Document:

<PAGE>

                                                                REDACTED VERSION

                                  EXHIBIT 10.30

                                       TO

                         LIGHT SCIENCES ONCOLOGY, INC.'S

                       REGISTRATION STATEMENT ON FORM S-1

                                 INITIALLY FILED

                                 APRIL 21, 2006

                           REGISTRATION NO. 333-133474

"[ * ]" = omitted, confidential material, which material has been separately
          filed with the Securities and Exchange Commission pursuant to a
          request for confidential treatment.

<PAGE>

                                SUPPLY AGREEMENT

                            DATED AS OF JUNE 30, 2006

                                     BETWEEN

                          LIGHT SCIENCES ONCOLOGY, INC.

                                       AND

                            FRONTIER SCIENTIFIC, INC.

<PAGE>

                                SUPPLY AGREEMENT

     This Supply Agreement, dated as of June 30, 2006, is made and entered into
by and between Light Sciences Oncology, Inc., a Washington corporation ("LSO"),
and Frontier Scientific, Inc., a Utah corporation ("Frontier"). LSO and Frontier
agree as follows:

SECTION 1. MANUFACTURE AND SUPPLY OF COMPOUND

     1.1 PURCHASE. Frontier will produce, sell and deliver to LSO, and LSO will
purchase from Frontier, [ * ] of chlorin e6 ("Compound") in accordance with the
terms and subject to the conditions of this Agreement. The Compound will conform
to the specifications set forth in the attached Exhibit A ("Specifications").
Frontier will procure, install and test all equipment, supplies, materials and
other items necessary to timely satisfy its obligations under this Agreement,
including, without limitation, procuring sufficient quantities of [ * ].
Frontier will procure [ * ] from [ * ] (a vendor approved by LSO) or another
vendor approved by LSO in writing, which approval will not be unreasonably
withheld by LSO. Prior to approving any vendor of [ * ] (other than [ * ]), LSO
must be provided an opportunity to interview the prospective vendor, inspect its
production facilities and test samples of its [ * ] material.

     1.2 DELIVERY. Frontier will deliver the Compound to LSO FOB Frontier's
manufacturing facility in accordance with the following delivery schedule:

<TABLE>
<CAPTION>
QUANTITY        DELIVERY DATE
-------------   -------------
<S>             <C>
    [ * ]           [ * ]

    [ * ]           [ * ]

    [ * ]           [ * ]

    [ * ]           [ * ]
</TABLE>

Frontier will notify LSO at least [ * ] business days before delivery of any
Compound and will coordinate with LSO so that each shipment of Compound is
delivered at a time on the delivery date reasonably acceptable to LSO. Frontier
will properly label the Compound and, unless otherwise approved by LSO, package
it in accordance with the packaging procedures set forth in the attached Exhibit
B. Risk of loss will pass to LSO when each

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shipment of the Compound is delivered to LSO at Frontier's manufacturing
facility following testing and acceptance of the Compound pursuant to Section
1.4. Upon [ * ] days' prior written notice to Frontier, LSO may reschedule any
delivery date to a date not more than [ * ] days after the original delivery
date specified above.

     1.3 SCHEDULE. In the event of any actual or anticipated delay in the
production or delivery of any shipment of the Compound, Frontier will give LSO
prompt written notice of the circumstances giving rise to the delay, the
anticipated duration of the delay, and the action Frontier is taking to overcome
or mitigate the delay. Frontier will promptly update such information upon
request of LSO.

     1.4 TESTING AND ACCEPTANCE. Before delivering any Compound to LSO, Frontier
will analyze and test the Compound using appropriate test methods (including,
without limitation, the test methods described in the Specifications) to ensure
that the Compound conforms to the Specifications. Before delivering each batch
of Compound specified in Section 1.2, Frontier will deliver to LSO a sample of
the Compound to be delivered suitable for testing. Frontier will deliver a
completed and signed Certificate of Analysis (in a form generally consistent
with the historical practices of the parties) with or before delivery of each
sample. During the [ * ]-business day period following LSO's actual receipt of
each sample, LSO may test the sample to determine whether it conforms with the
Specifications. If LSO does not notify Frontier in writing of its determination
regarding the applicable shipment of Compound within [ * ] business days after
the end of such [ * ] business day period, the shipment will be deemed to
conform to the Specifications and accepted by LSO. If LSO determines that the
Sample conforms to the Specifications, then LSO will notify Frontier in writing,
Frontier will deliver the shipment of Compound in accordance with Section 1.2
and the shipment will be deemed accepted by LSO. If LSO determines that the
Compound fails to conform to the Specifications, then LSO will notify Frontier,
and Frontier will notify LSO within [ * ] business days whether Frontier
disputes LSO's determination. If Frontier fails to provide such notice, then
Frontier will replace the Compound with Compound that conforms to the
Specifications within [ * ] days after the date of LSO's notice of
nonconformance. If Frontier timely disputes LSO's determination, then LSO will
engage [ * ], Inc. or, if [ * ], Inc. is not available, then another independent
third-party testing laboratory approved by both parties, which the parties will
approve within [ * ] business days after Frontier's notice, (the "Inspector") to
inspect and test the Compound to be delivered, in order to determine whether the
Compound conforms to the Specifications. The parties will instruct the Inspector
to complete its testing as soon as practicable and in no event more than [ * ]
days after an appropriate sample of the Compound to be delivered is furnished to
the Inspector. The Inspector will furnish the results of its tests to Frontier
and LSO, and each party may have a representative present when the testing is
performed. If the Inspector determines that the Compound does not comply with
the Specifications, Frontier will immediately advise LSO of the date on which

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Frontier will be able to replace the non-conforming Compound with Compound that
conforms to the Specifications. If Frontier's delivery date for the replacement
Compound is more than [ * ] days after the Inspector's determination that the
Compound does not conform to the Specifications, LSO may terminate the Agreement
upon written notice to Frontier. If Frontier's delivery date for the replacement
Compound is equal to or less than [ * ] days after the Inspector's determination
that the Compound does not materially conform to the Specifications, Frontier
will replace the non-conforming Compound with Compound that conforms to the
Specifications by such date at no additional charge to LSO. If the Inspector
determines that the Compound conforms to the Specifications, the Compound will
be deemed accepted by LSO upon delivery.

     1.5 PROGRESS REPORTS. Frontier will inform LSO of all significant
developments, events and circumstances that occur in connection [ * ] Frontier's
production [ * ]; procurement of materials, equipment, services or other
resources necessary to produce the Compound hereunder; or the production of the
Compound and will promptly respond to any reasonable requests from LSO for
information relating to the status and progress of such activities. Attached
hereto as Exhibit C is a summary of Frontier's plans and schedule [ * ] to meet
its obligations under this Agreement. Frontier will promptly notify LSO of any
material changes to the plans or schedule described in the attached Exhibit C.

     1.6 FACILITIES. LSO will have the right, but not the obligation, to visit
Frontier's facilities during Frontier's regular business hours and upon not less
than [ * ] business days' advance notice to Frontier, in order to observe [ * ]
Frontier's production facilities and the production of the Compound and to
review related records and data as reasonably necessary to confirm Frontier's
compliance with this Agreement; provided, that (a) Frontier will not be required
to disclose, and LSO will not have access to, Frontier's documented proprietary
production processes and methods, proprietary formulae or trade secrets and (b)
upon LSO's request, LSO will be permitted access to Frontier's analytical
reports regarding the Compound. During the Term (as defined below) and for a
period of [ * ] years thereafter (unless a longer period is required by
applicable law or regulation), Frontier will prepare, maintain and retain
accurate records and other documentation related to Frontier's raw materials
sourcing and Frontier's handling, storage and shipment of the Compound. For
avoidance of doubt, analytical reports regarding the production of the Compound
will not be considered proprietary to Frontier and will be made available to LSO
upon request.

     1.7 COMPLIANCE WITH LAWS. Frontier will comply with all applicable laws,
ordinances, rules, regulations, orders, licenses, permits and other
requirements, now or hereafter in effect in connection with its activities under
this Agreement, including, without limitation, all applicable safety, labeling,
packaging and other governmental requirements,

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associated with handling, storing, producing, shipping and delivering the
Compound. Without limiting the foregoing, Frontier will furnish a Material Data
Safety Sheet pursuant to 29 CFR 1910.1200 with each shipment of Compound.

     1.8 REGULATORY MATTERS. Frontier will (a) promptly notify LSO if it
receives notice of any material inspection or inquiry by any governmental
authority related to the production of the Compound; (b), to the extent
permitted by applicable regulations and orders, forward to LSO copies of any
correspondence from any such governmental authority relating to production of
the Compound; and (c) obtain the written consent of LSO, which will not
unreasonably be withheld, before referring to LSO in any regulatory
correspondence.

     1.9 SUPPLY TO OTHERS. Frontier will not directly or through any of its
affiliates supply any third party and its affiliates more than [ * ] of Compound
in any calendar year during the Term and thereafter; provided, however, that the
foregoing restriction shall lapse and not apply if (a) in the first full
calendar year after expiration of the Term (expected to be calendar year [ * ]),
LSO has not ordered from Frontier at least the lesser of (i) [ * ] of the
Compound during the calendar year or (ii) [ * ] of the Compound ordered by LSO
during the calendar year from all third parties or (b) in any subsequent
calendar year (expected to be calendar year [ * ]), LSO has not ordered from
Frontier at least the greater of (i) [ * ] of the Compound during the calendar
year or (ii) [ * ] of the Compound ordered by LSO during the calendar year from
all third parties.

SECTION 2. COMPENSATION

     2.1 PRODUCTION [ * ]. In partial consideration for Frontier's manufacture
and delivery of the Compound, LSO will reimburse Frontier the actual
out-of-pocket costs incurred by Frontier, up to a maximum of [ * ], for
Frontier's procurement of the following goods, services and resources related to
(a)[ * ] at least [ * ] of the Compound, or (b) the production of [ * ] of
Compound for LSO in accordance with this Agreement:

          (i) [ * ];

          (ii) chemical engineering consulting services for scale-up consulting,
     process development and hardware installation;

          (iii) [ * ];

          (iv) [ * ] (other than [ * ]) used for the production of the Compound
     hereunder; and

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          (v) disposal of hazardous materials generated during the production of
     the Compound for LSO.

     Frontier (itself or through one or more of its subsidiaries) will procure
such equipment, services and resources from unaffiliated third parties at
competitive prices and in the ordinary course of business. At LSO's election,
LSO will either reimburse Frontier such costs promptly after presentation of
proof that Frontier has paid such costs, or LSO will promptly pay the vendor's
invoices directly. To Frontier's knowledge, the equipment, services and other
resources identified for purchase under this Section 2.1 will be sufficient to
enable Frontier to satisfy its obligations under this Agreement and to produce
and supply on an annual basis [ * ] of the Compound.

     2.2 RAW MATERIALS. In partial consideration for Frontier's manufacture and
delivery of the Compound, LSO will reimburse Frontier the actual amounts paid by
Frontier to [ * ] (together with all related payments to third parties and
governmental entities for shipping, insurance, taxes, duties, customs charges
and related expenses associated with the shipment of [ * ]) to purchase such
quantities of [ * ] necessary to produce [ * ] of the Compound for LSO under
this Agreement up to a maximum of [ * ]. LSO will reimburse [ * ] of Frontier's
costs for such [ * ] at the time Frontier places its order, which amount must be
paid to Frontier's supplier (up to an aggregate maximum of [ * ], and the
remaining [ * ] (up to an aggregate maximum of [ * ] promptly after Frontier
accepts such [ * ].

     2.3 PER [ * ] FEE. LSO will pay Frontier at a rate of [ * ] per [ * ] of
the Compound received and accepted by LSO pursuant to Section 1.4; provided,
however, that up to [ * ] of the amounts payable by LSO under this Section 2.3
for each [ * ] of the Compound will be offset by the payments made by LSO to
Frontier pursuant to Sections 2.1 and 2.2 above until the aggregate amount of
such payments made under Sections 2.1 and 2.2 have been exhausted. Frontier will
invoice LSO for amounts payable pursuant to this Section 2.3 at the time
Frontier delivers the Compound to LSO pursuant to Section 1.4 and such invoices
will be paid by LSO within [ * ] days after Frontier's delivery of the
applicable shipment of the Compound.

     2.4 MAXIMUM PAYMENT. The maximum amount of compensation to be paid and
reimbursed under this Agreement for [ * ] of the Compound will not exceed [ * ]
constituting of the payments to be made by LSO under Sections 2.1, 2.2 and 2.3.

     2.5 INVOICES. Frontier will invoice LSO for all compensation, reimbursable
expenses and other amounts due under this Agreement. Each invoice will be in a
form consistent with the historical practices of the parties, and will be
furnished to LSO before the due date of the amount subject to the invoice. Upon
LSO's reasonable request, Frontier will

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promptly furnish to LSO documentation and other records substantiating any
reimbursable expense, including, without limitation, copies of purchase orders,
shipping document and receipts.

     2.6 SECURITY INTEREST. To secure Frontier's obligations hereunder, Frontier
hereby grants to LSO a security interest in all assets, equipment, raw materials
and other items acquired by Frontier and reimbursed or paid by LSO under this
Agreement, the proceeds thereof, and all work-in-progress and inventory produced
from such raw materials ("Collateral"). Frontier authorizes LSO to file and
record financing statements, amendments and other documents under the Uniform
Commercial Code ("UCC") reasonably necessary to evidence, perfect and maintain
the security interest granted under this Section 2.6. Frontier has not granted,
created or knowingly allowed to exist, and, during the Term Frontier will not,
grant, create or knowingly allow to exist, any lien, security interest or
encumbrance on the Collateral except as created by this Agreement or otherwise
authorized by LSO. The security interest granted under this Section 2.6, and
Frontier's obligations under this Section 2.6, will terminate when Frontier has
delivered, and LSO has accepted, [ * ] of the Compound in accordance with the
terms and conditions of this Agreement. Upon the occurrence of any material
breach by Frontier under this Agreement that is not cured within [ * ] days
after written notice thereof, LSO will, without limiting any other remedies,
have the remedies of a secured party under the UCC, and LSO will have the right
to dispose of the Collateral by way of one or more contracts or transactions,
for cash or on terms, in such manner and at such places as LSO determines is
commercially reasonable, and apply any proceeds thereof to the obligations
secured under this Agreement in whatever manner or order LSO deems appropriate.
LSO will not foreclose on the security interest granted hereunder if Frontier
fully and timely satisfies its obligations under Section 3.3.

