwise, except to the extent that any such
amount is expressly assumed by Buyer at the Closing.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer that except as set forth in the Disclosure Schedule
delivered by Seller to Buyer on the date hereof and attached hereto (the “Disclosure
Schedule”), each of the following representations, warranties and statements is true and
correct as of the date hereof and will be true and correct as of the Closing Date:

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     Section 5.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its operations as now
being conducted. Santera is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware and has all requisite limited liability company
power and authority to own, lease and operate its properties and to carry on its operations as now
being conducted. Taqua is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its operations as now being conducted. Each
Company is duly qualified or licensed to do business as a foreign corporation or limited liability
company, as applicable, and is in good standing to do business in each jurisdiction in which such
qualification is required by Law, except in any such jurisdiction where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse Effect. Seller has
previously made available to Buyer a complete and correct copy of Santera’s Certificate of
Formation and Operating Agreement, as currently in effect. Seller has previously made available to
Buyer a complete and correct copy of Taqua’s Certificate of Incorporation and Bylaws, as currently
in effect. Except as set forth in Section 5.1 of the Disclosure Schedule, the Companies
have no direct or indirect Subsidiaries and do not beneficially own or hold Equity Securities in
any Person.

     Section 5.2 Authorization. Seller has the requisite corporate power and authority to
execute and deliver this Agreement and each other agreement, document, instrument or certificate
contemplated hereby or to be executed and delivered by Seller in connection with the consummation
of the transactions contemplated by this Agreement (the “Transaction Documents”) and
consummate the transactions contemplated hereby. The execution, delivery and performance of this
Agreement and each of the Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate
action on the part of Seller. This Agreement has been duly executed and delivered by Seller and
constitutes, and, when executed and delivered, each of the other Transaction Documents to be
executed and delivered by Seller pursuant hereto will constitute (assuming in each case the valid
authorization, execution and delivery of such agreement by Buyer), a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except to the extent (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting creditors’ rights
generally and (b) the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court before which any
proceeding for any such remedy or relief may be brought.

     Section 5.3 Purchased Equity. The authorized capital stock of Taqua consists solely
of 1,000 shares of Common Stock, par value $0.01 per share (“Common Stock”), of which the Taqua
Share is the only share issued and outstanding. The Taqua Share is duly authorized, validly
issued, fully paid and non-assessable. The Santera Interest represents the only outstanding
membership interest of Santera. There are no outstanding securities convertible into, exchangeable
for, or carrying the right to acquire equity securities or membership interests, as

21

 

applicable, of either Company, nor are there any subscriptions, warrants, calls, options,
rights or other arrangements or commitments (other than this Agreement) which could obligate either
Company to issue or to sell, any of its Equity Securities or any securities convertible into or
exercisable for any of its Equity Securities. None of the outstanding Equity Securities of either
of the Companies was issued in violation of any preemptive right.

     Section 5.4 Ownership of the Purchased Equity. Seller is the sole record and
beneficial owner of the Purchased Equity. The Taqua Share constitutes all of the Equity Securities
of Taqua owned by Seller or any other Person, and the Santera Interest constitutes all of the
Equity Securities of Santera owned by Seller or any other Person. Seller has good title to such
Purchased Equity, free and clear of all Liens. There are no obligations, contingent or otherwise,
of either Company to (i) repurchase, redeem or otherwise acquire any shares of capital stock or
membership interest or other Equity Securities of such Company, as applicable, or (ii) provide
material funds to, or make any material investment in (in the form of a loan, capital contribution
or otherwise), or provide any guarantee with respect to the obligations of, any Person. There are
no outstanding share appreciation, phantom shares, profit participation or similar rights of any
kind or character of either Company.

     Section 5.5 Consents and Approvals; No Violations. Except for applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “H-S-R Act”),
none of the execution and delivery of this Agreement or the Transaction Documents, the performance
by Seller of its obligations hereunder and thereunder, or the consummation by Seller of the
transactions contemplated hereby or thereby will (a) conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of Seller, the Certificate of Formation or
Operating Agreement of Santera or the Certificate of Incorporation or Bylaws of Taqua; (b) require
any filing with, or the obtaining of any permit, authorization, consent or approval of, any
Governmental Authority; (c) violate, conflict with or result in a default (or any event that, with
notice or lapse of time or both, would constitute a default) under, or give rise to any right of
termination, cancellation or acceleration under, any of the terms, conditions or provisions of any
indenture, mortgage, note, installment obligation, agreement or other instrument relating to the
borrowing of money by either Company, or the guaranty of any obligation for the borrowing of money
to which either Company or the Seller is a party or by which either Company or the Seller or any of
their assets (including the Purchased Assets) may be bound; (d) violate any judgment, order,
injunction ruling or decree of any court or other Governmental Authority applicable to either
Company or the Seller; (e) violate any Law applicable to Seller or either Company; or (f) result in
the creation of, or impose on the Seller or either Company the obligation to create any Lien on the
Purchased Equity or the Purchased Assets; excluding from the foregoing clauses (b), (c), (d) and
(e) such requirements, conflicts, defaults or violations: (i) which, individually or in the
aggregate, would not have a Material Adverse Effect or adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement, or (ii) which become applicable as a
result of any acts or omissions by, or the status of or any facts pertaining to, Buyer.

     Section 5.6 Financial Statements. Attached as Section 5.6(a) of the Disclosure
Schedule are copies of the unaudited consolidated balance sheet of that portion of the Business

22

 

that is being acquired by Buyer under this Agreement as of February 23, 2007 (representing the
February 28, 2007 month-end) (the “Most Recent Balance Sheet”) and a consolidated statement
of income of the Business for the twelve (12) months ended December 31, 2006 (the financial
statements referred to and the accompanying notes thereto are referred to herein collectively as
the “Unaudited Financial Statements”). Except as provided in Section 5.6(b) of the
Disclosure Schedule, the Unaudited Financial Statements present fairly, in all material
respects, the financial position of that portion of the Business that is being acquired by Buyer
under this Agreement as of the date thereof and the results of operations of the Business for the
period indicated, provided that the Most Recent Balance Sheet is subject to quarter-end and
year-end adjustments in the ordinary course Seller’s Business. Except as provided in Section
5.6(b) of the Disclosure Schedule, all liabilities or obligations that relate to the assets,
employees or business operations of the Business or either Company to the extent they are being
acquired, directly or indirectly, by the Buyer and that are of a type required to be reflected on a
balance sheet prepared in accordance with GAAP are, as of February 23, 2007, reflected on the Most
Recent Balance Sheet.

     Section 5.7 Product Warranties and Product Liability.

          (a) Set forth in Section 5.7 of the Disclosure Schedule are the standard forms of
product warranties and guarantees used by the Business for the sale of Products of the Business as
of the date hereof. The Companies and Seller have also sold Products of the Business pursuant to
negotiated Contracts with their respective customers, and such Contracts may contain product
warranties and guarantees which differ from the standard forms set forth in said Section 5.7 of the
Disclosure Schedule. Seller has made available to Buyer a complete and correct copy of each such
Contract which is material to the Business as of the date hereof.

          (b) Except as set forth on Section 5.7(b) of the Disclosure Schedule, since December
31, 2006, no claim or allegation of personal injury, death or property or economic damages in
connection with any Product has been asserted against either Company or against Seller in writing
or, to the knowledge of Seller, otherwise, except for claims and allegations which individually
could not reasonably be expected to have a Material Adverse Effect.

     Section 5.8 Absence of Material Adverse Changes. Except as contemplated by this
Agreement, since December 31, 2006, there has been no change in the business, results of
operations or financial condition of the Business or in the condition of the assets and properties
of the Business (including the Purchased Equity and the Purchased Assets) that would have a
Material Adverse Effect. Since December 31, 2006:

               (a) the Seller and the Companies have used Reasonable Efforts consistent with past practice to
preserve business relationships with employees and with customers, vendors and suppliers related to
the Business;

               (b) the Seller and the Companies have paid all obligations related to the Business consistent
with past practice;

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               (c) neither the Seller nor either Company has sold or otherwise disposed of any material asset
reflected on the Most Recent Balance Sheet that, but for such sale or disposition, would have been
a Purchased Asset, in each case except in the ordinary course of Seller’s business;

               (d) neither the Seller nor either Company has granted any increase in the compensation of
officers or employees engaged in the Business (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or entered into any employment agreements with
any such officers or employees, except in the ordinary course of Seller’s business or as required
by Law or as identified on Section 5.8(d) of the Disclosure Schedule;

               (e) neither the Seller nor either Company has paid, discharged or satisfied any claims,
liabilities or obligations relating to the Business (absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction of any claims, liabilities or obligations made in
’the ordinary course of Seller’s business or intercompany transfers of cash and assets (e.g., cash
transfers between Seller and Shanghai Tekelec Communications Technology Co., Ltd., a foreign
Subsidiary of Santera);

               (f) neither the Seller nor either Company has amended, released or canceled any obligation,
liability, right or claim included in the Purchased Assets, except in the ordinary course of
Seller’s business; and

               (g) the Seller and the Companies have conducted, or caused to be conducted, the Business
consistent with the ordinary course of the Seller’s business.

     Section 5.9 Title, Ownership and Related Matters, Sufficiency of Assets.

          (a) As of the date hereof, the Companies do not own any real property. The Purchased Assets
do not include any ownership interests in real property.

          (b) Except as set forth on Section 5.9(b) of the Disclosure Schedule, the rights and
assets received under this Agreement are collectively sufficient for Buyer to conduct the Business
on the Closing Date as the Business was conducted by Seller immediately prior to the Closing Date
in all material respects.

          (c) Seller has, or will as of the Closing have, good and valid title to, or valid rights by
license, lease or other agreement to use, the Purchased Assets (other than Intellectual Property
Rights and Technology which are covered in Section 5.11). The Bill of Sale and other conveyance
documents to be executed and delivered to the Buyer by the Seller at the Closing will vest in the
Buyer good and valid title to the Purchased Assets (other than Intellectual Property Rights and
Technology which are covered in Section 5.11), subject only to Permitted Liens.

          (d) All tangible assets owned by the Companies or included in the Purchased Assets are owned
free and clear of all Liens, other than: (i) Liens for current taxes or assessments due but not yet
payable or being contested in good faith by appropriate proceedings; (ii)

24

 

servitudes, easements, restrictions, rights-of-way, encroachments and other similar rights in
real property or any interest therein that do not interfere with the use or enjoyment of the
Purchased Assets in any material respect; (iii) Liens that constitute mechanics’, carriers’,
workers’ or similar Liens arising in the ordinary course of Seller’s business that are not yet due
or that are being contested in good faith by appropriate proceedings; and (iv) Liens which are not
substantial or material in character, amount or extent in the conduct of the Business
(collectively, “Permitted Liens”).

          (e) Subject to the test equipment, trial equipment and other assets listed on Section
5.9(e) of the Disclosure Schedule, none of such owned material tangible assets is in the
possession of others, the Companies hold no material tangible assets on consignment, and Seller
does not hold any of the Purchased Assets on consignment.

     Section 5.10 Leases. Section 5.10(a) of the Disclosure Schedule lists, as of
the date hereof, all real property leases and subleases for space occupied by the Companies
(collectively, the “Leases”). True and complete copies of the Leases and all amendments
and agreements relating thereto have been made available to Buyer. Each of the Leases is in full
force and effect and is valid, binding and enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditor
rights and remedies generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in equity), and to the
knowledge of Seller, neither the Companies nor the other party to any Lease is in default under
such Lease in any material respect.

     Section 5.11 Intellectual Property.

          (a) Seller and the Companies have good and valid title to all Transferred Intellectual
Property and Transferred Technology and, to the knowledge of Seller, no other party has any rights
thereto. Each item of Transferred Intellectual Property and Transferred Technology is free and
clear of any Liens other than Permitted Liens.

          (b) Section 5.11(b) of the Disclosure Schedule lists all Contracts to which Seller or
a Company is a party with respect to the ownership or licensing of any Business Intellectual
Property or Business Technology other than non exclusive Software licenses granted to end user
customers pursuant to Seller’s or such Company’s standard customer agreements. After the Closing,
Buyer will be permitted to exercise all of Seller’s or a Company’s rights under all such Contracts
to the same extent Seller or a Company would have been able to exercise such rights had the
transactions contemplated by this Agreement not occurred and without the payment of any additional
amounts or consideration (other than ongoing fees, royalties or payments which Seller or a Company
would otherwise be required to pay).

          (c) No Business Intellectual Property or Business Technology is subject to any proceeding or
outstanding decree, order, judgment, or stipulation that, to the knowledge of Seller, adversely
affects the validity, use or enforceability of Business Intellectual Property or Business
Technology.

25

 

          (d) To the knowledge of Seller, the Business Intellectual Property and the Business Technology
constitute all Intellectual Property Rights and Technology that are necessary or material to the
operation of the Business by Buyer and the Companies immediately following the Closing in
substantially the same manner as currently conducted by Seller and the Companies.

          (e) Seller and the Companies have exercised reasonable care to protect Seller’s and each
Company’s proprietary rights, confidential information and trade secrets associated with or related
to the Business Intellectual Property and the Business Technology. Without limiting the foregoing,
Seller requires each employee and contractors and consultants to execute a proprietary rights and
confidentiality agreement with Seller before performing work for Seller or the Company. With
respect to contractors and consultants, this is done when Seller believes it is relevant and
appropriate to the work they are performing (e.g., the creation of works for hire). Further, with
respect to contractors, Seller will enter an agreement with the contractor’s employer (e.g.,
Manpower, Tech Mahindra) and these employers are expected to have appropriate agreements in place
with their employees. To the knowledge of Seller, no current or former employee, contractor or
consultant of Seller or the Companies is in violation of any term (whether written or verbal) of
any proprietary rights and confidentiality or nondisclosure agreement with Seller or the Companies.

          (f) Section 5.11(f)(i) of the Disclosure Schedule lists all Business Intellectual
Property that is Registered Intellectual Property. All such Registered Intellectual Property is in
full force and effect, has not been canceled, expired, abandoned, or made the subject of any
opposition, cancellation, reissue, reexamination, interference, or equivalent proceeding, is
currently in compliance with formal legal requirements (including payment of filing, examination
and maintenance fees and proofs of use), and is not subject to any unpaid maintenance fees or taxes
or actions due within 60 days after the Closing Date. There are no proceedings or actions known to
Seller before any court or tribunal (including the PTO or equivalent authority) related to any such
Registered Intellectual Property other than those set forth in Section 5.11(f)(ii) of the
Disclosure Schedule. To the knowledge of Seller, there are no assertions by any third party
that any Registered Intellectual Property is not valid and enforceable, and Seller and the
Companies have not taken, or failed to take, any action that would render any Registered
Intellectual Property invalid or unenforceable.

          (g) Except as listed in Section 5.11(g) of the Disclosure Schedule, Seller has not
received notice from any Person claiming, and Seller is not aware of any facts that should
reasonably cause Seller to believe, that any aspects of the Business, the Business Intellectual
Property or the Business Technology infringe or misappropriate the Intellectual Property Rights of
any Person or constitute unfair competition or trade practices under the laws of any jurisdiction.

          (h) To the knowledge of Seller, no Person is infringing or misappropriating the Business
Intellectual Property.

          (i) Except as listed in Section 5.11(i) of the Disclosure Schedule, Seller and the
Companies have the right to use, pursuant to valid licenses, all Business Intellectual Property and

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Business Technology that is licensed by Seller or the Companies from third parties. Seller
has disclosed and made available to Buyer copies of contracts with third parties who have licensed
Intellectual Property Rights to Seller or a Company that has retained ownership rights or license
rights to improvements made by or for Seller or a Company in such Intellectual Property Rights.
Neither the execution and delivery of this Agreement nor the consummation by Seller of the
transactions contemplated hereby will violate, conflict with or result in a default (or any event
that, with notice or lapse of time or both, would constitute a default) under, or give rise to any
right of termination or cancellation under, any of the terms, conditions or provisions of any such
license, excluding such violations, conflicts, defaults and rights: (i) which, individually or in
the aggregate, would not have a Material Adverse Effect and would not adversely affect the ability
of Seller to consummate the transactions contemplated by this Agreement; or (ii) which become
applicable as a result of any acts or omissions by, or the status of or any facts pertaining to,
Buyer.

          (j) There are no Contracts between Seller or either Company, on the one hand, and any other
Person, on the other hand, with respect to the Business Intellectual Property or the Business
Technology under which there is, to the knowledge of Seller, any dispute or any threatened dispute
regarding the scope of such Contract or performance under such Contract.

          (k) Seller and the Companies have disclosed, delivered or licensed to third parties, agreed in
writing to disclose, deliver or license to third parties, or permitted the disclosure or delivery
to third parties source code owned by Seller or a Company and used in association with a Product
(e.g., NEC do Brazil, Fibrehome). Seller and the Companies may have : (1) incorporated Open Source
Materials into, or combined Open Source Materials with, Products; (2) distributed Open Source
Materials in conjunction with Products; or (3) used Open Source Materials. “Open Source Materials”
means all software or other material that is distributed under licensing or distribution terms
which may require disclosure of source code (for example, the GNU General Public License and the
GNU Lesser General Public License).

     Section 5.12 Litigation. Except as set forth in Section 5.12 of the Disclosure
Schedule, there is no material claim, action, suit, proceeding or governmental investigation
pending by or before any court or other Governmental Authority or in arbitration, mediation or
other means of alternative dispute resolution (a “Legal Proceeding”), or, to the knowledge
of Seller, threatened against Seller or either of the Companies relating to the Business. There is
no Legal Proceeding pending against Seller or either Company or, to the knowledge of Seller,
threatened in writing that would reasonably be expected to prevent the execution and performance of
this Agreement.

     Section 5.13 Compliance with Applicable Law; Permits.

          (a) To the knowledge of Seller, Seller and each Company is in compliance with all applicable
Laws applicable to the Business (other than any Environmental Laws, which are covered by Section
5.19), except for violations, if any, which would not have a Material Adverse Effect. To the
knowledge of Seller, each of Seller, the Companies and their Affiliates and any of their respective
officers, directors, supervisors, managers, agents, or employees, has not violated and it has
instituted and maintains policies and procedures designed to ensure continued

27

 

compliance with each of the following laws in connection with the operation of the Business:
(i) anti-bribery laws, including but not limited to, any applicable Law, rule, or regulation of any
locality, including but not limited to any law, rule, or regulation promulgated to implement the
OECD Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977 or
any other law, rule or regulation of similar purpose and scope, (ii) laws and regulations imposing
U.S. economic sanctions measures, including, but not limited to, the International Emergency
Economic Powers Act, the Trading with the Enemy Act, the United Nations Participation Act, and the
Syria Accountability and Lebanese Sovereignty Act, all as amended, and any Executive Order,
directive, or regulation pursuant to the authority of any of the foregoing, including the
regulations of the United States Treasury Department set forth under 31 CFR, Subtitle B, Chapter V,
as amended, or any orders or licenses issued thereunder, and (iii) any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or foreign laws and
regulations.

          (b) To the knowledge of Seller, Seller and the Companies own or validly hold all licenses,
permits, authorizations, approvals and certifications necessary for Seller and the Companies to
carry on the Business as presently conducted (collectively, the “Permits”) in all material
respects. The Permits are valid and in full force and effect. To the knowledge of Seller, neither
Seller nor either Company is in violation of any of the Permits, and there are no pending or, to
the knowledge of Seller, threatened proceedings which could result in the revocation, cancellation
or inability of Seller or either Company to renew any such Permit in all material respects and, to
the knowledge of Seller, there is no valid basis for any such proceeding. To the knowledge of
Seller, the consummation of the transactions contemplated by this Agreement will not affect the
continued validity or effectiveness or alter the terms and conditions of any material Permit.

     Section 5.14 Certain Contracts and Arrangements. Set forth in Section 5.14 of the
Disclosure Schedule, is a list, identifying the parties thereto of the following Contracts
included in the Purchased Assets or to which either of the Companies is a party and which in either
case is in effect as of the date hereof. The list is representative of the type of Contracts listed
below. These and other Contracts were made available for Buyer’s inspection. All are not listed in
the Disclosure Schedule due to the number of such Contracts:

          (a) employment agreement;

          (b) sales representative, agency, distributor, or franchise agreement;

          (c) indenture, mortgage, note, installment obligation, agreement or other instrument relating
to the borrowing of money by Seller or a Company, or the guaranty by Seller or a Company of any
obligation for the borrowing of money;

          (d) indemnity or power of attorney involving outstanding, contingent or continuing obligation
of or to Seller or either Company;

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          (e) agreement with or to any director, officer, shareholder, manager or member of Seller or a
Company or any Affiliate of any such Person; and,

          (f) other Contracts for the furnishing of services, goods or products by or to Seller or a
Company after the date hereof with firm commitments having a value in excess of $250,000 on an
annual basis.

To the knowledge of Seller, the online data room includes a true copy of the Contracts which, in
the opinion of those representing knowledge of the Seller (i.e. Schedule 1.1(c)(i)), may be
material to the Business on the Closing Date. The online data room also includes a true copy of
the following documents:

          (i) Contracts containing a provision, covenant or obligation limiting or restricting in any
manner whatsoever (whether during any particular period of time from and after the Closing Date, in
certain geographic areas or otherwise) the ability of any of the Seller or either Company to engage
in any line of business, to sell any products or services to or to compete with any Person, or to
obtain products or services from any Person;

          (ii) Contracts containing covenants (other than covenants granted pursuant to Contracts
entered into in the ordinary course of Seller’s business with customers of the Business) that
prohibit or prevent the Seller or either Company from hiring or soliciting any Person for
employment for a period in excess of six months after the Closing Date;

          (iii) all Transferred Contracts that require the Seller or either Company to provide any
Products or any other goods or services to any Person at (or calculated as a percentage of or
otherwise directly based upon) the lowest, best or most favorable price (or otherwise upon the best
or most favorable terms) provided to any other Person.

To the knowledge of Seller, all such agreements are in full force and effect and are valid, binding
and enforceable in accordance with their terms, except to the extent that: (x) such enforcement may
be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors’ rights generally; (y) the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any proceeding therefor may be
brought; or (z) such failure to be valid, binding and enforceable, individually or in the
aggregate, would not have a Material Adverse Effect. To the knowledge of Seller, none of Seller
Company, or any other party to any of the aforesaid Contracts, is in material breach or default
under such agreements and no event, condition or occurrence exists which after notice or lapse of
time, or both, would constitute a material breach or default under any such Contract. To the
knowledge of Seller, there are no oral Contracts in the Transferred Contracts that are material to
the Business or the Purchased Assets. Without modifying the foregoing, Seller makes no
representation or warranty regarding the completeness of the online data room.

     Section 5.15 Labor Relations. The employees who perform services for the Business are
employed directly by Seller as of the date hereof. Section 5.15 of the Disclosure Schedule
lists as of the date hereof each employee of Seller who works exclusively or primarily on matters

29

 

for the Business (the “Business Employees”). Neither Seller nor the Companies is a
party to any collective bargaining agreement relating to the Business, and no collective bargaining
agreement with respect to any Business Employees is currently being negotiated by Seller or the
Companies. There is no labor strike, dispute, slowdown or work stoppage or lockout pending or, to
the knowledge of Seller, threatened against or affecting the Business; to the knowledge of Seller,
no union organizational campaign is in progress with respect to the employees in the Business and
no question concerning representation exists respecting any employees thereof; there is no unfair
labor practice charge or complaint against the Business or the Seller or either Company with
respect to the employees in the Business pending, or, to the knowledge of Seller, threatened before
the United States National Labor Relations Board; and neither the Seller nor either Company has
received notice of the intent of any federal, state or local agency responsible for the enforcement
of labor or employment Law to conduct any formal compliance review (other than an audit of the
Seller by the Office of Federal Contract Compliance and routine investigation of individual charges
and complaints) with respect to or relating to the employees in the Business and no such review is
in progress.

     Section 5.16 Employee Benefit Plans; ERISA.

          (a) Section 5.16(a) of the Disclosure Schedule lists each “employee benefit plan” (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), and all other material employee benefit, bonus and fringe benefit plans (a
“Plan” and collectively, the “Plans”) maintained for the benefit of, or contributed
to by Seller or either Company or any trade or business, whether or not incorporated (an “ERISA
Affiliate”), that, together with Seller and the Companies would be deemed a “single employer”
within the meaning of Section 4001 of ERISA, for the benefit of any employee or former employee of
the Business. Seller has made available to Buyer copies of each of the Plans including all
amendments to date.

          (b) Each of the Plans that is subject to ERISA complies in all material respects with the
applicable provisions thereof, and each of the Plans intended to be “qualified” within the meaning
of Section 401(a) of the Code, has been determined by the Internal Revenue Service (the
“IRS”) to be so qualified, and Seller knows of no fact or set of circumstances that would
adversely affect such qualification. None of the Plans is subject to Title IV of ERISA. There are
no pending or, to the knowledge of Seller, threatened material claims (other than routine claims
for benefits) by, on behalf of or against any of the Plans or any trusts related thereto.

          (c) All contributions (including all employee contributions and employee salary reduction
contributions) which are due have been paid to each Plan, except where the failure to make such
contributions would not, individually or in the aggregate, have a Material Adverse Effect.

     Section 5.17 Taxes.

          (a) Except as set forth in Section 5.17(a) of the Disclosure Schedule, all material
Tax Returns (as defined below) required to be filed with any Taxing Authority on or before the
Closing Date (taking into account any extension of a required filing date) by, or with

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respect to, the Companies and the Purchased Assets have been or will be timely filed on or
before the Closing Date in accordance with all applicable Laws. All such Tax Returns required to
be filed by, or with respect to, the Companies and the Purchased Assets are or will be (when filed)
true, correct and complete in all material respects.

          (b) Except as set forth in Section 5.17(b) of the Disclosure Schedule, each Company,
and Seller, with respect to the Purchased Assets, has timely paid all material Taxes due and
payable on or before the Closing Date whether or not shown on any Tax Return. Each Company has
withheld and paid all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

          (c) Neither Company is a party to or bound by any Tax allocation, tax indemnity or tax sharing
agreement.

          (d) Except as set forth in Section 5.17(d) of the Disclosure Schedule, neither Company
has received any written notice of deficiency, assessment proposed notice of deficiency, proposed
adjustment or other written claims from any Taxing Authority with respect to material liabilities
for Taxes that have not been fully paid or finally settled. There are not any Tax audits or
administrative or judicial Tax proceedings pending, noticed to be opened or being conducted with
respect to either of the Companies.

          (e) There are no Liens for material Taxes (except for Taxes not yet due) on any of the assets
of the Companies or the Purchased Assets, and no action, proceeding or, to the knowledge of Seller,
investigation has been instituted against either Company in which there is a reasonable probability
of an adverse determination that would result in any such Lien.

          (f) Neither Company has granted or been granted any extension or waiver of the statute of
limitations period applicable to any Tax Return or the payment of Taxes, which period (after giving
effect to such extension or waiver) has not expired.

          (g) Except with respect to the consolidated group of which Seller is the common parent,
neither Company has at any time been a member of an affiliated group filing a consolidated United
States federal income Tax Return and does not have any liability for the Taxes of any other Person
under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign tax
Law). Neither Company has liability for the Taxes of any Person as a transferee or successor, by
contract or otherwise.

          (h) Disclosure has been made on all federal income Tax Returns filed by, or which include,
either Company of all positions taken with respect to either Company which could give rise to a
substantial understatement of federal income Tax within the meaning of Code §6662. Neither Company
has at any time participated in a reportable transaction within the meaning of Treasury Regulations
Section 1.6011-4 or participated in a transaction that has been disclosed pursuant to IRS
Announcement 2002-2, 2002-2 I.R.B. 304.

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          (i) Except as set forth in Section 5.17(i) of the Disclosure Schedule, neither Company
is currently, and neither Company has at any time during the three year period preceding the
Closing Date been, subject to Taxation or been required to file any Tax Returns in (i) any
countries other than the United States and (ii) in any states other than California. Neither
Company has, and none of the Purchased Assets constitute, a permanent establishment or fixed place
of business in any country other than the United States. Neither Company owns any interest in any
controlled foreign corporation (as defined in section 957 of the Code) or passive foreign
investment company (as defined in section 1297 of the Code).

          (j) Taqua will not be required to include any item of income in, or exclude any item of
deduction from, taxable income from any taxable period ending after the Closing Date as a result of
any: (i) change in accounting method for a taxable period ending on or prior to the Closing Date;
(ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar
provision of state or foreign income Tax Laws) executed on or prior to the Closing Date; (iii)
installment sale or open transaction entered into on or prior to the Closing Date; or (iv) prepaid
amount received on or prior to the Closing Date.

          (k) As a result of Buyer’s purchase of the Taqua Share or any termination of employment of any
“disqualified individual” (as referenced below) within a fixed period of time following such
purchase, neither the Buyer nor the Companies will be obligated to make any payment to any Person
that would be: (i) a “parachute payment” to a “disqualified individual” as those terms are defined
in Section 280G of the Code without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future; or, (ii) nondeductible as a result of
the application of Section 162(m) of the Code.

          (l) As used in this Agreement:

          (i) “Income Taxes” means any federal, state, local or foreign tax imposed upon
or measured by net income or gross income (excluding any Tax based solely on gross receipts)
including any interest, penalty, or additions thereto, whether disputed or not.

          (ii) “Non-Income Taxes” means any Taxes other than Income Taxes.

          (iii) “Post-Closing Tax Period” means any Tax period beginning after the
Closing Date and the portion of Straddle Period beginning after the Closing Date.

          (iv) “Pre-Closing Tax Period” means any Tax period ending on or before the
Closing Date and any portion of any Straddle Period ending on the Closing Date.

          (v) “Straddle Period” means any Tax period that includes (but does not end on)
the Closing Date.

          (vi) “Tax” means any tax, governmental fee or other like assessment or charge
of any kind whatsoever (including any tax imposed under the Code and any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad

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valorem, value added, transfer, franchise, profits, license, withholding on amounts
paid to or by either Company, payroll, employment, excise, severance, stamp, capital stock,
occupation, property, environmental or windfall profit tax, premium, custom, duty or other
tax), together with any interest, penalty, addition to tax or additional amount due from, or
in respect of, any such Tax.

          (vii) “Tax Return” means any return, declaration, statement, report or form
filed or required to be filed with any Taxing Authority with respect to Taxes, including any
information statement, any claims for refunds of Taxes and any amendments or supplements of
any of the foregoing.

     Section 5.18 Accounts Receivable. All of the accounts receivable of the Companies set
forth on the Most Recent Balance Sheet and all of the accounts receivable included in the Purchased
Assets, and all of the accounts receivable of the Companies that have arisen between the date of
the Most Recent Balance Sheet and the Closing Date arose or will have arisen in the ordinary and
usual course of business of the Business arising from sales actually made or services actually
performed in the ordinary course of business, are current and collectible at Closing Date, subject
to any reserves (including, but not limited to, any deferred revenue related to the accounts
receivable) set forth in the Most Recent Balance Sheet.

     Section 5.19 Environmental Matters.

          (a) To the knowledge of Seller, Seller and each Company is in compliance with all applicable
Environmental Laws (as defined below) directly affecting the Business as of the date hereof except
where the failure to be in compliance would not reasonably be expected to have a Material Adverse
Effect. “Environmental Laws” means all applicable Federal, state, municipal and local laws,
statutes, ordinances, codes, orders, decrees, judgments or injunctions, and regulations rendered in
any governmental ministry, department or administrative or regulatory agency relating to pollution
or protection of the environment or the presence, treatment, storage, disposal, transport or
handling of Hazardous Substances (as defined below). “Hazardous Substances” means any
element, compound, chemical mixture, contaminant, pollutant material, waste or other substance
which is defined as hazardous or toxic under any Environmental Law or the release of which is
prohibited or materially restricted under any Environmental Law.

          (b) To the knowledge of Seller, Seller and the Companies have all material permits,
registrations, approvals and licenses required under Environmental Laws for the operation of the
Business as presently conducted (the “Environmental Permits”), and there are no violations,
and no pending or threatened investigations or proceedings with respect to such Environmental
Permits except where the failure to have such Environmental Permits or where the violation,
investigation or proceeding relating thereto would not reasonably be expected to have a Material
Adverse Effect.

          (c) Seller is not subject to any Environmental Claims and, to the knowledge of Seller, no
material unresolved Environmental Claims have been asserted or threatened in writing against Seller
or any predecessor in interest in relation to the Business. To the knowledge of

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Seller, no claims under Environmental Laws have been asserted in writing against any
facilities that may have received Hazardous Substances generated by Seller or any corporate
predecessor in interest for which Seller would be liable.

          (d) This Section 5.19 contains the sole and exclusive representations and warranties of Seller
with respect to any Environmental Laws.

     Section 5.20 Insurance. All policies of insurance held as of the date hereof by the
Companies or by Seller with respect to the Business are set forth in Section 5.20 of the
Disclosure Schedule. To the knowledge of Seller, there are no outstanding requirements or
recommendations by any current insurer or underwriter with respect to the Business or the Purchased
Assets which require or recommend changes in the conduct of the Business, or require any repairs or
other work to be done with respect to any of the Purchased Assets or operations of the Business.

     Section 5.21 Certain Fees. Except for the engagement of J.P. Morgan Securities, Inc.,
the fees and expenses of which will be the sole responsibility of Seller, no financial advisor,
finder, broker, agent or other intermediary, acting on behalf of Seller or either Company, is
entitled to a commission, fee or other compensation in connection with this Agreement or the
transactions contemplated hereby.

     Section 5.22 Banks; Powers of Attorney; Guarantees. Section 5.22 of the
Disclosure Schedule contains (a) a complete and correct list of the names and locations of all
banks in which the Companies have accounts or safe deposit boxes; and (b) the types of those
arrangements and accounts including the names in which the accounts or boxes are held, the account
or box numbers and the name of each Person authorized to draw thereon or have access thereto.
Except as set forth in Section 5.22 of the Disclosure Schedule, no Person holds a power of
attorney to act on behalf of either Company. Except for routine corporate governance (e.g., with
respect to the Companies and their Subsidiaries) and Tax matters handled in the ordinary course of
Seller’s business, to the knowledge of Seller, neither Company has any obligation to act under any
outstanding power of attorney or any obligation or liability, either accrued, accruing or
contingent, as guarantor, surety, co-signor, endorser (other than for purposes of collection in the
ordinary course of business), co-make or indemnitor in respect of the obligation of any Person.

     Section 5.23 Customers and Suppliers.

          (a) Schedule 5.23(a) of the Disclosure Schedule identifies and sets forth a true and
complete list of the ten largest customers of the Business (measured by dollar volume) for the year
ended December 31, 2006.

          (b) Seller has made available to Buyer for review copies of all material Contracts with the
material suppliers of the Business as in effect on the date of this Agreement, and such copies were
true and complete in all material respects when delivered. For the purpose of this Section
5.23(b), Contracts shall mean frame agreements and Seller is not obligated to produce all purchase
orders related to these suppliers.

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     Section 5.24 Related Party Transactions. To the knowledge of Seller, except as set
forth in Section 5.24 of the Disclosure Schedule, no agreement between either Company or
any Subsidiary thereof and any director, officer or Affiliate of Seller or either Company, or any
individual related by blood, marriage or adoption to any such individual or any entity in which any
such individual or entity owns any beneficial interest (each a “Related Person”) has been
entered into or in existence since January 1, 2006.

     Section 5.25 Investment Representation. Seller is acquiring the Buyer Investment
Shares for its own account, for investment and without any view to resale or distribution of the
Buyer Investment Shares or any portion thereof. Seller acknowledges that (a) the Buyer Investment
Shares have not been registered or qualified under the provisions of the Securities Act of 1933, as
amended (the “Securities Act”), or the securities laws of any state, and that the Buyer
Investment Shares may not be sold or otherwise transferred by Seller except pursuant to
registration or qualification under the Securities Act and any applicable state securities law or
Seller provides Buyer an opinion of counsel reasonably satisfactory to Buyer that such registration
under such statutes is not required; and (b) that Seller must bear all of the economic risk of an
investment in Buyer for an indefinite period of time.

     Section 5.26 Disclaimer of Other Representations and Warranties. EXCEPT AS EXPRESSLY
SET FORTH IN THIS ARTICLE V, SELLER HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE TO BUYER ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR
ITS ASSETS, LIABILITIES OR OPERATIONS, INCLUDING ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR
WARRANTIES ARE EXPRESSLY DISCLAIMED.

ARTICLE VI.

[INTENTIONALLY LEFT BLANK]

ARTICLE VII.

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller that except as set forth in the Disclosure Schedule
delivered by Buyer to Seller on the date hereof and attached hereto (the “Buyer Disclosure
Schedule”), each of the following representations, warranties and statements is true and
correct as of the date hereof and will be true and correct as of the Closing Date):

     Section 7.1 Organization. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be conducted. Buyer is duly
qualified to transact business and is in good standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on its business or properties.

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     Section 7.2 Capitalization and Voting Rights.

          (a) As of the date hereof (and which will be updated as of the Closing Date in the Buyer
Disclosure Schedules), the authorized capital of the Buyer consists of:

               i. Preferred Stock. Seventy-five million, eight hundred fifty-seven thousand, four hundred
forty-three (75,857,443) shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”),
(i) four million, fifty-seven thousand (4,057,000) of which have been designated as Series A
Preferred Stock (the “Series A Stock”), all of which shares are issued and outstanding; (ii)
fifty-five million, one hundred thirty-three thousand, seven hundred one (55,133,701) shares of
which have been designated as Series B Preferred Stock (the “Series B Stock”), 49,133,701 of which
shares are issued and outstanding; and (iii) sixteen million, six hundred sixty-six thousand, seven
hundred forty-two (16,666,742) shares of which have been designated as Series C Preferred Stock
(the “Series C Stock”), 10,269,575 of which shares are issued and outstanding. The rights,
privileges and preferences of the each series of Preferred Stock are as stated in Buyer’s Tenth
Amended and Restated Certificate of Incorporation (“Restated Certificate”).

               ii. Common Stock. Two hundred million (200,000,000) shares of common stock, par value $0.001
per share (“GenBand Common Stock”), eighteen million, seventy-one thousand, six hundred and
twenty-three (18,071,623) of which shares are issued and outstanding.

          (b) Attached as Annex A to the Buyer Disclosure Schedule is the true, complete and correct
capitalization table of the Buyer as of immediately after the Closing. All of the issued and
outstanding shares of capital stock of the Buyer are duly authorized, validly issued, fully paid
and nonassessable and issued in compliance with applicable laws (including applicable securities
laws).

          (c) Except for (A) the conversion privileges of the Series A Stock, Series B Stock and Series
C Stock; (B) the rights provided in Section 2.6 of the Investors’ Rights Agreement; (C) currently
outstanding options to purchase six million, seventy-eight thousand, eight hundred and ninety-eight
(6,078,898) shares of GenBand Common Stock granted to employees and other service providers
pursuant to the Buyer’s Amended and Restated 1999 Stock Option/Stock Issuance Plan (the “Option
Plan”); (D) currently outstanding options to purchase up to one thousand (1,000) shares of GenBand
Common Stock granted to Austin Entrepreneurs Foundation; (E) currently outstanding warrants to
purchase up to twenty-one thousand, five hundred fifty-three (21,553) shares of GenBand Common
Stock in connection with equipment lease financings and bank credit arrangements approved by the
Board of Directors; (F) authorized but not issued options to purchase two million, five hundred
eleven thousand, six hundred and fifty-seven (2,511,657) shares of GenBand Common Stock that are
available for grant under the Option Plan; and, (G) eight million, twenty thousand, six hundred and
seventy-seven (8,020,677) shares of restricted stock that have been granted under the Option Plan
and as to which restrictions have not lapsed, there are no options, warrants, rights or other
securities authorized, issued or outstanding (including conversion or preemptive rights) or
agreements (contingent or otherwise) for the issuance, redemption, disposition purchase or

36

 

acquisition from the Buyer of any shares of its capital stock. There are no issued,
outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the
Buyer. The Buyer has reserved eight million, five hundred ninety thousand, five hundred and
fifty-five (8,590,555) shares of GenBand Common Stock for purchase upon exercise of the options
granted or to be granted under the Option Plan. Except for the Investors’ Rights Agreement and the
Co-Sale Agreement, the Buyer is not a party or subject to any agreement or understanding, and, to
the Buyer’s knowledge, there is no agreement or understanding between any persons and/or entities
(including the Buyer), which affects or relates to the voting or giving of written consents with
respect to any security of the Buyer or a director or officer of the Buyer. None of the Buyer’s
stock purchase agreements, restricted stock or stock option documents contains a provision
providing for acceleration of vesting (or lapse of a repurchase right) upon the occurrence of any
events other than the lapse of time.

     Section 7.3 Authorization. All corporate action on the part of the Buyer, its
officers, directors and stockholders necessary for the authorization, execution and delivery of
this Agreement, the other Transaction Documents and the Investor Rights Agreement and the Co-Sale
Agreement (collectively, the “Buyer Transaction Documents”) to which it is a party, the performance
of all obligations of the Buyer hereunder and thereunder, and the authorization, issuance (or
reservation for issuance), sale and delivery of the Buyer Investment Shares and any Dilution
Protection Shares, has been taken or will be taken prior to the Closing, and this Agreement and the
other Buyer Transaction Documents constitute valid and legally binding obligations of the Buyer,
enforceable in accordance with their respective terms except to the extent (a) such enforcement may
be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors’ rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any proceeding for any such
remedy or relief may be brought.

     Section 7.4 Valid Issuance of Buyer Investment Shares. The Buyer Investment Shares
and any Dilution Protection Shares being acquired by Seller hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration expressed herein,
will be duly and validly issued, fully paid and nonassessable, and upon delivery will be free of
any Liens other than restrictions under the Investors’ Rights Agreement and the Co-Sale Agreement,
and under applicable state and federal securities laws. Except as would not have a Buyer Material
Adverse Effect, the outstanding shares of GenBand Common Stock and Preferred Stock have all been
issued in compliance with applicable federal and state securities laws.

     Section 7.5 Subsidiaries. Except for General Bandwidth Europe Limited, BayPackets,
Inc. (“BayPackets”) and BayPackets Technologies Private Ltd., the Buyer does not presently own or
control, directly or indirectly, any interest in any other corporation, association, or other
business entity. The Buyer is not a participant in any joint venture, partnership, or similar
arrangement.

     Section 7.6 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any federal, state or
local

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governmental authority on the part of the Buyer is required in connection with the
consummation of the transactions contemplated by this Agreement, other than state and federal
securities laws filings which may be made after the Closing and or requirements which, individually
or in the aggregate, would not have a Buyer Material Adverse Effect or adversely affect the ability
of Buyer to consummate the transactions contemplated by this Agreement.

     Section 7.7 Offering. Subject in part to the truth and accuracy of each Seller’s
representations set forth in Section 5.25 of this Agreement, the offer, sale and issuance of the
Buyer Investment Shares and any Dilution Protection Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act and all applicable blue sky laws,
and neither the Buyer nor any authorized agent acting on its behalf will take action hereafter that
would cause the loss of such exemption; provided, further, that for purposes of this Section 7.7,
each of Seller’s representations set forth in Section 5.25 shall be deemed to be made as of the
date of the issuance of any Dilution Protection Shares.

     Section 7.8 Litigation. There is no action, suit, proceeding or investigation pending
or currently threatened against the Buyer that questions the validity of this Agreement or any
other Buyer Transaction Documents or the right of the Buyer to enter into this Agreement or any
other Buyer Transaction Documents or to consummate the transactions contemplated hereby or thereby.
There is no material action, suit, proceeding or investigation pending or currently threatened
against the Buyer or BayPackets. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened that might result in any change in the current
equity ownership of the Buyer or BayPackets or involving the prior employment of any of the Buyer’s
employees, their use in connection with the Buyer’s business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations under any agreements
with prior employers. Neither the Buyer nor BayPackets is a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation initiated by the Buyer
currently pending or that the Buyer intends to initiate.

     Section 7.9 Intellectual Property. (a) All patents (including, without limitation, all
U.S. and foreign patents, patent applications (including provisional applications), invention
disclosures and any and all divisions, continuations, continuations-in-part, reissues,
re-examinations and extensions thereof), design rights, trademarks, trademark applications
(including intent to use filings), trade names and service marks (whether or not registered), trade
dress, logos, Internet domain names, copyrights (whether or not registered) and any renewal rights
therefor, sui generis database rights, statistical models, technology, inventions, supplier lists,
trade secrets, know-how, computer software programs or applications in both source and object code
forms, databases, technical documentation, mask works, registrations and applications for any of
the foregoing and all other tangible and intangible proprietary information, materials and
associated goodwill that are held by or have been used in (including in the development of) the
Buyer’s business and/or in any product, technology or process (i) currently being or formerly
manufactured, published or offered by the Buyer or (ii) currently under development for possible
future manufacturing, publication, marketing or other use by the

38

 

Buyer, but excluding any third party “off the shelf” software, including any such property
owned by BayPackets, are hereinafter referred to as the “Buyer Intellectual Property.”

          (b) Section 7.9(b) of the Buyer Disclosure Schedule contains a true and complete list of each
of the Buyer’s and BayPackets’ patents and patent applications, registered trademarks and trademark
applications, registered copyrights and copyright applications and other registered Intellectual
Property.

          (c) The Buyer Intellectual Property contains only those items and rights that are: (i) owned
by the Buyer or BayPackets; (ii) in the public domain; or (iii) rightfully used by the Buyer or
BayPackets pursuant to a valid license or other similar agreement (the Buyer Intellectual Property
described in this subsection (iii) is referred to as “Buyer Licensed Intellectual Property”).
Buyer or BayPackets possesses all right, title, and interest in and to and is sole and exclusive
owner (or, in the case of the Buyer Licensed Intellectual Property, the exclusive licensee) of the
Buyer Intellectual Property, free and clear of all Liens, except as would not have a Buyer Material
Adverse Effect. Buyer or BayPackets has all rights in Buyer Intellectual Property owned by the
Buyer or BayPackets (as applicable) and in Buyer Licensed Intellectual Property necessary to carry
out its current activities and future activities as currently contemplated by the Buyer, including
rights to license, rent and lease and, other than with respect to Buyer Licensed Intellectual
Property, assign and sell Buyer Intellectual Property, except as would not have a Buyer Material
Adverse Effect.

          (d) To the knowledge of Buyer, the use, reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Buyer Intellectual Property, product,
activity, technology or process as now used or offered for use, licensing or sale by the Buyer or
as currently contemplated to be offered for use, licensing or sale by the Buyer does not directly
or indirectly, infringe on any rights in any Intellectual Property or other proprietary right of
any person or entity. To the knowledge of Buyer, no claims or investigations (i) challenging or
threatening the validity, enforceability, effectiveness or ownership by the Buyer or BayPackets of
any Buyer Intellectual Property or (ii) to the effect that the use, manufacturing, distribution,
licensing, sublicensing, sale or any other exercise of rights in any Buyer Intellectual Property,
product, activity, technology or process as now used by the Buyer or BayPackets infringes any
Intellectual Property or other proprietary right of any person or entity, have been asserted or
threatened by any person or entity. To the knowledge of Buyer, there is no unauthorized use,
infringement or misappropriation of any Buyer Intellectual Property by any third party, employee,
former employee or contract worker other than as set forth on Section 7.9(d) of the Buyer
Disclosure Schedule.

          (e) All personnel of the Buyer, including employees, contract workers, agents, consultants,
other service providers and contractors, who have contributed to or participated in the conception
or development of Buyer Intellectual Property and all current and former employees, contract
workers, agents, consultants and contractors of the Buyer has executed proprietary inventions
agreements substantially in the form attached to Section 7.9(e) of the Buyer Disclosure Schedule or
either (i) have been a party to an enforceable “work-for-hire” or similar agreement with the Buyer
in accordance with any applicable Law that has accorded the Buyer full, effective, exclusive and
original ownership of all tangible and intangible property

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thereby arising or (ii) have executed appropriate instruments of assignment in favor of the
Buyer as assignee that have conveyed to the Buyer effective and exclusive ownership (including, in
the case of employees, a waiver of any of the employees’ moral rights therein) of all Buyer
Intellectual Property thereby arising.

          (f) Buyer is not in material breach of, and as a result of the execution or delivery of this
Agreement or the performance of the Buyer’s obligations hereunder, and will not be in breach of,
any license, sublicense, agreement or instrument involving Intellectual Property to which the Buyer
is a party or otherwise bound, nor will the execution or delivery of this Agreement, or the
performance of the Buyer’s obligations hereunder, cause the diminution, license, transfer,
termination or forfeiture of the Buyer’s rights in any Buyer Intellectual Property, except as would
not have a Buyer Material Adverse Effect or adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement.

          (g) Buyer has taken reasonable measures to protect the proprietary nature of the Buyer
Intellectual Property and to maintain in confidence all trade secrets and confidential information
owned or used by the Buyer.

          (h) Section 7.9(h) of the Buyer Disclosure Schedule contains a true and complete list of all
of the software programs included in or developed for inclusion in the Buyer’s products by the
Buyer (including all software programs embedded or incorporated in the Buyer’s products) (the
“Buyer Software Programs”). To the knowledge of Buyer, Buyer has not incorporated any third party
Intellectual Property into the Buyer Software Programs not identified in Section 7.9(h) of the
Buyer Disclosure Schedule. Buyer has taken prudent steps consistent with industry standards to
assure that it is in compliance with the licensing obligations associated with the third party
Intellectual Property incorporated into the Buyer Software Programs. The Buyer owns good and valid
or has valid licenses to such Buyer Software Programs, free and clear of all Liens. The Buyer
Software Programs include open source or public library software as described on Schedule 7.9(h) of
the Buyer Disclosure Schedule, which are embodied or incorporated in the Buyer Software Programs.
Buyer has taken prudent steps consistent with industry standards to assure that it is in compliance
with the licensing obligations associated with such open source or public library software, and to
the knowledge of Buyer, no diminution, license, transfer, termination or forfeiture of the Buyer’s
rights in any Buyer Intellectual Property will occur as a result of such open source or public
library software.

          (i) Except as set forth on Section 7.9(i) of the Buyer Disclosure Schedule or as would not
have a Buyer Material Adverse Effect, the source code and system documentation relating to the
Buyer Software Programs (i) have at all times been maintained in accordance with commercially
reasonable procedures to ensure their confidentiality, (ii) have been disclosed by the Buyer only
to employees or third parties who are bound by appropriate nondisclosure obligations, (iii) have
not been licensed, sold or disclosed to any third party, and (iv) are not the subject of any escrow
or similar agreement or arrangement giving any third party rights in or to such source code and/or
system documentation upon the occurrence of certain events.

          (j) Buyer has taken all reasonable steps to preserve and maintain notes and records relating
to Buyer Intellectual Property.

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          (k) The Buyer Intellectual Property is free and clear of any and all Liens.

          (l) Section 7.9(l) of the Buyer Disclosure Schedule sets forth all material agreements by
which the Buyer is obligated to make to third parties any payments related to Buyer Intellectual
Property.

          (m) Buyer employs commercially reasonable measures to ensure that the Buyer Software Programs
contain no “viruses.” For the purposes of this Agreement, “virus” means any computer code
intentionally designed to disrupt, disable or harm in any manner the operation of any software or
hardware. To the knowledge of Buyer, none of the Buyer Software Programs contains any worm, bomb,
backdoor, clock, timer or other disabling device, code, design or routine which causes the software
to be erased, inoperable, impaired in performance or otherwise incapable of being used, either
automatically or upon command by any party.

          (n) Buyer has taken commercially reasonable measures to ensure the physical and electronic
protection of Buyer information assets from unauthorized disclosure, use or modification. There
has been no material breach of security involving any Buyer information assets.

          (o) To the knowledge of Buyer, Buyer is in compliance, in material respects, with all
applicable data protection laws, rules, regulations, guidelines and industry standards.

     Section 7.10 Compliance with Other Instruments. The Buyer is not in violation or
default of any provision of its Restated Certificate or Bylaws, or in any material respect of any
instrument, judgment, order, writ, decree or contract to which it is a party or by which it is
bound, or in any material respect, of any provision of any Law applicable to the Buyer. The
execution, delivery and performance of this Agreement and the other Transaction Documents to which
the Buyer is a party, and the consummation of the transactions contemplated hereby and thereby will
not result in any such violation or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or an event that results in the creation of any Lien upon any
assets of the Buyer or the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to the Buyer, its business or
operations or any of its assets or properties, other than violations, conflicts, defaults or other
events which, individually or in the aggregate, would not have a Buyer Material Adverse Effect or
adversely affect the ability of Buyer to consummate the transactions contemplated by this
Agreement.

     Section 7.11 Certain Contracts and Arrangements. 

          (a) Except for agreements explicitly contemplated hereby and by the Investors’ Rights
Agreement and the Co-Sale Agreement, there are no agreements, understandings or proposed
transactions between the Buyer and any of its officers, directors, affiliates, or any affiliate
thereof.

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          (b) There are no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Buyer is a party or by which it is bound that may
involve (i) obligations (contingent or otherwise) of, or payments to the Buyer in excess of, one
hundred thousand dollars ($100,000) or (ii) provisions restricting or adversely affecting the
development, manufacture or distribution of the Buyer’s products or services.

          (c) The Buyer has not (i) declared or paid any dividends or authorized or made any
distribution upon or with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities to third parties individually in excess of
one hundred thousand dollars ($100,000), (iii) made any loans or advances to any person or entity,
other than ordinary advances for travel expenses, which are currently outstanding or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.

          (d) For the purposes of subsections (b) and (c) above, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions involving the same
person or entity (including persons or entities the Buyer has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.

     Section 7.12 Permits. To the knowledge of Buyer, Buyer has all material franchises,
permits, licenses, and any similar authority necessary for the conduct of its business as now being
conducted by it. The Buyer believes that it can obtain, without undue burden or expense, any
similar authority for the conduct of their respective businesses as planned to be conducted. Buyer
is not in default in any material respect under any of such franchises, permits, licenses or other
similar authority.

     Section 7.13 Disclosure. The Buyer has fully provided Seller with all the information that
Seller has requested for deciding whether to purchase the Buyer Investment Shares, and all
information that the Buyer believes is reasonably necessary to enable Seller to make such decision.
The representations and warranties contained in this Article VII do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
herein or therein not misleading.

     Section 7.14 Registration Rights. Except as provided in the Investors’ Rights Agreement,
the Buyer has not granted or agreed to grant any registration rights, including, without
limitation, piggyback rights, to any person or entity.

     Section 7.15 Corporate Documents. The Restated Certificate and Bylaws of the Buyer are in
the form previously made available to the Seller.

     Section 7.16 Title to Property and Assets. Buyer and BayPackets own their respective
property and assets free and clear of all Liens, other than: (i) Liens for current taxes or
assessments due but not yet payable or being contested in good faith by appropriate proceedings;
(ii) servitudes, easements, restrictions, rights of way, encroachments and other similar rights in
real property or any interest therein that do not interfere with the use or enjoyment of the
Buyer’s

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assets in any material respect; (iii) Liens that constitute mechanics’, carriers’, workers’ or
similar Liens arising in the ordinary course of Buyer’s business that are not yet due or that are
being contested in good faith by appropriate proceedings; and (iv) Liens which are not substantial
or material in character, amount or extent in the conduct of the Buyer’s business. None of the
foregoing will have a Material Adverse Effect. With respect to the property and assets it leases,
Buyer is in compliance with such leases in all material respects and, to its knowledge, holds a
valid leasehold interest free of any Liens.

     Section 7.17 Buyer Financial Statements.

          (a) The Buyer has made available to Seller its consolidated audited financial statements
(balance sheet, income statement and statement of cash flows), at and for the year ended December
31, 2005, and its unaudited consolidated financial statements (balance sheet, income statement and
statement of cash flows) for the year ended December 31, 2006 (collectively, the “Buyer Financial
Statements”). The Buyer Financial Statements have been prepared in accordance with GAAP, except
that the unaudited Buyer Financial Statements may not contain all footnotes required by generally
accepted accounting principles. The Buyer Financial Statements fairly present the financial
condition and operating results of the Buyer as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments.

          (b) Except as set forth in the Buyer Financial Statements, the Buyer has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to December 31, 2006, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Buyer Financial Statements

     Section 7.18 Absence of Material Adverse Changes. Since December 31, 2006, except as
expressly contemplated herein or in the other Transaction Documents, there has not been:

          (a) any material change in the assets, liabilities, financial condition or operating results
of the Buyer from that reflected in the Buyer Financial Statements;

          (b) any material damage, destruction or loss, whether or not covered by insurance;

          (c) any waiver by the Buyer of a valuable right or of a material debt owed to it;

          (d) any satisfaction or discharge of any Lien or of any obligation by the Buyer, except in the
ordinary course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Buyer (as such business is presently conducted and
as it is proposed to be conducted);

          (e) any material change or amendment to a material contract or arrangement by which the Buyer
or any of its assets or properties is bound or subject;

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          (f) any material change in any compensation arrangement or agreement with any key employee,
officer, director or shareholder;

          (g) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets;

          (h) any resignation or termination of employment of any officer of the Buyer holding any of
the following positions: President, Chief Executive Officer, Chief Financial Officer, Vice
President, Senior Vice President or Executive Vice President, and the Buyer, to its knowledge, does
not know of the impending resignation or termination of employment of any such officer;

          (i) receipt of notice that there has been a loss of, or material order cancellation by, any
major customer of the Buyer;

          (j) any Lien created by Buyer, with respect to any of its material properties or assets,
except liens for taxes not yet due or payable;

          (k) any loans or guarantees made by the Buyer to or for the benefit of its employees, officers
or directors, or any members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;

          (l) any declaration, setting aside or payment or other distribution in respect of any of the
Buyer’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any
of such stock by the Buyer;

          (m) any involvement by the Buyer in any current or pending transactions in connection with any
merger or acquisition of the Buyer;

          (n) to the knowledge of Buyer, any other event or condition of any character that might
materially and adversely affect the assets, properties, financial condition, operating results,
business or prospects of the Buyer (as such business is presently conducted and as it is proposed
to be conducted); or

          (o) any agreement or commitment by the Buyer to do any of the things described in this Section
7.18.

     Section 7.19 Employee Benefit Plans; ERISA.