     2.7 OBLIGATION TO SUPPLY ADDITIONAL QUANTITIES. In addition to the
quantities of Compound identified in Section 1.2 above, upon the written request
of LSO, Frontier will produce and deliver to LSO up to an additional [ * ] of
Compound conforming to the Specifications. In exchange of Frontier's production
and delivery of such additional Compound, LSO shall pay to Frontier a price of
[ * ] per additional [ * ] pursuant to terms and conditions substantially
similar to the terms and conditions set forth herein; provided, however, that
Frontier shall not be required to grant any security interest or pledge any
assets in favor of LSO as security for Frontier's performance of its obligations
under this Section 2.7 and no payments will be required under Sections 2.1 and
2.2. Without limiting the foregoing, lead and delivery times for any such
additional Compound will be substantially the same as the lead and delivery
times set forth herein taking into account that no expansion of production
capacity will be required to produce such additional Compound.

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SECTION 3. TERM AND TERMINATION

     3.1 TERM. The term of this Agreement will commence on the date of this
Agreement and, unless sooner terminated as provided in Section 3.2, will end on
the date that Frontier has delivered [ * ] of Compound in accordance with the
terms and conditions of this Agreement and such Compound has been found
acceptable in accordance with Section 1.4 (the "Term").

     3.2 TERMINATION. Either party may terminate this Agreement by giving the
other party [ * ] days' prior written notice of termination if the other party
materially breaches any of its obligations under this Agreement and fails to
cure such breach within such [ * ] day period. Any failure of Frontier to
deliver a shipment of the Compound conforming to the Specifications within [ * ]
days after the applicable delivery date set forth in Section 1.2 or established
pursuant to Section 1.4 will be deemed a material breach of this Agreement.

     3.3 EFFECT OF TERMINATION. Upon any termination of this Agreement by LSO
pursuant to Section 1.4, 3.2 or 5.11, Frontier will promptly refund to LSO an
amount equal to [ * ] of the [ * ] of Compound accepted by LSO hereunder before
the effective date of termination multiplied by [ * ] before the effective date
of termination. For example, if LSO terminates the this Agreement pursuant to
Section 3.2 after LSO has accepted [ * ] then Frontier will refund [ * ],
calculated as follows: [ * ]. LSO will release the security interest granted
under Section 2.6 promptly following receipt of any refund owing under this
Section 3.3.

     3.4 SURVIVAL. Sections 1.8, 1.9, 2.7, 3.3, 4 and 5 will survive the
expiration or termination of this Agreement.

SECTION 4. WARRANTIES AND INDEMNIFICATION

     4.1 WARRANTIES. Frontier represents and warrants to LSO that (a) the
Compound will conform to the Specifications when delivered pursuant to Section
1.2; and (b) Frontier's production and sale of the Compound as contemplated by
this Agreement do not infringe or misappropriate any patent, trade secret or any
other intellectual property right of any third party.

     4.2 INDEMNIFICATION BY FRONTIER. Frontier will defend, indemnify and hold
harmless LSO from and against all actions, claims, proceedings, losses,
liabilities, damages and expenses (including, without limitation, reasonable
attorneys' fees) incurred or sustained by LSO as a result of any claim made or
asserted against LSO based upon (a) any claim which, if proven, would constitute
a breach of Frontier's representations and warranties set forth in Section 4.1,
and (b) any claim of bodily injury or death arising from the gross

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negligence or intentional misconduct of Frontier. LSO will have the right to
approve the counsel selected by Frontier for defense of any such claim, which
approval will not be unreasonably withheld. LSO will provide Frontier prompt
written notice of any such claim and such information and assistance as Frontier
may reasonably request to help Frontier defend such claim; provided, that
Frontier pays or reimburses all of the costs and expenses reasonably incurred by
LSO in connection with any assistance requested by Frontier under this Section
4.2. Frontier will not have any right to settle any such claim without LSO's
written consent, which consent will not be unreasonably withheld.

     4.3 INDEMNIFICATION BY LSO. LSO will defend, indemnify and hold harmless
Frontier from and against all actions, claims, proceedings, losses, liabilities,
damages and expenses (including, without limitation, reasonable attorneys' fees)
incurred or sustained by Frontier as a result of any claim made or asserted
against Frontier based upon (a) any sale or use by LSO of Compound conforming to
the Specifications after delivery to LSO pursuant to Section 1.2; or (b) any
claim of bodily injury or death arising from the gross negligence or intentional
misconduct of LSO. Frontier will have the right to approve the counsel selected
by LSO for defense of any such claim, which approval will not be unreasonably
withheld. Frontier will provide LSO prompt written notice of any such claim and
such information and assistance as LSO may reasonably request to help LSO defend
such claim; provided, that LSO pays or reimburses all of the costs and expenses
reasonably incurred by Frontier in connection with any assistance requested by
LSO under this Section 4.3. LSO will not have any right to settle any such claim
without Frontier's written consent, which consent will not be unreasonably
withheld.

SECTION 5. MISCELLANEOUS

     5.1 RELATIONSHIP OF THE PARTIES. Frontier is an independent contractor, not
an agent of LSO. This Agreement will not be interpreted or construed to create
an association, joint venture, partnership or agency relationship between the
parties or to impose any partnership obligation or liability upon either party.

     5.2 NOTICES. Any notice or other communication under this Agreement given
by either party to the other will be in writing and delivered to the address set
forth below either (a) in person or by first-class, registered or certified mail
or overnight delivery service, return receipt requested, postage prepaid, or (b)
by facsimile with a hard copy mailed or delivered as provided in clause (a)
above, unless first acknowledged as received by the recipient in writing,
whether by facsimile or other means. Notices will be deemed received once the
same have been received, as evidenced by a return receipt, delivery
confirmation, facsimile confirmation or similar record of delivery:

     If to Frontier:   Frontier Scientific, Inc.
                       195 South 700 West
                       Logan UT 84323-0031
                       Attn: President
                       phone: (435) 753-1901

<PAGE>

                       fax: (435) 753-6731

     If to LSO:        Light Sciences Oncology, Inc.
                       34931 SE Douglas Street, Suite 250
                       Snoqualmie, WA 98065
                       phone: (425) 369-2760
                       fax: (425) 392-7392

Either party may change its address specified above by giving the other party
written notice of such change in accordance with this Section 5.2.

     5.3 PUBLICITY. Neither party will issue any press release or other public
announcement regarding this Agreement or the transactions contemplated hereby
without first obtaining the prior written consent of the other party, except to
the extent required by applicable law, rule, regulation or order. In the event a
party determines that such disclosure is required by applicable law, rule,
regulation or order, the party shall promptly (and in no event less than two (2)
business days prior to the time of disclosure) notify the other party of the
nature and timing of the disclosure.

     5.4 NONWAIVER. The failure of either party to insist upon or enforce strict
performance by the other party of any provision of this Agreement or to exercise
any right under this Agreement will not be construed as a waiver or
relinquishment to any extent of such party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will be
and remain in full force and effect.

     5.5 SEVERABILITY. If any provision of this Agreement is held by any court
of competent jurisdiction to be invalid, illegal or unenforceable under
applicable law, then such provision will be deemed reformed or omitted to the
extent determined by such court (i.e., with the objective of preserving the
intent of such provision to the extent permitted by applicable law). In any
event, the remainder of this Agreement will remain valid and enforceable.

     5.6 ATTORNEYS' FEES AND COSTS. In any action, suit, arbitration or other
proceeding to enforce any right or remedy under this Agreement or to interpret
any provision of this Agreement, the party which prevails by enforcing the
provisions of this Agreement will be entitled to recover its costs and expenses
(including, without limitation, expert witness and reasonable attorneys' fees)
reasonably incurred in connection with such action, suit, or other proceeding or
any appeal thereof.

     5.7 SUCCESSORS AND ASSIGNS. Neither party will assign (voluntarily, by
operation of law or otherwise), subcontract or delegate this Agreement or any
right, interest or benefit under this Agreement without the prior written
consent of the other party. No assignment

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with or without such consent will relieve or release the assigning party of any
of its obligations under this Agreement. Subject to the foregoing restriction on
assignments, this Agreement will be fully binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors, assigns and
legal representatives. Any attempted assignment in violation of this Section 5.7
will be void.

     5.8 APPLICABLE LAW. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Utah, without reference to
its choice of law rules to the contrary.

     5.9 AMENDMENT. No change, amendment or modification of any provision of
this Agreement will be valid unless set forth in a written instrument signed by
both parties.

     5.10 ENTIRE AGREEMENT. This Agreement, the Non-Disclosure and Non-Use of
Information Agreement between the parties dated [ * ], and the Confidentiality
Agreement between the parties dated [ * ] (the "CDA") set forth the entire
agreement, and supersede any and all prior agreements, of the parties with
respect to the subject matter hereof. Neither party will be bound by, and each
of them specifically objects to, any term, condition or other provision which is
different from or in addition to the provisions of this Agreement (whether or
not it would materially alter this Agreement) and which is proffered by the
other party in any quotation, invoice, shipping document, acceptance,
confirmation, correspondence or otherwise, unless the recipient specifically
agrees to such provision in a written instrument signed by the recipient.

     5.11 FORCE MAJEURE. In the event that either party is unable to perform any
of its obligations under this Agreement because of natural disaster, actions or
decrees of governmental bodies or actions of third parties beyond the control of
the party whose performance is so affected (hereinafter referred to as a "Force
Majeure Event"), the party who has been so affected shall give prompt notice to
the other party and shall use commercially reasonable efforts to resume
performance as soon as reasonably practicable. Upon delivery of such notice, the
performance obligations of the party affected by the Force Majeure Event shall
be suspended throughout the duration of the Force Majeure Event. If a party's
performance under this Agreement is delayed, or is reasonably expected to be
delayed, by more than six (6) months as a result of a Force Majeure Event, then
the non-affected party will have the right to terminate this Agreement upon
written notice.

     5.12 CONFIDENTIAL INFORMATION. Each party will maintain all of the
"Confidential Information" (as defined below) of the other party in confidence
and not disclose, publish or distribute any portion of the Confidential
Information of the other party to any third person other than their attorneys
and accountants who need to know such Confidential Information. In the event
that either party is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information of the other party, such party will promptly notify the other party
of the request or requirement so that the other party may seek an appropriate
protective order. If, in the absence of a

[  *  ]  Confidential Treatment Request
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protective order, a party is compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, the party may disclose the
Confidential Information of the other party to the tribunal; provided, however,
that the party disclosing such information to the tribunal shall use its
reasonable efforts to obtain an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information of
the other party required to be disclosed. The foregoing provisions shall not
apply to any Confidential Information, which (a) is or has become generally
available to the public through no fault of the receiving party, (b) is or was
acquired by the receiving party from a third party and is not subject to an
unexpired obligation to such third party restricting the receiving party's use
or disclosure thereof; or (c) is independently developed by the receiving party
without reliance upon or use of any of the Confidential Information of the other
party. Without in any manner limiting the foregoing, the parties agree that the
existence, terms and conditions of this Agreement shall not be disclosed or
furnished to any third party (other than a party's accountants and lawyers on a
need to know basis or, on a confidential basis, any prospective corporate
partner or purchaser of the party or its securities), except to the extent
required by applicable law, rule, regulation or order. If a party is required to
disclose the existence, terms or conditions of this Agreement under any
applicable law, rule, regulation or order, then the party required to disclose
will notify the other party prior to such disclosure. If LSO is required to
disclose the existence, terms or conditions of this Agreement to the SEC or in
any public securities filing, then LSO will use diligent efforts to obtain
confidential treatment of such terms and conditions for which confidential
treatment may be afforded under applicable SEC regulations and will provide
Frontier a [ * ] business day period to review and comment on any such request
for confidential treatment. LSO will consider all such comments in good faith.
For purposes of this Agreement, "Confidential Information" shall mean any and
all non-public information furnished or disclosed, in whatever form or medium,
concerning a disclosing party, including, without limitation, such disclosing
party's intellectual property, customer lists, business contacts, business
plans, policies, procedures, techniques, know-how, products, agreements,
economic and financial information, marketing plans, data, reports, analyses,
compilations and any other materials or information, or any materials based
thereon, whether written or oral, furnished directly or indirectly by a
disclosing party to the other party. Notwithstanding anything in this Agreement
to the contrary, the parties agree that the Specifications shall be deemed to be
Confidential Information of LSO and LSO may freely disclose the Specifications.
The obligations under this Section 5.12 will terminate [ * ] after the effective
date of termination of this Agreement.

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

LSO:                                    FRONTIER:

Light Sciences Oncology, Inc.           Frontier Scientific, Inc.

By:  /s/ Robert M. Littauer             By:  /s/ Jerry C. Bommer
    ---------------------------------       ------------------------------------
Print:  Robert M. Littauer              Print:  Jerry C. Bommer
       ------------------------------          ---------------------------------
Title:  VP - CFO                        Title:  President
       ------------------------------          ---------------------------------

<PAGE>

                                    EXHIBIT A

                       Purchase Specification Chlorin e6

                              Frontier Scientific

<TABLE>
<CAPTION>
Test                     Test Method                   Specification
                          Reference
<S>                      <C>                           <C>
Appearance                Visual                        Dark blue-green powder,
                                                        contamination or
                                                        visible foreign matters
                                                        are not observed

Identification:
UV-Visible
Absorption Spectrum       UV-visible                    [ * ]

Purity                    [ * ]                         [ * ]

[ * ]                     [ * ]                         [ * ]

</TABLE>

[ * ]

------------
[ * ] Confidential Treatment Requested
<PAGE>

                                    EXHIBIT B

                              PACKAGING PROCEDURES

Compound to be packed in [ * ].

----------
[ * ] Confidential Treatment Requested

<PAGE>

                                    EXHIBIT C

                                   [ * ] PLANS

     [ * ] Plan:

1.   [ * ].