          (a) The name of each plan, program, arrangement, agreement or commitment sponsored or
maintained by or on behalf of the Buyer or any ERISA Affiliate or to which the Buyer or any ERISA
Affiliate makes or is obligated to make contributions or to which the Buyer or any ERISA Affiliate
made or was obligated to make contributions during the year period ending on the date hereof, which
is a Plan is set forth on Section 7.19 of the Buyer Disclosure Schedule hereto. The Buyer has
complied in all material respects with all of the provisions of each such Plan and all applicable
provisions of ERISA and the Code, has administered each such Plan (including the payment of
benefits thereunder) in all material respects in accordance with

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the provisions of each such Plan and all applicable provisions of ERISA and the Code, and no
penalties under ERISA or any other applicable law or regulation are and at the Closing Date will be
owed to any Plan participant and/or beneficiary and/or any governmental authority with respect to
the failure to file any reports or other information required under ERISA or any other applicable
law or regulation or to distribute or make available any such reports or other information. The
Buyer has and at the Closing Date will have timely made all required contributions to each such
Plan.

          (b) No such Plan is an “employee pension benefit plan” within the meaning of, nor has any such
Plan at any time been subject to, Section 3(2) of ERISA and no such Plan is a “multi-employer plan”
with the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of ERISA.

          (c) As of the date hereof and as of the Closing Date, the Buyer is entitled to cease its
participation in each Plan referred to in this Section 7.19 without default, penalty, premium or
any additional cost to the Buyer (other than customary administrative costs of terminating such
Plan, including termination fees, distributing the assets of any related trust, and making such
reports and filings as are necessary or appropriate for the termination of such Plan, all of which
costs would in the aggregate not be material) and each such Plan, by its provisions permits the
Buyer to amend or terminate, in whole or in part, each Plan referred to in this Section 7.19
without default, penalty, premium or any additional cost to the Buyer (other than customary
administrative costs of terminating such Plan, including termination fees, distributing the assets
of any related trust, and making such reports and filings as are necessary or appropriate for the
termination of such Plan, all of which costs would in the aggregate not be material).

          (d) The transactions contemplated by this Agreement will not result in any payment or series
of payments by the Buyer of a parachute payment within the meaning of Section 280G of the Code.

          (e) With respect to each Plan maintained or sponsored by the Buyer which is an “employee
welfare benefit plan” within the meaning of Section 3(1) of ERISA (a “Welfare Plan”): (i) the
applicable requirements of Part III of Subchapter B of Chapter 1 of the Code are satisfied if
benefits under such Welfare Plan are intended to qualify for tax-favored treatment; (ii) there is
no disqualified benefit which would subject the Investors to tax under Section 4976(a) of the Code;
(iii) each such Welfare Plan which is a group health plan within the meaning of Section 4980B of
the Code is and has at all times been in material compliance with the applicable requirements of
Section 601 through 608 of ERISA, and the Buyer is not now and has never been liable for any tax
under Section 4980B of the Code and (iv) each such Welfare Plan which is a group health plan within
the meaning of Section 9832 of the Code is and at all times has been in material compliance with
the applicable requirements of Sections 9801 through 9833 of the Code and Sections 701 through 734
of ERISA, and the Buyer is not and never has been liable for any tax under Section 4980D of the
Code.

          (f) None of the Plans is under investigation or audit by either the United States Department
of Labor or the IRS.

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          (g) None of the Plans provides benefits including, without limitation, death or medical
benefits (whether or not insured) with respect to any current or former employee of the Buyer
beyond their retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) disability benefits under any “employee welfare benefit plan” (as defined in
Section 3(1) of ERISA) that have been fully provided for by insurance or otherwise, (iii) deferred
compensation benefits accrued as liabilities on the books of the Buyer or for which contributions
have been made to a trust qualified under Code Section 501(a) an amount sufficient to fund all such
benefits, or (iv) benefits in the nature of severance pay.

     Section 7.20 Tax Returns, Payments and Elections. Buyer has filed all Tax Returns as
required by applicable Law. All Tax Returns are true and correct in all material respects. Buyer
has paid all Taxes shown thereon to be due, except those contested by it in good faith that are
listed in the Buyer Disclosure Schedule or would not have a Buyer Material Adverse Effect. The
provision for Taxes of the Buyer in the Buyer Financial Statements is adequate for Taxes due or
accrued as of the date thereof. Buyer has not elected pursuant to the Code to be treated as a
Subchapter S corporation pursuant to Section 1362(a) or made any election under Section 341(f) of
the Code, nor has it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation or amortization) that would have a Buyer
Material Adverse Effect. Buyer has not had any tax deficiency proposed or assessed against it and
neither has executed any waiver of any statute of limitations on the assessment or collection of
any Taxes. Since the date of the Buyer Financial Statements, Buyer has not incurred any Taxes
other than in the ordinary course of business and the Buyer has made adequate provisions on its
books of account for all Taxes with respect to its business, properties and operations for such
period. Buyer has withheld or collected from each payment made to each of its employees, the
amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.
Disclosure has been made on all federal income Tax Returns filed by or which include Buyer of all
positions taken with respect to Buyer which could give rise to a substantial understatement of Tax
within the meaning of Code §6662. Buyer has not at any time participated in a reportable
transaction within the meaning of Treasury Regulations Section 1.6011-4 or participated in a
transaction that has been disclosed pursuant to IRS Announcement 2002-2, 2002-2 I.R.B. 304. Buyer
is not a party to or bound by any Tax allocation, tax indemnity or tax sharing agreement.

     Section 7.21 Insurance. The Buyer has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged or destroyed. The
Buyer has in full force and effect and is the sole beneficiary of the “key man” life insurance on
the life of Charles Vogt with a face policy benefit of one million dollars ($1,000,000). The Buyer
has not been refused any policy of insurance sought or applied for and the Buyer has no reason to
believe that it will be unable to renew its existing insurance policies when the same shall expire
at terms less favorable than those terms presently in effect, other than any increases in premiums
for reasons other than any act or omission of the Buyer.

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     Section 7.22 Minute Books. The minute books of the Buyer contain a complete summary
of all meetings of directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.

     Section 7.23 Labor Agreements and Actions; Employee Compensation. The Buyer is not
bound by or subject to (and none of its assets or properties is bound by or subject to) any written
or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the knowledge of Buyer, has sought to represent any of the employees,
representatives or agents of the Buyer. There is no strike or other labor dispute involving the
Buyer pending, or to the knowledge of Buyer, threatened, nor is the Buyer aware of any labor
organization activity involving its employees. To the knowledge of Buyer, no officer or key
employee, or any group of key employees, intends to terminate their employment with the Buyer, nor
does the Buyer have a present intention to terminate the employment of any officer holding any of
the following positions: President, Chief Executive Officer, Chief Financial Officer, Vice
President, Senior Vice President or Executive Vice President. The employment of each officer and
employee of the Buyer is terminable at the will of the Buyer. To its knowledge, the Buyer has
complied in all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment. Except for those Plans disclosed in Section 7.19
of the Buyer Disclosure Schedule, the Buyer is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing
plan, retirement agreement, or other employee compensation agreement.

     Section 7.24 Investment Company Status. The Buyer is not an “investment company” or
an entity directly or indirectly controlled by or acting on behalf of an investment company within
the meaning of the Investment Company Act of 1940, as amended.

     Section 7.25 Brokers. Except for Citigroup Global Markets, the Buyer has no contract,
arrangement or understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.

ARTICLE VIII.

COVENANTS

     Section 8.1 Conduct of the Business. Seller agrees that, during the period from the
date of this Agreement to the Closing, except as otherwise: (i) contemplated by this Agreement,
including the making of the Distributions permitted under Section 4.2; or, (ii) consented to by
Buyer (which consent shall not be unreasonably withheld or delayed):

          (a) Seller shall conduct and shall cause the Companies to conduct the Business in all material
respects in substantially the same manner as the Business is being conducted on the date hereof;
and

          (b) Seller shall, and shall cause the Companies to: (i) not sell or dispose of any of the
properties or assets of the Business, except in the ordinary course of business; (ii) maintain the
properties, machinery and equipment owned or leased by the Business, in all material

47

 

respects, in sufficient operating condition and repair to enable Seller and the Companies to
conduct the Business in substantially the same manner in which the Business is currently conducted,
except for maintenance or repair required by reason of fire, flood, earthquake or other similar
acts of God; (iii) not terminate or materially amend any material Transferred Contract except in
the ordinary course of business; (iv) not enter into any new material Contract other than (A)
customer Contracts or (B) renewals of existing Contracts or (C) in the ordinary course of business;
(v) not enter into any written employment agreement with any employee or increase in any manner the
compensation of any of the officers or other key Business Employees, except for such increases as
are granted in the ordinary course of business in accordance with customary practices (which shall
include normal periodic performance reviews and related compensation and benefits increases) as
required by a pre-existing commitment; (vi) not adopt, grant, extend or increase the rate or terms
of any bonus, insurance, pension or other employee benefit plan, payment or arrangement made to,
for or with any such officers or Business Employees, except increases which are required by any
applicable Law or by a pre-existing commitment, or which are granted in the ordinary course of
business in accordance with customary practices; and (vii) operate in the ordinary course of
business to preserve the relationships of the Business with suppliers, customers, licensors,
licensees and others having material business relationships with the Business such that the
Business will not be materially impaired.

     Section 8.2 Access to Information.

          (a) Until the Closing, Seller shall, and shall cause the Companies to (i) give Buyer and its
authorized representatives reasonable access to all books, records, offices and other facilities
and properties of the Companies and the VocalData Business; (ii) permit Buyer to make such
inspections thereof as Buyer may reasonably request; and (iii) furnish Buyer with such financial
and operating data and other information with respect to the business and properties of the
Companies and the VocalData Business as Buyer may from time to time reasonably request;
provided, however, that Buyer shall in each instance give reasonable prior notice
to Seller, and that any such investigation shall be conducted during normal business hours under
the supervision of Seller’s or the Companies’ personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby and shall not interfere
unreasonably with the business operations of the Companies or the VocalData Business; and,
provided, further, that any such disclosure shall not be required if it would
violate any laws or the terms or conditions of any contracts or adversely affect the ability of
Seller or the Companies to assert attorney-client, attorney work product or other similar
privilege.

          (b) Any disclosure whatsoever during such investigation by Buyer shall not constitute an
enlargement of or additional representations or warranties of Seller beyond those specifically set
forth in Article V of this Agreement.

          (c) All information concerning the Companies and/or Seller or the Business furnished or
provided by either Company or Seller to Buyer or its representatives (whether furnished before or
after the date of this Agreement) shall be held subject to a non-disclosure agreement between
Seller and Buyer dated as of February 24, 2007 (the “Confidentiality Agreement”).

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     Section 8.3 Consents.

          (a) Each of Seller and Buyer shall cooperate, and use its Reasonable Efforts, to make all
filings and obtain all licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities necessary to consummate the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, Seller and Buyer shall: (i) make any
and all notifications and filings required to be made to any court, administrative agency or
commission or other governmental agency, authority or instrumentality having supervisory or
regulatory authority with respect to the relevant party or parties to this Agreement in connection
with the transactions contemplated by this Agreement; and (ii) file any Notification and Report
Forms and related material that such party may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice under the H-S-R
Act, use its Reasonable Efforts to obtain early termination of the applicable waiting period, and
make any further filings, submit requested documents and submit requested data, pursuant thereto
that may be necessary, proper or advisable in connection therewith. Any and all filing fees in
respect of such filings shall be paid by Buyer.

          (b) Seller shall use and shall cause the Companies to use their respective Reasonable Efforts
to obtain any third party consents or approvals that Buyer may reasonably request in connection
with the consummation of the transactions contemplated by this Agreement. Buyer agrees to provide
such assurances as to financial capability, resources and creditworthiness as may be reasonably
requested by any third party whose consent or approval is sought hereunder.

          (c) With respect to any agreements for which any required consent or approval is not obtained
prior to the Closing, Seller and Buyer shall each use its Reasonable Efforts to obtain any such
consent or approval after the Closing Date until such consent or approval has been obtained. At
such time after Closing that any such consent or approval has been obtained, the Contract or other
instrument or permit associated with such consent or approval shall be assigned or transferred to
Buyer automatically without any other conveyance or other action by the parties.

          (d) For a period no greater than 18 months following the Closing Date: (i) to the extent
permitted by applicable law, all Transferred Contracts for which a required consent has not been
obtained as of the Closing shall be held, from the Closing Date and until the appropriate consents
to transfer are obtained, by Seller in trust for Buyer, and the covenants and obligations
thereunder shall be performed by Buyer, at its sole cost and expense, in Seller’s name, and all
benefits and obligations existing thereunder shall be for Buyer’s account; and (ii) Seller shall
take or cause to be taken, at Buyer’s sole cost and expense, such actions in its name or otherwise
as Seller may reasonably determine so as to provide Buyer with the benefits of such Transferred
Contracts and to effect collection of money or other consideration that becomes due and payable
under such Transferred Contracts. Seller shall promptly pay over to Buyer all money or other
consideration received by it after the Closing in respect to any such Transferred Contracts.

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     Section 8.4 Reasonable Efforts. Each of Seller and Buyer shall cooperate, and use its
Reasonable Efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth herein).

     Section 8.5 Covenant to Satisfy Conditions. Seller will use its Reasonable Efforts to
ensure that the conditions set forth in Article IX hereof are satisfied, insofar as such matters
are within the control of Seller. Buyer will use its Reasonable Efforts to ensure that the
conditions set forth in Article IX hereof are satisfied, insofar as such matters are within the
control of Buyer. Notwithstanding the foregoing, neither of the parties to this Agreement shall be
required to waive any condition herein to its obligations at the Closing or to incur any
substantial cost not otherwise required under this Agreement. Seller and Buyer further covenant
and agree, with respect to a threatened or pending preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation or executive order that would adversely affect
the ability of the parties hereto to consummate the transactions contemplated hereby, to use all
Reasonable Efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may
be.

     Section 8.6 Public Announcements. Prior to the Closing, except as otherwise agreed to
by the parties, the parties shall not issue any report, statement or press release or otherwise
make any public statements with respect to this Agreement and the transactions contemplated hereby,
except as in the reasonable judgment of the party may be required by law or in connection with the
obligations of a publicly held company, in which case the parties will exercise their Reasonable
Efforts to reach mutual agreement as to the language of any such report, statement or press
release. Upon the Closing, Seller and Buyer will consult with each other with respect to the
issuance of a joint report, statement or press release with respect to this Agreement and the
transactions contemplated hereby.

     Section 8.7 Use of “Tekelec” Name. From and after the Closing, Buyer agrees not to
use and shall cause the Companies and Buyer’s Affiliates not to use the “Tekelec” name in any
manner in any part of the world as part of their company names or in any manner in connection with
the Business or their respective businesses.

     Section 8.8 Employees; Employee Benefits.

          (a) Buyer shall be entitled to discuss potential post-Closing employment opportunities and
responsibilities with any Business Employee provided that any employment offers are conditioned
upon Closing, and further provided that Buyer shall continue to comply with the non-solicitation
provisions of the non-disclosure agreement signed by Buyer and Seller if this Agreement is
terminated in accordance with Section 10.1. Prior to the Closing Date and as contemplated by
Section 3.2, Seller shall effect a restructuring of the Business by terminating certain Business
Employees as described in Schedule 8.8(a) (the “Restructuring”). Prior to the
Closing Date, Seller shall also transfer to the Companies (i) all Business Employees whose
employment has not been or will not be terminated as part of the Restructuring and who have agreed
to become employed by Buyer or either of the Companies at Closing and (ii) all employees of Seller
who have agreed to become employed by Buyer or either of the Companies

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at Closing. Seller shall pay all costs associated with the Restructuring in accordance with
Seller’s current policies and practices. Buyer will take no post-closing actions that will trigger
obligations or liabilities on the part of Seller with respect to the Restructuring, including
without limitation obligations and liabilities under the Worker Adjustment and Retraining
Notification Act, as amended. Because the Companies do not directly employ most of their
respective employees as of the date of the Agreement and most employees who perform services for
the Business are employed directly by Seller, certain Intellectual Property Rights and Technology
directly related to and used primarily in the current operation of the Business may be owned by
Seller pursuant to confidentiality, nondisclosure and invention assignment agreements between
Seller and such Business Employees and by virtue of the employer—employee relationship between
Seller and the Business Employees. Prior to the Closing, Seller shall assign to the Companies all
of Seller’s right, title and interest in and to Intellectual Property Rights and Technology used
primarily in the current operations of the Business that was developed or created by the Business
Employees, and Seller shall assign to the Companies all applicable right, title and interest of
Seller under such agreements between Seller and such Business Employees. Prior to Closing, Seller
must also record the assignment of all Patents and Trademarks pursuant to this Section in the
applicable patent, trademark, or other intellectual property registration office (which for the
United States, for example, is the United States Patent and Trademark Office).

(b) Except as agreed between Buyer and Seller pursuant to Section 8.8(a), Buyer agrees that
prior to the Closing it will not require or request of Seller or either Company that Seller or the
Companies terminate any Business Employees. Following the Closing, Buyer shall provide to each
employee of Seller who continues as an employee of the Companies or becomes an employee of the
Buyer from and after the Closing (an “Employee”) with a salary that is not less than the
last base salary of record paid by Seller (as provided by Seller to Buyer in connection with this
Agreement) to that Employee (including any adjustments by Seller in accordance with Section 5.8(d)
or 8.1(b)(v), above), together with bonus and/or incentive compensation and benefits that are
substantially comparable to the bonus and/or incentive compensation and benefits provided to
similarly situated employees of Buyer. Buyer shall give full credit for all service with Seller or
the Companies or any Affiliate thereof, and any predecessor thereto to the extent that service with
such predecessor entity was recognized under the applicable Plan of Seller, the Companies or any
Affiliate, to each Employee for purposes of vesting and eligibility, including waiting periods
relating to preexisting conditions under medical plans, under any employee benefit plan (as defined
in Section 3(3) of ERISA) maintained by Buyer or its Subsidiaries (and any vacation or accrued sick
pay plan or policy) in which the Employees participate on or after the Closing Date. Prior to the
Closing, Seller shall furnish Buyer with a list of the length of service with Seller, the Companies
or their Affiliates for each of the Business Employees. For purposes of computing deductible
amounts (or like adjustments or limitations on coverage) under any employee welfare benefit plan
(as defined in Section 3(1) of ERISA), expenses and claims previously recognized for similar
purposes under the applicable welfare benefit plan of the Companies or any Affiliate shall be
credited or recognized under the comparable plan maintained after the Closing Date by Buyer or its
Subsidiaries in which the Employees participate.

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          (c) Notwithstanding anything in paragraph (a) of this Section to the contrary, if any Employee
is discharged by Buyer or the Companies on or within twelve (12) months after the Closing Date,
then Buyer shall be responsible for severance, if any, payable to such discharged Employee, such
severance payable to be determined under Buyer’s then current severance policy, giving effect to
the provisions of Section 8.8(b). Buyer and the Companies shall be responsible and assume all
liability for all notices or payments due to any Employee, and all notices, payments, fines or
assessments due to any government authority, pursuant to any applicable Laws with respect to the
employment, discharge or layoff of Employees by Buyer or the Companies after the Closing, including
the Worker Adjustment and Retraining Notification Act and any rules or regulations that have been
issued in connection with the foregoing.

          (d) Seller shall be responsible for the continuation of health plan coverage, in accordance
with the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”),
Sections 601 through 608 of ERISA and Section 4980B of the Code and the regulations hereunder, for
any employee or former employee of the Business or the Companies or a qualified beneficiary under
the Companies’ health plan (or a Seller or other affiliate health plan with respect to the
Companies’ participation in such plan) who is already receiving COBRA benefits or who loses health
coverage prior to Closing in connection with the transactions contemplated in this Agreement.
Buyer shall be responsible for the continuation of health plan coverage, in accordance with the
requirements of COBRA, Sections 601 through 608 of ERISA and Section 4980B of the Code and the
regulations hereunder, for any Employee terminated by the Buyer or the Companies after the Closing.

          (e) Effective as of the Closing Date, Seller shall transfer, or cause to be transferred, to
Buyer an amount, in cash, equal to the excess, if any, of the aggregate 2007 contributions of all
Employees then participating in Seller’s or its Affiliate’s flexible benefits plan (the “Seller
Flexible Benefits Plan”), over the aggregate 2007 reimbursements to all Business Employees
under such plan. Buyer shall cause such amounts to be credited to each such employee’s accounts
under Buyer’s (or one of its affiliate’s) corresponding flexible benefit plan (the “Buyer
Flexible Benefits Plan”) which shall be established and in effect for such employees as of the
Closing Date, and all claims for reimbursement which have not been paid as of the date of the
transfer to Buyer and credited under the Buyer Flexible Benefits Plan shall be paid pursuant to and
under the terms of the Buyer Flexible Benefits Plan. In connection with such transfer, Buyer shall
deem that such employees’ deferral elections made under the Seller Flexible Benefits Plan for the
2007 calendar year shall continue in effect under the Buyer Flexible Benefits Plan for the
remainder of the 2007 calendar year following the Closing Date.

     Section 8.9 Certain Tax Matters.

          (a) All transfer, documentary, sales, use, value-added, gross receipts, stamp, registration or
other similar transfer Taxes incurred in connection with the transfer and sale of the Purchased
Equity and the Purchased Assets and Assumed Liabilities as contemplated by the terms of this
Agreement, including all recording or filing fees, notarial fees and other similar costs of
Closing, that may be imposed, payable, collectible or incurred shall be shared equally by Seller
and Buyer; provided, however, that any Taxes imposed on the sale of the Purchased

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Assets shall be borne solely by Buyer to the extent that Buyer or any Affiliate is entitled to
a credit or refund for such Taxes paid. All transfer Taxes shall be paid when due.

          (b) Seller will be responsible for the preparation and filing of all Non-Income Tax Returns
for all Tax periods ending on, or prior to, the Closing Date (including Tax Returns required to be
filed after the Closing Date) that relate to the Seller’s operation of the VocalData Business or
Seller’s use or ownership of the Purchased Assets. Seller’s Non-Income Tax Returns to the extent
they relate to the VocalData Business or Purchased Assets shall be prepared in accordance with
applicable Law in all respects. Seller will be responsible for and make all payments of Non-Income
Taxes shown to be due on such Tax Returns to the extent they relate to the Purchased Assets or the
VocalData Business.

          (c) Buyer will be responsible for the preparation and filing of all Non-Income Tax Returns for
all Tax periods commencing after the Closing Date, that Buyer is required to file with respect to
Buyer’s ownership or use of the Purchased Assets or its operation of the VocalData Business.
Buyer’s Non-Income Tax Returns, to the extent they related to the Purchased Assets or the VocalData
Business, shall be prepared in accordance with applicable Law in all respects. Buyer will make all
payments of Non-Income Taxes shown to be due on such Non-Income Tax Returns to the extent they
relate to the Purchased Assets or the Business.

          (d) To the extent any payment of Non-Income Taxes made by Seller or Buyer is attributable to
the Purchased Assets or VocalData Business and is made for a Straddle Period, the non-filing party
shall within fifteen (15) days after notice from the paying party reimburse the paying party for
the portion of such Non-Income Tax apportionable to such non-paying party upon receipt of a copy of
the filed Non-Income Tax Return. These Non-Income Taxes shall be apportioned between the Seller and
Buyer based upon the number of days in the applicable Straddle Period falling on or before the
Closing Date and the number of days in the applicable Straddle Period falling after the Closing
Date. The Seller shall be responsible for the amount apportioned to days on or before the Closing
Date and Buyer shall be responsible for the amount apportioned to days after the Closing Date;
provided, however, that in no event shall the non-paying party be responsible for
any penalties, interest or the like resulting from any failure by the filing party to timely or
correctly file any such Non-Income Tax Returns.

          (e) Seller shall include in its Income Tax Returns all items of income, gain, loss, deduction,
and credit attributable to the ownership or operation of the Purchased Assets and the VocalData
Business during any Pre-Closing Tax Period and shall be responsible for paying all Income Taxes on
such income, gain, loss, deduction, and credit. Buyer shall include in its Income Tax Returns all
items of income, gain, loss, deduction, and credit attributable to the ownership or operation of
the Purchased Assets and the VocalData Business during any Post-Closing Tax Period and shall be
responsible for paying all Income Taxes on such income, gain, loss, deduction, and credit.

          (f) Seller shall prepare or cause to be prepared and file or cause to be filed all Income Tax
Returns for the Companies for all Tax periods ending on, or prior to the Closing Date. In this
regard, Seller shall include in such Tax Returns the income, gains, losses, deductions, and credits
of the Companies which are attributable to periods ending on or prior to

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the Closing Date, which items shall be determined based on an interim closing of the books of
the Companies. Buyer shall cooperate with Seller in filing and causing to be filed such returns.
Seller shall be responsible for payment of, and shall pay when due, any Income Taxes shown due on
such returns. If, after the Closing Date, Buyer or the Companies pay any such Income Taxes for
which Seller is responsible, Seller shall reimburse Buyer or the Companies within fifteen (15) days
after the date Seller is notified by Buyer or the Companies that such Income Taxes were paid.

          (g) Buyer shall prepare or cause to be prepared and file all Income Tax returns for the
Companies for all Tax periods beginning after the Closing Date. Seller shall cooperate with Buyer
in filing and causing to be filed such returns. Buyer shall be responsible for payment of, and
shall pay when due, any Income Taxes shown due on such returns. If, after the Closing Date, Seller
pays any such Income Taxes for which Buyer or the Companies are responsible, Buyer shall reimburse
Seller within fifteen (15) days after the date Buyer or the Companies is notified by Seller that
such Income Taxes were paid.

          (h) Buyer or the Companies shall prepare or cause to be prepared and file or cause to be filed
all Non-Income Tax Returns for the Companies for all periods ending prior to the Closing Date that
are required to be filed after the Closing Date. Seller shall cooperate with Buyer in filing and
causing to be filed such returns. Seller shall be responsible for payment of, and shall pay when
due, any Non-Income Taxes shown due on such returns. If, after the Closing Date, Buyer or either
Company pays any such Non-Income Taxes for which Seller is responsible, Seller shall reimburse
Buyer or such Company within fifteen (15) days after the date Seller is notified by Buyer or either
Company that such Taxes were paid.

          (i) Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Companies for all Straddle Periods. All Taxes with respect to the Companies attributable
to Pre-Closing Periods shall be allocated to and paid by Seller, and all Taxes with respect to the
Companies attributable to Post-Closing Periods shall be allocated to and paid by Buyer. In the
case of any Taxes with respect to the Companies for a Straddle Period, the portion of such Taxes
that are allocated to the Pre-Closing Period shall (x) be deemed to be the amount that would be
payable if the relevant Tax period ended as of the Closing Date pursuant to an interim closing of
the books in the case of all Income Taxes with respect to the Companies and any Non-Income Taxes
with respect to the Companies not described in (y) below, and (y) in the case of Non-Income Taxes
with respect to the Companies that cannot be allocated based upon an interim closing of the books
(e.g., property or net worth taxes), be deemed to the amount of such Taxes for the entire Taxable
period multiplied by a fraction, the numerator of which is the total number of days in that portion
of such Taxable period ending on the Closing Date and the denominator of which is the total number
of days in such Tax period. Seller shall pay to Buyer within fifteen (15) days after the date
Seller is notified that Taxes with respect to the Companies attributable to a Straddle Period were
paid by Buyer an amount equal to the portion of such Taxes attributable to the Pre-Closing Period.
All determinations necessary to give effect to the foregoing allocations shall be made in a manner
consistent with the lawful prior practices of Seller.

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          (j) With respect to any Tax Return of the Companies required to be filed by Buyer or the
Companies after the Closing Date for Pre-Closing Periods or Straddle Periods, Seller and its
authorized representatives shall have the right to review and audit such Tax Returns prior to
filing. Buyer and Seller agree to consult and resolve in good faith any issues arising as a result
of the review and audit of any such Tax Return by Seller or its authorized representative. If
Seller and Buyer cannot reach agreement on any issues raised by Seller, any such disagreement shall
be resolved by Deloitte & Touche LLP (which Seller and Buyer each represent and warrant are
independent of such party), or such other independent registered public accounting firm as Seller
and Buyer shall mutually agree. The resolution of such accounting firm shall be final and binding
on the parties and the Companies without any further adjustment. The costs, expenses and fees of
such accounting firm shall be borne equally by Seller and Buyer.

          (k) Buyer covenants that without the prior consent of Seller it will not, and will not cause
or permit the Companies or any Affiliate of Buyer, to change any Tax election or accounting method,
amend any Tax Return, enter into any transaction, or take any action that is inconsistent with the
lawful prior practices of Seller that results in any increased Tax liability of the Companies or
Seller in respect of any Pre-Closing Tax Period; provided, however, Seller’s
consent shall not be unreasonably withheld or delayed if Buyer agrees in writing to indemnify
Seller for the increased Tax liability (including the Tax owed by Seller due to such
indemnification payment). Seller covenants that without the prior written consent of Buyer, it
will not, and will not cause the Companies or any Affiliate of Seller, to change any Tax election
or accounting method, amend any Tax Return, enter into any transaction, or take any action that is
inconsistent with the lawful prior practices of Seller that results in any increased Tax liability
of the Companies or the Buyer in respect of any Post-Closing Tax Period; provided,
however, Buyer’s consent shall not be unreasonably withheld or delayed if Seller agrees in
writing to indemnify Buyer for the increased Tax liability (including the Tax owed by Buyer due to
such indemnification payment).