2.   Engage chemical engineering firm to consult for scale-up, process
     development, and hardware installation.

3.   Purchase of [ * ]. Additionally, any other equipment as specified by the
     chemical engineering firm.

     Schedule for Implementation of [ * ] Plan:

1.   Within two (2) weeks of signing to engage chemical engineering firm.

2.   Upon signing [ * ].

3.   Purchasing of equipment will be after the chemical engineering firm has
     completed its review.

----------
[ * ] Confidential Treatment Requestedexv10w53

 

Exhibit
10.53

 

 

CREDIT AGREEMENT

by and among

BOOKHAM, INC.,

as Parent,

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, INC.

as the Arranger and Administrative Agent

Dated as of August 2, 2006

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS AND CONSTRUCTION.	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Definitions	 	 	1	 
	 
	 	1.2	 	Accounting Terms	 	 	1	 
	 
	 	1.3	 	Code	 	 	1	 
	 
	 	1.4	 	Construction	 	 	1	 
	 
	 	1.5	 	Schedules and Exhibits	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	2.	 	LOAN AND TERMS OF PAYMENT.	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Revolver Advances	 	 	2	 
	 
	 	2.2	 	Intentionally Deleted	 	 	2	 
	 
	 	2.3	 	Borrowing Procedures and Settlements	 	 	2	 
	 
	 	2.4	 	Payments	 	 	7	 
	 
	 	2.5	 	Overadvances	 	 	8	 
	 
	 	2.6	 	Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations	 	 	9	 
	 
	 	2.7	 	Cash Management	 	 	10	 
	 
	 	2.8	 	Crediting Payments	 	 	10	 
	 
	 	2.9	 	Designated Account	 	 	11	 
	 
	 	2.10	 	Maintenance of Loan Account; Statements of Obligations	 	 	11	 
	 
	 	2.11	 	Fees	 	 	11	 
	 
	 	2.12	 	Letters of Credit	 	 	11	 
	 
	 	2.13	 	LIBOR Option	 	 	14	 
	 
	 	2.14	 	Capital Requirements	 	 	16	 
	 
	 	2.15	 	Joint and Several Liability of Borrowers	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	3.	 	CONDITIONS; TERM OF AGREEMENT.	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Conditions Precedent to the Initial Extension of Credit	 	 	18	 
	 
	 	3.2	 	Conditions Precedent to all Extensions of Credit	 	 	18	 
	 
	 	3.3	 	Term	 	 	18	 
	 
	 	3.4	 	Effect of Termination	 	 	18	 
	 
	 	3.5	 	Early Termination by Borrowers	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	4.	 	REPRESENTATIONS AND WARRANTIES.	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	No Encumbrances	 	 	19	 
	 
	 	4.2	 	Eligible Accounts	 	 	19	 
	 
	 	4.3	 	Inventory	 	 	20	 
	 
	 	4.4	 	Equipment	 	 	20	 
	 
	 	4.5	 	Location of Inventory and Equipment	 	 	20	 
	 
	 	4.6	 	Inventory Records	 	 	20	 
	 
	 	4.7	 	Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims	 	 	20	 
	 
	 	4.8	 	Due Organization and Qualification; Subsidiaries	 	 	20	 
	 
	 	4.9	 	Due Authorization; No Conflict	 	 	21	 
	 
	 	4.10	 	Litigation	 	 	22	 
	 
	 	4.11	 	No Material Adverse Change	 	 	22	 
	 
	 	4.12	 	Fraudulent Transfer	 	 	22	 
	 
	 	4.13	 	Employee Benefits	 	 	22	 
	 
	 	4.14	 	Environmental Condition	 	 	22	 
	 
	 	4.15	 	Intellectual Property	 	 	22	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.16	 	Leases	 	 	23	 
	 
	 	4.17	 	Deposit Accounts and Securities Accounts	 	 	23	 
	 
	 	4.18	 	Complete Disclosure	 	 	23	 
	 
	 	4.19	 	Indebtedness	 	 	23	 
	 
	 	4.20	 	Inactive Obligors	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS.	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Accounting System	 	 	23	 
	 
	 	5.2	 	Collateral Reporting	 	 	24	 
	 
	 	5.3	 	Financial Statements, Reports, Certificates	 	 	24	 
	 
	 	5.4	 	Guarantor Reports	 	 	24	 
	 
	 	5.5	 	Inspection	 	 	24	 
	 
	 	5.6	 	Maintenance of Properties	 	 	24	 
	 
	 	5.7	 	Taxes	 	 	24	 
	 
	 	5.8	 	Insurance	 	 	24	 
	 
	 	5.9	 	Location of Inventory and Equipment	 	 	25	 
	 
	 	5.10	 	Compliance with Laws	 	 	25	 
	 
	 	5.11	 	Leases	 	 	25	 
	 
	 	5.12	 	Existence	 	 	25	 
	 
	 	5.13	 	Environmental	 	 	26	 
	 
	 	5.14	 	Disclosure Updates	 	 	26	 
	 
	 	5.15	 	Control Agreements	 	 	26	 
	 
	 	5.16	 	Formation of Subsidiaries	 	 	26	 
	 
	 	5.17	 	Further Assurances	 	 	26	 
	 
	 	5.19	 	UK Mortgage Documents	 	 	27	 
	 
	 	5.20	 	Post-Closing Covenants	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	6.	 	NEGATIVE COVENANTS.	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Indebtedness	 	 	27	 
	 
	 	6.2	 	Liens	 	 	28	 
	 
	 	6.3	 	Restrictions on Fundamental Changes	 	 	28	 
	 
	 	6.4	 	Disposal of Assets	 	 	28	 
	 
	 	6.5	 	Change Name	 	 	28	 
	 
	 	6.6	 	Nature of Business	 	 	28	 
	 
	 	6.7	 	Prepayments and Amendments	 	 	28	 
	 
	 	6.8	 	Change of Control	 	 	29	 
	 
	 	6.9	 	Consignments	 	 	29	 
	 
	 	6.10	 	Distributions	 	 	29	 
	 
	 	6.11	 	Accounting Methods	 	 	29	 
	 
	 	6.12	 	Investments	 	 	30	 
	 
	 	6.13	 	Transactions with Affiliates	 	 	30	 
	 
	 	6.14	 	Use of Proceeds	 	 	30	 
	 
	 	6.15	 	Inventory and Equipment with Bailees	 	 	31	 
	 
	 	6.16	 	Financial Covenants	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	7.	 	EVENTS OF DEFAULT.	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	8.	 	THE LENDER GROUP’S RIGHTS AND REMEDIES	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Rights and Remedies	 	 	33	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.2	 	Remedies Cumulative	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	9.	 	TAXES AND EXPENSES.	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	10.	 	WAIVERS; INDEMNIFICATION.	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Demand; Protest; etc	 	 	35	 
	 
	 	10.2	 	The Lender Group's Liability for Collateral	 	 	35	 
	 
	 	10.3	 	Indemnification	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	11.	 	NOTICES.	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	12.	 	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	13.	 	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 
	 	13.1	 	Assignments and Participations.	 	 	37	 
	 
	 	13.2	 	Successors	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	14.	 	AMENDMENTS; WAIVERS.	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	14.1	 	Amendments and Waivers	 	 	39	 
	 
	 	14.2	 	Replacement of Holdout Lender	 	 	40	 
	 
	 	14.3	 	No Waivers; Cumulative Remedies	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	15.	 	AGENT; THE LENDER GROUP.	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 
	 	15.1	 	Appointment and Authorization of Agent	 	 	41	 
	 
	 	15.2	 	Delegation of Duties	 	 	41	 
	 
	 	15.3	 	Liability of Agent	 	 	42	 
	 
	 	15.4	 	Reliance by Agent	 	 	42	 
	 
	 	15.5	 	Notice of Default or Event of Default	 	 	42	 
	 
	 	15.6	 	Credit Decision	 	 	42	 
	 
	 	15.7	 	Costs and Expenses; Indemnification	 	 	43	 
	 
	 	15.8	 	Agent in Individual Capacity	 	 	43	 
	 
	 	15.9	 	Successor Agent	 	 	44	 
	 
	 	15.10	 	Lender in Individual Capacity	 	 	44	 
	 
	 	15.11	 	Withholding Taxes	 	 	44	 
	 
	 	15.12	 	Collateral Matters	 	 	46	 
	 
	 	15.13	 	Restrictions on Actions by Lenders; Sharing of Payments	 	 	47	 
	 
	 	15.14	 	Agency for Perfection	 	 	48	 
	 
	 	15.15	 	Payments by Agent to the Lenders	 	 	48	 
	 
	 	15.16	 	Concerning the Collateral and Related Loan Documents	 	 	48	 
	 
	 	15.17	 	Field Audits and Examination
Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	 	 	48	 
	 
	 	15.18	 	Several Obligations; No Liability	 	 	49	 
	 
	 	15.19	 	Bank Product Providers	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	16.	 	GENERAL PROVISIONS.	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	 
	 	16.1	 	Effectiveness	 	 	49	 
	 
	 	16.2	 	Section Headings	 	 	49	 
	 
	 	16.3	 	Interpretation	 	 	49	 
	 
	 	16.4	 	Severability of Provisions	 	 	50	 
	 
	 	16.5	 	Counterparts; Electronic Execution	 	 	50	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	16.6	 	Revival and Reinstatement of Obligations	 	 	50	 
	 
	 	16.7	 	Confidentiality	 	 	50	 
	 
	 	16.8	 	Lender Group Expenses	 	 	51	 
	 
	 	16.9	 	USA PATRIOT Act	 	 	51	 
	 
	 	16.10	 	Integration	 	 	51	 
	 
	 	16.11	 	Bookham UK as Agent for Borrowers	 	 	51	 
	 
	 	16.12	 	Judgment Currency	 	 	51	 

 

 

EXHIBITS AND SCHEDULES

	 	 	 
	Exhibit A-1

	 	Form of Assignment and Acceptance
	Exhibit B-1

	 	Form of Borrowing Base Certificate
	Exhibit C-1

	 	Form of Compliance Certificate
	Exhibit L-1

	 	Form of LIBOR Notice
	 	 	 
	Schedule A-1

	 	Agent’s Account
	Schedule C-1

	 	Commitments
	Schedule D-1

	 	Designated Account
	Schedule F-1

	 	Foreign Security Documents
	Schedule P-1

	 	Permitted Intercompany Transactions
	Schedule P-2

	 	Permitted Liens
	Schedule 1.1

	 	Definitions
	Schedule 2.7(a)

	 	Cash Management Banks
	Schedule 3.1

	 	Conditions Precedent
	Schedule 4.5

	 	Locations of Inventory and Equipment
	Schedule 4.7(a)

	 	States of Organization
	Schedule 4.7(b)

	 	Chief Executive Offices
	Schedule 4.7(c)

	 	Organizational Identification Numbers
	Schedule 4.7(d)

	 	Commercial Tort Claims
	Schedule 4.8(b)

	 	Capitalization of Parent
	Schedule 4.8(c)

	 	Capitalization of Parent’s Subsidiaries
	Schedule 4.10

	 	Litigation
	Schedule 4.14

	 	Environmental Matters
	Schedule 4.15

	 	Intellectual Property
	Schedule 4.17

	 	Deposit Accounts and Securities Accounts
	Schedule 4.19

	 	Permitted Indebtedness
	Schedule 5.2

	 	Collateral Reporting
	Schedule 5.3

	 	Financial Statements, Reports, Certificates
	Schedule 5.20

	 	Post-Closing Covenants

 

 

CREDIT AGREEMENT

     THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of August 2, 2006, by and
among the lenders identified on the signature pages hereof (such lenders, together with their
respective successors and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, “Agent”), BOOKHAM, INC., a
Delaware corporation (“Parent”), and each of Parent’s Subsidiaries identified as borrower
on the signature pages hereof (such Subsidiaries are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”).

     The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

     1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings
specified therefor on Schedule 1.1.

     1.2 Accounting Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrowers” or the term “Parent” is used in
respect of a financial covenant or a related definition, it shall be understood to mean Borrowers
and their Subsidiaries or Parent and its Subsidiaries, as applicable, on a consolidated basis,
unless the context clearly requires otherwise.

     1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein; provided,
however, that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.

     1.4 Construction. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular, references to the
singular include the plural, the terms “includes” and “including” are not limiting, and the term
“or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular provision of this Agreement or such other Loan Document, as
the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein or in any other Loan Document to the
satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or
cash collateralization in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank Product Obligations that,
at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of this Agreement to be repaid or cash collateralized. Any
reference herein to any Person shall be construed to include such Person’s successors and assigns.
Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by
the transmission of a Record and any Record so transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained therein.

1

 

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

2. LOAN AND TERMS OF PAYMENT.

     2.1 Revolver Advances.

          (a) Subject to the terms and conditions of this Agreement, and during the term of
this Agreement, each Lender with a Revolver Commitment agrees (severally, not jointly or jointly
and severally) to make advances (“Advances”) to Borrowers in an amount at any one time
outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the lesser of (i) the
Maximum Revolver Amount less the Letter of Credit Usage at such time, and (ii) the Borrowing Base
at such time less the Letter of Credit Usage at such time.

          (b) Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish reserves against the Borrowing Base in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate,
including reserves with respect to (i) sums that Borrowers or their Subsidiaries are required to
pay under any Section of this Agreement or any other Loan Document (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts payable under such
leases) and have failed to pay, and (ii) amounts owing by Parent and its Subsidiaries to any Person
to the extent secured by a Lien on, or trust over, or preferential claim by operation of law over,
or claim of retention of title to, any of the Collateral (other than a Permitted Lien), which Lien
or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent’s
Liens (such as Liens, preferred claims, claims of retention of title, or trusts in favor of
employees, creditors, landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral.

          (c) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time during the term of
this Agreement. The outstanding principal amount of the Advances, together with interest accrued
thereon, shall be due and payable on the Maturity Date or, if earlier, on the date on which they
are declared due and payable pursuant to the terms of this Agreement.

     2.2 Intentionally Deleted.

     2.3 Borrowing Procedures and Settlements.

          (a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated
to make a Swing Loan pursuant to Section 2.3(b), such notice must be received by Agent no
later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date
specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day; provided, however, that if Swing Lender is not obligated to make a
Swing Loan as to a requested Borrowing, such notice must be received by Agent no later than 10:00
a.m. (California time) on the Business Day prior to the date that is the requested Funding Date.
At Agent’s election, in lieu of delivering the above-described written request, any Authorized
Person may give Agent telephonic notice of such request by the required time. In such
circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within
24 hours of the giving of such telephonic notice, but the failure to provide such written
confirmation shall not affect the validity of the request.