          (l) Seller shall deliver to Buyer at the Closing, pursuant to Section 1445(b)(2) of the Code
and Treasury Regulation § 1.1445-2(b)(2), a duly executed certification of non-foreign status of
Seller.

          (m) Buyer and Seller agree to furnish or cause to be furnished to each other, upon written
request, as promptly as practicable, such information (including access to books and records) and
assistance relating to the Companies or the Purchased Assets as is reasonably necessary for the
filing of any Tax Return, for the preparation for any audit, and for the prosecution or defense of
any claim, suit or proceeding relating to any proposed adjustment. Buyer and Seller shall
cooperate with each other in the conduct of any audit or other proceedings involving the Companies
or the Purchased Assets for any Tax purposes and each shall execute and deliver such documents as
are necessary to carry out the intent of this subsection. Any Tax audit or other Tax proceeding
shall be deemed to be a third party claim subject to the procedures set forth in Section 11.6 of
this Agreement.

          (n) Buyer shall promptly pay or shall cause prompt payment to be made to Seller of all refunds
of Taxes and interest thereon received by, or credited against the Tax liability of Buyer, any
Affiliate of Buyer or the Companies attributable to Taxes paid by Seller or

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the Companies with respect to any Pre-Closing Tax Period or any portion of the Straddle Period
prior to the Closing Date. If, with respect to a Tax Return required to be filed by the Companies,
Seller reasonably determines that the Companies are entitled to file a claim for refund or an
amended Tax Return with respect to a Pre-Closing Tax Period, Buyer shall, upon Seller’s reasonable
request and at Seller’s expense, cause the Companies to file all such claims or amended Tax
Returns; provided that Buyer shall not be required to cause the Companies to file any such claim or
amended Tax Return if so doing could have the effect of increasing the Tax liability of Buyer or
the Companies in any Post-Closing Tax Period.

          (o) Any tax sharing arrangement between the Companies, on the one hand, and Seller and any of
its respective Affiliates (other than the Companies), on the other hand, shall be terminated with
respect to the Companies as of the Closing Date, and the Companies shall have no further
liabilities to the Seller or its Affiliates under any such tax sharing arrangements.

          (p) Seller shall (i) file sales and use Tax Returns in respect of the VocalData Business,
Taqua, and Santera in each of the states specified on Schedule 5.17(a) by entering into voluntary
disclosure agreements with each state as required and (ii) pay any sales and use Taxes due thereon
which are attributable to Pre-Closing Tax Periods. At least three days before the Closing Date,
Seller shall provide Buyer with a reasonable estimate of the sales and use Taxes expected to be due
on or before the Closing Date, and Buyer agrees to provide reasonable assistance to assist the
Seller to the extent necessary to complete the Tax Return filings and voluntary disclosure
agreements after the Closing Date. Seller shall file, on or before the Closing Date, a 2005
personal property rendition with Collin County Texas for the personal property related to the
Business which is located at 3601 and 3605 E. Plano Parkway, Plano, Texas and shall furnish the
Buyer with a copy of such rendition.

     Section 8.10 Exclusivity.

          (a) From and after the date of this Agreement until the earlier of the Closing Date or
termination of this Agreement pursuant to Article X, Seller shall not, directly or indirectly,
solicit offers from, or in any manner initiate or encourage the submission of any proposal of, any
third party relating to the Purchased Equity or all or substantially all of the Purchased Assets,
including any acquisition structured as a tender offer, exchange offer, merger, consolidation, or
share exchange (such proposals, announcements or transactions being called herein “Acquisition
Proposals”).

          (b) Notwithstanding the foregoing, if the members of the Board of Directors of Seller
reasonably believe that the following is necessary for the purpose of fulfilling their fiduciary
duties, Seller, the Companies and their respective directors, officers and managers may participate
in any discussions or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any Acquisition Proposal initiated by any other
Person that has (i) made a bona fide proposal that the Seller reasonably believes constitutes a
Superior Proposal, and (ii) entered into a confidentiality agreement on terms substantially similar
to the agreement executed by Seller and Buyer, but allows Seller to comply with this Agreement.
Seller shall be permitted to direct its officers and other employees, agents, advisors

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and counsel to cooperate with and be reasonably available to consult with any such third party
under the circumstances described in this Section 8.10. Notwithstanding anything to the contrary
in this Agreement, Seller’s rights under this Section 8.10(b) and under Section 8.10(d) shall
terminate and be of no further force or effect at 11:59 p.m. Eastern time on April 3, 2007 (the
“End Time”), and any and all activities, if any, of Seller, the Companies and their respective
directors, officers and managers that were previously occurring pursuant to and in accordance with
this Section 8.10(b) shall immediately cease at the End Time.

          (c) Seller will notify Buyer as promptly as practicable (but in any event within 48 hours)
after receipt of any Acquisition Proposal, or any material modification of or material amendment to
any Acquisition Proposal, or if Seller or any of its Affiliates conduct any discussions or
negotiations concerning any Acquisition Proposal.

          (d) Seller may enter into a letter of intent, memorandum of understanding, acquisition
agreement or similar agreement in connection with any Superior Proposal and terminate this
Agreement if and only if (i) Seller exercises these rights prior to the End Time specified in
Section 8.10(b), (ii) the Board of Directors approves the Superior Proposal, (iii) Seller has
complied with this Section 8.10, (iv) at least five business days have passed from the date Buyer
received the notice set forth in Section 8.10(c), (v) Seller provides Buyer written notice of its
decision to accept the Superior Proposal, and (vi) with the notice identified in the preceding
clause Seller delivers to Buyer the Termination Fee.

          (e) Seller will, and will cause its Subsidiaries and their respective officers, directors,
agents and representatives to, immediately cease and cause to be terminated any existing
discussions or negotiations with any Persons (other than Buyer and its representatives) conducted
heretofore with respect to any Acquisition Proposal. Seller agrees not to, and to cause its
Subsidiaries not to, release any third party from the confidentiality and stand still provisions of
any agreement to which Seller or its Subsidiaries is a party or becomes a party. Seller will use
reasonable efforts to ensure that the officers, directors and all employees agents and
representatives of the Seller or its Subsidiaries are aware of the restrictions in this Section
8.10 as reasonably necessary to avoid violations thereof. Any violation of the restrictions set
forth in this Section 8.10 by any officer, director, employee, agent or representative (including
any investment banker, financial advisor, attorney, accountant, or other retained representative)
of the Seller will be deemed to be a breach of this Section 8.10 by the Seller.

     Section 8.11 Investor Rights Agreement. At the Closing, Buyer will provide for Seller, and
Seller will agree, to become a party to: (i) the Investors’ Rights Agreement pursuant to the terms
of that certain Amendment No. One to Ninth Amended and Restated Investors’ Rights Agreement dated
as of March 20, 2007 by and among the parties to the Investor Rights Agreement and (ii) the Co-Sale
Agreement pursuant to the terms of that certain Amendment No. One to Ninth Amended and Restated
First Refusal and Co-Sale Agreement dated as of March 20, 2007 by and among the parties to the
Co-Sale Agreement.

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     Section 8.12 Notice of Developments(a) .

          (a) Prior to Closing, Seller shall promptly notify Buyer in writing of any development to the
knowledge of Seller causing a breach of any of the representations and warranties of Seller in
Article V above. No later than five business days prior to the anticipated Closing Date, Seller
shall deliver to Buyer updated Disclosure Schedules to reflect any changes occurring following the
date of this Agreement, which updated Schedules shall be deemed to modify the representations and
warranties of Seller in this Agreement unless such changes would have a Material Adverse Effect, in
which case Buyer’s sole remedy is to terminate the Agreement in accordance with Section 10.1(d).

          (b) Prior to Closing, Buyer shall promptly notify Seller in writing of any development to the
knowledge of Buyer causing a breach of any of the representations and warranties of Buyer in
Article VII above. No later than five business days prior to the anticipated Closing Date, Buyer
shall deliver to Seller updated Buyer Disclosure Schedules to reflect any changes occurring
following the date of this Agreement, which updated Buyer Disclosure Schedules shall be deemed to
modify the representations and warranties of Buyer in this Agreement unless such changes would have
a Buyer Material Adverse Effect, in which case, Seller’s sole remedy is to terminate the Agreement
in accordance with Section 10.1(d).

     Section 8.13 Remittances of Receivables. After the Closing, if Seller receives any
payments on accounts receivable or other amounts that are otherwise properly due and owing to the
Companies or Buyer, or otherwise included in the Purchase Assets, Seller shall promptly remit such
amounts to Buyer promptly after receipt of such funds.

     Section 8.14 Bulk Transfer Laws. Buyer acknowledges that Seller has not taken, and
does not intend to take, any action required to comply with any applicable bulk transfers laws or
similar laws.

     Section 8.15 Covenant Not to Solicit. Beginning on the Closing Date and ending on the
second anniversary of the Closing Date, Seller shall not, directly or indirectly, solicit the
employment of any Business Employee who commences employment with Buyer or who continues employment
with the Companies from and after the Closing Date. This restriction shall not apply to any
Business Employee whose employment with the Buyer or the Companies is terminated by Buyer or the
Companies (or any Affiliate thereof) after the Closing. Beginning on the Closing Date and ending
on the second anniversary of the Closing Date, Buyer shall not, directly or indirectly, solicit the
employment of any employee of Seller or any Affiliate of Seller. This restriction shall not apply
to any employee of Seller or any Affiliate of Seller whose employment with Seller or such Affiliate
is terminated by Seller or such Affiliate after the Closing.

     Section 8.16 Shared Contracts. Set forth on Schedule 8.16 hereto is a list of
Contracts to which Seller is a party and which Seller relies upon in the operation of the Business
and its other businesses (collectively, the “Shared Contracts”). None of the Shared
Contracts will be included in the Purchased Assets because neither Company is a party to them and
because Seller will continue to rely upon them to operate its retained businesses. Seller is
providing this list of

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Shared Contracts so that Buyer can assess whether and/or how to replace the Shared Contracts
to support the operation of the Business after the Closing (a copy of each Shared Contract was made
available to the Buyer in Seller’s online data room). For a period of six months after the Closing
and at Buyer’s request, Seller shall, at Buyer’s sole cost and expense and in such manner as Seller
may reasonably determine (but not, for example, through the offering of any guarantee), cooperate
with and assist Buyer and the Companies in their efforts to enter into new contractual arrangements
with the other parties to such Shared Contracts. No commitments or representations are made by
Seller that Buyer or the Companies will be able to enter into new contractual arrangements with
such parties, or that any such new contractual arrangements will be on terms and conditions and at
prices as favorable as the Shared Contracts. For a period of six months after the Closing, Seller
will cooperate in good faith with Buyer, at Buyer’s sole cost and expense, after Closing to assist
Buyer in seeking a partial assignment for Shared Contracts including, at Buyer request, sending to
each other party or parties to any Shared Contracts a notice in the form reasonably acceptable to
Seller requesting such partial assignment.

     Section 8.17 Non-Development Agreement. For a period of two years from and after the
Closing Date, Seller shall not develop or build Products as they exist on the Closing Date as
identified by the part numbers listed on Schedule 8.17.

     Section 8.18 Seller’s Anti-Anti-Dilution Rights. On and after the Closing Date, Buyer
covenants and agrees that it shall not, either directly or indirectly, without the prior written
consent of Seller, purchase, redeem or otherwise acquire any outstanding securities of Buyer, or
take any other action, where, immediately following the date of such purchase, redemption,
acquisition or other action, Seller would own 20% or more of the Vested Voting Equity outstanding
as of the date of such purchase, redemption, acquisition or other action (the “Remaining Vested
Voting Equity”), unless immediately prior to such purchase, redemption or other acquisition, Seller
already owned 20% or more of the Remaining Vested Voting Equity. If an event occurs after Closing
which for any reason shall cause Seller’s equity interest in Buyer to exceed 19.99% of the
Remaining Vested Voting Equity, then Seller shall be deemed to have put and sold to Buyer,
effective immediately prior to such event, such number of Buyer Investment Shares and/or Dilution
Protection Shares as shall result in Seller’s maintaining ownership of 19.99% of the Remaining
Vested Voting Equity. Buyer shall within five days after the occurrence of any such event pay to
Seller in cash the purchase price for such Buyer Investment Shares and/or Dilution Protection
Shares, which purchase price shall be equal to the fair market value of such Buyer Investment
Shares and/or Dilution Protection Shares on the last date the value of such Buyer Investment Shares
and/or Dilution Protection Shares is determined by a qualified third party consultant selected by
Buyer in its reasonable discretion. The foregoing put provisions shall not constitute Seller’s
exclusive remedy for any breach by Buyer of its covenants in the first two sentences of this
Section 8.18.

     Section 8.19 Certain Post-Closing Covenants of Buyer. Buyer hereby covenants and
agrees that following the Closing Date:

          (a) Buyer will furnish, as soon as practicable after the end of each quarter, and in any event
within forty five (45) days thereafter, consolidated balance sheets of

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Buyer and Buyer’s subsidiaries, if any, as at the end of each such quarter, and consolidated
statements of income and of statements of cash flow and stockholder’s equity of Buyer and Buyer’s
subsidiaries, if any, for each such quarter, and for the current fiscal year to date, unaudited,
but prepared in accordance with GAAP, consistently applied, all in reasonable detail and certified,
subject to changes resulting from year-end audit adjustments, by the chief financial officer of
Buyer; provided, however, that such reports need not include all footnotes required
under GAAP.

          (b) Buyer will furnish, as soon as practicable after the end of each fiscal year, and in any
event within one hundred and twenty (120) days thereafter, consolidated balance sheets of Buyer and
its subsidiaries, if any, as at the end of such fiscal year, and consolidated statements of income
and statements of cash flow and stockholders’ equity of Buyer and its Subsidiaries, if any, for
such year, prepared in accordance with GAAP, consistently applied, and setting forth in each case
in comparative form the financial statements for the previous fiscal year, all in reasonable detail
and audited by independent public accountants of recognized standing selected by Buyer.

          (c) Buyer will furnish such other information that is provided to shareholders generally;
provided, however, that Buyer shall not be obligated pursuant to this Section 8.19
to disclose or provide any information if such action would result in a publication of such
information or result in a breach of any obligation of Buyer to protect and/or keep secret such
information unless Seller has entered into a standard confidentiality agreement with respect
thereto.

          (d) In connection with a redemption of Buyer Investment Shares or Dilution Protection Shares
pursuant to Section 8.18 of this Agreement or as reasonably requested by Seller in order to comply
with Seller’s public reporting obligations, Buyer will furnish any valuation reports related to
the Buyer (e.g., business enterprise valuations, fair market valuations of common stock in support
for the exercise price of stock options or similar instruments, etc.); provided that
Seller shall enter into an appropriate non-disclosure agreement with the provider of such
valuation reports.

          (e) Buyer will furnish to Seller, as soon as available, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for the next fiscal year,
including cash flow projection and operating budget, prepared on a monthly basis, including
balance sheets and income statements for such months and, as soon as prepared, any other budgets
or revised budgets prepared by Buyer.

          (f) Without Seller’s consent, Buyer will not enter into any amendment or modification to or
waiver of the provisions of the Investor Rights Agreement, as amended to date or in the future, or
to the Co-Sale Agreement, as amended to date or in the future, that would adversely affect the
rights of Seller thereunder in a manner disproportionate to the rights of other holders of
Genband Common Stock that are parties to these agreements. Notwithstanding the foregoing, Buyer
shall have the right to terminate Seller’s Board observer rights set forth in Section 2.8(c) of
the Investor Rights Agreement, as amended, upon the termination of the rights of Siemens and the
Alcatel Group set forth in Sections 2.8(a) and (b)

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of the Investor Rights Agreement, and all other similar Board observer rights granted to any
other Person

     Section 8.20 Facilities Consolidation Costs. Following the Closing and in accordance
with the billing, payment and other additional terms set forth in the Transition Services
Agreement, Seller agrees to reimburse Buyer for up to the maximum aggregate amount of $800,000 for
actual and reasonable out-of-pocket expenses incurred by Buyer during the 180-day period following
the Closing Date in effecting the relocation and consolidation of Business Employees within the
Plano Facilities. Such reimbursable expenses shall include expenses incurred in (i) moving
employees, cubicles and labs from one Plano Facility to the other, (ii) reorganizing workspaces,
(iii) constructing conference rooms and demising walls, but in each case only to the extent such
expenses relate to the consolidation of facilities to accommodate the relocation of Business
Employees.

ARTICLE IX.

CONDITIONS TO OBLIGATIONS OF THE PARTIES

     Section 9.1 Conditions to Each Party’s Obligation. The respective obligation of each
party to consummate the transactions contemplated herein is subject to the satisfaction at or prior
to the Closing of the following conditions:

          (a) No statute, rule or regulation shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits or restricts the consummation of the
transactions contemplated hereby;

          (b) There shall not be in effect any judgment, order, injunction or decree of any court of
competent jurisdiction enjoining the consummation of the transactions contemplated hereby;

          (c) There shall not be any suit, action, investigation, inquiry or other proceeding
instituted, pending or threatened by any governmental or other regulatory or administrative agency
or commission which seeks to enjoin or otherwise prevent consummation of the transactions
contemplated hereby;

          (d) All necessary regulatory notices, consents, authorizations and other approvals required
for the consummation of the transactions contemplated herein shall have been obtained and any
waiting periods applicable to the transactions contemplated by this Agreement under applicable U.S.
antitrust or trade regulation laws and regulations, including under the H-S-R Act, shall have
expired or been terminated; and

     Section 9.2 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated hereby are further subject to the satisfaction (or waiver)
at or prior to the Closing of the following conditions:

          (a) The representations and warranties of Buyer contained in Article VII of this Agreement
shall be true and correct in all material respects at the date hereof and as of the

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Closing as if made at and as of such time, except for changes permitted or contemplated hereby
and except for representations and warranties which are as of a specific date;

          (b) Buyer shall have performed in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Closing pursuant to the terms hereof;

          (c) Buyer shall have delivered to Seller those items set forth in Section 3.4 hereof;

          (d) The respective landlords for the Plano Facilities shall have consented in writing to the
Plano Lease Assignment and to the Plano Sublease;

          (e) Buyer shall not have suffered a Buyer Material Adverse Effect; and

          (f) Buyer shall have delivered to Seller a Certificate executed by an executive officer of
Buyer, dated as the Closing Date, to the effect that the conditions set forth in Sections 9.2(a),
(b) and (e) have been satisfied.

     Section 9.3 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby are further subject to the satisfaction (or waiver)
at or prior to the Closing of the following conditions:

          (a) The representations and warranties of Seller contained in Article V of this Agreement
shall be true and correct in all material respects at the date hereof and as of the Closing as if
made at and as of such time, except for changes permitted or contemplated hereby and except for
representations and warranties which are as of a specific date;

          (b) Seller shall have performed in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Closing pursuant to the terms hereof;

          (c) Seller shall have delivered to Buyer those items set forth in Section 3.3 hereof;

          (d) The Business shall not have suffered a Material Adverse Effect; and

          (e) Seller shall have delivered to the Buyer a Certificate executed by an executive officer of
Seller, dated as the Closing Date, to the effect that the conditions set forth in Section 9.3(a),
(b) and (d) have been satisfied.

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ARTICLE X.

TERMINATION; AMENDMENT; WAIVER

     Section 10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned prior to the Closing as follows:

          (a) At any time, by mutual written consent of Seller and Buyer;

          (b) By Buyer, on the one hand, or by Seller, on the other hand, if any court of competent
jurisdiction in the United States or any United States governmental body shall have issued a final
and non-appealable judgment, order, injunction, decree, or ruling permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;
provided that no party hereto affiliated with the person who brought the action seeking the
permanent enjoinment of the transactions contemplated hereby may seek termination of this Agreement
pursuant to this Section 10.1(b);

          (c) If the transactions contemplated hereby or any of the conditions to Closing hereunder
become impossible to perform or obtain, as applicable, provided that no party hereto who
caused such impossibility may seek termination of this Agreement pursuant to this Section 10.1(c);

          (d) Buyer may terminate this Agreement by giving written notice to Seller at any time prior to
the Closing in the event (i) Seller has given Buyer any notice pursuant to Section 8.12(a) and (ii)
the development that is the subject of the notice has had a Material Adverse Effect. Seller may
terminate this Agreement by giving written notice to Buyer at any time prior to the Closing in the
event (i) Buyer has given Seller any notice pursuant to Section 8.12(b) above and (ii) the
development that is the subject of the notice has had a Buyer Material Adverse Effect.

          (e) Buyer may terminate this Agreement by giving written notice to Seller at any time prior to
the Closing in the event Seller has breached any representation, warranty or covenant contained in
this Agreement in any material respect, Buyer has notified Seller of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the notice of breach;

          (f) Seller may terminate this Agreement by giving written notice to Buyer at any time prior to
the Closing in the event Buyer has breached any representation, warranty or covenant contained in
this Agreement in any material respect, Seller has notified Buyer of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the notice of breach; or

          (g) At any time on or after May 31, 2007 (or such later date as Seller and Buyer shall have
agreed in writing), by either Seller, on the one hand, or Buyer, on the other hand, if the Closing
shall not have occurred on or prior to such date (or such later date as Seller and Buyer shall have
agreed in writing); provided that no party hereto may seek termination of this Agreement
pursuant to this Section 10.1(g) if the failure of any condition precedent under Article

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IX results primarily from such party breaching any representation, warranty or covenant
contained in this Agreement.

          (h) Prior to the End Time by Seller in accordance with Section 8.10.

     Section 10.2 Procedure and Effect of Termination. In the event of the termination of
this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 10.1
hereof, written notice thereof shall forthwith be given by the party so terminating to the other
party and this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by Seller, on the one hand, or Buyer, on the other hand. If this
Agreement is terminated pursuant to Section 10.1 hereof:

          (a) Each party shall redeliver to the party furnishing the same all documents, work papers and
other materials received from the other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, and all confidential information received by
any party hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement and Section 8.2(c) hereof;

          (b) All filings, applications and other submissions made pursuant hereto shall be withdrawn
from the agency or other person to which made; and

          (c) There shall be no liability or obligation hereunder on the part of Seller or Buyer or any
of their respective directors, officers, employees, managers, members, affiliates, controlling
persons, agents or representatives, except that Seller or Buyer, as the case may be, may have
liability to the other party if the basis of termination is a willful, material breach by Seller or
Buyer, as the case may be, of one or more of the provisions of this Agreement. The obligations
provided for in Sections 8.2(c), 10.2(a) and 10.3 and Article XII hereof shall survive any
termination of this Agreement.

     Section 10.3 Reimbursement Fee. In the event this Agreement is terminated by the
applicable party pursuant to Sections 10.1(c), (d), (e) or (f) hereof, where the failure giving
rise to such right of termination shall have been caused in whole or in part by any action or
inaction within the control of the other party (it being understood that any action or inaction
outside the control of any party shall not come within this Section 10.3), the non-terminating
party shall within five business days following the termination of this Agreement pay the
terminating party the amount equal to reimbursement of out-of-pocket fees and expenses incurred by
the terminating party in connection with the transactions contemplated by this Agreement.

ARTICLE XI.

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

     Section 11.1 Survival of Representations, Warranties and Agreements.

          (a) The representations and warranties made by Seller in Article V shall survive for a period
of twelve (12) months after the Closing Date, provided, however, that the
representations and warranties contained in Sections 5.9(c) (Title) and 5.17 (Taxes) shall survive

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for a period of twenty four (24) months after the Closing Date (such survival periods being
referred to herein as the applicable “Indemnity Period”); provided further,
however, that any obligations under Section 11.2 with respect to breaches of
representations and warranties made by Seller shall not terminate with respect to any Damages as to
which the Person to be indemnified shall have given notice (stating in reasonable detail the basis
of the claim for indemnification) to the indemnifying party in accordance with Section 11.2 before
the termination of the applicable Indemnity Period.

          (b) The representations and warranties made by Buyer in Article VII shall survive for a period
of twelve (12) months after the Closing Date (also referred to herein as the “Indemnity
Period”); provided, however, that any obligations under Section 11.3 with
respect to breaches of representations and warranties made by Buyer shall not terminate with
respect to any Damages as to which the Person to be indemnified shall have given notice (stating in
reasonable detail the basis of the claim for indemnification) to the indemnifying party in
accordance with Section 11.3 before the termination of the applicable Indemnity Period.

          (c) The parties intend to shorten the statute of limitations and agree that no claims or
causes of action may be brought against Seller or Buyer based upon, directly or indirectly, any of
the representations or warranties hereof after the Closing or after any applicable Indemnity Period
or, except as provided in Section 10.2(c) hereof, after any termination of this Agreement.

          (d) This Section 11.1 shall not limit any covenant or agreement of the parties which
contemplates performance after the Closing, including the covenants and agreements set forth in
Sections 4.1, 8.6, 8.7, 8.8, 8.9, 8.18 and 8.19 hereof, which shall survive the Closing until
expiration in accordance with their terms or any applicable statute of limitations.

          (e) Except as provided in Section 10.2(c) hereof, the representations, warranties, covenants
and agreements shall not survive any termination of this Agreement pursuant to Section 10.1.

          Section 11.2 Seller’s Agreement to Indemnify.

          (a) Subject to the terms and conditions set forth herein, from and after the Closing, Seller
shall indemnify and hold harmless Buyer and its directors, officers, employees, affiliates,
controlling persons, agents and representatives and their successors and assigns (collectively, the
“Buyer Indemnitees”) from and against all liability, demands, claims, actions or causes of
action, assessments, losses, damages, costs and expenses (including the reasonable fees and
expenses of attorneys and experts) (collectively “Damages”) asserted against or incurred by
any Buyer Indemnitee as a result of or arising out of:

          (i) a breach by Seller of any representation or warranty contained in Article V of this
Agreement when made or at and as of the Closing,

          (ii) any breach or violation of any covenant or agreement made in this Agreement by Seller to
be performed after the Closing,

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          (iii) any Excluded Liabilities,

          (iv) any failure by Seller to deliver any of the Purchased Assets, or

          (v) the ownership, use or possession of the Excluded Assets.

          (vi) any Taxes imposed on or with respect to the Companies which are attributable to any
Pre-Closing Tax Period or result from any transaction in a Pre-Closing Tax Period, any Taxes
attributable to the ownership or operation of the Purchased Assets and/or the VocalData Business
during any Pre-Closing Tax Period, any liability for Taxes under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign tax Law) or as a transferee or
successor, and any Taxes resulting from a breach of Seller’s representations and warranties in
Section 5.17 (except to the extent such Taxes were already paid or reimbursed by Seller pursuant to
Section 8.9).

          (b) Seller’s obligations to indemnify the Buyer Indemnitees pursuant to Section 11.2(a)(i)
hereof with respect to a breach of a representation or warranty contained in this Agreement are
subject to the following limitations:

          (i) No indemnification shall be made by Seller unless the aggregate amount of Damages exceeds
$500,000 and, in such event, indemnification shall be made by Seller from the first dollar of such
Damages.

          (ii) In no event shall Seller’s aggregate obligation to indemnify the Buyer Indemnitees exceed
25% of the total value of: (A) the Buyer Investment Shares to be received at Closing and (B) the
shares of GenBand Common Stock issued pursuant to the Dilution Protection Right, or, in the case of
fraud, 100% of the total value of: (A) the Buyer Investment Shares to be received at Closing and
(B) the shares of GenBand Common Stock issued pursuant to the Dilution Protection Right, whether
paid in cash, Escrow Shares in accordance with the Escrow Agreement, and/or other Buyer Investment
Shares or Dilution Protection Shares as contemplated by Section 11.2(c) below.

          (c) Notwithstanding anything to the contrary herein, Seller may, at its election and in its
sole discretion, elect to satisfy any indemnification obligations to any Buyer Indemnitee under
this Article XI by: (i) payment in cash, (ii) delivery of Escrow Shares in accordance with the
Escrow Agreement; and/or (iii) other Buyer Investment Shares or Dilution Protection Shares, in any
combination of the foregoing determined by Seller having a value equal to the amount of the
indemnification obligation. Escrow Shares, Buyer Investment Shares and/or Dilution Protection
Shares delivered for purposes of satisfying any such indemnification obligation of Seller and/or
referenced for purposes of computing the value of any indemnity caps and limitations under this
Article 11 shall be valued at one dollar and forty-four cents ($1.44) per Escrow Share, Buyer
Investment Share and/or Dilution Protection Share, as applicable. Subject to the foregoing and
during the term of the Escrow Agreement, Seller shall deliver Escrow Shares in satisfaction of such
indemnification obligation pursuant to and in accordance with the terms of the Escrow Agreement.

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          (d) The amount of any Damages shall be reduced by any amount received by a Buyer Indemnitee
with respect thereto under any insurance coverage or from any other party alleged to be responsible
therefor. The Buyer Indemnitees shall use Reasonable Efforts to collect any amounts available
under such insurance coverage and from such other party alleged to have responsibility. If a Buyer
Indemnitee receives an amount under insurance coverage directly as a result of Damages at any time
subsequent to any indemnification provided by Seller pursuant to this Section 11.2, then such Buyer
Indemnitee shall promptly reimburse Seller for any payment made by Seller in connection with such
indemnification up to such amount received by the Buyer Indemnitee.

          (e) The caps applicable to Seller’s obligation to indemnify the Buyer Indemnitees under
Section 11.2(b)(ii) are modified as expressly described below, and all other terms of Seller’s
indemnity shall remain unchanged in all other respects:

     (1) Monetary damages under Section 11.2(a)(ii) shall be subject to a cap of
100% of the total value of: (A) the Buyer Investment Shares to be received at
Closing and (B) the shares of GenBand Common Stock issued pursuant to the Dilution
Protection Right (provided that this Section 11.2 shall not limit Buyer’s ability
to seek injunctive relief, when appropriate);

     (2) Sections 11.2(a)(iii), 11.2(a)(v), and 11.2(a)(vi) shall not be subject to
this cap.

     Section 11.3 Buyer’s Agreement to Indemnify. Subject to the terms and conditions set
forth herein, from and after the Closing, Buyer shall indemnify and hold harmless Seller and its
directors, officers, employees, affiliates, controlling persons, agents and representatives and
their successors and assigns (collectively, the “Seller Indemnitees”) from and against all
Damages asserted against or incurred by any Seller Indemnitee as a result of or arising out of:

          (a) a breach of any representation or warranty contained in Article VII of this
Agreement when made or at and as of the Closing,

          (b) any breach or violation of any covenant or agreement made in this Agreement by
Buyer to be performed after the Closing, (with monetary damages subject to a cap equal to
100% of the total value of: (A) the Buyer Investment Shares to be received at Closing and
(B) the shares of GenBand Common Stock issued pursuant to the Dilution Protection Right and
provided that Seller may seek injunctive relief, when appropriate),

          (c) any Assumed Liabilities, and

          (d) events occurring or circumstances existing in connection with the Purchased Equity,
the Purchased Assets or the conduct and operation of the Business, including without
limitation the ownership, possession and use of the Purchased Assets prior to, at or after
the Closing (except in each case to the extent that Buyer is expressly entitled to be
indemnified pursuant to Section 11.2).

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     Section 11.4 Notice of Claims.

          (a) Upon obtaining knowledge of any Damages, the party entitled to indemnification (the
“Injured Party”) shall promptly deliver written notice (a “Notice of Claim”) to the
party liable for such indemnification (the “Indemnifying Party”) which Notice of Claim
shall set forth in reasonable detail and to the extent then known the basis of the claim for
Damages and, to the extent reasonably practicable, a reasonable estimate of the amount thereof.
The failure of an Injured Party to timely deliver a Notice of Claim to the Indemnifying Party shall
not release the Indemnifying Party from its indemnity obligations under this Article XI, except to
the extent that the Indemnifying Party is materially prejudiced in its ability to defend such
claim.

          (b) If no third party claim is involved, the Injured Party and Indemnifying Party shall
attempt for not less than thirty (30) days to negotiate a mutually satisfactory resolution of the
matter set forth in a Notice of Claim. In the event such parties are not able to agree on a
mutually satisfactory resolution, either party may seek to resolve the dispute by litigation in any
court of competent jurisdiction in accordance with the provisions of Section 12.8 hereof.

     Section 11.5 General Limitations; Exclusive Remedy.

          (a) In the case of claims made under Sections 11.2(a)(i) or 11.3(a), the Indemnifying Party
shall be obligated to indemnify the Injured Party only for those claims giving rise to Damages as
to which the Injured Party has given to the Indemnifying Party written notice thereof prior to the
end of the Indemnity Period.

          (b) The provisions of this Article XI shall constitute the exclusive remedy of the parties
with respect to any and all claims, losses, damages, liabilities, expenses or costs resulting from
or arising out of any breach of any representation, warranty, or covenant of this Agreement, or
otherwise resulting from or arising out of the transactions contemplated hereby and which may be
asserted on or after the Closing.

     Section 11.6 Third-Party Indemnification.

          (a) If the Injured Party settles or compromises any third-party claims prior to giving a
Notice of Claim to the Indemnifying Party, the Indemnifying Party shall be released from its
indemnity obligation.

          (b) With respect to any action or any claim set forth in a Notice of Claim relating to a
third-party claim, the Indemnifying Party may defend, in good faith and at its expense, any such
claim or demand, and the Injured Party, at its expense, shall have the right, but not the
obligation, to participate in (but not control) at its expense in the defense of any such
third-party claim. So long as the Indemnifying Party is defending any such third-party claim, the
Injured Party shall not settle or compromise such third-party claim without the consent of the
Indemnifying Party which consent shall not be unreasonably withheld. If such claim is settled by
the Injured Party without the Indemnifying Party’s consent, the Injured Party shall be deemed to
have waived all rights hereunder for money damages arising out of such claim. The

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Indemnifying Party may settle or compromise such third-party claim without the consent of the
Injured Party, if (i) the settlement or compromise involves only the payment of monetary damages
and included in such settlement or compromise as an unconditional term thereof is the delivery to
Injured Party of a written release from all liability in respect of such third-party claim. and
(ii) in the case of a claim relating to Taxes, such settlement or compromise is on a basis that
would not increase any tax liabilities incurred by, or adversely impact any tax attributes of, the
Injured Party or its Affiliates (unless the Indemnifying Party is indemnifying the Injured Party
and its Affiliates for any such increase in tax liabilities or adverse impact on tax attributes).
Otherwise, the Indemnifying Party may not settle or compromise such third-party claim without the
consent of the Injured Party, which consent shall not be unreasonably withheld. The Injured Party
shall make available to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any third-party claim. The Injured Party shall
cooperate in good faith with the Indemnifying Party in the defense of all such claims.

          (c) If the Indemnifying Party fails to assume the defense of any such third-party claims,
within thirty (30) days after receipt of a Notice of Claim (or such shorter period of time that the
Injured Party may be required to respond to any suit or governmental action), the Injured Party
shall have the right to undertake the defense, settle or compromise any such third-party claim at
the risk and expense of the Indemnifying Party, subject to the right of the Indemnifying Party to
assume the defense of such claim at any time prior to settlement, compromise or final determination
thereof. The failure of the Indemnifying Party to respond in writing to the aforesaid notice of
the Injured Party with respect to such third-party claim within thirty (30) days after receipt
thereof shall be deemed an election not to defend same. The Indemnifying Party will not, however,
be responsible for any Damages if and to the extent that they arise from action taken or omitted to
be taken by the Injured Party in bad faith, fraudulently, negligently or as a result of a breach of
this Agreement by the Injured Party.

ARTICLE XII.

MISCELLANEOUS

     Section 12.1 Fees and Expenses. Except as otherwise expressly provided herein, Seller
and Buyer shall each bear its own costs, fees and expenses in connection with, or in anticipation
of, this Agreement and the consummation of the transactions contemplated hereby, including fees and
expenses of attorneys, accountants and financial advisors. In addition, each of Seller, on the one
hand, and Buyer, on the other hand, shall indemnify and hold harmless the other party from and
against any and all claims or liabilities for financial advisory and finders’ fees incurred by
reason of any action taken by such party or otherwise arising out of the transactions contemplated
by this Agreement by any person claiming to have been engaged by such party.

     Section 12.2 Further Assurances. From time to time after the Closing Date, at the
reasonable request of another party hereto and at the expense of the party so requesting, each of
the parties hereto shall execute and deliver to such requested party such documents and take such
other action as such requesting party may reasonably request in order to consummate more
effectively the transactions contemplated hereby. Any such documents executed or acts taken by

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either party at the request of the other party shall be at the requesting party’s expense and
the other party shall not, in connection therewith or as a result thereof, incur any legal
liability beyond that provided for in this Agreement.

     Section 12.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be in writing and may
be given by any of the following methods: (a) personal delivery; (b) facsimile transmission; (c)
registered or certified mail, postage prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its address or facsimile number given
below (or at such other address or facsimile number for such party as shall be specified by notice
given hereunder):

If to Buyer to:

GENBAND Inc.

3701 W. Plano Parkway, Suite 200

Plano, Texas 75075-7833

Attention: Ms. Jan Gaulding

Facsimile: (972) 521-5801

with a copy to:

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas 75201-2980

Attention: Don McDermett

Facsimile: 214-661-4854

Telephone: 214-953-6454

If to Seller to:

Tekelec

5200 Paramount Parkway

Morrisville, NC 27560

Attn: Legal Department

Facsimile: 919-461-6886

Telephone: 919-466-3193

with a copy to:

Bryan Cave LLP

120 Broadway, Suite 300

Santa Monica, CA 90401

Attn: Katherine F. Ashton

Facsimile: 310-576-2200

Telephone: 310-576-2100

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All such notices, requests, demands waivers and communications shall be deemed received upon (i)
actual receipt thereof by the addressee, (ii) actual delivery thereof to the appropriate address or
(iii) in the case of facsimile transmission, upon transmission thereof by the sender and issuance
by the transmitting machine of a confirmation slip that the number of pages constituting the notice
have been transmitted without error.

     Section 12.4 Severability. Should any provision of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the validity or enforceability of
any of the other provisions of this Agreement, which remaining provisions shall remain in full
force and effect and the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable shall be valid and
enforced to the fullest extent permitted by law.

     Section 12.5 Binding Effect; Assignment. This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or indirectly, including by
operation of law, by any party hereto without the prior written consent of the other party hereto.

     Section 12.6 No Third-Party Beneficiaries. This Agreement is solely for the benefit
of Seller, and its successors and permitted assigns, with respect to the obligations of Buyer under
this Agreement, and for the benefit of Buyer, and its respective successors and permitted assigns,
with respect to the obligations of Seller, under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement,
cause of action or other right, except for the parties entitled to the benefits of and Sections
11.2 and 11.3.

     Section 12.7 Interpretation.

          (a) The article and section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.

          (b) The parties have participated substantially in the negotiation and drafting of this
Agreement and agree that no ambiguity herein should be construed against the draftsman.

          (c) Each time that this Agreement provides that one party must obtain the consent of the
other, such consent may not be unreasonably withheld, delayed or conditioned, unless otherwise
specified. As used in this Agreement and the other Transaction Documents, accounting terms not
otherwise defined, or only partially defined, shall have the meanings given to them under GAAP. To
the extent that the definitions of accounting terms in the Transaction Documents are inconsistent
with the meanings of such terms under GAAP, the definitions contained in the Transaction Documents
shall control.

     Section 12.8 Jurisdiction and Consent to Service. Seller agrees: (a) to bring any
suit, action or proceeding arising out of or relating to this Agreement solely in the state or
Federal

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courts having competent jurisdiction within Collin County in the State of Texas or the United
States District Court in the Northern District of Texas; (b) consents to the exclusive jurisdiction
of each such court in any such suit, action or proceeding relating to or arising out of this
Agreement; (c) waives any objection which it may have to the laying of venue in any such suit,
action or proceeding in any such court; and (d) agrees that service of any court paper may be made
in such manner as may be provided under applicable laws or court rules governing service of
process. Buyer agrees: (1) to bring any suit, action or proceeding arising out of or relating to
this Agreement solely in the state or Federal courts having competent jurisdiction within Wake
County in the State of North Carolina or the United States District Court in the Middle District of
North Carolina; (2) consents to the exclusive jurisdiction of each such court in any such suit,
action or proceeding relating to or arising out of this Agreement; (3) waives any objection which
it may have to the laying of venue in any such suit, action or proceeding in any such court; and
(4) agrees that service of any court paper may be made in such manner as may be provided under
applicable laws or court rules governing service of process.

     Section 12.9 Attorneys’ Fees. In the event that litigation arises in connection with
enforcement of any provision of this Agreement, the prevailing party in such litigation shall be
entitled to recover its reasonable attorneys’ fees and expenses, in addition to any other relief to
which it may be deemed entitled.

     Section 12.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof) as to all matters, including but
not limited to matters of validity, construction, effect, performance and remedies.

     Section 12.11 Specific Performance. The parties acknowledge and agree that any breach
of the terms of this Agreement would give rise to irreparable harm for which money damages would
not be an adequate remedy and accordingly the parties agree that, in addition to any other
remedies, each shall be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as a remedy.

     Section 12.12 Entire Agreement. This Agreement, the Confidentiality Agreement, the
Schedules, the Disclosure Schedules, the Transition Services Agreement, the License Agreement, the
Investors’ Rights Agreement, the Escrow Agreement, the Co-Sale Agreement, and the other agreements
and documents referred to herein or delivered pursuant hereto which form a part hereof constitute
the entire agreement among the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, between the parties or any of
them with respect to the subject matter hereof.

     Section 12.13 Amendment, Modification and Waiver. This Agreement may be amended,
modified or supplemented at any time by written agreement of Seller and Buyer. Any failure of
Seller or Buyer to comply with any term or provision of this Agreement may be waived, with respect
to the Buyer, on the one hand, by Seller, and with respect to Seller, on the other hand, by Buyer,
by an instrument in writing signed by or on behalf of the appropriate party,

72

 

but such waiver of failure to insist upon strict compliance with such term or provision shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply.

     Section 12.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but which together shall constitute one and the same
agreement.

* * * * * * * *

(signatures appear on next page)

73

 

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

	 	 	 	 	 	 	 	 	 
	 	 	Seller:	 	TEKELEC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Franco Plastina	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: Franco Plastina	 	 
	 	 	 	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Buyer:	 	GENBAND Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Charles Vogt	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: Charles Vogt	 	 
	 	 	 	 	Title: President and Chief Executive Officer	 	 

74

 

AMENDMENT NO. 1 TO ACQUISITION AGREEMENT

     THIS AMENDMENT NO. 1 TO ACQUISITION AGREEMENT (this “Amendment”) is entered into as of
April 21, 2007 (the “Amendment Date”) by and between Tekelec, a California corporation
(“Seller”), and GENBAND Inc., a Delaware corporation (“Buyer”), in order to amend
that certain Acquisition Agreement dated as of March 20, 2007 (the “Agreement Date”)
between Seller and Buyer (the “Agreement”). Unless otherwise defined herein, each
capitalized term used in this Amendment shall have the same meaning assigned to that term in the
Agreement.

RECITAL

     WHEREAS, Seller and Buyer desire to amend the Agreement as set forth herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the recital and the mutual covenants and agreements
hereinafter expressed, the parties hereto hereby agree as follows:

     1. Ownership of China Subsidiary as of Agreement Date. Seller hereby represents, warrants and
confirms to Buyer that, contrary to the information set forth in the Agreement and in the Seller
Schedules and Seller Disclosure Schedule delivered by Seller to Buyer on the Agreement Date, as of
the Agreement Date, Seller (and not Santera) owned (and currently owns) all of the outstanding
equity interest in Shanghai Tekelec Communication Co., Ltd. (the “China Subsidiary”).

     2. Transfer of Equity Interest in China Subsidiary. Seller hereby agrees to take such actions
and execute such documents as are necessary to transfer to Santera all of Seller’s equity interest
in the China Subsidiary (the “Equity Interest”). Seller agrees that the Equity Interest is
a Purchased Asset. To the extent that the transfer has not been completed prior to the Closing,
then following the Closing, (i) Seller shall, with the cooperation of Buyer and Santera, take such
actions and execute such documents as are necessary or appropriate to complete the transfer of the
Equity Interest to Santera and (ii) Buyer shall cooperate, and shall cause Santera to cooperate,
with Seller to complete such transfer. Without limiting the generality of the foregoing, Seller
agrees to cooperate with Buyer, and Buyer agrees to cooperate with Seller, in making and/or causing
Santera and the China Subsidiary to make such governmental filings as may be required to be made in
China in connection with the foregoing, including without limitation filings with the Zhangjiang
Hi-Tech Park Division of Shanghai Municipal Administration for Industry and Commerce, Pudong
Sub-branch. To the extent that filings, registrations and other actions may be required after the
transfer has been effected in order to complete the documentation and registration of the transfer,
such matters shall continue to be subject to the terms of this Section 2, notwithstanding the fact
that the transfer itself has become effective. All third party costs, filing fees and other
expenses payable to government entities or other third parties to complete the transfer of the
Equity Interest to Santera shall be borne by Seller. Seller agrees to use Reasonable Efforts to
obtain the landlord’s consent to the transfer if such consent is required under the two real estate
leases for office space used by the China Subsidiary listed on Schedule 5.10(a)(4) as a result of
the transfer of the Equity Interest to Santera.

 

 

     3. Conduct of Business of China Subsidiary after Closing. Following the Closing and until
such time as Seller’s transfer of the Equity Interest to Santera has been completed and is duly
registered under applicable Law, Buyer and Santera agree that (i) Seller shall hold legal title to
the Equity Interest in trust for Santera and Santera shall be deemed the sole beneficial owner of
the Equity Interest, (ii) Seller shall manage and oversee the business, conduct, operations,
management and funding of the China Subsidiary upon the direction and for the benefit of Buyer and
Santera, and (iii) Buyer shall be entitled to designate the officers of the China Subsidiary and,
as soon as possible following the Closing and in any event upon the effectiveness of the transfer
of the Equity Interest to Santera, Buyer shall be entitled to designate the legal representative
and all directors of the China Subsidiary. Without limiting the generality of the foregoing, from
and after the Closing, Buyer and Santera shall have the sole authority to direct the transfer and
uses of all funds which, as of the Closing, are held in the bank accounts identified on Schedule
2.3(b) to the Agreement, which Seller represents and warrants will be at least US$1,000,000 at the
Closing; provided, however, that in order to comply with the provisions of Section
4.2 of the Agreement regarding settlement of intercompany amounts, Buyer and Santera shall cause
the Chinese Subsidiary to make payments aggregating RMB5,120,000 for the equipment ( “Equipment
Purchase Price”) it purchased from Seller and/or its Affiliates prior to the Closing, and,
provided further, Seller shall pay the Chinese Subsidiary the services fee under
that certain research and development agreement between Seller and the Chinese Subsidiary in US
Dollar equivalent of RMB5,120,000 within ten (10) working days after receiving the Equipment
Purchase Price from the Chinese Subsidiary. Buyer and Seller further agree that, from and after
the Closing and subject to the terms and conditions of this Amendment and the Agreement, Buyer
shall be (i) responsible for all liabilities and obligations, including tax liabilities and
obligations, of the China Subsidiary, and (ii) entitled to all benefits owned by, resulting from or
associated with the China Subsidiary, its assets and operations.

     4. Consideration for the Transfer of the Equity Interest. Seller and Buyer hereby expressly
acknowledge and agree that neither Buyer nor Santera shall be required to pay any additional
consideration for the transfer of the Equity Interest as contemplated by this Amendment, and that,
whether such transfer becomes effective prior to or after Closing, the consideration paid by Buyer
to Seller under the Agreement pursuant to Section 3.1 thereof will include consideration for
Seller’s transfer of the Equity Interest to Santera and Buyer’s related acquisition of the indirect
beneficial ownership of the China Subsidiary.

     5. Identification and Ownership of the China Subsidiary. Seller and Buyer agree and confirm
all references in the Seller Schedules and the Seller Disclosure Schedule delivered by Seller to
Buyer on the Agreement Date to “Shanghai Tekelec Communication Technology Co., Ltd.”, “Shanghai
Tekelec Communication”, and “Tekelec Shanghai Development Co., Ltd.” shall be deemed to be
references to the China Subsidiary as identified herein. Buyer further acknowledges that the
updated Seller Schedules and the Seller Disclosure Schedule to be delivered by Seller to Buyer
prior to Closing pursuant to Section 8.12(a) of the Agreement shall reflect that, as of the
Agreement Date (and, to the extent the transfer of the Equity Interest has not been completed prior
to the Closing Date, as of the Closing Date), the China Subsidiary is a subsidiary of Seller and
not of Santera. The parties further agree that such updated information shall be deemed to modify,
as of the Agreement Date and, as applicable, as of the Closing Date, the representations,
warranties and other provisions of the Agreement which pertain to the China Subsidiary.

2

 

     6. Closing. Buyer and Seller agree that Section 3.2 of the Agreement is hereby amended in its
entirety to read as follows:

     “Section 3.2 Closing. The Closing of the transactions
contemplated by the Agreement (the “Closing”) shall take
place at the offices of Baker Botts L.L.P., 2001 Ross Avenue,
Dallas, Texas 75201-2980, at 8:00 a.m., local time, on April 21,
2007 or, if the conditions to the Closing are not then satisfied, on
such other date as the parties may agree after the satisfaction or
waiver of all conditions to the obligations of the parties to
consummate the transactions contemplated hereby, which date shall be
no later than the third day after the satisfaction or waiver of such
conditions. The date of the Closing is sometimes referred to herein
as the “Closing Date.” All wire transfers related to the
Closing shall be sent on April 23, 2007 but shall be deemed to have
been received on the Closing Date.

     7. Certain Employees Outside of the United States. Notwithstanding any provision in the
Agreement to the contrary, from and after the Closing, Seller and Buyer shall cooperate in
effecting the transfer from Seller (or its Affiliates) to Buyer (or its Affiliates) of Business
Employees identified on Attachment A (the “Designated Employees”). Seller and
Buyer hereby acknowledge and agree that following the Closing and for a period of up to 120
calendar days thereafter, Seller (or its Affiliates) will continue to employ the Designated
Employees; provided however, that Seller is making no representation to Buyer that
such Designated Employees will not voluntarily terminate such employment; and, provided
further, that Seller shall not be obligated to continue to employ any Designated Employee
who does not comply with Seller’s (or its Affiliates’) employment policies and practices. Buyer
shall be responsible for and direct the activities of the Designated Employees during such
post-Closing period, and Buyer shall from and after the Closing proceed diligently to arrange for
the transfer of such Designated Employees to the employment of Buyer (or an Affiliate) as soon as
possible following the Closing and in any event prior to the end of such 120-day period. Seller
will submit to Buyer monthly written invoices for the compensation, benefits and expenses of the
Designated Employees which are paid by or on behalf of Seller (or its Affiliates) during the
post-Closing period, and Buyer will pay and reimburse Seller for the same promptly and in any event
within 30 days following receipt of any such invoices. Without Buyer’s written consent, Seller
shall not increase the compensation or benefits of any Designated Employees except for increases
granted in the ordinary course of business in accordance with customary practices (including as
part of normal performance reviews) or as required by a pre-existing commitment.

     8. Brazil Contracts. Tekelec do Brasil Ltda., a wholly-owned subsidiary of Seller (“Tekelec
Brazil”), is a party to a Software License Agreement with Seller and a Software License Agreement
with NEC do Brasil (collectively, the “TTLs”). The TTLs are Transferred Contracts and included in
the Purchased Assets, but will not be assigned to Buyer until Buyer has created a subsidiary in
Brazil (the “GB Brazil Sub”). Buyer shall promptly cause the GB Brazil Sub to be formed and able
to receive the TTLs as the assignee, which shall be completed no later than 60 days after the
Closing Date. Upon written notice from Buyer, Seller shall cause Tekelec Brazil to assign

3

 

the TTLs to the GB Brazil Sub and Buyer shall cause GB Brazil Sub to assume all obligations
and liabilities under the TTLs. Prior to such assignment, Buyer and Seller agree that (i) Seller
shall hold its interest in the TTLs in trust for Buyer and Buyer shall be deemed the sole
beneficial owner of Tekelec Brazil’s interest in the TTLs for the earlier of 60 days after the
Closing Date or the date the TTLs are assigned to GB Brazil Sub, and (ii) Seller shall cause
Tekelec Brazil to manage the contract administration aspects of the TTLs for the benefit of Buyer,
provided, however, Buyer shall be solely responsible for all liabilities and
obligations of the TTLs (including but not limited to the payment in advance of any import duties,
taxes or other fees Buyer needs Tekelec Brazil to pay on its behalf), and entitled to all benefits
resulting from or associated with the TTLs. Buyer shall reimburse Seller for its reasonable out of
pocket expenses incurred in connection with Tekelec Brazil’s administration of the TTLs on Buyer’s
behalf.

     9. Indemnification. In consideration of the covenants of Seller as set forth herein and for
other good and valuable consideration, Buyer agrees that from and after the Closing, Buyer shall
indemnify and hold harmless any and all Seller Indemnitees from and against any and all Damages
asserted against or incurred by any Seller Indemnitee, and pay to the applicable Seller Indemnitee
the amount of all Damages, whether or not involving a third party claim, resulting from or arising
out of: (i) the business, conduct, operations, management and funding of the China Subsidiary
following the Closing not caused by Seller’s breach of this Amendment; (ii) the performance of
services or other activities of the Designated Employees following the Closing; (iii) any failure
by Buyer to comply with the Investors’ Rights Agreement among Buyer and certain of its shareholders
in connection with its October 2006 private offering of its Series C Stock; and (iv) the TTLs.
Any indemnification claims shall be subject to the procedures set forth in Article 11 of the
Agreement.

     10. Oracle End User Licenses. Buyer and Seller agree that in view of the fact that Seller
will, in the performance of the Transition Services Agreement, be required to use certain Oracle
end user licenses that are required to be transferred to Buyer under the Agreement, Seller shall
not be required to effect the transfers of such licenses until such time after the Closing as
Seller’s performance of the related services under the Transition Services Agreement has been
completed.

     11. Microsoft Licenses. Buyer and Seller agree that promptly following the Closing, Seller
and Buyer will work together to identify the Microsoft end user licenses that are required to be
transferred to Buyer under the Agreement. Following completion of the identification process,
Seller agrees to use Reasonable Efforts to effect the transfers of the identified Microsoft
licenses from Seller to Buyer. From and after Closing, Buyer agrees to cooperate with Seller to
assist Seller in completing the license identification and transfers contemplated by this Section
11.

     12. Seller Flexible Benefits Plan. Further to Section 8.8(e) of the Agreement, Buyer and
Seller agree that, at the Closing and with respect to Seller’s Flexible Benefits Plan and the
Employees, Seller shall transfer $21,649.86 to Buyer, which represents the aggregate net amount of
the excess contributions received by Seller as of April 17, 2007 over the disbursements made as of
April 17, 2007 with respect to the Employees. For each Employee in a “deficit” position as of
April 17, 2007 (because their claims paid to date in 2007 exceed their contributions as of the
April 17, 2007 “cut-off” date) and who continues to be in a deficit position at the end of the 2007
calendar

4

 

year, Seller will reimburse Buyer the amount of the account deficit for each such Employee,
but only to the extent that the deficit existed on April 17, 2007. This reimbursement for deficit
accounts will be paid no later than January 31, 2008. The wire transfer instructions for Seller’s
payment to Buyer of monies on the Closing Date pursuant to this Section 12 are set forth on
Attachment B hereto.

     13. Unaudited Closing Balance Sheet and Audit Assistance.

          (a) Buyer and Seller agree that, during the 45-day period following the Closing and for each
party’s use for internal accounting and other purposes, they shall cooperate with each other and
use Reasonable Efforts to produce and agree upon an unaudited balance sheet, as of the Closing
Date, for that portion of the Business being acquired by Buyer under the Agreement (the
“Closing Balance Sheet”). Without limiting the generality of the foregoing, each party
will share with the other party such records and information as may reasonably be required by the
other party in connection with the preparation of the balance sheet. The Closing Balance Sheet
shall be prepared in accordance with GAAP, applied on a basis consistent with the Most Recent
Balance Sheet.

          (b) In the event Buyer’s auditors audit Buyer’s financial statements, Seller agrees to
reasonably cooperate (at no cost to Seller) with Buyer’s auditor in the conduct of such audit.
Seller shall provide to Buyer (at Buyer’s expense) copies of, or shall provide Buyer access to,
such factual information as may be reasonably requested by Buyer in the possession or control of
Seller to enable Buyer’s auditor to conduct an audit of that portion of the Business being acquired
by Buyer in connection with such audit. Notwithstanding the foregoing, the foregoing obligations
of Seller shall be limited to providing such information or documentation as may be in the
possession of, or reasonably obtainable by, Seller or its accountants, at no cost to Seller, and in
the format that Seller has maintained such information, and that relates solely to that portion of
the Business being acquired by Buyer prior to the Closing.

     14. Allocation of Purchase Price. Buyer and Seller agree that, during the 45-day period
following the Closing, they shall cooperate with each other and shall use Reasonable Efforts to
mutually agree upon the Purchase Price Allocation as of the Closing Date. The parties further
agree that, in any event, the Purchase Price Allocation shall require each party to allocate all of
the Cash Consideration to the Taqua Share.

     15. Letter of Credit. The parties acknowledge and agree that, at the Closing and pursuant to
the Plano Lease Assignment, Seller shall assign to Buyer, and Buyer shall assume from Seller, all
of Seller’s rights and obligations as tenant under that certain Industrial Lease Agreement dated
April 18, 2000 between Industrial Property Fund V, LP (the “3605 Landlord”) and Seller, as
amended by that certain (a) First Amendment to Industrial Lease Agreement dated June 15, 2000, (b)
Second Amendment to Industrial Lease Agreement dated effective as of August 21, 2000 and (c) Third
Amendment to Industrial Lease Agreement dated effective as of January 1, 2004 (as amended, the
“3605 Lease Agreement”). In connection with such assignment and assumption of the 3605
Lease Agreement, Buyer and Seller agree that, within 30 days following the Closing, Buyer shall be
required, at its expense, to obtain and provide an irrevocable letter of credit (the “Letter of
Credit”) naming Seller as the beneficiary, in the amount of US$1,000,000, issued by a U.S.