          (b) Making of Swing Loans. In the case of a request for an Advance and so long as
either (i) the aggregate amount of Swing Loans made since the last Settlement Date plus the amount
of the requested Advance does not exceed $2,500,000, or (ii) Swing Lender, in its sole discretion,
shall agree to make

2

 

a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall make an Advance in
the amount of such Borrowing (any such Advance made solely by Swing Lender pursuant to this
Section 2.3(b) being referred to as a “Swing Loan” and such Advances being referred to
collectively as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Borrowers’ Designated Account. Each Swing Loan shall
be deemed to be an Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments on any Swing Loan shall be payable to Swing
Lender solely for its own account. Subject to the provisions of Section 2.3(d)(ii), Swing
Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual
knowledge that (i) one or more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date. Swing Lender shall not
otherwise be required to determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to Advances that are Base
Rate Loans. Notwithstanding anything in this Section 2.3(b) to the contrary, at any time
that there is only one Lender, the Swing Lender shall not be obligated to make a Swing Loan,
requested Borrowings shall be made pursuant to Section 2.3(c), and, subject to the other
terms and provisions contained herein, Borrowers may request Advances to be made directly as LIBOR
Rate Loans.

          (c) Making of Loans.

               (i) In the event that Swing Lender is not obligated to make a Swing Loan, then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall
notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately
preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro
Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s
Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After
Agent’s receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available
to Administrative Borrower on the applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to Administrative Borrower’s Designated Account;
provided, however, that, subject to the provisions of Section 2.3(d)(ii),
Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any
Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested Funding Date for
the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.

               (ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California
time) on the date of a Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent
in immediately available funds on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If
and to the extent any Lender shall not have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made available, such payment to Agent
shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to Agent on the Business Day following the Funding Date,
Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent,
Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing

3

 

such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance on such Funding Date, but
no Lender shall be responsible for the failure of any other Lender to make the Advance to be made
by such other Lender on any Funding Date.

               (iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender’s Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default
has occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not funded
by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had
made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such
payments received and retained by Agent for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting
Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero. This Section shall remain effective with respect to such Lender until (x) the Obligations
under this Agreement shall have been declared or shall have become immediately due and payable, (y)
the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the
applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof.
The operation of this Section shall not be construed to increase or otherwise affect the Commitment
of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of
their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting
Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by
such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option,
upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance
in favor of the substitute Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being repaid its share of the
outstanding Obligations (other than Bank Product Obligations, but including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender
shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or
remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.

          (d) Protective Advances and Optional Overadvances.

               (i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in
Agent’s sole discretion, (A) after the occurrence and during the continuance of a Default or an
Event of Default, or (B) at any time that any of the other applicable conditions precedent set
forth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or
protect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the
Obligations (other than the Bank Product Obligations), or (3) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in Section 9 (any of the Advances described in this
Section 2.3(d)(i) shall be referred to as “Protective Advances”).

               (ii) Any contrary provision of this Agreement notwithstanding, the Lenders hereby
authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable,
may,

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but is not obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby would be created,
so long as (A) after giving effect to such Advances, the outstanding Revolver Usage does not exceed
the Borrowing Base by more than $2,500,000, and (B) after giving effect to such Advances, the
outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount. In the
event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the
immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Agent
shall notify the Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of arrangements that shall be implemented
with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of
the Advances to Borrowers to an amount permitted by the preceding paragraph. In such
circumstances, if any Lender with a Revolver Commitment objects to the proposed terms of reduction
or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders. Each Lender with a Revolver Commitment
shall be obligated to settle with Agent as provided in Section 2.3(e) for the amount of
such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender,
any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any
Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group
Expenses.

               (iii) Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be eligible to be a LIBOR
Rate Loan and all payments on the Protective Advances shall be payable to Agent solely for its own
account. The Protective Advances and Overadvances shall be repayable on demand, secured by the
Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time
to time to Advances that are Base Rate Loans. The provisions of this Section 2.3(d) are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit
any Borrower in any way.

          (e) Settlement. It is agreed that each Lender’s funded portion of the Advances is
intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of any Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among the Lenders as to
the Advances, the Swing Loans, and the Protective Advances shall take place on a periodic basis in
accordance with the following provisions:

               (i) Agent shall request settlement (“Settlement”) with the Lenders on a
weekly basis, or on a more frequent basis if so determined by Agent (1) on behalf of Swing Lender,
with respect to the outstanding Swing Loans, (2) for itself, with respect to the outstanding
Protective Advances, and (3) with respect to Borrowers’ or their Subsidiaries’ Collections
received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement (the date of such requested
Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances, Swing Loans, and Protective Advances for
the period since the prior Settlement Date. Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender’s balance of the Advances (including
Swing Loans and Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances
(including Swing Loans and Protective Advances) as of a Settlement Date, then Agent shall, by no
later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available
funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each
such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share
of the Advances (including Swing Loans and Protective Advances), and (z) if a Lender’s balance of
the Advances (including Swing Loans and Protective Advances) is less than such

5

 

Lender’s
Pro Rata Share of the Advances (including Swing Loans and Protective Advances) as of a Settlement Date,
such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in
immediately available funds to the Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances). Such amounts made available to Agent under clause
(z) of the immediately preceding sentence shall be applied against the amounts of the applicable
Swing Loans or Protective Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Advances of such
Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover
for its account such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.

               (ii) In determining whether a Lender’s balance of the Advances, Swing Loans, and
Protective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the
Advances, Swing Loans, and Protective Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually received in good funds
by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such
Lender after such application, such net amount shall be distributed by Agent to that Lender as part
of such next Settlement.

               (iii) Between Settlement Dates, Agent, to the extent no Protective Advances or
Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender’s Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections of Borrowers or their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the
accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding
Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have,
as of such Settlement Date, its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Protective
Advances, and each Lender (subject to the effect of agreements between Agent and individual
Lenders) with respect to the Advances other than Swing Loans and Protective Advances, shall be
entitled to interest at the applicable rate or rates payable under this Agreement on the daily
amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

          (f) Notation. Agent shall record on its books the principal amount of the
Advances owing to each Lender, including the Swing Loans owing to Swing Lender, and Protective
Advances owing to Agent, and the interests therein of each Lender, from time to time and such
records shall, absent manifest error, conclusively be presumed to be correct and accurate.

          (g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in accordance with their
Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender
to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

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     2.4 Payments.

          (a) Payments by Borrowers.

               (i) Except as otherwise expressly provided herein, all payments by Borrowers shall
be made to Agent’s Account for the account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time), shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall continue to accrue
until such following Business Day.

               (ii) Unless Agent receives notice from Administrative Borrower prior to the date
on which any payment is due to the Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrowers do not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender until the date repaid.

          (b) Apportionment and Application.

               (i) So long as no Event of Default has occurred and is continuing and except as
otherwise provided with respect to Defaulting Lenders, all principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations
to which such payments relate held by each Lender) and all payments of fees and expenses (other
than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the
Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee
or expense relates. All payments to be made hereunder by Borrowers shall be remitted to Agent and
all (subject to Section 2.4(b)(iv)) such payments, and all Collections which have been
received by Agent pursuant to Section 2.7, shall be applied, so long as no Event of Default
has occurred and is continuing, to reduce the balance of the Advances outstanding and, thereafter,
to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under
applicable law.

               (ii) At any time that an Event of Default has occurred and is continuing and
except as otherwise provided with respect to Defaulting Lenders, all payments remitted to Agent and
all proceeds of Collateral received by Agent shall be applied as follows:

                    (A) first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until paid in full,

                    (B) second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

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

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

7

 

                    (E) fifth, ratably to pay any Lender Group Expenses (including cost or
expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents,
until paid in full,

                    (F) sixth, ratably to pay any fees or premiums then due to any of the
Lenders under the Loan Documents until paid in full,

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

                    (H) eighth, ratably (i) to pay the principal of all Swing Loans until paid
in full, (ii) to pay the principal of all Advances until paid in full, (iii) to Agent, to be held
by Agent, for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment,
as cash collateral in an amount up to 105% of the Letter of Credit Usage, and (iv) to Agent, to be
held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to
the amount of the Bank Product Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default,

                    (I) ninth, to pay any other Obligations (including the provision of
amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the
amount necessary to secure Borrowers’ and their Subsidiaries’ obligations in respect of Bank
Products), and

                    (J) tenth, to Borrowers (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.

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

               (iv) In each instance, so long as no Event of Default has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers to Agent and
specified by Borrowers to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.

               (v) For purposes of Section 2.4(b)(ii), “paid in full” means payment of
all amounts owing under the Loan Documents according to the terms thereof, including loan fees,
service fees, professional fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.

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

     2.5 Overadvances. If, at any time or for any reason, the amount of Obligations owed
by Borrowers to the Lender Group pursuant to Section 2.1 or Section 2.12 is greater
than any of the limitations set forth in Section 2.1 or Section 2.12, as applicable
(an “Overadvance”), Borrowers immediately (or, with respect to any intentional Overadvances
made by Agent pursuant to Section 2.3(d)(ii), on such other terms as shall be imposed by
Agent and Lenders) shall pay to Agent, in cash, the amount of such excess, which amount

8

 

shall be used by Agent to reduce the Obligations in accordance with the priorities set forth
in Section 2.4(b). Borrowers promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or, if earlier, on the
date on which the Obligations are declared due and payable pursuant to the terms of this Agreement.

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

          (a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows: (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a
per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per
annum rate equal to the Base Rate plus the Base Rate Margin.

          (b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of
the Lenders with a Revolver Commitment, subject to any agreements between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate equal to 2.75% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.

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

               (i) all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above
the per annum rate otherwise applicable hereunder, and

               (ii) the Letter of Credit fee provided for in Section 2.6(b) shall be
increased to 2 percentage points above the per annum rate otherwise applicable hereunder.

          (d) Payment. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time that Obligations
or Commitments are outstanding. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to charge all interest and fees (when due and payable), all Lender Group
Expenses (as and when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including any amounts due and payable to the Bank Product
Providers in respect of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’
Loan Account, which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances that are Base Rate Loans. Any interest not paid
when due shall be compounded by being charged to the Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans.

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

9

 

          (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of
payment stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the
maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement,
Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrowers in excess of such legal maximum, whenever received, shall be
applied to reduce the principal balance of the Obligations to the extent of such excess.

     2.7 Cash Management.

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

          (b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and the applicable Obligor. Each such Cash Management Agreement shall
provide, among other things, that (i) the Cash Management Bank will comply with any instructions
originated by Agent directing the disposition of the funds in such Cash Management Account without
further consent by Parent or any of its Subsidiaries, as applicable, (ii) the Cash Management Bank
has no rights of setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other items of payment,
and (iii) it will forward, by daily sweep, all amounts in the applicable Cash Management Account to
the Agent’s Account.

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

          (d) Each Cash Management Account shall be a cash collateral account subject to a
Control Agreement.

     2.8 Crediting Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or
otherwise) shall not be considered a payment on account unless such payment item is a wire transfer
of immediately available

10

 

federal funds made to the Agent’s Account or unless and until such
payment item is honored when presented for payment. Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such payment and interest
shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the Agent’s Account on a
Business Day on or before 11:00 a.m. (California time). If any payment item is received into the
Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it
shall be deemed to have been received by Agent as of the opening of business on the immediately
following Business Day.

     2.9 Designated Account. Agent is authorized to make the Advances, and Issuing Lender
is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person or, without instructions,
if pursuant to Section 2.6(d). Administrative Borrower agrees to establish and maintain
the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds
of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless
otherwise agreed by Agent and Administrative Borrower, any Advance, Protective Advance, or Swing
Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the
Designated Account.

     2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an
account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will
be charged with all Advances (including Protective Advances and Swing Loans) made by Agent, Swing
Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued by
Issuing Lender for Borrowers’ account, and with all other payment Obligations hereunder or under
the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account
will be credited with all payments received by Agent from Borrowers or for Borrowers’ account,
including all amounts received in the Agent’s Account from any Cash Management Bank. Agent shall
render statements regarding the Loan Account to Administrative Borrower, including principal,
interest, and fees, and including an itemization of all charges and expenses constituting Lender
Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to
be correct and accurate and constitute an account stated between Borrowers and the Lender Group
unless, within 30 days after receipt thereof by Administrative Borrower, Administrative Borrower
shall deliver to Agent written objection thereto describing the error or errors contained in any
such statements.

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

     2.12 Letters of Credit.

          (a) Subject to the terms and conditions of this Agreement, the Issuing Lender
agrees to issue letters of credit for the account of Borrowers (each, an “L/C”) or to
purchase participations or execute indemnities or reimbursement obligations (each such undertaking,
an “L/C Undertaking”) with respect to letters of credit issued by an Underlying Issuer (as
of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment, renewal, or
extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and
delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic
method of transmission reasonably in advance of the requested date of issuance, amendment, renewal,
or extension. Each such request shall be in form and substance satisfactory to the Issuing Lender
in its Permitted Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the
date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration
date of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or the
beneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information
(including, in the case of an amendment, renewal, or extension, identification of the outstanding
Letter of Credit to be so amended, renewed, or extended) as shall be necessary

11

 

to prepare, amend, renew, or extend such Letter of Credit. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall have no
obligation to issue a Letter of Credit if any of the following would result after giving effect to
the issuance of such requested Letter of Credit:

               (i) the Letter of Credit Usage would exceed the Borrowing Base less the
outstanding amount of Advances, or

               (ii) the Letter of Credit Usage would exceed $5,000,000, or

               (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the
outstanding amount of Advances less the Bank Product Reserve, and less the aggregate amount of
reserves, if any, established by Agent under Section 2.1(b).

     Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Credit
may be issued to support letters of credit that already are outstanding as of the Closing Date.
Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender
is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such
L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not
later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement
prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California
time, on the Business Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, or by 11:00 a.m., California
time, on the Business Day after notice is received if such receipt is on or after 10:00 a.m.
California time, on such date, and, in the absence of such reimbursement, the L/C Disbursement
immediately and automatically shall be deemed to be an Advance hereunder and, initially, shall bear
interest at the rate then applicable to Advances that are Base Rate Loans. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt
by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(b) to reimburse the Issuing Lender, then to such Lenders and the Issuing
Lender as their interests may appear.