5

 

commercial bank which is reasonably acceptable to Seller. The Letter of Credit shall remain
outstanding until January 1, 2014, and shall secure Buyer’s performance under the 3605 Lease
Agreement and the Plano Lease Assignment. Seller shall be entitled to draw, after providing 15
days prior written notice to Buyer, upon amounts outstanding under the Letter of Credit at any time
Seller is obligated to make a payment to the 3605 Landlord in the event Buyer fails to fulfill any
obligation under the 3605 Lease Agreement or the Plano Lease Assignment. In such event, Seller
shall be able to draw an amount equal to such claim and such draw shall be deemed to be a payment
to Seller by Buyer under Section 11.3(c) of the Agreement. If Seller draws down amounts under the
Letter of Credit for a claim and it is later determined that all or a portion of such amount was
ultimately not owed to the 3605 Landlord, Buyer shall be entitled to any reimbursements related to
such overpayment. Additionally, Seller shall be entitled to draw the entire amount then
outstanding under the Letter of Credit in the event Buyer either (i) enters into any sublease with
respect to the premises subject to the 3605 Lease Agreement without Seller’s prior written consent
to such sublease (which consent cannot be unreasonably withheld), or (ii) enters into any amendment
of the 3605 Lease Agreement or the Plano Lease Assignment that increases the rent payable under, or
extends the term of, the 3605 Lease Agreement without Seller’s prior written consent to such
amendment (which consent may be withheld by Seller in its sole discretion). If requested by
Seller, Buyer agrees to provide a substitute letter of credit to the 3605 Landlord in the amount of
at least $1,000,000, securing Buyer’s obligations under the 3605 Lease Agreement and the Plano
Lease Assignment for the benefit of the 3605 Landlord. Upon Seller being fully released from the
3605 Lease Agreement, Buyer may terminate the Letter of Credit.

     16. Certain Transitional Arrangements. Buyer agrees that to the extent certain employees
of Seller are, as of the Closing Date, employed in the facilities of the Business located in Plano,
Texas, such persons may continue to work in those locations, at no rental charge to Seller, for up
to 90 days following the Closing. Seller agrees that to the extent that lab gear for Taqua
Products is, as of the Closing Date, located on the leased premises of Seller in Hyannis,
Massachusetts, Buyer shall have up to 30 days following the Closing to remove the lab gear, at
Buyer’s expense, from such location. Buyer shall have up to 120 days following the Closing to
remove any Purchased Assets at Suite 100, 3601 East Plano Parkway not located in the space covered
by the Plano Sublease Assignment.

     17. Certain Commission Payments. Concerning the payment of sales commissions owed to
Employees with respect to orders placed with the Business during 2007 but prior to the Closing
Date, Seller and Buyer agree that such sales commissions shall be paid in accordance with
Attachment C hereto. As provided on Attachment C, at the Closing, Buyer and Seller
shall agree upon a schedule of all orders received during the first quarter of 2007 and all orders
received during the second quarter of 2007 (prior to the Closing) for which commission payments
will remain outstanding as of the Closing. Such schedule shall reflect the cash collection status
for each order and the related determination of commission payment obligations between Buyer and
Seller as determined in accordance with Attachment C.

     18. Contract Bonds. Buyer has agreed to assume at the Closing, as an Assumed Liability, the
obligations of Seller that are evidenced by the three Contract Bonds listed in Schedule 2.5(a) of
the Updated Schedules to the Acquisition Agreement (the “Contract Bonds”).

6

 

Notwithstanding such obligation, Buyer has advised Seller that, as of the Closing Date, Buyer
will not yet have procured substitute contract bonds to replace the Contract Bonds. Buyer agrees
that, within 15 days following the Closing Date, Buyer shall procure substitute contract bonds that
will fully replace and result in the full cancellation of the Contract Bonds.

     19. Sublease Excess Rent. Seller shall promptly reimburse Buyer for that portion of the
additional rent paid by Buyer to Seller in accordance with Section 11.3 of the Plano Sublease
Assignment, but only to the extent that Seller is not required to pay such additional rent to the
Master Lessor (as defined in the Plano Sublease Assignment) under the Master Lease (as defined in
the Plano Sublease Assignment).

     20. Payment for Personal Property. Seller hereby grants Buyer the right to use the certain
furniture, equipment (including modular work stations and cubicles) and other personal property
(collectively, the “Personal Property”) owned by Seller and located at Suite 100, 3601 East Plano
Parkway during the term of the Plano Sublease Assignment, provided, however, that
Buyer’s right to use the Personal Property shall cease in the event that the Plano Sublease
Assignment is terminated for any reason, including as a result of Buyer’s default thereunder.
Buyer shall make quarterly payments in the amount of $49,875 for the use of such assets on the
first business day of each calendar quarter during the term of the Plano Sublease Assignment (each
such payment a “Rental Payment”). Notwithstanding the foregoing, the first Rental Payment, due
July 1, 2007, will be prorated to reflect the number of days the Plano Sublease Assignment was in
effect during the quarter then ended. In the event of a failure to make a Rental Payment within 30
days of the due date, aside from all remedies under law available to Seller, such failure shall
also constitute a default by Buyer under the Plano Sublease Assignment.

     21. Governing Law. This Amendment shall be governed by and construed in accordance with the
laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.

     22. Counterparts. This Amendment may be executed in counterparts, each of which shall be
deemed to be an original, but which together shall constitute one and the same agreement.

     23. Further Assurances. Prior to and after the Closing, the parties shall execute and deliver
all documents, provide all information and take or refrain from taking all actions as may be
necessary or appropriate to achieve the purposes of this Amendment.

     24. Miscellaneous. This Amendment, together with the Agreement and the other agreements
referred to in Section 12.12 thereof, constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and understandings
pertaining thereto. In the event of any conflict between any provision of this Amendment and any
provision of the Agreement, the terms of this Amendment shall prevail. Except to the extent
modified herein, the terms and provisions of the Agreement shall remain in full force and effect
from and after the Amendment Date.

7

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed on the date
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	Seller:	 	TEKELEC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ William H. Everett	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: William H. Everett	 	 
	 	 	 	 	Title: Executive Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Buyer:	 	GENBAND Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Jan Gaulding	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: Jan Gaulding	 	 
	 	 	 	 	Title: Chief Financial Officer and SecretaryEX-4.1

 

Exhibit 4.1

 

FIVE YEAR CREDIT AGREEMENT

Dated as of April 26, 2007

among

THE SHERWIN-WILLIAMS COMPANY,

THE LENDERS PARTY HERETO,

CITICORP USA, INC.,

as Administrative Agent,

CITICORP USA, INC.,

as Issuing Bank,

and

THE BANK OF NEW YORK,

as Paying Agent

 

$250,000,000 REVOLVING AND LETTER OF CREDIT FACILITY

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page
	Article I Definitions
	 	 	1	 
	SECTION 1.01. Defined Terms
	 	 	1	 
	SECTION 1.02. Terms Generally
	 	 	13	 
	SECTION 1.03. Accounting Terms; GAAP
	 	 	14	 
	 
	 	 	 	 
	Article II The Credits
	 	 	14	 
	SECTION 2.01. Commitments
	 	 	14	 
	SECTION 2.02. Loans and Borrowings
	 	 	15	 
	SECTION 2.03. Requests for Borrowings
	 	 	15	 
	SECTION 2.04. The Letter of Credit
	 	 	16	 
	SECTION 2.05. Funding of Borrowings
	 	 	19	 
	SECTION 2.06. Interest Elections
	 	 	19	 
	SECTION 2.07. Termination of Commitments; Reduction of Commitments
	 	 	20	 
	SECTION 2.08. Repayment of Loans; Evidence of Debt; Obligations Absolute
	 	 	21	 
	SECTION 2.09. Prepayment of Loans
	 	 	22	 
	SECTION 2.10. Fees
	 	 	23	 
	SECTION 2.11. Interest
	 	 	23	 
	SECTION 2.12. Alternate Rate of Interest
	 	 	23	 
	SECTION 2.13. Increased Costs
	 	 	24	 
	SECTION 2.14. Break Funding Payments
	 	 	25	 
	SECTION 2.15. Taxes
	 	 	26	 
	SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	27	 
	SECTION 2.17. Mitigation Obligations; Replacement of Lenders
	 	 	29	 
	 
	 	 	 	 
	Article III Representations and Warranties
	 	 	30	 
	SECTION 3.01. Organization; Powers
	 	 	30	 
	SECTION 3.02. Authorization; Enforceability
	 	 	30	 
	SECTION 3.03. Governmental Approvals; No Conflicts
	 	 	30	 
	SECTION 3.04. Financial Condition
	 	 	31	 
	SECTION 3.05. Disclosure
	 	 	31	 
	SECTION 3.06. Federal Reserve Regulations
	 	 	31	 
	SECTION 3.07. Investment Company Status
	 	 	31	 
	 
	 	 	 	 
	Article IV Conditions
	 	 	31	 
	SECTION 4.01. Conditions to Effective Date
	 	 	31	 
	SECTION 4.02. Condition to Each Credit Event
	 	 	32	 
	 
	 	 	 	 
	Article V Affirmative Covenants
	 	 	32	 
	SECTION 5.01. Financial Statements; and Other Information
	 	 	32	 
	SECTION 5.02. Notices of Material Events
	 	 	34	 
	SECTION 5.03. Existence; Conduct of Business
	 	 	34	 

i

 

	 	 	 	 	 
	 	 	Page
	Article VI Negative Covenants
	 	 	34	 
	SECTION 6.01. Equal and Ratable Security
	 	 	34	 
	SECTION 6.02. Fundamental Changes
	 	 	35	 
	SECTION 6.03. Limitation on Sale/Leaseback Transactions
	 	 	35	 
	 
	 	 	 	 
	Article VII Events of Default
	 	 	35	 
	 
	 	 	 	 
	Article VIII The Administrative Agent and the Paying Agent
	 	 	37	 
	 
	 	 	 	 
	Article IX Miscellaneous
	 	 	39	 
	SECTION 9.01. Notices
	 	 	39	 
	SECTION 9.02. Waivers; Amendments
	 	 	39	 
	SECTION 9.03. Expenses; Indemnity; Damage Waiver
	 	 	40	 
	SECTION 9.04. Successors and Assigns
	 	 	42	 
	SECTION 9.05. Survival
	 	 	44	 
	SECTION 9.06. USA Patriot Act
	 	 	44	 
	SECTION 9.07. Counterparts; Integration; Effectiveness
	 	 	44	 
	SECTION 9.08. Severability
	 	 	45	 
	SECTION 9.09. Right of Setoff
	 	 	45	 
	SECTION 9.10. Governing Law; Jurisdiction; Consent to Service of Process;
Process Agent; Waiver of Immunity
	 	 	45	 
	SECTION 9.11. WAIVER OF JURY TRIAL
	 	 	46	 
	SECTION 9.12. Headings
	 	 	46	 
	SECTION 9.13. Confidentiality
	 	 	46	 
	SECTION 9.14. Interest Rate Limitation
	 	 	47	 
	 
	 	 	 	 
	SCHEDULES:
	 	 	 	 
	 
	 	 	 	 
	Schedule 2.01 Commitments
	 	 	 	 
	 
	 	 	 	 
	EXHIBITS:
	 	 	 	 
	 
	 	 	 	 
	Exhibit A Form of Assignment and Acceptance
	 	 	 	 
	Exhibit B Form of Notes
	 	 	 	 
	Exhibit C Form of Notice of LC Request
	 	 	 	 
	Exhibit D Form of Letter of Credit
	 	 	 	 

 

 

FIVE YEAR CREDIT AGREEMENT, dated as of April 26, 2007 (as
amended, supplemented, amended and restated or otherwise
modified from time to time, this “Agreement”), among THE
SHERWIN-WILLIAMS COMPANY, an Ohio corporation (the
“Company”), the LENDERS party hereto (the “Lenders”),
CITICORP USA, INC. (“CUSA”), as Administrative Agent (in
such capacity the “Administrative Agent”), CUSA, as Issuing
Bank (in such capacity, the “Issuing Bank”), and THE BANK OF
NEW YORK, as successor to JPMorgan Chase Bank, N.A., as
Paying Agent (the “Paying Agent”).

     The Company has requested the Lenders to extend credit to enable it to borrow on a revolving
credit basis on and after the date hereof and at any time and from time to time during the
Availability Period (such term and each other capitalized term used and not otherwise defined
herein having the meaning assigned to it in Article I) a principal amount not in excess of
$250,000,000 at any time outstanding. The Company has further requested the Issuing Bank to issue
the Letter of Credit to support other payment obligations of the Company. The proceeds of
borrowings hereunder are to be used for general corporate purposes of the Company and its
Subsidiaries and other purposes not inconsistent with this Agreement.

     The Lenders and the Issuing Bank are willing to extend such credit to the Company on the terms
and subject to the conditions herein set forth.

     Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     SECTION 1.01. Defined Terms.

     As used in this Agreement, the following terms have the meanings specified below:

     “ABR”, when used in reference to any Loan or Borrowing, means that such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.

     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve
Rate.

     “Administrative Agent” has the meaning ascribed to it in the preamble to this
Agreement.

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

 

2

     “Affiliate” means, with respect to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

     “Agents” means the Administrative Agent and the Paying Agent.

     “Agreement” has the meaning ascribed to it in the preamble to this agreement.

     “Alternate Base Rate” means, for any day, a rate per annum equal to the higher of (a)
the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Base
Rate or the Federal Funds Effective Rate shall be effective from and including the effective
date of such change in the Base Rate or the Federal Funds Effective Rate, respectively.

     “Applicable Percentage” means, with respect to any Lender, the percentage of the total
Commitments represented by such Lender’s Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Commitments most
recently in effect, giving effect to any assignments.

     “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any other form
approved by the Administrative Agent.

     “Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as of the
time of determination, (i) if the obligation in respect of such Sale/Leaseback Transaction
is a Capital Lease Obligation, the amount of such obligation determined in accordance with
GAAP and included in the financial statements of the lessee or (ii) if the obligation in
respect of such Sale/Leaseback Transaction is not a Capital Lease Obligation, the total Net
Amount of Rent required to be paid by the lessee under such lease during the remaining term
thereof (including any period for which the lease has been extended), discounted from the
respective due dates thereof to such determination date at the rate per annum borne by the
Company’s Indebtedness issued pursuant to the debentures, notes, bonds or other evidence of
debt issued pursuant to the Indenture, compounded semiannually or, if no such Indebtedness
is then outstanding, at the rate per annum borne by the Company’s long-term Indebtedness
compounded semiannually.

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

     “Base Rate” means the rate of interest per annum publicly announced from time to time
by Citibank, as its “base” rate; each change in the Base Rate shall be effective from and
including the date such change is publicly announced as being effective.

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

 

3

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

     “Borrowing Request” means a request by the Company for Loans in accordance with Section
2.03.

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

     “Capital Lease” means, with respect to any Person which is the lessee thereunder, any
lease or charter of property, real or personal, which would, in accordance with GAAP, be
recorded as an asset under a capital lease on a balance sheet of such Person.

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

     “Change in Law” means (a) the adoption of any law, rule or regulation after the date of
this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.13(b), by any
lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if
any) with any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.

     “Citibank” means Citibank, N.A.

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

     “Commitment” means, with respect to each Lender, the commitment of such Lender to make
Loans and acquire participations in the Letter of Credit, as such commitment may be (a)
reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial
amount of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable.

     “Company” means The Sherwin-Williams Company, an Ohio corporation.

 

4

     “Consolidated Net Revenue” means, for any period, the net revenue of the Company and
its Subsidiaries for such period, determined on a consolidated basis in accordance with
GAAP.

     “Consolidated Net Tangible Assets” means, as of any date of determination, the sum of
the amounts that would appear on a consolidated balance sheet of the Company and its
Subsidiaries for the total assets (less accumulated depletion, depreciation or amortization,
allowances for doubtful receivables, other applicable reserves and other properly deductible
items) of the Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, after giving effect to purchase accounting and after deducting therefrom, to the
extent included in total assets, in each case as determined on a consolidated basis in
accordance with GAAP (without duplication): (i) the aggregate amount of liabilities of the
Company and its Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated); (ii) current Indebtedness and current maturities of
long-term Indebtedness; (iii) minority interests in the Company’s Subsidiaries held by
Persons other than the Company or a wholly owned subsidiary of the Company; and (iv)
unamortized debt discount and expenses and other unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, licenses, organization or
developmental expenses and other intangible items.

     “Consolidated Total Assets” means, on any date, the aggregate amount of assets of the
Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

     “Control” means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have
meanings correlative thereto.

     “Credit Event” means each Borrowing and each issuance, renewal, extension or increase
of the Letter of Credit.

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

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

     “Effective Date” means the date on which the conditions set forth in Section 4.01 are
satisfied or waived in accordance with Section 9.02.

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

 

5

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

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

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

     “Excluded Taxes” means, with respect to any Agent, any Lender, the Issuing Bank, or any
other recipient of any payment to be made by or on account of any obligation of the Company
hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the
United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in
which its applicable lending office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in which the
Company is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to
a request by the Company under Section 2.17(b)) or any foreign branch or Affiliate of a
Lender caused by such Lender to make a Loan under Section 2.02(b), any withholding tax that
is imposed by the United States of America on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement or such foreign branch or
Affiliate is caused to make such a Loan or is attributable to such Foreign Lender’s or such
foreign branch’s or Affiliate’s failure or inability to comply with Section 2.15(e), except
to the extent that such Foreign Lender’s assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Company with respect to such withholding
tax pursuant to Section 2.15(a) and (d) in the case of any Lender, any withholding tax that
is imposed by the United States of America on amounts payable to such Lender that are
attributable to such Lender’s failure to comply with Section 2.15(e).

     “Facility Fee” has meaning ascribed to it in Section 2.10.

     “Federal Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers,
as published on the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for
such transactions received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

6

     “Fee Letter” means the fee letter, dated as of the date hereof, between the Company and
CUSA, as amended, modified or supplemented from time to time.

     “Financial Officer” means, with respect to the Company, the chief financial officer,
principal accounting officer, treasurer or controller of the Company.

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

     “GAAP” means generally accepted accounting principles in the United States of America
applied in a manner consistent with the audited financial statements of the Company referred
to in Section 3.04.

     “Governmental Authority” means the government of the United States of America, or any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of the guarantor, direct or
indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. For purposes hereof, the amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the
related primary obligations, or portion thereof, in respect of which such Guarantee is made
or, if not stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the guarantor in good faith.

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

 

7

     “Hedging Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to,
one or more rates, currencies or prices of commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value, or any similar transaction or any combination of such transactions;
provided that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or consultants of the
Company or the Subsidiaries shall be a Hedging Agreement. The amount of the obligations of
the Company or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the Company or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

     “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such
Person, (d) all obligations of such Person in respect of the deferred purchase price of
property or services, (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien
on property owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g)
all Capital Lease Obligations of such Person, and (h) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit, letters of
guaranty and banker’s acceptances; provided, however, that Indebtedness of any Person shall
not include (i) trade payables, (ii) any obligations of such Person incurred in connection
with letters of credit, letters of guaranty or similar instruments obtained or created in
the ordinary course of business to support obligations of such Person that do not constitute
Indebtedness or (iii) endorsements of checks, bills of exchange and other instruments for
deposit or collection in the ordinary course of business.

     “Indemnified Taxes” means Taxes (other than Excluded Taxes) and Other Taxes.

     “Indemnitee” shall have the meaning ascribed to it in Section 9.03.

     “Indenture” means the Indenture, dated as of February 1, 1996, between the Company and
JPMorgan Chase Bank, N.A., as trustee, as amended, modified or supplemented from time to
time.

     “Information” shall have the meaning ascribed to it in Section 9.13.

     “Interest Election Request” means a request by the Company to convert or continue a
Borrowing in accordance with Section 2.06.

     “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each
March, June, September and December, and (b) with respect to any Eurodollar Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan

 

8

is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months’ duration, each day during such Interest Period that occurs at intervals
of three months’ duration after the first day of such Interest Period.

     “Interest Period” means with respect to any Eurodollar Borrowing, the period commencing
on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is 7 days (if generally available), or one, two, three or six months
thereafter, as the Company may elect; provided, that (a) if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next preceding Business
Day, (b) any Interest Period of one month or more that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period and (c) any Interest Period that otherwise would
extend beyond the Maturity Date shall end on the Maturity Date. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or continuation of such
Borrowing.

     “Issuing Bank” has the meaning ascribed to it in the preamble to this Agreement.

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

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

     “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall
have become a party hereto pursuant to an Assignment and Acceptance, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.

     “Letter of Credit” has the meaning assigned to that term in Section 2.04(a).

     “LIBO Rate” means, with respect to each Interest Period, the rate per annum determined
by the Administrative Agent to be the offered rate for deposits in dollars with a term
comparable to such Interest Period that appears on the Reuters Screen LIBOR01 Page at
approximately 11:00 a.m., London time, two Business Days prior to the beginning of such
Interest Period; provided, however, that if at any time for any reason such offered rate
does not appear on the Reuters Screen LIBOR01 Page, “LIBO Rate” shall mean, with respect to
each day during each Interest Period, the rate per annum (rounded upward to the nearest
1/100 of 1%) at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London

 

9

office of Citibank or any of its Affiliates in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business Days prior to
the beginning of such Interest Period. In the event the LIBO Rate is determined as set
forth in the next preceding sentence, the LIBO Rate shall be determined by the
Administrative Agent on the basis of the applicable rates furnished to and received by the
Administrative Agent from Citibank or any of its Affiliates on the second Business Day prior
to the commencement of such Interest Period.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset. For the purposes of this
Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention agreement relating to
such asset.

     “Loan Documents” means, collectively, this Agreement and the Fee Letter

     “Loans” means the loans made by the Lenders to the Company pursuant to Sections 2.03
and 2.04(e).

     “Margin Stock” shall have the meaning provided in Regulation U of the Board.

     “Material Adverse Effect” means an event or circumstance that constitutes a material
adverse effect on (a) the business, operations or condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole, (b) the ability of the Company to perform any
of its material obligations under this Agreement or (c) the legality, validity, binding
effect or enforceability against the Company of this Agreement.

     “Material Subsidiary” means, at any time, (a) each Subsidiary that would be a
“significant subsidiary” within the meaning of Rule 1-02 under Regulation S-X promulgated by
the SEC and (b) each other Subsidiary designated as a “designated subsidiary” by the
Company. The Company will designate one or more Subsidiaries as “designated subsidiaries”
when and as necessary in order that there will at no time be two or more Subsidiaries that
are not Material Subsidiaries under the preceding sentence but that, if considered together
as a single Subsidiary, would cause the total for all such Subsidiaries to exceed 20% of
either (i) Consolidated Total Assets at such time or (ii) Consolidated Net Revenue for the
period of four calendar quarters ended at or most recently prior to such time.

     “Maturity Date” means June 20, 2012.

     “Net Amount of Rent” as to any lease for any period means the aggregate amount of rent
payable by the lessee with respect to such period after excluding amounts required to be
paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges. In the case of any lease that is terminable by the lessee upon the payment
of a penalty, such net amount shall also include the amount of such penalty, but no rent
shall be considered as payable under such lease subsequent to the first date upon which it
may be so terminated.

 

10

     “Note” has the meaning ascribed to it in Section 2.08(e)

     “Notice of LC Request” means a notice substantially in the form of Exhibit C hereto
delivered by the Company to the Issuing Bank and the Administrative Agent pursuant to
Section 2.04(b) with respect to the Letter of Credit.

     “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising (but excluding any tax,
charge or levy that constitutes an Excluded Tax) from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

     “Participant” has the meaning ascribed to it in Section 9.04(e).

     “Paying Agent” shall have the meaning ascribed to it in the preamble to this Agreement.

     “Paying Agent’s Account” means the account of the Paying Agent maintained by the Paying
Agent at its office at 4 New York Plaza, 15th Floor, New York, New York
10004-2413, or such other account of the Paying Agent as is designated in writing from time
to time by the Paying Agent to the Company, the Administrative Agent, the Issuing Bank and
the Lenders for such purpose

     “Permitted Liens” means, with respect to any Person, (a) pledges or deposits by such
Person under worker’s compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (including government
contracts, but excluding contracts for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure performance, surety or appeal
bonds to which such Person is a party or which are otherwise required of such Person, or
deposits as security for contested taxes or import duties or for the payment of rent or
other obligations of like nature, in each case incurred in the ordinary course of business;
(b) Liens imposed by law, such as carriers’, warehousemen’s, laborers, materialmen’s,
landlords’, vendors’, workmen’s, operators’, producers and mechanics’ Liens, in each case
for sums not yet due or being contested in good faith by appropriate proceedings; (c) Liens
for property taxes, assessments and other governmental charges or levies not yet delinquent
or which are being contested in good faith by appropriate proceedings; (d) survey
exceptions, encumbrances, easements, defects, irregularities, or deficiencies in title to
easements, or reservations of or with respect to, or rights of others for or with respect
to, licenses, rights-of-way, sewers, electric and other utility lines and usages, telegraph
and telephone lines, pipelines, surface use, operation of equipment, permits, servitudes and
other similar matters, or zoning or other restrictions as to the use of real property or
Liens incidental to the conduct of the business of such Person or to the ownership of its
properties which, in all such cases, were not incurred in connection with Indebtedness and
which do not in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person; (e) Liens
existing on or provided

 

11

for under the terms of agreements existing on the date of this Agreement; (f) Liens on
property at the time the Company or any of its Subsidiaries acquired the property or the
entity owning such property, including any acquisition by the property or the entity owning
such property, including any acquisition by means of a merger or consolidation with or into
the Company; provided, however, that any such Lien may not extend to any other property
owned by the Company or any of its Subsidiaries; (g) Liens securing obligations under a
Hedging Agreement so long as such Hedging Agreement is of the type customarily entered into
in connection with, and is entered into for the purpose of, limiting risk; (h) Liens on
accounts receivable or inventory to secure working capital or revolving credit indebtedness
incurred in the ordinary course of business; (i) Purchase Money Liens; (j) Liens securing
only Indebtedness of a wholly owned subsidiary of the Company to the Company or one or more
wholly owned subsidiaries of the Company; (k) Liens on property or shares of stock of
another Person at the time such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming such a Subsidiary of such Person; (l) Liens
created, assumed or existing in connection with a tax-free financing; (m) Liens resulting
from the deposit of funds or evidences of Indebtedness in trust for the purpose of defeasing
Indebtedness of the Company or any of its Subsidiaries; (n) legal or equitable encumbrances
deemed to exist by reason of negative pledges or the existence of any litigation or other
legal proceeding and any related lis pendens filing (excluding any attachment prior to
judgment, judgment lien or attachment lien in aid of execution on a judgment); (o) rights of
a common owner of any interest in property held by such Person; (p) Liens placed upon any
real property now owned or hereafter acquired by the Company or any of its Subsidiaries
securing Indebtedness in an amount up to 80% of the fair market value of such real property;
and (q) Liens to secure any refinancing, refunding, extension, renewal or replacement (or
successive refinancings, refundings, extensions, renewals or replacements), as a whole, or
in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (e)
through (l) and (p); provided, however, that (i) such new Lien shall be limited to all or
part of the same property that secured the original Lien (plus improvements on such
property) and (ii) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (e) through (l) and (p) at the
time the original Lien became a Permitted Lien under this Agreement and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement.

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

     “Principal Property” means any manufacturing plant or manufacturing facility, located
within the United States of America (other than its territories and possessions), owned or
leased by the Company or any Restricted Subsidiary, unless, in the opinion of the board of
directors of the Company, such plant, facility or property is not of material importance to
the total business conducted by the Company and its Restricted Subsidiaries as an entirety.

 

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     “Purchase Money Lien” means a Lien on property securing Indebtedness incurred by the
Company or its Subsidiaries to provide funds for all or any portion of the cost of
acquiring, constructing, altering, expanding, improving or repairing such property or assets
used in connection with such property.

     “Register” has the meaning ascribed to it in Section 9.04(c).

     “Regulation U” shall mean Regulation U of the Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof.

     “Regulation X” shall mean Regulation X of the Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof.

     “Reimbursement Agreement” means the Agreement for Letter of Credit, dated as of April
26, 2007, between Citibank and the Company, as amended, modified or supplemented from time
to time.

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

     “Required Lenders” means, (a) at any time prior to the termination of the Commitments
pursuant to Article VII, Lenders having Total Exposures and unused Commitments representing
more than 50% of the aggregate Total Exposures and unused Commitments at such time, and (b)
for all purposes after the termination of the Commitments pursuant to Article VII, Lenders
having outstanding Loans and LC Exposures representing more than 50% of the aggregate
outstanding principal amount of Loans and LC Exposures.

     “Restricted Subsidiary” means at any time any Subsidiary of the Company (i)
substantially all the property of which is located, or substantially all of the business of
which is carried on, within the United States of America (other than its territories or
possessions) and (ii) which owns or leases a Principal Property or which, in the event of a
Sale/Leaseback Transaction, will own or lease a Principal Property.

     “Reuters Screen LIBOR01 Page” means the Reuters Screen LIBOR01 Page (or such other page
as may replace such page on such service for the purpose of displaying the rates at which
dollar deposits are offered by leading banks in the London interbank deposit market).

     “Sale/Leaseback Transaction” means an arrangement relating to Principal Property owned
on the date of this Agreement or thereafter acquired whereby the Company or any of its
Restricted Subsidiaries transfers such Principal Property to a Person and the Company or any
of its Restricted Subsidiaries leases it from such Person.

     “SEC” means the Securities and Exchange Commission.