          (b) Promptly following receipt of a notice of L/C Disbursement pursuant to
Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro Rata Share
of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as
if Borrowers had requested such Advance and Agent shall promptly pay to Issuing Lender the amounts
so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Lender or the Lenders with Revolver Commitments, the Issuing Lender shall be deemed to have
granted to each Lender with a Revolver Commitment, and each Lender with a Revolver Commitment shall
be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender
agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of any
payments made by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on
the date due as provided in Section 2.12(a), or of any reimbursement payment required to be
refunded to Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges and
agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount
equal to its respective Pro Rata

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Share of
each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3. If any such Lender
fails to make available to Agent the amount of such Lender’s Pro Rata Share of each L/C
Disbursement made by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate until paid in full.

          (c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred
by the Lender Group arising out of or in connection with any Letter of Credit; provided,
however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence or willful misconduct
of the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound by
the Underlying Issuer’s regulations and interpretations of any Underlying Letter of Credit or by
Issuing Lender’s interpretations of any L/C issued by Issuing Lender to or for such Borrower’s
account, even though this interpretation may be different from such Borrower’s own, and each
Borrower understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following Borrowers’ instructions or
those contained in the Letter of Credit or any modifications, amendments, or supplements thereto.
Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the
Underlying Issuer for certain costs or liabilities arising out of claims by Borrowers against such
Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or
liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group’s
indemnification of any Underlying Issuer; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it
is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower hereby acknowledges and agrees that neither the Lender Group
nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting from the
malfunction of equipment in connection with any Letter of Credit.

          (d) Each Borrower hereby authorizes and directs any Underlying Issuer to deliver
to the Issuing Lender all instruments, documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the
Issuing Lender’s instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.

          (e) Any and all issuance charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes
of this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of
the Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date,
the issuance charge imposed by the prospective Underlying Issuer is .825% per annum times the
undrawn amount of each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments,
extensions, drawings, and renewals.

          (f) If by reason of (i) any change after the Closing Date in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any
direction, request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board
as from time to time in effect (and any successor thereto):

13

 

               (i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued hereunder, or

               (ii) there shall be imposed on the Underlying Issuer or the Lender Group any other
condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender
Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any
time within a reasonable period after the additional cost is incurred or the amount received is
reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent
may specify to be necessary to compensate the Lender Group for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of
any amount due pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error,
be final and conclusive and binding on all of the parties hereto.

     2.13 LIBOR Option.

          (a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”) to
have interest on all or a portion of the Advances be charged (whether at the time when made (unless
otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon
continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto, (ii) the date on which all or any portion of the Obligations
are accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement is
terminated pursuant to the terms hereof. On the last day of each applicable Interest Period,
unless Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the
interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event
of Default has occurred and is continuing, Borrowers no longer shall have the option to request
that Advances bear interest at a rate based upon the LIBOR Rate and Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.

          (b) LIBOR Election.

               (i) Administrative Borrower may, at any time and from time to time, so long as no
Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying
Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of
the proposed Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’s
election of the LIBOR Option for a permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to
be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the affected Lenders.

               (ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the
Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of
(A) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any
LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the
failure to borrow, convert, continue or

14

 

prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”).
Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (1) the amount of
interest that would have accrued on the principal amount of such LIBOR Rate Loan had such
event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from
the date of such event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert, or continue, for the period that would have been the Interest
Period therefor), minus (2) the amount of interest that would accrue on such principal amount for
such period at the interest rate which Agent or such Lender would be offered were it to be offered,
at the commencement of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting
forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this
Section 2.13 shall be conclusive absent manifest error. In the event that Borrowers obtain
any LIBOR Rate Loans during the Tax Clearance Waiting Period, Agent and Lenders agree not to charge
the Borrowers for any Funding Losses under Section 2.13 (b)(ii)(A), if and to the extent
that such Funding Losses arise out of the automatic application of Collections to repay such LIBOR
Rate Loans under Section 2.4(b)(i) other than as a result of an Event of Default. For
purposes of the preceding sentence, “Tax Clearance Waiting Period” means the period
commencing on the Closing Date and continuing until the earlier to occur of (x) Agent’s receipt of
confirmation from the relevant Governmental Authorities that the Lenders party to the Agreement on
the Closing Date are exempt from withholding tax under the laws of the United Kingdom, or (y) the
occurrence of a Default or an Event of Default.

               (iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any given
time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
integral multiples of $500,000 in excess thereof.

          (c) Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are converted or
prepaid on any date that is not the last day of the Interest Period applicable thereto, including
as a result of any automatic prepayment through the required application by Agent of proceeds of
Parent’s and its Subsidiaries’ Collections in accordance with Section 2.4(b) or for any
other reason, including early termination of the term of this Agreement or acceleration of all or
any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend,
and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses
in accordance with Section 2.13 (b)(ii) above.

          (d) Special Provisions Applicable to LIBOR Rate.

               (i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes
in applicable law occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except (a) changes of general applicability in corporate income tax
laws and (b) changes in the rate of tax on the overall income of the Lender) and changes in the
reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any
successor), excluding the Reserve Percentage, which additional or increased costs would increase
the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt
of the notice from the affected Lender, Administrative Borrower may, by notice to such affected
Lender (y) require such Lender to furnish to Administrative Borrower a statement setting forth the
basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment,
or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any
amounts due under Section 2.13(b)(ii)).

15

 

               (ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of application thereof, shall
at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue
such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender
shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of
such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to
be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate
Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate
Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender
determines that it would no longer be unlawful or impractical to do so.

          (e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually
to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by
acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.

     2.14 Capital Requirements. If, after the date hereof, any Lender determines that (i)
the adoption of or change in any law, rule, regulation or guideline regarding capital requirements
for banks or bank holding companies, or any change in the interpretation or application thereof by
any Governmental Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or directive of any such
entity regarding capital adequacy (whether or not having the force of law), has the effect of
reducing the return on such Lender’s or such holding company’s capital as a consequence of such
Lender’s Commitments hereunder to a level below that which such Lender or such holding company
could have achieved but for such adoption, change, or compliance (taking into consideration such
Lender’s or such holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return
of capital as and when such reduction is determined, payable within 90 days after presentation by
such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s
calculation thereof and the assumptions upon which such calculation was based (which statement
shall be deemed true and correct absent manifest error); provided, however, that
Borrowers shall not be required to compensate any Lender pursuant to this Section 2.14 for
such reduction of rate of return on capital incurred more than 90 days prior to the date that such
Lender delivers such statement. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.

     2.15 Joint and Several Liability of Borrowers.

          (a) Each Borrower is accepting joint and several liability hereunder and under the
other Loan Documents in consideration of the financial accommodations to be provided by the Lender
Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and
in consideration of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.

          (b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the Obligations (including,
without limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and several obligations
of each Borrower without preferences or distinction among them.

16

 

          (c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the Obligations in
accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to,
or perform, such Obligation.

          (d) The Obligations of each Borrower under the provisions of this Section
2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower
enforceable against each Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

          (e) Except as otherwise expressly provided in this Agreement, each Borrower hereby
waives notice of acceptance of its joint and several liability, notice of any Advances or Letters
of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default,
Event of Default, or of any demand for any payment under this Agreement, notice of any action at
any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any
time or times in respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever
by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay in acting or
failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to
comply with any of its respective Obligations, including, without limitation, any failure strictly
or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws
or regulations thereunder, which might, but for the provisions of this Section 2.15 afford
grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of
its Obligations under this Section 2.15, it being the intention of each Borrower that, so
long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall not be discharged except by performance and then only to the extent
of such performance. The Obligations of each Borrower under this Section 2.15 shall not be
diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower or any Agent or Lender.

          (f) Each Borrower represents and warrants to Agent and Lenders that such Borrower
is currently informed of the financial condition of Borrowers and of all other circumstances which
a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.
Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that
such Borrower will continue to keep informed of Borrowers’ financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Obligations.

          (g) The provisions of this Section 2.15 are made for the benefit of Agent,
Lenders and their respective successors and assigns, and may be enforced by it or them from time to
time against any or all Borrowers as often as occasion therefor may arise and without requirement
on the part of Agent, Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any remedies available to it
or them against any Borrower or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of this Section
2.15 shall remain in effect until all of the Obligations shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of
any of the

17

 

Obligations, is rescinded or must otherwise be restored or returned by Agent or any
Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this
Section 2.15 will forthwith be reinstated in effect, as though such payment had not been
made.

          (h) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders
with respect to any of the Obligations or any collateral security therefor until such time as all
of the Obligations have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other
Loan Documents are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary,
all such Obligations shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Borrower
therefor.

3. CONDITIONS; TERM OF AGREEMENT.

     3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of each
Lender to make its initial extension of credit provided for hereunder, is subject to the
fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set
forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being
conclusively deemed to be its satisfaction or waiver of the conditions precedent).

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

          (a) the representations and warranties contained in this Agreement or in the other
Loan Documents shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof) on and as of the date of such extension of credit,
as though made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);

          (b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making thereof;

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

          (d) no Material Adverse Change shall have occurred since May 27, 2006.

     3.3 Term. This Agreement shall continue in full force and effect for a term ending on
August 1, 2009 (the “Maturity Date”). The foregoing notwithstanding, the Lender Group,
upon the election of the Required Lenders, shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the continuation of an
Event of Default.

     3.4 Effect of Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with respect to
outstanding Letters of Credit and including all Bank Product Obligations) immediately shall become
due and payable without notice or

18

 

demand (including (a) either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to
the Bank Product Obligations). No termination of this Agreement, however, shall relieve or
discharge Parent or its Subsidiaries of their duties, Obligations, or covenants hereunder or under
any other Loan Document and the Agent’s Liens in the Collateral shall remain in effect until all
Obligations have been paid in full and the Lender Group’s obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all of the Obligations
have been paid in full and the Lender Group’s obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute
and deliver any termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or release documents
(and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the
Agent’s Liens and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.

     3.5 Early Termination by Borrowers. Borrowers have the option, at any time upon 30
days prior written notice by Administrative Borrower to Agent, to terminate this Agreement and
terminate the Commitments hereunder by paying to Agent, in cash, the Obligations (including (a)
either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral
(in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the
Bank Product Obligations), in full. If Administrative Borrower has sent a notice of termination
pursuant to the provisions of this Section, then the Commitments shall terminate and Borrowers
shall be obligated to repay the Obligations (including (a) either (i) providing cash collateral to
be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to
105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as
sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit
of the Bank Product Providers with respect to the Bank Product Obligations), in full, on the date
set forth as the date of termination of this Agreement in such notice.

4. REPRESENTATIONS AND WARRANTIES.

     In order to induce the Lender Group to enter into this Agreement, Parent and each Borrower,
jointly and severally, make the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be
true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance (or other extension of credit) made thereafter, as though made
on and as of the date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

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

     4.2 Eligible Accounts. As to each Account that is identified by a Borrower as an
Eligible Account in a borrowing base report submitted to Agent, such Account is (a) a bona fide
existing payment obligation of the applicable Account Debtor created by the sale and delivery of
Inventory or the rendition of services to such Account Debtor in the ordinary course of such
Person’s business, (b) at the time so identified, and thereafter except as disclosed to Agent, owed
to such Person without any known defenses, disputes, offsets, counterclaims, or rights of return or
cancellation, and (c) at the time so identified, and thereafter except

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as disclosed to Agent, not excluded as ineligible by virtue of one or more of the excluding
criteria set forth in the definition of Eligible Accounts.

     4.3 Inventory. The Inventory of Active Obligors is, in all material respects, of good
and merchantable quality, free from known defects.

     4.4 Equipment. Each material item of Equipment of Active Obligors is used or held for
use in their business and is, in all material respects, in good working order, ordinary wear and
tear and damage by casualty excepted.

     4.5 Location of Inventory and Equipment. Except as disclosed on Schedule 4.5,
the Inventory and Equipment (other than vehicles or Equipment out for repair) of Active Obligors
with an aggregate fair market value in excess of $100,000 at any one location or $250,000 in the
aggregate for all such locations are not stored with a bailee, warehouseman, or similar party and
are located only at, or in-transit between, the locations identified on Schedule 4.5 (as
such Schedule may be updated pursuant to Section 5.9).

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

     4.7 Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.

          (a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction
of organization of Parent and each of its Subsidiaries is set forth on Schedule 4.7(a) (as
such Schedule may be updated from time to time to reflect changes permitted to be made under
Section 6.5).

          (b) The chief executive office of Parent and each of its Subsidiaries is located
at the address indicated on Schedule 4.7(b) (as such Schedule may be updated from time to
time to reflect changes permitted to be made under Section 5.9).

          (c) Parent’s and each of its Subsidiaries’ tax identification numbers and
organizational identification numbers, if any, are identified on Schedule 4.7(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be made under Section
6.5).

          (d) As of the Closing Date, neither Parent nor any of its Subsidiaries holds any
commercial tort claims, except as set forth on Schedule 4.7(d).

     4.8 Due Organization and Qualification; Subsidiaries.

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

          (b) Set forth on Schedule 4.8(b) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.16, or changes to
Parent’s capital structure that are not otherwise prohibited under the Loan Documents), is a
complete and accurate description of the authorized capital Stock of Parent, by class, and, as of
the Closing Date, a description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 4.8(b), there are no subscriptions,
options, warrants, or calls relating to any shares of Parent’s capital Stock, including any right
of conversion or exchange under any outstanding security or other instrument, except for the
issuance of Series B Preferred Stock, or options, warrants, and restricted stock granted to
employees, management, and directors in

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the ordinary course of Parent’s business as in effect on the Closing Date so long as the
granting of such options, warrants or restricted stock (x) does not result in a Change of Control
and (y) is not otherwise prohibited hereunder. Parent is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any
security convertible into or exchangeable for any of its capital Stock.

          (c) Set forth on Schedule 4.8(c) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.16), is a complete and
accurate list of Parent’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of their
organization, (ii) the number of shares of each class of common and preferred Stock authorized for
each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of
each such class owned directly or indirectly by Parent. All of the outstanding capital Stock of
each such Subsidiary has been validly issued and is fully paid and non-assessable.