 

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

     “subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in accordance
with GAAP, as well as any other corporation, limited liability company, partnership,
association or other entity of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of
a partnership, more than 50% of the general partnership interests are, as of such date,
owned by the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.

     “Subsidiary” means any subsidiary of the Company.

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

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

     “Transactions” means each of the execution, delivery and performance by the Company of
this Agreement, the borrowing of Loans hereunder and the issuance and modification of the
Letter of Credit for the account of the Company hereunder.

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

     “USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, supplemented,
amended and restated or otherwise modified from time to time.

     SECTION 1.02. Terms Generally.

     The definitions of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the corresponding

 

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masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to
have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a)
any definition of or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s permitted successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.

     SECTION 1.03. Accounting Terms; GAAP.

     Except as otherwise expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the
Company notifies the Administrative Agent that the Company requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the
application thereof on the operation of such provision (or if the Administrative Agent notifies the
Company that the Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision is amended in accordance herewith.

ARTICLE II

THE CREDITS

     SECTION 2.01. Commitments.

     Subject to the terms and conditions set forth herein and without limiting each Lender’s
obligation to make Loans pursuant to Section 2.04(e), each Lender agrees to make Loans to the
Company from time to time during the Availability Period and to participate in the Letter of Credit
in an aggregate principal amount not exceeding the amount of such Lender’s Commitment; provided,
that after giving effect to each Credit Event (a) no Lender’s Total Exposure shall exceed such
Lender’s Commitment, and (b) the sum of the Total Exposures of all the Lenders shall not exceed the
sum of the Commitments of all Lenders. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Company may borrow, prepay and reborrow Loans and request the
issuance, renewal, extension and increase of the Letter of Credit.

 

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     SECTION 2.02. Loans and Borrowings.

     (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders,
ratably in accordance with their respective Commitments. The failure of any Lender to make any
Loan required to be made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several, and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.

     (b) Subject to Sections 2.04(e) and 2.12, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Company may request in accordance herewith and shall be in
dollars. Each Lender at its option may make any Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Company to repay such Loan in accordance with the terms of this
Agreement and shall not be inconsistent with the duty of such Lender under Section 2.17(a) to
minimize the amounts payable by the Company under Section 2.13 or 2.15.

     (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$10,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that an
ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated
by Section 2.04(e). Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of five outstanding Eurodollar Borrowings.

     SECTION 2.03. Requests for Borrowings.

     To request a Borrowing, except as otherwise provided with respect to Loans to be made pursuant
to Section 2.04(e), the Company shall notify the Administrative Agent of such request by telephone
(a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case of any ABR Borrowing,
not later than 11:00 a.m., New York City time, on the Business Day of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent at its office set forth in Section 9.01 of a
written Borrowing Request in a form approved by the Administrative Agent and signed by the Company.
Each such telephonic and written Borrowing Request shall specify the following information in
compliance with Section 2.02:

     (i) the aggregate amount of the requested Borrowing;

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

     (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

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

     (v) the location and number of the Company’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05.

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

     SECTION 2.04. The Letter of Credit.

     (a) General. Subject to the terms and conditions set forth herein, the Issuing Bank agrees to
issue and amend (including, without limitation, to increase or decrease the stated amount of the
Letter of Credit) at the request and for the account of the Company, a standby letter of credit
substantially in the form of Exhibit D or in such other form as may be reasonable acceptable to the
Issuing Bank and the Company (the “Letter of Credit”), at any time and from time to time from the
Effective Date until the date that is one Business Day prior to the Maturity Date. The Issuing
Bank shall not be under any obligation to issue the Letter of Credit if any order, judgment or
decree of any Governmental Authority or arbitrator binding upon the Issuing Bank shall by its terms
purport to enjoin or restrain the Issuing Bank from issuing the Letter of Credit, or any law, rule,
regulation or orders of any Governmental Authority applicable to the Issuing Bank or any request or
directive (whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from,
the issuance of letters of credit generally or the Letter of Credit in particular or shall impose
upon the Issuing Bank with respect to the Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on
the date hereof, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense that
was not applicable on the date hereof and that the Issuing Bank in good faith deems material to it.

     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the
issuance of the Letter of Credit (or the amendment, renewal or extension of the Letter of Credit),
the Company shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (at least one Business Day in advance of the requested date of issuance,
amendment, renewal or extension) a Notice of LC Request requesting the issuance of the Letter of
Credit and specifying the requested date of issuance of the Letter of Credit (which shall be a
Business Day) and, as applicable, specifying the date of amendment, renewal or extension (which
shall be a Business Day), the date on which the Letter of Credit is to expire (which shall comply
with subsection (c) of this Section), the amount of the Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew
or extend the Letter of Credit. The Letter of Credit shall be issued,

 

17

amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of
the Letter of Credit the Company shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension (i) the aggregate LC Exposure shall not
exceed the aggregate Commitments, and (ii) the Total Exposures shall not exceed the total
Commitments. The Issuing Bank shall promptly (and in any event within one Business Day) notify the
Administrative Agent of each issuance, amendment, renewal, extension or expiry of the Letter of
Credit, and shall provide to the Administrative Agent such other information as the Administrative
Agent shall reasonably request as to the Letter of Credit.

     (c) Expiration Date. The Letter of Credit shall expire at or prior to the date that is one
Business Day prior to the Maturity Date.

     (d) Participations. By the issuance of the Letter of Credit (or an amendment to the Letter of
Credit increasing the amount thereof) and without any further action on the part of the Issuing
Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires
from the Issuing Bank, a participation in the Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under the Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Company on the date due as provided in subsection (e) of this Section, or of any
reimbursement payment required to be refunded to the Company for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant to this subsection
in respect of the Letter of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of the Letter of Credit or
the occurrence and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

     (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement, the Issuing Bank shall
promptly notify the Company by telephone, facsimile or other telecommunication of the date and
amount of such LC Disbursement. The Company shall reimburse such LC Disbursement, whether drawn
before, on or, to the extent in accordance with applicable law, after the expiration date of the
Letter of Credit, and payment of each such reimbursement obligation shall be made on demand;
provided that unless the Company shall have notified the Administrative Agent otherwise, the
Company’s obligations shall be financed with an ABR Borrowing made under this subsection (e) in an
equivalent amount and, to the extent so financed, the Company’s obligation to make such payment
shall be discharged and replaced by the resulting ABR Borrowing. If the Company fails to make such
payment when due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Company in respect thereof and such Lender’s Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the Company, and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the
Lenders. Each Lender agrees to fund its Applicable Percentage of such payment due from the Company
on (i) the Business Day on which demand therefore is made by the Issuing Bank, provided that
notice of such demand is given not later than 11:00 a.m. (New York time) on such Business Day,

 

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or (ii) the first Business Day next succeeding such demand if notice of such demand is given
after such time. If and to the extent that any Lender shall not have made such amount available to
the Administrative Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand
such amount together with interest thereon, for each day from the date of demand by the Issuing
Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for
its account or the account of the Issuing Bank, as applicable. If such Lender shall pay to the
Administrative Agent such amount for the account of the Issuing Bank on any Business Day, such
amount so paid in respect of principal shall constitute an ABR Loan made by such Lender on such
Business Day for purposes of this Agreement.

     (f) Certain Liabilities Relating to the Letter of Credit. None of the Administrative Agent,
the Lenders or the Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of the Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in Section 2.08(f)), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to the
Letter of Credit (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that, without limiting Section 2.08(f), the foregoing shall not be construed
to excuse the Issuing Bank from liability to the Company to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived by the Company to
the extent permitted by applicable law) suffered by the Company that are caused by the Issuing
Bank’s failure to exercise care when determining whether drafts and other documents presented under
the Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have
exercised care in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents presented that appear on
their face to be in substantial compliance with the terms of the Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or information to the contrary
(other than a valid injunction issued by a court of competent jurisdiction), or refuse to accept
and make payment upon such documents if such documents are not in strict compliance with the terms
of the Letter of Credit.

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

     (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the
Company shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Company reimburses such LC

 

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Disbursement, at the rate per annum then applicable to ABR Loans; provided that, if the
Company fails to reimburse such LC Disbursement when due pursuant to subsection (e) of this
Section, then Section 2.11(d) shall apply. Interest accrued pursuant to this subsection shall be
for the account of the Issuing Bank, except that interest accrued on and after the date of payment
by any Lender pursuant to subsection (e) of this Section to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.

     SECTION 2.05. Funding of Borrowings.

     (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders; except as provided otherwise
with respect to ABR Loans made pursuant to Section 2.04(e), such transfers shall be made by (x)
12:00 Noon, New York City time in the case of Borrowings other than ABR Borrowings and (y) 2:00
p.m., New York City time in the case of ABR Borrowings on the date such Loan is made. The
Administrative Agent will make such amounts available to the Company by promptly crediting the
amounts so received, in like funds, to an account of the Company designated by the Company in the
applicable Borrowing Request; provided that ABR Loans made to refinance the reimbursement of an LC
Disbursement as provided in Section 2.04(e) shall be remitted by the Administrative Agent to the
Issuing Bank.

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

     SECTION 2.06. Interest Elections.

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

 

20

     (b) To make an election pursuant to this Section, the Company shall notify the Administrative
Agent of such election by telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Company were requesting a Borrowing of the Type resulting from such election to
be made on the effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Company.

     (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:

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

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

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

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

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

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

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

     SECTION 2.07. Termination of Commitments; Reduction of Commitments.

     (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.

 

21

     (b) The Company may at any time terminate, or from time to time reduce, the aggregate amount
of the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that
is an integral multiple of $1,000,000 and not less than $5,000,000, (ii) the Company shall not
terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.09, the sum of the Total Exposures of all the Lenders would
exceed the total Commitments and (iii) the Company shall satisfy all its obligations in respect
under Sections 2.14 and 9.03(d) in respect of such termination or reduction and any concurrent
repayment.

     (c) The Company shall notify the Administrative Agent of any election to terminate or reduce
the Commitments under subsection (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each reduction of the Commitments shall be made ratably among the
Lenders based on their respective Commitments.

     SECTION 2.08. Repayment of Loans; Evidence of Debt; Obligations Absolute.

     (a) The Company hereby unconditionally promises to pay to the Paying Agent for application in
accordance with Section 2.16 the outstanding principal amount of each Loan on the Maturity Date.

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

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

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

     (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Company shall prepare, execute and deliver to such Lender a nonnegotiable promissory
note substantially in the form attached as Exhibit B (a “Note”) payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its permitted registered assigns).
Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including
after assignment pursuant to Section 9.04) be represented by one or more Notes

 

22

payable to the order of the payee named therein (or, if such Note is a registered Note, to
such payee and its permitted registered assigns).

     (f) The Company’s obligation to repay the Loans, to reimburse LC Disbursements and to make the
other payments provided herein shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of the Letter of Credit
or this Agreement, or any term or provision therein, (ii) the existence of any claim, set-off,
defense or other right that the Company, or any Affiliate of the Company may have at any time
against the beneficiary or any transferee of the Letter of Credit (or any Persons or entities for
whom such beneficiary or transferee may be acting), the Issuing Bank or any other Person, whether
in connection with this Agreement, the transactions contemplated herein or any unrelated
transaction; (iii) without limiting Section 2.04(f), any draft, demand certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iv) payment by the
Issuing Bank under the Letter of Credit against presentation of a draft or other document that does
not comply with the terms of the Letter of Credit, (v) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan Documents; (vi) any
non-application or misapplication by the beneficiary the Letter of Credit of the proceeds of any
drawing under the Letter of Credit; (vii) the fact that a Default shall have occurred and be
continuing; or (viii) any other event or circumstance whatsoever, whether or not similar to any of
the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Company’s obligations hereunder.

     SECTION 2.09. Prepayment of Loans.

     (a) The Company shall have the right at any time and from time to time to prepay any Borrowing
made by it in whole or in part, subject to prior notice in accordance with subsection (b) of this
Section.

     (b) The Company shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of prepayment and (ii) in the
case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date
of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of
any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders and the
Paying Agent of the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.

 

23

     SECTION 2.10. Fees.

     The Company agrees to pay to the Paying Agent for application in accordance with Section 2.16
a facility fee (the “Facility Fee”), payable in such amounts and at the times specified in the Fee
Letter. The Facility Fee shall be paid on the dates due in immediately available funds. Absent
manifest error, once paid, the Facility Fee shall not be refundable under any circumstances.

     SECTION 2.11. Interest.

     (a) The Loans comprising each ABR Borrowing shall bear interest at a rate per annum equal to
the Alternate Base Rate.

     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum
equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing.

     (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or
other amount payable by the Company hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Loans as provided above.

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

     (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and shall be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be conclusive absent manifest
error.

     SECTION 2.12. Alternate Rate of Interest.

     If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

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

 

24

     (b) the Administrative Agent is advised by the Required Lenders that because of a change in
circumstances affecting the eurodollar market generally the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Company and the Lenders by telephone
or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the
Company and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

     SECTION 2.13. Increased Costs. Subject to Section 2.17,

     (a) If any Change in Law shall:

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

     (ii) impose on any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or the Letter of
Credit or participations therein; and the result of any of the foregoing shall be to increase the cost to such Lender or the Issuing
Bank in an amount that such Lender or the Issuing Bank deems to be material of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost of such Lender or the Issuing Bank in an amount that such Lender or the Issuing
Bank deems to be material of participating in, issuing or maintaining the Letter of Credit or
reduce the amount of any sum received or receivable by such Lender or the Issuing bank hereunder
(whether of principal, interest or otherwise), then the Company will pay to the Paying Agent for
distribution to the Administrative Agent, other than any increase in costs resulting from (A)
Excluded Taxes or (B) Indemnified Taxes or Other Taxes to which Section 2.15 is applicable, then
the Company will pay to such Lender or the Issuing Bank, as the case may be, for the account of
such Lender or the Issuing Bank in accordance with Section 2.16 such additional amount or amounts
as will compensate such Lender or the Issuing Bank for such additional costs incurred or reduction
suffered.

     (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or the
Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if
any, as a consequence of this Agreement or the Loans made or the Letter of Credit to a level below
that which such Lender or the Issuing Bank or such Lender’s the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration
such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing

 

25

Bank’s holding company with respect to capital adequacy), then from time to time the Company will
pay to the Paying Agent for distribution to the Administrative Agent for the account of such Lender
or the Issuing Bank in accordance with Section 2.16 such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
for any such reduction suffered.

     (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be,
as specified in subsection (a) or (b) of this Section, and explaining in reasonable detail the
method by which such amount or amounts shall have been determined, shall be delivered to the
Company and shall be conclusive absent manifest error; provided that no Lender nor the Issuing Bank
shall be required to deliver information pursuant to this Section relating to its business, other
than any such information that is available to the Company on a nonconfidential basis prior to the
date of such certificate. The Company shall pay to the Paying Agent the amount shown as due on any
such certificate within 10 days after receipt thereof.

     (d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant
to this Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand
such compensation; provided that the Company shall not be required to compensate a Lender or
Issuing Bank pursuant to this Section for any increased costs or reductions unless the Lender or
the Issuing Bank gives notice to the Company to compensate such Lender or the Issuing Bank pursuant
to this Section within 180 days after the date such Lender or the Issuing Bank knows an event has
occurred pursuant to which such Lender or the Issuing Bank will seek such compensation.

     SECTION 2.14. Break Funding Payments.

     In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date
specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan
other than on the last day of the Interest Period applicable thereto as a result of a request by
the Company pursuant to Section 2.17, then, in any such event, the Company shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar
Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount
determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that
such Lender would pay for a deposit equal to the principal amount of such Loan for the period from
the date of such payment, conversion, failure or assignment to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the
duration of the Interest Period that would have resulted from such borrowing, conversion or
continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO Rate for
such Interest Period, over (ii) the amount of interest that such Lender would earn on such
principal amount for such period if such Lender were to invest such principal amount for such
period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for
dollar deposits from other banks in the eurodollar market at the commencement
of such period. A certificate of any Lender setting forth any amount or amounts that such
Lender

 

26

is entitled to receive pursuant to this Section and explaining in reasonable detail the
method by which such amount or amounts shall have been determined shall be delivered to the Company
and shall be conclusive absent manifest error; provided that no Lender or Issuing Bank shall be
required to deliver information pursuant to this Section relating to its business, other than any
such information that is available to the Company on a nonconfidential basis prior to the date of
such certificate. The Company shall pay the amount shown as due on any such certificate to the
Paying Agent for distribution to the Administrative Agent for the account of such Lender in
accordance with Section 2.16 within 10 days after receipt of such certificate.

     SECTION 2.15. Taxes.

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

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

     (c) The Company shall indemnify the Administrative Agent, the Paying Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by the Administrative Agent, the Paying
Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or
an account of any obligation of the Company hereunder and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the Company by a Lender or
the Issuing Bank, or by the Administrative Agent or the Paying Agent, on its own behalf or on
behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. Notwithstanding
the foregoing, the Company shall have no obligation to indemnify the Administrative Agent, the
Paying Agent, any Lender or the Issuing Bank for any interest, penalties or expenses described
above arising from the gross negligence or willful misconduct of the Administrative Agent, the
Paying Agent, such Lender or the Issuing Bank, as the case may be, in taking any action it was
required by applicable law to take including, but not limited to, filing any tax return or report
in a timely manner.

     (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Company to a Governmental Authority, the Company shall deliver to the Administrative Agent (with a
copy to the Paying Agent) the original or a certified copy of a receipt issued by such

 

27

Governmental Authority evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent.

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

     (f) If the Administrative Agent, Paying Agent, the Issuing Bank or any Lender determines that
it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the
Company or with respect to which the Company has paid additional amounts pursuant to this Section
2.15, it shall pay over such refund to the Company (but only to the extent of indemnity payments
made, or additional amounts paid, by the Company under this Section 2.15 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent, Paying Agent, The Issuing Bank or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided, that the
Company, upon the request of the Administrative Agent, the Paying Agent, the Issuing Bank or such
Lender, agrees to repay the amount paid over to the Company (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative Agent, the Paying
Agent, the Issuing Bank or such Lender in the event the Administrative Agent, the Paying Agent, the
Issuing Bank or such Lender is required to repay such refund to such Governmental Authority. This
Section shall not be construed to require the Administrative Agent, the Paying Agent, the Issuing
Bank or any Lender to make available its tax returns (or any other information relating to its
taxes which it deems confidential) to the Company or any other Person.

     SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) The Company shall make each payment required to be made by it hereunder (whether of
principal, interest, fees, reimbursement of LC Disbursements or of any amounts under Section 2.13,
2.14 or 2.15, or otherwise) prior to 12:00 Noon, New York City time, on the date when due in
immediately available funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Paying Agent to be credited to the Paying Agent’s Account. All payments made
by the Company to the Paying Agent as provided herein or in any Note shall be deemed received by
the Lenders or the Issuing Bank for all purposes as between the Lenders or the Issuing Bank and the
Company. The Administrative Agent shall notify the Paying Agent in advance of each such expected
payment. The Paying Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal, interest or Facility Fees to the Administrative Agent or, with respect to
payments to be made to the Issuing Bank, the Issuing Bank, and the Administrative Agent or the
Issuing Bank (as the case may be) will promptly after any such payment cause to be distributed like
funds relating to the payment of principal or interest or Facility Fees (other than amounts payable

 

28

pursuant to Section 2.04(f), 2.13, 2.14, 2.15 or 9.03(a), (b) or (c)) (according to the
Lenders’ respective Commitments) to the Lenders for the account of their respective lending
offices, and like funds relating to the payment of any other amount payable to any Lender to the
Administrative Agent, and the Administrative Agent then shall cause like funds to be distributed to
such Lender for the account of its applicable lending office, in each case to be applied in
accordance with the terms of this Agreement or any Note. The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for the period of such
extension. All payments hereunder shall be made in dollars.

     (b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then
due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of interest and fees then
due to such parties, and (ii) second, to pay principal and unreimbursed LC Disbursements then due
hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal
and unreimbursed LC Disbursements then due to such parties.

     (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or participations in
unreimbursed LC Disbursements resulting in such Lender receiving payment of a greater proportion of
the aggregate amount of its Loans or participations in unreimbursed LC Disbursements and accrued
interest thereon than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the Loans or
participations in unreimbursed LC Disbursements of other Lenders to the extent necessary so that
the benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans or participations
in unreimbursed LC Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this subsection shall not be construed to apply to any payment made by the
Company pursuant to and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate
thereof (as to which the provisions of this subsection shall apply). The Company consents to the
foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise against the Company
rights of set-off and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of the Company in the amount of such participation.

     (d) Unless the Paying Agent shall have received notice from the Company prior to the date on
which any payment is due to the Paying Agent for the account of the Lenders or the Issuing Bank
that the Company will not make such payment, the Paying Agent may assume that the Company has made
such payment on such date in accordance herewith and may, in reliance

 

29

upon such assumption, distribute to the Administrative Agent, whereupon the Administrative
Agent shall distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In
such event, if the Company has not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the Paying Agent forthwith on demand
the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day
from and including the date such amount is distributed to it to but excluding the date of payment
to the Paying Agent, at the Federal Funds Effective Rate.

     (e) If any Lender or the Issuing Bank shall fail to make any payment required to be made by it
pursuant to Section 2.04(d), 2.05(b) or 2.16(d), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender or the Issuing Bank to satisfy such
Lender or the Issuing Bank’s obligations under such Sections until all such unsatisfied obligations
are fully paid.

     SECTION 2.17. Mitigation Obligations; Replacement of Lenders.

     (a) If any Lender requests compensation under Section 2.13, or if the Company is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The
Company hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment.

     (b) If any Lender requests compensation under Section 2.13, or if the Company is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, or
if in connection with any proposed amendment, modification, waiver or consent, the consent of the
Required Lenders has been obtained but the consent of a Lender the consent of which is required
shall not have been obtained, then the Company may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its
interests, rights and obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) the Company shall have received the prior written consent of the Administrative Agent (and
if a Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be
withheld or delayed, (ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the Company (in the case of
all other amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such

 

30

compensation or payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation cease to apply.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to each of the Lenders and the Issuing Bank as follows:

     SECTION 3.01. Organization; Powers.

     The Company is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry on its business as
now conducted and is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.02. Authorization; Enforceability.

     The Transactions are within the Company’s corporate powers and have been duly authorized by
all necessary corporate action. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights generally and subject to general principles of equity, regardless
of whether considered in a proceeding in equity or at law.

     SECTION 3.03. Governmental Approvals; No Conflicts.

     The Transactions (a) do not require any consent or approval of, registration or filing with,
or any other action by, any Governmental Authority, except such as have been obtained or made and
are in full force and effect, except (i) those required in the ordinary course of business of the
Company in connection with the performance by the Company of its obligations of the covenants
hereunder, other filings under securities laws, and filings, registrations consents or approvals in
each case not required to be made or obtained by the date hereof, and (ii) the filing by the
Company of a Periodic Report on Form 8-K with respect to the transactions contemplated hereby,
which filing will be made promptly following the execution and delivery of this Agreement, (b) will
not violate any applicable law or regulation or the charter, by-laws or other organizational
documents of the Company or any order of any Governmental Authority, (c) will not result in a
material violation of or default under any indenture or other material agreement or instrument
binding upon the Company or any of the Subsidiaries or their assets, or give rise to a right
thereunder to require any payment to be made by the Company or any of the Subsidiaries, and (d)
will not result in the creation or imposition of any material Liens on any material assets of the
Company or any of the Subsidiaries.

 

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     SECTION 3.04. Financial Condition.

     The Company has heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders’ equity and cash flows as of and for the fiscal year ended
December 31, 2006, reported on by independent public accountants. Such financial statements
present fairly, in all material respects, the consolidated financial position of the Company and
its Subsidiaries as of the dates thereof and results of operations and cash flows of the Company
and its Subsidiaries for the periods covered thereby in accordance with GAAP.

     SECTION 3.05. Disclosure.

     Each of the reports required to be filed by the Company under Section 13(a) of the Securities
Exchange Act of 1934 on or prior to the date hereof has been filed and, as of the respective dates
thereof and the date hereof, such reports did not contain and do not contain an untrue statement of
a material fact and did not omit and do not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.

     SECTION 3.06. Federal Reserve Regulations.

     (a) Neither the Company nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of purchasing or carrying
Margin Stock.

     (b) No part of the proceeds of the Loans has been or will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a
violation of the provisions of the Regulations of the Board, including, without limitation,
Regulation U or X thereof. Not more than 25% of the assets subject to the restrictions of Section
6.01 and 6.02, valued in accordance with Regulation U, will at any time consist of Margin Stock.

     SECTION 3.07. Investment Company Status.

     Neither the Company nor any of the Subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

ARTICLE IV

CONDITIONS

     SECTION 4.01. Conditions to Effective Date.

     The obligations of the Lenders to make Loans to the Company and of the Issuing Bank to issue
the Letter of Credit for the account of the Company shall not become effective until the date on
which each of the following conditions are satisfied (or waived in accordance with Section 9.02):

     (a) The Administrative Agent shall have received at least one executed counterpart of this
Agreement from the Company, each Agent, the Issuing Bank and each Lender, and arrangements
satisfactory to the Administrative Agent shall have been made for the delivery of

 

32

additional executed counterparts, sufficient in number for distribution to the Agents, the Issuing Bank, the
Lenders and the Company, together with all Exhibits thereto;

     (b) The Administrative Agent shall have received a favorable written opinion (addressed to the
Administrative Agent, the Issuing Bank and the Lenders and dated the Effective Date) of (i) L.E.
Stellato, Vice President, General Counsel and Secretary of the Company, in a form reasonably
satisfactory to the Administrative Agent and (ii) Jones Day, in a form reasonably satisfactory to
the Administrative Agent;

     (c) The Administrative Agent shall have received documents and certificates relating to the
organization, existence and good standing of the Company, the authorization of the Transactions,
the incumbency of the persons executing this Agreement on behalf of the Company, all in form and
substance satisfactory to the Administrative Agent;

     (d) The Administrative Agent shall have received a certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer of the Company, confirming as of
the Effective Date, that (i) the representations and warranties of the Company set forth in Article
III of this Agreement are true and correct in all material respects on and as of such date and (ii)
no Default has occurred and is continuing; and

     (e) The Administrative Agent and each Lender (and its Affiliates) shall have received all fees
and other amounts due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid
by the Company hereunder.

     SECTION 4.02. Condition to Each Credit Event.

     The obligation of each Lender to make a Loan to the Company on the occasion of any Borrowing
(other than a Borrowing made to reimburse the Issuing Bank for any LC Disbursement as provided in
Sections 2.04(d) and (e)), and the obligation of the Issuing Bank to issue, renew, extend or
increase the amount of the Letter of Credit, is subject to the satisfaction of the condition that,
at the time of and immediately after giving effect to such Credit Event, no Event of Default shall
have occurred and be continuing.

     Each Credit Event shall be deemed to constitute a representation and warranty by the Company on the
date thereof as to the satisfaction of the condition described in this Section.

ARTICLE V

AFFIRMATIVE COVENANTS

     Until the Commitments have expired or been terminated, the principal of and interest on each
Loan and all fees payable hereunder shall have been paid in full, and the Letter of Credit shall
have expired or terminated and all LC Disbursements shall have been reimbursed, the Company
covenants and agrees with the Lenders that:

     SECTION 5.01. Financial Statements; and Other Information.

     The Company will furnish to each Lender:

 

33

     (a) within 90 days after the end of each fiscal year of the Company, its audited
consolidated balance sheet and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by independent public
accountants of recognized national standing (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Company and the
Subsidiaries on a consolidated basis in accordance with GAAP;

     (b) within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Company, its consolidated balance sheet and related statements of
operations and cash flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the balance sheet, as of the end
of) the previous fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of operations of the
Company and the Subsidiaries on a consolidated basis in accordance with GAAP, subject to
normal year-end audit adjustments and the absence of footnotes;

     (c) concurrently with any delivery of financial statements under clause (a) or (b)
above, a certificate of a Financial Officer of the Company certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto;

     (d) promptly after the same become publicly available, copies of all reports on Forms
10-K, 10-Q and 8-K (or any substitute or successor forms) filed by the Company with the SEC,
or any Governmental Authority succeeding to any or all of the functions of said Commission,
or distributed by the Company to its shareholders generally, as the case may be;

     (e) promptly following a request therefor, all documentation and other information that
any Lender reasonably requests as necessary in order for it to comply with its ongoing
obligations under applicable “know your customer” and anti-money laundering rules and
regulations, including the USA Patriot Act; and

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

     Information required to be delivered pursuant to this Section and clause (ii) of
Section 5.02 shall be deemed to have been delivered if such information, or one or more
annual or quarterly reports containing such information, shall have been (i) posted by the
Administrative Agent on an IntraLinks or similar site to which the Lenders have been
granted access or shall be available on the website of the SEC at http://www.sec.gov and, in
either case, a confirming electronic correspondence shall have been delivered or

 

34

caused to be delivered to the Lenders providing notice of such posting or availability; provided that
the Company shall deliver paper copies of such information to any Lender that requests such
delivery, or (ii) delivered to Citibank pursuant to the Reimbursement Agreement.
Information required to be delivered pursuant to this Section may also be delivered by
electronic communications pursuant to procedures approved by the Administrative Agent.

     SECTION 5.02. Notices of Material Events.

     The Company will furnish to the Administrative Agent and each Lender prompt written notice of
the occurrence of any Default promptly after a Financial Officer becomes aware thereof.

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

     SECTION 5.03. Existence; Conduct of Business.

     The Company will, and will cause each of the Material Subsidiaries to, do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits, privileges and franchises material to the conduct of its business
except where the failure to do so could not reasonably be expected to have a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger or consolidation of the Company
permitted under Section 6.02 or any merger, consolidation, liquidation or dissolution of a
Subsidiary that is not otherwise prohibited by the terms of this Agreement.

ARTICLE VI

NEGATIVE COVENANTS

     Until the Commitments have expired or been terminated, the principal of and interest on each
Loan and all fees payable hereunder shall have been paid in full, and the Letter of Credit shall
have expired or terminated and all LC Disbursements shall have been reimbursed, the Company
covenants and agrees with the Lenders that:

     SECTION 6.01. Equal and Ratable Security.

     The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or permit to exist any Lien on any Principal Property, or shares of capital
stock of any Restricted Subsidiary, whether owned on the date of this Agreement or thereafter
acquired, securing any obligation unless the Company contemporaneously secures the Company’s
obligations under this Agreement equally and ratably with (or prior to) such obligation. The
preceding sentence shall not require the Company to secure the Company’s obligations under this
Agreement if the Lien consists of the following:

     (i) Permitted Liens; or

 

35

     (ii) Liens other than those permitted in Section 6.01(i) above, provided that the aggregate
amount of all obligations secured by Liens permitted by this Section 6.01(ii) shall not exceed 15%
of Consolidated Net Tangible Assets.

     SECTION 6.02. Fundamental Changes.

     The Company will not merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in
one transaction or in a series of transactions and including by means of any merger or sale of
capital stock or otherwise) all or substantially all of its assets (whether now owned or hereafter
acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing, any Person may merge with
or into or consolidate with the Company if the Company is the surviving Person.

     SECTION 6.03. Limitation on Sale/Leaseback Transactions.

     The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into
any Sale/Leaseback Transaction with respect to any Principal Property unless (i) the Company or
such Restricted Subsidiary would be entitled to create a Lien on such Principal Property securing
Indebtedness in an amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction without securing the Company’s obligations under this Agreement pursuant
to Section 6.01 or (ii) the Company, within six months from the effective date of such
Sale/Leaseback Transaction, applies to the voluntary defeasance or retirement (excluding
retirements of any Indebtedness ranking pari passu with Company’s obligations under this Agreement
as a result of conversions or pursuant to mandatory sinking fund or mandatory prepayment provisions
or by payment at maturity) of any Indebtedness ranking pari passu with the Company’s obligations
under this Agreement an amount equal to the Attributable Indebtedness in respect of such
Sale/Leaseback Transaction; provided that the foregoing will not prevent the Company or any
Restricted Subsidiary from (x) entering into any Sale/Leaseback Transaction involving a lease with
a term of less than three years or (y) entering into any Sale/Leaseback Transaction between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries.

ARTICLE VII

EVENTS OF DEFAULT

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

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

     (b) the Company shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Article) payable under
this Agreement, when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of five Business Days;

 

36

     (c) any representation or warranty made or deemed made by or on behalf of the Company
or any Subsidiary in or in connection with this Agreement or any amendment or modification
hereof or waiver hereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, shall prove to have been incorrect in any material
respect when made or deemed made;

     (d) the Company shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.03 (but only with respect to the Company’s existence) or in Article
VI;

     (e) the Company shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 60 days after written
notice thereof from the Administrative Agent to the Company (which notice will be given at
the request of any Lender);

     (f) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of the Company or
any Material Subsidiary or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Material Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered; or

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

then, and in every such event (other than an event with respect to the Company described in clause
(f) or (g) of this Article), and at any time thereafter during the continuance of such event, the
Paying Agent (in the case of an Event of Default described in clause (a) or (b) above) shall
promptly provide notice of such Event of Default to the Administrative Agent, and the
Administrative Agent, upon receipt of such notice from the Paying Agent, and in the case of any
other Event of Default, shall, at the request of the Required Lenders, by notice to the Company,
take either or both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the

 

37

Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued interest thereon
and all fees and other obligations of the Company hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company; and in case of any event with respect to the Company described in
clause (f) or (g) of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all fees and other
obligations of the Company hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Company.

ARTICLE VIII

THE ADMINISTRATIVE AGENT AND THE PAYING AGENT

     Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent
and the Paying Agent as its agent and authorizes the Administrative Agent and the Paying Agent to
take such actions on its behalf and to exercise such powers as are delegated to the Administrative
Agent or the Paying Agent, as applicable, by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

     Any bank serving as the Administrative Agent or the Paying Agent hereunder shall have the same
rights and powers in its capacity as a Lender or the Issuing Bank as any other Lender and may
exercise the same as though it were not the Administrative Agent or the Paying Agent, as
applicable, and such bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any of its Subsidiaries thereof or other
Affiliate thereof as if it were not the Administrative Agent or the Paying Agent, as applicable,
hereunder.

     Neither Agent shall have any duties or obligations except those expressly set forth for such
Agent herein. Without limiting the generality of the foregoing, (a) neither Agent shall be subject
to any fiduciary or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby that
such Agent is required to exercise in writing as directed by the Required Lenders, and (c) except
as expressly set forth herein, neither Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Company or any of its
Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its
Affiliates in any capacity. Neither Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section 9.02) to the
extent required by Section 9.02 or in the absence of its own gross negligence or willful
misconduct. Neither Agent shall be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this Agreement,
(ii) the contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of

 

38

this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than, in the case
of the Administrative Agent, to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

     Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent also
may rely upon any statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with
legal counsel (who may be counsel for the Company), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.

     The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more subagents appointed by the Administrative Agent. The Administrative
Agent and any such subagent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding subsections
shall apply to any such subagent and to the Related Parties of the Administrative Agent and any
such subagent, and shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Administrative Agent.

     Subject to the appointment and acceptance of an appropriate successor Agent as provided in
this subsection, each Agent may resign at any time by notifying the Lenders, the Issuing Bank and
the Company. Upon any such resignation, the Required Lenders shall have the right, with the
consent of the Company (not to be unreasonably withheld or delayed), to appoint a successor, which
must be a bank or trust company with an office in New York, New York, or an Affiliate of any such
bank. If no such successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may, on behalf of the Lenders and in consultation with the Company, appoint
a successor Agent, which shall be a bank with an office in New York, New York, or an Affiliate of
any such bank. Upon the acceptance of its appointment as an Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Company to a successor Agent shall be the same as those, if
any, payable to its predecessor unless otherwise agreed between the Company and such successor.
After any Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as such Agent.

     Each Lender acknowledges that it has, independently and without reliance upon any Agent, the
Issuing Bank or any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement.
Each Lender also acknowledges that it will, independently and without reliance upon any Agent,
the Issuing Bank or any other Lender and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or not taking

 

39

action under or based upon this Agreement, any related agreement or any document furnished hereunder or
thereunder.

ARTICLE IX

MISCELLANEOUS

     SECTION 9.01. Notices.

     Except in the case of notices and other communications expressly permitted to be given by
telephone, all notices and other communications provided for herein shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or registered mail or sent
by telecopy, as follows:

     (a) if to the Company, to 101 Prospect Avenue, N.W., Cleveland, OH 44115, Telecopy: (216)
566-2947, E-mail: sphennessy@sherwin.com, Attention: Senior Vice President-Finance and Chief
Financial Officer with a copy to the General Counsel, Telecopy No. (216) 566-1708, E-mail:
lestellato@sherwin.com;

     (b) if to the Administrative Agent, to Two Penns Way, Suite 110, New Castle, Delaware 19720,
Telecopy: (212) 994-0847, Email: dennis1.banfield@citigroup.com, Attention: Dennis Banfield.

     (c) if to the Paying Agent, to 4 New York Plaza, New York, NY 10004-2413, Attention:
Institutional Trust Service, Telecopy: (212) 623-6274, Email: joseph.g.powell@bankofny.com;

     (d) if to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire (a copy of which the Administrative Agent shall provide to the
Company, unless such notice or communication was delivered by the Company); and

     (e) if to the Issuing Bank, to Two Penns Way, Suite 110, New Castle, Delaware 19720, Telecopy:
(212) 994-0847, Email: dennis1.banfield@citigroup.com, Attention: Dennis Banfield.

Any party hereto may change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be deemed to have been given
on the date of receipt.

     SECTION 9.02. Waivers; Amendments.

     (a) No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right
or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any other right or power.
The rights and remedies of the Agents, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the Company therefrom
shall in any event be effective unless the same shall be permitted by this Section, and then such
waiver or consent shall be effective only in the specific instance and for the purpose

 

40

for which construed as a waiver of any Default, regardless of whether any Agent, the Issuing Bank or any
Lender may have had notice or knowledge of such Default at the time.

     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Company and the Required
Lenders or by the Company and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce
the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of
each Lender affected thereby and the Issuing Bank, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees or any
other amount payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written consent of each
Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each Lender, or (v) change
any of the provisions of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify
any rights hereunder or make any determination or grant any consent hereunder without the written
consent of each Lender; provided further that (A) no such agreement shall amend, modify or
otherwise affect the rights or duties of any Agent hereunder without the prior written consent of
such Agent and (B) no amendment, modification or waiver of this Agreement or any provision hereof
that would alter the rights or duties of the Issuing Bank hereunder shall be effective without the
written consent of the Issuing Bank.

     SECTION 9.03. Expenses; Indemnity; Damage Waiver.

     (a) The Company agrees to pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent, in connection with the preparation and administration of
this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel for the Administrative
Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement, including its rights under this Section, or in connection
with the Loans made hereunder and the Letter of Credit, including in connection with any workout,
restructuring or negotiations in respect thereof.

     (b) The Company agrees to indemnify each Agent, the Issuing Bank and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of
this Agreement or any agreement or instrument contemplated hereby, the performance by the parties
hereto of

 

41

their respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) the representation or warranty set forth in Section
3.05 of this Agreement being incorrect in any material respect when made or deemed made under this
Agreement, (iii) any Loan or the Letter of Credit or the use of the proceeds thereof (including any
refusal by the Issuing Bank to honor a demand for payment under the Letter of Credit if the
documents presented in connection with such demand do not strictly comply with the terms of the
Letter of Credit), (iv) any actual or alleged presence or release of Hazardous Materials on or from
any property owned or operated by the Company or any of its Subsidiaries, or any Environmental
Liability related in any way to the Company or any of its Subsidiaries, or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or its Affiliates or from a breach of this
Agreement by such Indemnitee.

     (c) To the extent that the Company fails to pay any amount required to be paid by it to the
Administrative Agent or the Issuing Bank under subsection (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent or the Issuing Bank, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent or the Issuing Bank in its capacity as such.

     (d) The Company acknowledges and agrees that Citibank, CUSA and their respective affiliates
(each, an “indemnified party”) may enter into certain transactions in order to mitigate credit risk
arising out of the financing contemplated by this Agreement. The Company agrees to indemnify each
indemnified party against, in each case subject to and in accordance with the Fee Letter, losses,
costs or expenses that such indemnified party may sustain or incur as a consequence of (i) any
reduction or termination of the Commitments prior to the Maturity Date, (ii) the assignment of any
Indemnified Party’s Commitment or Total Exposure as a result of a request by the Company pursuant
to Section 2.17 or (iii) the occurrence of any successor event (as defined below), including
without limitation any such losses, costs or expenses sustained or incurred as a consequence of any
event described in clause (i), (ii) or (iii) above in connection with (A) the termination or
adjustment of, or (B) designation of a “Successor” (as defined in the 2003 ISDA Credit Derivatives
Definitions) to the Company under, or (C) any other modification to, any such transaction entered
into by an indemnified party in order to mitigate credit risk arising out of the financing
contemplated by this Agreement. For purposes of this Section 9.03(d), “successor event” shall mean
any event, such as a merger, consolidation, amalgamation, transfer of assets or liabilities,
demerger, spin-off or other similar event, whereby another entity shall succeed to the obligations
of the Company, whether by operation of law or pursuant to any agreement.

     (e) To the extent permitted by applicable law, no party hereto shall assert, and each party
hereto hereby waives, any claim against any other party, on any theory of liability, for special,

 

42

consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan, the Letter of Credit or the use of the proceeds thereof.

     (f) All amounts due under this Section shall be payable promptly after written demand
therefore accompanied by the appropriate invoice or other detail supporting such amount.

     SECTION 9.04. Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that (i) the
Company may not assign or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer by the Company
without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer
rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby and, to the extent expressly contemplated
hereby, Participants and the Related Parties of the Agents, the Issuing Bank and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

     (b) Any Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans and
participations in LC Disbursements at the time owing to it); provided that (i) each of the Company
(except that (A) in the case of an assignment to a Lender or an Affiliate of a Lender or (B) upon
the occurrence and during the continuance of an Event of Default or an “Event of Default” under,
and as defined in, the Reimbursement Agreement (without regard to the proviso at the end of Section
15 of the Reimbursement Agreement), the consent of the Company shall not be required), the
Administrative Agent and in the case of any assignment of a Commitment, the Issuing Bank must give
its prior written consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment
of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment
of the assigning Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Company and the Administrative Agent otherwise consent
or unless an Event of Default shall have occurred and be continuing, (iii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement, (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together (except in the case of an
assignment by a Lender to one of its Affiliates or an assignment as a result of any of the events
contemplated by Section 2.17) with a processing and recordation fee of $3,500, and (v) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent and the Paying
Agent an Administrative Questionnaire. Upon acceptance and recording pursuant to subsection (d) of
this Section, from and after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and
the

 

43

assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (e) of this Section.

     (c) The Administrative Agent, acting for this purpose as an agent of the Company, shall
maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall
be conclusive absent manifest error, and the Company, each Agent, the Lenders and the Issuing Bank
may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Company, the Issuing Bank, the Paying Agent and
any Lender, at any reasonable time and from time to time upon reasonable prior notice.

     (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in subsection
(b) of this Section and any written consent to such assignment required by subsection (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this subsection.

     (e) Any Lender may, without the consent of any of the Company, the Administrative Agent or the
Issuing Bank, sell participations to one or more banks or other entities (each a “Participant”) in
all or a portion of such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations and (iii) the Company, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to subsection (f) of this Section, the Company agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14
and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also

 

44

shall be entitled to the benefits of Section 9.09 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.15(f) as though it were a Lender.

     (f) A Participant shall not be entitled to receive any greater payment under Section 2.13 or
2.15 than the applicable Lender would have been entitled to receive with respect to the
participations sold to such Participant, unless the sale of the participations to such Participant
is made with the Company’s prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Company is
notified of the participations sold to such Participant and such Participant agrees, for the
benefit of the Company, to comply with Section 2.15(f) as though it were a Lender.

     (g) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any such pledge or
assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto.

     SECTION 9.05. Survival.

     All covenants, agreements, representations and warranties made by the Company herein and in
the certificates or other instruments delivered in connection with or pursuant to this Agreement
shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding that any Agent or
any Lender may have had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or the termination of this
Agreement or any provision hereof.

     SECTION 9.06. USA Patriot Act.

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

     SECTION 9.07. Counterparts; Integration; Effectiveness.

     This Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the Fee Letter and any other separate
letter agreements with respect to fees payable to the Administrative Agent constitute the
entire contract among the parties relating to the subject matter hereof and supersede any and all

 

45

previous agreements and understandings, oral or written, relating to the subject matter hereof.
Except as provided in Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

     SECTION 9.08. Severability.

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

     SECTION 9.09. Right of Setoff.

     If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the account of the
Company against any of and all the obligations of the Company now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have. Any Lender exercising any of its rights pursuant to this
Section shall provide notice of the same to the Company promptly after exercising the same;
provided, however, the failure to give such notice shall not effect the validity of such setoff.

     SECTION 9.10. Governing Law; Jurisdiction; Consent to Service of Process; Process Agent;
Waiver of Immunity.

     (a) This Agreement shall be construed in accordance with and governed by the law of the State
of New York.

     (b) The Company hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions

 

46

by suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender or the Issuing Bank
may otherwise have to bring any action or proceeding relating to this Agreement against the Company
or its properties in the courts of any jurisdiction.

     (c) The Company hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any court
referred to in subsection (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

     (d) The Company and each other party to this Agreement irrevocably consent to service of
process in the manner provided for notices to it in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.

     SECTION 9.11. WAIVER OF JURY TRIAL.

     EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     SECTION 9.12. Headings.

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

     SECTION 9.13. Confidentiality.

     Each of the Administrative Agent, the Paying Agent and the Lenders and the Issuing Bank agrees
to maintain the confidentiality of the Information (as defined below), except that Information may
be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisers (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed
to keep such Information confidential) on a “need to know” basis
solely in connection with the Transactions, (b) to the extent requested by any regulatory
authority, provided, however, that, to the extent legally permitted, the Company is promptly

 

47

notified in order that it may seek a protective order or take other appropriate action, (c) to the
extent required by applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) to the extent reasonably required or reasonably deemed
advisable in connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any securitization, swap or derivatives transaction relating to the Company, any
Subsidiaries and the obligations hereunder, (g) with the consent of the Company or (h) to the
extent such Information (i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, the Paying Agent, any Lender or the
Issuing Bank on a nonconfidential basis from a source other than the Company. For the purposes of
this Section, “Information” means all information received from the Company in connection with this
Agreement relating to the Company or its business, other than any such information that is
available to the Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis
prior to disclosure by the Company; provided that, in the case of information received from the
Company after the date hereof, such information is clearly identified as confidential at the time
of delivery. Any Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

     SECTION 9.14. Interest Rate Limitation.

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

[Remainder of page intentionally left blank]

 

48

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

	 	 	 	 	 	 	 
	 	 	THE SHERWIN-WILLIAMS COMPANY
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	CITICORP USA, INC.,
	 	 	individually, as Administrative Agent, as
Issuing Bank and as Lender
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK,
	 	 	as Paying Agent
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

Sherwin III — Credit Agreement

 

EXHIBIT A

to Credit Agreement

FORM OF

ASSIGNMENT AND ACCEPTANCE

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

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

	 	 	 	 	 
	1.

	 	Assignor:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	2.

	 	Assignee:	 	 
	 

	 	 	 	 
	 

	 	 	 	[an Affiliate of [Lender]]
	 
	 	 	 	 
	3.

	 	Company:
	 	THE SHERWIN-WILLIAMS COMPANY
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	CITICORP USA, INC., as the
Administrative Agent under the
Credit Agreement

A-1 

 

	 	 	 	 	 
	5.

	 	Credit Agreement:
	 	Five Year Credit Agreement, dated
as of April 26, 2007, among THE
SHERWIN-WILLIAMS COMPANY, the
Lenders party thereto, CITICORP
USA, INC., as Administrative
Agent, and the other agents and
the issuing bank parties thereto
	 
	 	 	 	 
	6.

	 	Assigned Interest:	 	 

	 	 	 	 	 	 	 	 	 
	Aggregate Amount of	 	Amount of	 	Percentage Assigned
	Commitment/Loans/LC	 	Commitment/Loans/	 	of Commitment/
	Exposure for all Lenders	 	LC Exposure Assigned	 	Loans/LC Exposure1
	$
	 	$	 	 	 	 	%	 

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

 

			
	1	 	Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans/LC Exposure of all Lenders thereunder.

A-2 

 

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

	 	 	 	 	 	 	 
	 	 	ASSIGNOR	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNEE]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

	 	 	 	 	 
	Consented to and accepted:	 	 
	 
	 	 	 	 
	CITICORP USA, INC.,	 	 
	as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	CITICORP USA, INC.,	 	 
	as Issuing Bank	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

A-3 

 

	 	 	 	 	 
	[Consented to:]2	 	 
	 
	 	 	 	 
	THE SHERWIN-WILLIAMS COMPANY	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

			
	2	 	The Company’s consent will not be required if an Event of Default has occurred and is continuing or the
assignment is to an Affiliate of the Assignor.

A-4 

 

ANNEX I

THE SHERWIN-WILLIAMS COMPANY

FIVE YEAR CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

     1. Representations and Warranties.

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

     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and the other Loan Documents as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement and the other Loan Documents, together with copies of the most recent financial
statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the Administrative Agent or
any other Lender, and (v) if it is a Lender organized under the laws of a jurisdiction outside the
United States, attached to this Assignment and Acceptance is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the
Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender.

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

A-5 

 

Effective Date and to the Assignee for amounts which have accrued from and after the Effective
Date.

     3. General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This Assignment and
Acceptance may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the law of the State of New York.

A-6 

 

EXHIBIT B

to Credit Agreement

FORM OF NOTE

			
	 	 	 
	$                                        
	 	                     ___, ___

     FOR VALUE RECEIVED, the undersigned, THE SHERWIN-WILLIAMS COMPANY, an Ohio corporation (the
“Company”), unconditionally promises to pay to the order of                                          (the “Lender”)
the principal sum of                                          DOLLARS ($                    ) or, if less, the aggregate unpaid
principal amount of all Loans made by the Lender pursuant to the Five Year Credit Agreement, dated
as of April 26, 2007 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the “Credit Agreement”), among the Company, the financial institutions (including the
Lender) from time to time parties thereto, Citicorp USA, Inc., as the Administrative Agent, and
each of the other agents and the issuing bank party thereto, on such dates and in such amounts as
are set forth in the Credit Agreement. The amounts payable under the Credit Agreement may be
reduced only in accordance with the terms of the Credit Agreement. Unless otherwise defined,
capitalized terms used herein have the meanings provided in the Credit Agreement.

     The Company also promises to pay interest on the unpaid principal amount hereof from time to
time outstanding from and including the date hereof until maturity (whether by acceleration or
otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in
the Credit Agreement.

     Payments of both principal and interest are to be made without setoff or counterclaim in
lawful money of the United States of America in same day or immediately available funds to the
account designated by the Paying Agent.

     This Note is one of the Notes referred to in, and evidences the Loans made by the Lender
under, the Credit Agreement, to which reference is made for a statement of the terms and conditions
on which the Company is permitted and required to make prepayments and repayments of principal of
the indebtedness evidenced by this Note and on which such indebtedness may be declared to be or
shall automatically become immediately due and payable.

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

	 	 	 	 	 	 	 
	 	 	THE SHERWIN-WILLIAMS COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

B-1 

 

LOAN AND PRINCIPAL PAYMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount	 	Amount of	 	Unpaid	 	Notations
	Date	 	of Loan	 	Principal Repaid	 	Principal Balance	 	Made By
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

B-2 

 

EXHIBIT C

to Credit Agreement

[Letterhead of Company]

FORM OF

NOTICE OF LC REQUEST

Certificate Date: ______ _, ____

Citicorp USA, Inc., as Administrative Agent

     and the LC Issuer party to the Credit

     Agreement referred to below

Two Penns Way, Suite 110

New Castle, Delaware 19720

	 	 	 	 	 
	 

	 	Re:
	 	THE SHERWIN-WILLIAMS COMPANY— NOTICE OF LC REQUEST

Ladies and Gentlemen:

     This Notice of LC Request is delivered to Citicorp USA, Inc., as the issuing bank (the
“Issuing Bank”), pursuant to Section 2.04(b) of the Five Year Credit Agreement, dated as of April
26, 2007 (as amended, supplemented, amended and restated or otherwise modified from time to time,
the “Credit Agreement”), among THE SHERWIN-WILLIAMS COMPANY, an Ohio corporation (the “Company”),
the financial institutions from time to time parties thereto as lenders (the “Lenders”), the
Issuing Bank, and Citicorp USA, Inc., as the Administrative Agent. Unless otherwise defined
herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

     1. [We request that the Letter of Credit (the “Letter of Credit”) be issued as provided
herein. The amount of the Letter of Credit is $                    . After giving effect to the issuance
of the Letter of Credit, the Total Exposures of all Lenders do not exceed the aggregate
Commitments.] [We request that the [identify Letter of Credit] (the “Letter of Credit”) be
[amended] [renewed] [extended] as provided herein. After giving effect to the [amendment]
[renewal] [extension] of the Letter of Credit, the Total Exposures of all Lenders do not exceed the
aggregate Commitments.]

     2. The proposed date of the requested [issuance] [amendment] [renewal] [extension] of the
Letter of Credit is                      ___, ___(which is a Business Day).

     3. The expiration date of the Letter of Credit is                     ___, ___.3

     4. [Company to add any other description necessary to prepare, amend, renew or extend the
Letter of Credit (including amount of Letter of Credit, beneficiary thereof, drawing conditions,
etc.).]

 

			
	3	 	Insert date which is at or prior to the close of business on the Maturity Date.

C-1 

 

     The undersigned Financial Officer of the Company certifies that each of the conditions
precedent to the proposed issuance set forth in Section 4.02 of the Credit Agreement has been
satisfied.

     The Company has caused this Notice of LC Request to be executed and delivered by a Financial
Officer of the Company this ___day of                     , ___.

	 	 	 	 	 	 	 
	 	 	THE SHERWIN-WILLIAMS COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

C-2 

 

EXHIBIT D

to Credit Agreement

FORM OF STANDBY LETTER OF CREDIT

Date:                     , 20___

Beneficiary:

Citibank, N.A.

c/o Citicorp North America, Inc.

3800 Citibank Center

Building B 3rd Floor

Tampa, FL 33610

Letter of Credit No. [•]

Ladies and Gentlemen:

     By order of THE SHERWIN-WILLIAMS COMPANY (the “Company”), we hereby open our irrevocable
Standby Letter of Credit No. [•] (this “Credit”), in your favor for an amount of USD [•] and No
Cents ([•] U.S. Dollars and 00/100), which may adjust from time to time as provided in the next
paragraph, effective immediately and expiring at our office located at 399 Park Avenue, New York,
NY 10022-4614 (the “Office”) on June 20, 2012.

     This Credit has been issued in your favor as security in support of the letters of credit
already issued by you or to be issued by you on or after the date hereof in the amounts notified to
us by you or to be issued by you from time to time hereafter for the account of the Company
pursuant to the Agreement for Letter of Credit, dated as of April 26, 2007, between the Company and
you (the “Reimbursement Agreement”) and any other written agreement between the Company and you
regarding the issuance of letters of credit for the account of the Company that specifies that such
letters of credit are to be considered Citibank LCs, as hereinafter defined (such letters of credit
being hereinafter referred to collectively as the “Citibank LCs”). The amount outstanding under
this Credit may adjust from time to time, without amendment, to account for (i) drawings hereunder
that we have honored (in the amount of such drawing), (ii) cancellation, increase, reduction or
expiration of Citibank LCs, upon receipt by us of your notice describing such cancellation,
increase, reduction or expiration (in the amount of the available amount of the Citibank LCs that
have been cancelled or expired or in the amount of such reduction, as applicable), and (iii)
issuance by you from time to time after the date hereof of any Citibank LC (in the amount of the
available amount of such Citibank LC), subject in the case of any increase described in clause (ii)
or any issuance described in clause (iii), to confirmation by us prior to such increase or issuance
of the available amount hereunder. In no event shall the amount available hereunder exceed
$250,000,000.

     Funds hereunder are available to you against your sending to us by courier or facsimile either
of the following written certifications:

  

 

“We hereby demand payment in the amount of USD                     
because, in connection with our Irrevocable Standby Letter of Credit
No.                                          (the “Credit”), the beneficiary has drawn a
draft under the Credit (the “Draft”), we did not receive payment
when due for the amount of such Draft.”

“We hereby demand payment in the amount of USD (which amount does
not exceed the aggregate outstanding undrawn amounts under the
letters of credit issued under the Agreement for Letter of Credit,
dated as of , as amended, between The Sherwin-Williams
Company and Citibank, N.A.” (the “Reimbursement Agreement”) because
there has been an Event of Default (without regard to the proviso at
the end of Section 15 of the Reimbursement Agreement) under the
Reimbursement Agreement.

     Any number of multiple draws are permitted from time to time.

     Presentation of drawing document(s) may also be made by fax transmission to (212) 994-0847, or
such other fax number identified by Citicorp USA, Inc. in a written notice to you. To the extent a
presentation is made by fax transmission, you must provide telephone notification thereof to
Citicorp USA, Inc. ((302) 994-6109, Dennis Banfield), prior to or simultaneously with the sending
of such fax transmission, provided, however, that Citicorp USA, Inc.’s receipt of such telephone
notice shall not be a condition to payment hereunder.

     We hereby agree to honor your drawing documents as specified above, if presented in compliance
with the terms and conditions of this Standby Letter of Credit.

     Should you have occasion to communicate with us regarding this Standby Letter of Credit,
please direct your correspondence to our Office, making specific mention of the Letter of Credit
number indicated above.

[Remainder of page left intentionally blank.]

D-2 

 

     Except as otherwise expressly stated herein, this Standby Letter of Credit is subject to the
International Standby Practices (“ISP98”), International Chamber of Commerce, Publication No. 590,
and as to matters not addressed by the ISP98, shall be governed by and construed in accordance with
the laws of the State of New York and applicable U.S. Federal Law.

CITICORP USA, INC.

AUTHORIZED SIGNATURE

D-3 

 

Schedule 2.01

Commitments

	 	 	 	 	 
	Lender	 	Commitment
	Citicorp USA, Inc.
	 	$	250,000,000	 
	Total
	 	$	250,000,000

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