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

     4.9 Due Authorization; No Conflict.

          (a) The execution, delivery, and performance by Parent and its Subsidiaries of
this Agreement and the Loan Documents to which each, individually or collectively, is a party have
been duly authorized by all necessary action on the part of such Person.

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

          (c) Other than the filing of financing statements and other filings or actions
necessary to perfect Liens granted to Agent in the Collateral, the execution, delivery, and
performance by Parent and its Subsidiaries of this Agreement and the other Loan Documents to which each, individually or
collectively, is a party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other than consents or
approvals that have been obtained and that are still in force and effect.

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

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          (e) The Agent’s Liens are validly created, perfected (other than (i) in respect of motor
vehicles, (ii) the UK Real Property Collateral, and (iii) any Deposit Accounts and Securities
Accounts not subject to a Control Agreement as permitted by Section 6.12, and subject only
to the filing of financing statements and other foreign perfection filings), and first priority
Liens, subject only to Permitted Liens.

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

     4.11 No Material Adverse Change. All financial statements relating to Parent and its
Subsidiaries that have been delivered by any such Persons to the Lender Group have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in all material
respects, the applicable Person’s or Persons’ financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material Adverse Change with
respect to Borrowers and their Subsidiaries since May 27, 2006.

     4.12 Fraudulent Transfer.

          (a) Parent and its Subsidiaries, on a consolidated basis, are Solvent.

          (b) No transfer of property is being made by Parent or its Subsidiaries and no
obligation is being incurred by Parent or its Subsidiaries in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Parent or any of its Subsidiaries.

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

     4.14 Environmental Condition. Except as set forth on Schedule 4.14, (a) to
the knowledge of each Obligor party hereto, none of Parent’s or any of its Subsidiaries’ properties
or assets has ever been used by Parent, its Subsidiaries, or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such use, production, storage, handling, treatment, release or transport was in violation, in
any material respect, of any applicable Environmental Law and expected to involve liabilities in an
aggregate amount in excess of $1,000,000, (b) to the knowledge of each Obligor party hereto,
neither Parent’s nor any of its Subsidiaries’ properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site which designation or identification could be expected to result in liabilities in an
aggregate amount in excess of $1,000,000, (c) neither Parent nor any of its Subsidiaries has
received notice that a Lien arising under any Environmental Law involving an aggregate amount in
excess of $1,000,000 has attached to any revenues or to any Real Property owned or operated by
Parent or its Subsidiaries, and (d) neither Parent nor any of its Subsidiaries have received a
summons, citation, notice, or directive which could reasonably be expected to involve liabilities
in an aggregate amount in excess of $1,000,000 from the United States Environmental Protection
Agency or any other foreign or domestic federal, state, or local governmental agency concerning any
action or omission by Parent or any Subsidiary of Parent resulting in the releasing or disposing of
Hazardous Materials into the environment.

     4.15 Intellectual Property. Parent and its Subsidiaries own, or hold licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the
conduct of their business as currently conducted, and attached hereto as Schedule 4.15 (as
updated from time to time) is a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright registrations as to
which Parent or one of its Subsidiaries is the owner or is an

22

 

exclusive licensee; provided, however, that the Obligors party hereto
may amend Schedule 4.15 to add additional property so long as such amendment occurs by
written notice to Agent not less than 10 days after the date on which Parent or any Subsidiary of
Parent acquires any such property after the Closing Date.

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

     4.17 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 is
a listing of all of Parent’s and its Subsidiaries’ Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (a) the name and address of such
Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

     4.18 Complete Disclosure. All factual information (taken as a whole) furnished by or
on behalf of Parent and its Subsidiaries in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter furnished by or on
behalf of Parent and its Subsidiaries in writing to Agent or any Lender will be, true and accurate
in all material respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional Projections
represent Parent’s good faith estimate of its and its Subsidiaries’ future performance for the
periods covered thereby based upon assumptions believed by Parent to be reasonable at the time of
the delivery thereof to Agent (it being understood that such projections and forecasts are subject
to uncertainties and contingencies, many of which are beyond the control of Parent and its
Subsidiaries and no assurances can be given that such projections or forecasts will be realized).

     4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of Parent and its Subsidiaries outstanding immediately prior to the Closing Date
that is to remain outstanding after the Closing Date and such Schedule accurately sets forth the
aggregate principal amount of such Indebtedness and the principal terms thereof.

     4.20 Inactive Obligors. Each of the Inactive Obligors is inactive and does not
conduct any business operations, except as may be related to the dissolution of such Inactive
Obligor or the consolidation or merger of such Inactive Obligor with one or more Active Obligors as
permitted under the terms of this Agreement.

5. AFFIRMATIVE COVENANTS.

     Parent and each Borrower, joint and severally, covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, each such Person shall and shall
cause each of its respective Subsidiaries to do all of the following:

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

23

 

     5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with copies
for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified
therein. In addition, Parent and each Borrower agrees to cooperate fully with Agent to facilitate
and implement a system of electronic collateral reporting in order to provide electronic reporting
of each of the items set forth above.

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

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

     5.5 Inspection. Permit Agent, each Lender, and each of their duly authorized
representatives or agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its affairs, finances,
and accounts with, and to be advised as to the same by, its officers and employees at such
reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default
or Event of Default exists, with reasonable prior notice to Administrative Borrower.

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

     5.7 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due
or payable by, or imposed, levied, or assessed against Parent, its Subsidiaries, or any of their
respective assets to be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Parent will and will cause its Subsidiaries to make timely payment or deposit
of all tax payments and withholding taxes required of them by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating that the applicable
Person has made such payments or deposits.

     5.8 Insurance.

          (a) At Borrowers’ expense, maintain insurance respecting Parent’s and its
Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. Parent and its Subsidiaries also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such amounts and with such
insurance companies as are reasonably satisfactory to Agent. Administrative Borrower shall deliver
copies of all such policies of Obligors to Agent with an endorsement naming Agent as the sole loss
payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as
appropriate. Each such policy of insurance or endorsement shall contain a clause requiring the
insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever.

          (b) Administrative Borrower shall give Agent prompt notice of any loss exceeding
$250,000 covered by such insurance of Parent or any of its Subsidiaries. So long as no Event of
Default has occurred and is continuing, Parent and its Subsidiaries, as the case may be, shall have the
exclusive right to

24

 

adjust any losses payable under any such insurance policies of Subsidiaries that
are not Obligors and under any insurance policies of Obligors which are less than $1,000,000.
Following the occurrence and during the continuation of an Event of Default, or in the case of any
losses exceeding $1,000,000 payable under such insurance covering Collateral, Agent shall have the
exclusive right to adjust any losses payable under any such insurance policies covering Collateral,
without any liability to Parent and its Subsidiaries whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy mentioned above (other than
liability insurance policies or casualty policies respecting assets that are not Collateral) or as
payment of any award or compensation for condemnation or taking by eminent domain with respect to
Collateral, shall be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations (provided that any such prepayment shall not result in a
permanent reduction of the Commitments) or to be disbursed to Administrative Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations; provided, however, that, with respect to
any such monies in an aggregate amount during any 12 consecutive month period not in excess of
$1,000,000, so long as (A) no Default or Event of Default shall have occurred and is continuing,
(B) Administrative Borrower shall have given Agent prior written notice of Parent’s or its
respective Subsidiaries’ intention to apply such monies to the cost of repair, replacement, or
restoration of the property which is the subject of the loss, destruction, or taking by
condemnation, (C) the monies are held in a Borrower’s Deposit Account subject to a Control
Agreement, and (D) Parent or its Subsidiaries complete such repairs, replacements, or restorations
within 180 days after the initial receipt of such monies, Parent or such Subsidiaries shall have
the option to apply such monies to the cost of repair, replacement, or restoration of the property
which is the subject of the loss, destruction, or taking by condemnation unless and to the extent
that such applicable period shall have expired or an Event of Default shall have occurred without
such repair, replacement, or restoration being made, in which case, any amounts remaining in the
cash collateral account shall be applied to the Obligations in accordance with Section
2.4(b)(ii).

     5.9 Location of Inventory and Equipment. Keep Active Obligors’ Inventory and
Equipment (other than vehicles and Equipment out for repair) only at the locations identified on
Schedule 4.5 and keep each Obligor’s chief executive offices only at the locations
identified on Schedule 4.7(b); provided, however, that Administrative
Borrower may amend Schedule 4.5 or Schedule 4.7 so long as such amendment occurs by
written notice to Agent not less than 30 days prior to the date on which such Inventory or
Equipment is moved to such new location or such chief executive office is relocated, so long as
such new location is within the continental United States, Canada, or the United Kingdom, and so
long as (x) at the time of such written notification, the applicable Obligor provides Agent a
Collateral Access Agreement with respect to such locations at which Inventory or Equipment with an
aggregate fair market value in excess of $100,000 at any one location or $250,000 for all such
locations is located (it being understood that in the event an Obligor is unable to obtain any such
Collateral Access Agreement, Agent may establish such reserves against Availability as it deems
necessary in its Permitted Discretion with respect to such Inventory or Equipment), and (y) except
as otherwise expressly permitted hereunder, at the time any such Inventory or Equipment is moved or
transferred, Agent’s Liens on such Inventory and Equipment are not adversely affected.

     5.10 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations,
and orders the non-compliance with which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change.

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

     5.12 Existence. Except in connection with a Permitted Restructuring Transaction, at
all times preserve and keep in full force and effect Parent’s and each of its Subsidiaries’ valid
existence and good

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standing and, except as could not reasonably be expected to result in a Material Adverse
Change, any rights, franchises, permits, licenses, accreditations, authorizations, or other
approvals material to their businesses.

     5.13 Environmental. (a) Keep any property either owned or operated by Parent or any
Subsidiary of Parent free of any Environmental Liens involving an aggregate amount in excess of
$1,000,000 or post bonds or other financial assurances sufficient to satisfy the obligations or
liability evidenced by such Environmental Liens, (b) comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably
requests, where the failure to comply could be expected to involve potential liabilities in excess
of $1,000,000 in the aggregate, (c) promptly notify Agent of any release of a Hazardous Material in
any reportable quantity from or onto property owned or operated by Parent or any Subsidiary of
Parent and take any Remedial Actions required to abate said release or otherwise to come into
compliance with applicable Environmental Laws in each case, where the failure to comply could be
expected to involve potential liabilities in excess of $1,000,000 in the aggregate, and (d)
promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice
of any of the following: (i) notice that an Environmental Lien involving an aggregate amount in
excess of $1,000,000 has been filed against any of the real or personal property of Parent or any
Subsidiary of Parent, (ii) commencement of any Environmental Action or notice that an Environmental
Action will be filed against Parent or any Subsidiary of Parent which could reasonably be expected
to involve potential liabilities in excess of $1,000,000 in the aggregate, and (iii) notice of a
violation, citation, or other administrative order which reasonably could be expected to result in
a Material Adverse Change.

     5.14 Disclosure Updates. Promptly and in no event later than 5 Business Days after
obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished
to the Lender Group contained, at the time it was furnished, any untrue statement of a material
fact or omitted to state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any material fact nor shall
any such notification have the effect of amending or modifying this Agreement or any of the
Schedules hereto.

     5.15 Control Agreements. Take all reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect
to (subject to the proviso contained in Section 6.12) all of Obligors’ Securities Accounts,
Deposit Accounts, electronic chattel paper, investment property, and letter-of-credit rights.

     5.16 Formation of Subsidiaries. At the time that any Obligor forms any direct
Subsidiary or acquires any direct Subsidiary after the Closing Date, such Obligor shall (a) cause
such new Subsidiary to provide to Agent a joinder to the Guaranty and the Security Agreement,
together with such other security documents (including mortgages with respect to any Real Property
of such new Subsidiary), as well as appropriate financing statements (and with respect to all
property subject to a mortgage, fixture filings), all in form and substance satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge
agreement and appropriate certificates and powers or financing statements, hypothecating all of the
direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory
to Agent, and (c) provide to Agent all other documentation, including one or more opinions of
counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution
and delivery of the applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all property subject to a mortgage). Any
document, agreement, or instrument executed or issued pursuant to this Section 5.16 shall
be a Loan Document.

     5.17 Further Assurances. Subject to the provisions regarding the UK Real Property
Collateral set forth in Section 5.19, at any time upon the request of Agent, Parent and
Borrowers shall execute or deliver

26

 

to Agent, and shall cause their Subsidiaries to execute or deliver to Agent, any
and all financing statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all
other documents (collectively, the “Additional Documents”) that Agent may request in form
and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to
better perfect the Agent’s Liens in all of the properties and assets of Parent and the Subsidiaries
of Parent that are Obligors (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property
acquired by Parent and the Subsidiaries of Parent that are Obligors after the Closing Date, and in
order to fully consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Parent and Borrowers authorize Agent
to execute any such Additional Documents in Parent’s, Borrowers’ or their Subsidiaries’ names, as
applicable, and authorizes Agent to file such executed Additional Documents in any appropriate
filing office.

     5.18 Intentionally Omitted.

     5.19 UK Mortgage Documents. In the event the UK Real Property Collateral is not sold
within 120 days of the Closing Date, or at any other time, upon Agent’s request, following an Event
of Default, the Parent, Borrowers, and the applicable Obligor shall execute and deliver any and all
additional security documents requested by Agent with respect to the UK Real Property Collateral,
each such document to be in form and substance satisfactory to Agent, together with all other
documentation requested by Agent in connection therewith, including, without limitation, (x) one or
more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to
the execution and delivery of the applicable documentation referred to above, and (y) a policy of
title insurance or other documentation with respect to the UK Real Property Collateral.

     5.20 Post-Closing Covenants. The continuing obligation of the Lender Group (or any
member thereof) to make any Advances hereunder at any time (or to extend any other credit
hereunder) shall be subject to the fulfillment, to the satisfaction of Agent and each Lender (or
waiver thereby), of each of the post-closing covenants set forth on Schedule 5.20 within
the prescribed time periods set forth on such Schedule. Except as otherwise specifically provided
in such Schedule, the failure by Borrowers to satisfy the post-closing covenants set forth on
Schedule 5.20 within the prescribed time periods shall constitute an Event of Default.

6. NEGATIVE COVENANTS.

     Parent and each Borrower, jointly and severally, covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, such Person will not and will not
permit any of its respective Subsidiaries to do any of the following:

     6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

          (a) Indebtedness evidenced by this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit,

          (b) Indebtedness set forth on Schedule 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,

          (c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

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

27

 

          (e) Indebtedness comprising Permitted Investments;

          (f) Indebtedness evidenced by Permitted Intercompany Advances; and

          (g) other unsecured Indebtedness of the Parent and its Subsidiaries which is
subordinated to the Obligations on terms and conditions (including all economic and subordination
terms and the absence of covenants) acceptable to Lenders and does not exceed in the aggregate
$5,000,000 at any time outstanding, and any Refinancing Indebtedness in respect of such
Indebtedness.

     6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired,
or any income or profits therefrom, except for Permitted Liens.

     6.3 Restrictions on Fundamental Changes. Except with respect to a Permitted
Restructuring Transaction.

          (a) Enter into any merger, consolidation, reorganization, or, except with respect
to the issuance of the Series B Preferred Stock, any recapitalization or reclassification its
Stock,

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

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

     6.4 Disposal of Assets. Other than Permitted Dispositions, Permitted Investments,
Permitted Intercompany Advances, or a Permitted Restructuring Transaction, convey, sell, lease,
license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell,
lease, license assign, transfer, or otherwise dispose of) any of the assets of any Parent or any
Subsidiary of Parent.

     6.5 Change Name. Change Parent’s or any of its Subsidiaries’ name, organizational
identification number, state of organization or organizational identity; provided,
however, that Parent or a Subsidiary of Parent may change its name upon at least 15 days
prior written notice by Administrative Borrower to Agent of such change and so long as, at the time
of such written notification, such Person provides any financing statements necessary to perfect
and continue perfected the Agent’s Liens.

     6.6 Nature of Business. Make any change in the nature of its business or acquire any
properties or assets that are not reasonably related to the conduct of such business activities.

     6.7 Prepayments and Amendments. Except in connection with Refinancing Indebtedness
permitted by Section 6.1,

          (a) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Parent or any Subsidiary of Parent, other than (i) the Obligations in accordance
with this Agreement, or (ii) Permitted Intercompany Advances so long as any such prepayment,
redemption, defeasance, or purchase is permitted under the terms of the Intercompany Subordination
Agreement,

          (b) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment if such payment is not permitted at such time under the
subordination terms and conditions,

28

 

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

          (d) directly or indirectly, amend, modify, alter, increase or change any of the
payment or other material terms or conditions of the Series B Preferred Stock following issuance
thereof.

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

     6.9 Consignments. Solely with respect to Obligors, consign any of their Inventory or
sell any of their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.

     6.10 Distributions. Make any distribution or declare or pay any dividends (in cash or
other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of any of
Parent or any of its Subsidiaries’ Stock, of any class, whether now or hereafter outstanding,
except that:

          (a) a Borrower may make cash distributions or declare and make dividend payments
to Parent or another Borrower, and a non-Obligor Subsidiary or a Guarantor may make cash
distributions or declare and make dividend payments to any Active Obligor;

          (b) Parent and its Subsidiaries may declare and make dividend payments and other
distributions payable solely in its equity interests, so long as Agent’s Liens, if any, in the
equity of the issuer are not adversely affected; and

          (c) (i) Parent may make scheduled payments of cash dividends on the Series B
Preferred Stock, consistent with the terms thereof on the date such Stock is issued,
provided, that any dividends (whether paid or accrued) for the initial 12 months after
issuance of such Stock will be payable only in additional shares of Stock of Parent, and no payment
of cash dividends shall be made prior to the 18 month anniversary of the issuance of such Stock or
at any time that an Event of Default exists or would result therefrom; (ii) Parent may make
optional redemptions of the Series B Preferred Stock, consistent with the terms thereof on the date
such Stock is issued, provided, that at the time of any such redemption (x) no Event of
Default exists or would result therefrom, (y) the Daily Balance on such date, taking any such
redemption into account would be $0, and (z) at least 24 months shall have passed from the issuance
of such Stock being redeemed; (iii) Parent may make mandatory redemptions of the Series B Preferred
Stock as a result of Permitted Dispositions of the stock or assets of Bookham (Switzerland) or the
thin film filter operations of Bookham (US), consistent with the terms thereof on the date such
Stock is issued, provided, that at the time of any such redemption (x) no Event of Default
exists or would result therefrom, and (y) after taking such redemption into account, no Overadvance
would exist and the Borrowers would have Excess Availability plus Qualified Cash of not less than
$25,000,000; and (iv) in the event Parent fails to register a form S-3 Registration Statement in
connection with the issuance of such Stock, Parent may make payments due to the holders of such
Stock as a result of such failure, consistent with the terms thereof on the date such Stock is
issued, provided, that at the time of any such payment (x) no Event of Default exists or
would result therefrom, and (y) the Borrowers would have Excess Availability plus Qualified Cash of
not less than $25,000,000 after taking any such payment into account.

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

29

 

     6.12 Investments. Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent obligations) for or in
connection with any Investment; provided, however, that (i) Parent and its
Subsidiaries that are Obligors shall not have Permitted Investments (other than in the Cash
Management Accounts) in Deposit Accounts or Securities Accounts for the first 30 days immediately
following the Closing Date in an aggregate amount in excess of $100,000 at any one time, and
thereafter, $25,000, at any one time, unless such Person and the applicable securities intermediary
or bank have entered into Control Agreements governing such Permitted Investments in order to
perfect (and further establish) the Agent’s Liens in such Permitted Investments, (ii) unless and
until Bookham China consummates the Bookham China Sale and Leaseback, Bookham China shall not have
cash and Cash Equivalents in an aggregate amount in excess of $5,500,000 at any one time, and upon
and during the 2 months after the consummation of the Bookham China Sale and Leaseback, in an
aggregate amount in excess of $14,000,000 at any one time, (iii) Bookham Switzerland shall not have
cash and Cash Equivalents in an aggregate amount in excess of $3,500,000 at any one time, (iv)
Forthaven Ltd., a company organized under the laws of England and Wales (“Forthaven”),
shall not have cash and Cash Equivalents in an aggregate amount in excess of £135,000 (UK pounds
sterling) at any one time, and (v) Parent’s Subsidiaries that are not Obligors (other than Bookham
China, Bookham Switzerland, and Forthaven) shall not have cash and Cash Equivalents in an aggregate
amount in excess of $300,000 at any one time. Subject to the Investments permitted by the
foregoing proviso, Parent shall not and shall not permit its Subsidiaries that are Obligors to
establish or maintain any Deposit Account or Securities Account unless Agent shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.

     6.13 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any transaction with any Affiliate of Parent or any Subsidiary of Parent except for:

          (a) Permitted Intercompany Transactions;

          (b) the payment of reasonable fees, compensation, or employee benefit arrangements
to, and any indemnity provided for the benefit of, outside directors of Parent in the ordinary
course of business and consistent with industry practice;

          (c) distributions described in and permitted under Section 6.10; and

          (d) Permitted Intercompany Advances, Permitted Dispositions, and Permitted
Investments.

Notwithstanding the foregoing, in no event may an Active Obligor make payments, sell or make any
other transfers of assets to an Inactive Obligor.

     6.14 Use of Proceeds.

          (a) Use the proceeds of the Advances for any purpose other than (i) on the Closing
Date, to pay transactional fees, costs, and expenses incurred in connection with this Agreement,
the other Loan Documents, and the transactions contemplated hereby and thereby, and (ii)
thereafter, consistent with the terms and conditions hereof, for its lawful and permitted purposes.

          (b) Transfer, directly or indirectly any proceeds of the Advances to any Inactive
Obligor.

          (c) With respect to Inactive Obligors, request or receive, directly or indirectly
any proceeds of the Advances from the Agent, Lenders, an Active Obligor, or otherwise.

30

 

     6.15 Inventory and Equipment with Bailees. Except as set forth on Schedule
4.5 and as permitted by Section 5.9, store the inventory or Equipment of Parent or its
Subsidiaries that are Obligors at any time now or hereafter with a bailee, warehouseman, or similar
party unless such bailee, warehouseman, or similar party has first provided Agent with a Collateral
Access Agreement.

     6.16 Financial Covenants.

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

	 	 	 
	Applicable Amount	 	Applicable Period
	 	 	 
	($11,505,000)
	 	For the 1 quarter period

ending September 30, 2006
	 	 	 
	($14,433,000)
	 	For the 2 quarter period

ending December 31, 2006
	 	 	 
	($15,763,000)
	 	For the 3 quarter period

ending March 31, 2007
	 	 	 
	($16,205,000)
	 	For the 4 quarter period

ending June 30, 2007
	 	 	 
	$2,184,000
	 	For the 4 quarter period

ending September 30, 2007
	 	 	 
	$7,321,000
	 	For the 4 quarter period

ending December 31, 2007
	 	 	 
	$7,810,000
	 	For the 4 quarter period

ending March 31, 2008 and each quarter end thereafter

; provided, however, that Borrowers shall only be required to satisfy the foregoing
financial covenant in the event that they do not achieve Minimum Liquidity. For purposes of the
preceding sentence, Agent will test Minimum Liquidity on the last day of each month during the term
of this Agreement. Such test for any month will be based upon an average of the weekly Excess
Availability and weekly Qualified Cash amounts for weeks ending during such month, which amounts
will be based upon availability and cash balance reports delivered to Agent in accordance with the
terms of this Agreement. In the event that Borrowers fail to achieve Minimum Liquidity as of any
such monthly test, or fail to timely deliver the reports necessary to make such determination, or
if a Default or Event of Default has occurred and is continuing, then Borrowers will be required to
satisfy the foregoing financial covenant for the most recently completed Applicable Period in the
foregoing table. For purposes of this Section 6.16(a), Minimum Liquidity means that the
sum of Excess Availability plus Qualified Cash is at least $30,000,000.

          (b) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess
of the amount set forth in the following table for the applicable period:

31

 

	 	 	 	 	 	 	 
	Closing Date	 	 	 	 	 	 
	through the end of	 	 	 	 	 	 
	Fiscal Year 2006	 	Fiscal Year 2007	 	Fiscal Year 2008	 	Fiscal Year 2009
	 	 	 	 	 	 	 
	$4,000,000
	 	$8,000,000 plus the lesser

of (a) $4,000,000 minus

the aggregate amount of

Capital Expenditures made

from the Closing Date

through the end of Fiscal

Year 2006, and (b)

$2,000,000
	 	$8,000,000 plus the lesser

of (a) $8,000,000 minus

the aggregate amount of

Capital Expenditures

made during the Fiscal

Year 2007, and (b)

$4,000,000
	 	$8,000,000 plus the

lesser of (a) $8,000,000

minus the aggregate

amount of Capital

Expenditures made

during the Fiscal Year

2008, and (b)

$4,000,000

7. EVENTS OF DEFAULT.

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

     7.1 If any Obligor fails to pay when due and payable, or when declared due and payable, (a)
all or any portion of the Obligations consisting of interest, fees, or charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof
constituting principal) constituting Obligations (including any portion thereof that accrues after
the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period
of 3 Business Days, or (b) all or any portion of the principal of the Obligations;

     7.2 If Parent or any Subsidiary of Parent:

          (a) fails to perform or observe any covenant or other agreement contained in any
of Sections 2.7, 5.2, 5.3, 5.4, 5.5, 5.8,
5.12, 5.14, 5.16, 5.17 and 6.1 through 6.16 of this
Agreement or Section 6 of the Security Agreement;

          (b) fails to perform or observe any covenant or other agreement contained in any
of Sections 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of
this Agreement and such failure continues for a period of 10 days after the earlier of (i) the date
on which such failure shall first become known to any officer of any Obligor or (ii) written notice
thereof is given to Administrative Borrower by Agent; or

          (c) fails to perform or observe any covenant or other agreement contained in this
Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or
agreement that is the subject of another provision of this Section 7 (in which event such
other provision of this Section 7 shall govern), and such failure continues for a period of
20 days after the earlier of (i) the date on which such failure shall first become known to any
officer of any Obligor or (ii) written notice thereof is given to Administrative Borrower by Agent;

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

     7.4 If an Insolvency Proceeding is commenced by Parent or any Subsidiary of Parent;

32

 

     7.5 If an Insolvency Proceeding is commenced against Parent or any Subsidiary of Parent, and
any of the following events occur: (a) the applicable Person consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not
timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within
60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, Parent or any Subsidiary of Parent, or (e) an order for
relief shall have been issued or entered therein;

     7.6 If Parent, any Obligor, Bookham China, or Bookham Switzerland is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any material part of its
business affairs;

     7.7 If one or more judgments, orders, or awards involving an aggregate amount of $1,000,000,
or more (except to the extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing) shall be entered or filed against Parent or any Subsidiary of Parent
or with respect to any of their respective assets, and the same is not released, discharged, bonded
against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5
days prior to the date on which such asset is subject to being forfeited by the applicable Person;

     7.8 If (a) there is a default in one or more agreements to which Parent or any Subsidiary of
Parent is a party with one or more third Persons relative to Indebtedness of such Person involving
an aggregate amount of $1,000,000 or more, and such default (i) occurs at the final maturity of the
obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of Parent’s Subsidiary’s (as applicable) obligations
thereunder; or (b) there shall occur any event which would result in the mandatory redemption or
other payment in respect of the Series B Preferred Stock in a manner not specifically permitted
under the terms of this Agreement;

     7.9 If any warranty, representation, statement, or Record made herein or in any other Loan
Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan
Document proves to be untrue in any material respect (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

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

     7.11 If the Security Agreement or any other Loan Document that purports to create a Lien,
shall, for any reason, fail or cease to create a valid and perfected and, except to the extent
permitted by the terms hereof or thereof, first priority Lien on or security interest in the
Collateral covered hereby or thereby, except as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement; or

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

8. THE LENDER GROUP’S RIGHTS AND REMEDIES

     8.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of their election and
without demand) may

33

 

authorize and instruct Agent to do any one or more of the following on behalf- of the
Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Parent and Borrowers:

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

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

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

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

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default
described in Section 7.4 or Section 7.5, in addition to the remedies set forth
above, without any notice to Borrowers or any other Person or any act by the Lender Group, the
Commitments shall automatically terminate and the Obligations then outstanding, together with all
accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and
the other Loan Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly waived by Parent
and Borrowers.

     8.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender
Group shall have all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election. and no waiver by the Lender Group of any Event of Default shall be deemed a continuing
waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

9. TAXES AND EXPENSES.

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

34

 

10. WAIVERS; INDEMNIFICATION.

     10.1 Demand; Protest; etc. Parent and each Borrower waive demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper,
and guarantees at any time held by the Lender Group on which Parent or any such Borrower may in any
way be liable.

     10.2 The Lender Group’s Liability for Collateral. Parent and each Borrower hereby
agree that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender
Group shall not in any way or manner be liable or responsible for (i) the safekeeping of the
Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any
cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Parent and Borrowers.

     10.3 Indemnification. Parent and each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an
“Indemnified Person”) harmless (to the fullest extent permitted by law) from and against
any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines,
costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or
consultants and all other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred
by any of them (a) in connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration (including any restructuring or workout with respect
hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby
or thereby or the monitoring of Parent’s and its Subsidiaries’ compliance with the terms of the
Loan Documents, (b) with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or arising out of any
presence or release of Hazardous Materials at, on, under, to or from any assets or properties
owned, leased or operated by Parent or any of its Subsidiaries or any Environmental Actions,
Environmental Liabilities and Costs or Remedial Actions related in any way to any such assets or
properties of Parent or any of its Subsidiaries (each and all of the foregoing, the
“Indemnified Liabilities”). The foregoing to the contrary notwithstanding, neither Parent
nor Borrowers shall have any obligation to any Indemnified Person under this Section 10.3
with respect to any Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of the Obligations. If
any Indemnified Person makes any payment to any other Indemnified Person with respect to an
Indemnified Liability as to which Parent or Borrowers were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by such Person with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION (BUT NOT GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11. NOTICES.

     Unless otherwise provided in this Agreement, all notices or demands by Parent, Borrowers, or
Agent to the other relating to this Agreement or any other Loan Document shall be in writing and
(except for financial statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail (at such email
addresses as Administrative Borrower or Agent, as applicable,

35

 

may designate to each other in accordance herewith), or telefacsimile to Borrowers in care of
Administrative Borrower or to Agent, as the case may be, at its address set forth below:

	 	 	 
	If to Administrative Borrower:

	 	BOOKHAM TECHNOLOGY PLC
	 

	 	2584 Junction Avenue
	 

	 	San Jose, California 95134
	 

	 	Attn: Jerry Turin, Corporate Controller
	 

	 	Fax No.: 408.904.5072
	 
	 	 
	with copies to:

	 	WILMER HALE
	 

	 	60 State Street
	 

	 	Boston, Massachusetts 02109
	 

	 	Attn: John D. Sigel, Esq.
	 

	 	Fax No.: 617.526.5000
	 
	 	 
	If to Agent:

	 	WELLS FARGO FOOTHILL, INC.
	 

	 	2450 Colorado Avenue
	 

	 	Suite 3000 West
	 

	 	Santa Monica, California 90404
	 

	 	Attn: Business Finance Division Manager
	 

	 	Fax No.: 310.453.7413
	 
	 	 
	with copies to:

	 	BUCHALTER NEMER
	 

	 	1000 Wilshire Boulevard, Suite 1500
	 

	 	Los Angeles, CA 90017-2457
	 

	 	Attn: Robert J. Davidson, Esq.
	 

	 	Fax No.: 213.896.0400

     Agent and Administrative Borrower may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other party. All notices or
demands sent in accordance with this Section 11, other than notices by Agent in connection
with enforcement rights against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof
in the mail. Parent and each Borrower acknowledges and agrees that notices sent by the Lender
Group in connection with the exercise of enforcement rights against Collateral under the provisions
of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth above.

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES
HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.

          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO
THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES,

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STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY
BE FOUND. BORROWERS AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

          (c) PARENT, BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND
EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT
OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

     13.1 Assignments and Participations.

          (a) Any Lender may assign and delegate to one or more assignees (each an
“Assignee”) that are Eligible Transferees all or any portion, of the Obligations, the
Commitments and the other rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount (unless waived by the Agent) of $5,000,000 (except such minimum
amount shall not apply to (x) an assignment or delegation by any Lender to any other Lender or an
Affiliate of any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each other
or a fund or account managed by any such new Lender or an Affiliate of such new Lender to the
extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000);
provided, however, that Borrowers and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent an Assignment and Acceptance and Agent has notified the assigning Lender of its
receipt thereof in accordance with Section 13.1(b), and (iii) unless waived by the Agent,
the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in
the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of
any fees shall not be required and the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of
all or any substantial portion of the business or loan portfolio of the assigning Lender.

          (b) From and after the date that Agent notifies the assigning Lender (with a copy
to Administrative Borrower) that it has received an executed Assignment and Acceptance and, if
applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 10.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights and

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obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a
party hereto and thereto), and such assignment shall effect a novation among Borrowers, the
assigning Lender, and the Assignee; provided, however, that nothing contained
herein shall release any assigning Lender from obligations that survive the termination of this
Agreement, including such assigning Lender’s obligations under Section 15 and Section
16.7(a) of this Agreement.

          (c) By executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement
or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
Parent or Borrowers or the performance or observance by Parent or Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such
Assignee confirms that it has received a copy of this Agreement, together with such other documents
and information as it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance
upon Agent, such assigning Lender or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement as are delegated to Agent, by the
terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such
Assignee agrees that it will perform all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.

          (d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b),
this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.

          (e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all or any
portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the
“Originating Lender”) hereunder and under the other Loan Documents; provided,
however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the participating interest in
the Obligations, the Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the
Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating
Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender’s rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A) extend the final
maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce
the interest rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or guaranties (except to the
extent expressly provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all
amounts payable by Borrowers hereunder shall be determined as if such Lender had not

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sold such participation, except that, if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this Agreement. The rights
of any Participant only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this Agreement or the other
Loan Documents or any direct rights as to the other Lenders, Agent, Parent, Borrowers, the
Collections of Parent or its Subsidiaries, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.

          (f) In connection with any such assignment or participation or proposed assignment
or participation, a Lender may, subject to the provisions of Section 16.7, disclose all
documents and information which it now or hereafter may have relating to Parent and its
Subsidiaries and their respective businesses.

          (g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights under and interest
in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under applicable law.

     13.2 Successors. This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that none of
Parent or Borrowers may assign this Agreement or any rights or duties hereunder without the
Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio.
No consent to assignment by the Lenders shall release Parent or any Borrower from its Obligations.
A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to
Section 13.1, no consent or approval by Parent or any Borrower is required in connection
with any such assignment.

14. AMENDMENTS; WAIVERS.

     14.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no
consent with respect to any departure by any Obligor therefrom, shall be effective unless the same
shall be in writing and signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and Administrative Borrower (on behalf of all Obligors) and then any such waiver
or consent shall be effective, but only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all of the Lenders directly affected thereby and Administrative
Borrower (on behalf of all Obligors), do any of the following:

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

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

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

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

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

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

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

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

          (i) other than in connection with a merger, liquidation, dissolution or sale of
such Person expressly permitted by the terms hereof or the other Loan Documents, release any
Obligor from any obligation for the payment of money,

          (j) amend any of the provisions of Section 2.4(b)(i) or (ii),

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

          (l) amend any of the provisions of Section 15,

and, provided further, however, that no amendment, waiver or consent shall, unless
in writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rights
or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any
other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among themselves, and that does
not affect the rights or obligations of any Obligor, shall not require consent by or the agreement
of the Obligors.

     14.2 Replacement of Holdout Lender.

          (a) If any action to be taken by the Lender Group or Agent hereunder requires the
unanimous consent, authorization, or agreement of all Lenders, and a Lender (“Holdout
Lender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5
Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a “Replacement Lender”), and the Holdout
Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.

          (b) Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the
Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of
its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment
and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed
to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout
Lender shall be made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other
rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the
Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances and
to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of
the Risk Participation Liability of such Letter of Credit.

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     14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise
any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or
any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any
Lender will be effective unless it is in writing, and then only to the extent specifically stated.
No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s
rights thereafter to require strict performance by Obligors of any provision of this Agreement or
any other Loan Document. Agent’s and each Lender’s rights under this Agreement and the other Loan
Documents will be cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.

15. AGENT; THE LENDER GROUP.

     15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents
on its behalf and to take such other action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions
contained in this Section 15. The provisions of this Section 15 (other than the
proviso to Section 15.11(a)) are solely for the benefit of Agent, and the Lenders, and
Parent and its Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and agreed that the use of the word
“Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has
the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan
Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect: (a) maintain, in
accordance with its customary business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections of Parent and its Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written agreements with
respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in
the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Parent and
its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the Collections of Parent
and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of
the Lender Group with respect to any Obligor, the Obligations, the Collateral, the Collections of
Parent and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents,
and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan Documents.

     15.2 Delegation of Duties. Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or attorneys in fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

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     15.3 Liability of Agent. None of the Agent Related Persons shall (a) be liable to any
Lender for any action taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby (except for its own
gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by Parent or any Subsidiary or
Affiliate of Parent, or any officer or director thereof , contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document referred to or
provided for in, or received by Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document,
or to inspect the books and records or properties of Parent or the books or records or properties
of any of Parent’s Subsidiaries or Affiliates.

     15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, telefacsimile or other electronic method of transmission, telex or telephone message,
statement or other document or conversation believed by it to be genuine and correct and to have
been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless Agent shall first receive such advice
or concurrence of the Lenders as it deems appropriate and until such instructions are received,
Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of the requisite
Lenders and such request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Lenders.

     15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for
the account of the Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower
referring to this Agreement, describing such Default or Event of Default, and stating that such
notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to
its Participants, if any. Subject to Section 15.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 8; provided, however, that unless and until Agent
has received any such request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable.

     15.6 Credit Decision. Each Lender acknowledges that none of the Agent Related Persons
has made any representation or warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Parent and its Subsidiaries or Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any other

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Person party to a Loan Document, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this Agreement and to
extend credit to Borrowers. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and any other Person
party to a Loan Document. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the Agent Related
Persons.

     15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including
court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral,
whether or not Parent or its Subsidiaries are obligated to reimburse Agent or Lenders for such
expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and
retain sufficient amounts from the Collections of Parent and its Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts
to Lenders. In the event Agent is not reimbursed for such costs and expenses by Parent or its
Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such
Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such
Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations
of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such
Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants,
advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder
and the resignation or replacement of Agent.

     15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity interests in, and
generally engage in any kind of banking, trust, financial advisory, underwriting, or other business
with Parent and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to
such activities, WFF or its Affiliates may receive information regarding Parent, its Subsidiaries,
or its Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Parent, its Subsidiaries, or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in
such circumstances (and in the absence of a waiver of such confidentiality obligations, which
waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. The terms “Lender” and “Lenders” include WFF in
its individual capacity.

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     15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders
(unless such notice is waived by the Required Lenders). If Agent resigns under this Agreement, the
Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may appoint, after
consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the Required Lenders may
agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder, such successor
Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term
“Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders
appoint a successor Agent as provided for above.

     15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial advisory, underwriting,
or other business with Parent and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Lender and its respective Affiliates may receive information
regarding Parent or its Affiliates and any other Person party to any Loan Documents that is subject
to confidentiality obligations in favor of Parent or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver
such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them. With respect to the Swing Loans and Protective
Advances, Swing Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of Agent.

     15.11 Withholding Taxes.

          (a) All payments made by any Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In addition, all such
payments will be made free and clear of, and without deduction or withholding for, any present or
future Taxes, and in the event any deduction or withholding of Taxes is required, each Borrower
shall comply with the penultimate sentence of this Section 15.11(a). “Taxes” shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof
or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein measured by or based on the net
income or net profits of any Lender or any withholding tax that is imposed on amounts payable to
such Lender at the time such Lender becomes a party to the Agreement or is attributable to such
Lender’s failure to comply with Sections 15.11(b) or (c)) and all interest,
penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, each
Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 15.11(a) after withholding or
deduction for or on account of any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrowers shall not be required to increase any such
amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful
misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Each
Borrower will furnish to Agent as promptly as possible

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after the date the payment of any Tax is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by any Borrower.

          (b) If a Lender claims an exemption from United States withholding tax, Lender
agrees with and in favor of Agent and any Borrower, to deliver to Agent and the Administrative
Borrower:

               (i) if such Lender claims an exemption from United States withholding tax pursuant
to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of
perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a
controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before it becomes a Lender
under this Agreement and at any other time reasonably requested by Agent or any Borrower;

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

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

               (iv) such other form or forms, including IRS Form W-9, as may be required under
the IRC or other laws of the United States as a condition to exemption from, or reduction of,
United States withholding or backup withholding tax before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or any Borrower.

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

          (c) If a Lender claims an exemption from withholding tax in a jurisdiction other
than the United States, Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent
any such form or forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its
first payment under this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower.

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

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

          (e) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (b) or (c)

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of this Section 15.11 are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.

          (f) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for
the account of any Lender due to a failure on the part of the Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to notify Agent of a
change in circumstances which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all
amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under
this Section 15.11, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.

          (g) If a Borrower has paid an amount to any Lender under Section 15.11(a)
and the Lender subsequently utilizes, retains or receives a Tax Credit that arises as a result of
the deduction or withholding or payment of Taxes which gave rise to the payment of the amount in
question, the Lender shall pay to Borrowers the lesser of (x) the amount of such Tax Credit or (y)
such amount as the Lender determines in its discretion (acting reasonably) will leave the Borrower
(after that payment) in the same after-Tax position as it would have been in had such deduction or
withholding or payment of Taxes not been required to be made by the Borrower in the first place.
“Tax Credit” shall mean a credit against, relief or remission for, or repayment of any
Taxes.

          (h) WFF, in its capacity as a Lender, hereby represents and warrants to Borrowers
that it is a Treaty Lender at the date of this Agreement. “Treaty Lender” means, in
relation to any Lender, that the Lender: (i) is a resident of a Treaty State for the purposes of
the relevant Treaty, and is entitled to the full benefit of that Treaty with respect to interest
payments, (ii) is the beneficial owner of any payments made hereunder by a Borrower for the
purposes of the relevant Treaty, and (iii) does not carry on a business in any state other than the
Treaty State through a permanent establishment with which that Lender’s receipt of any payments
hereunder is effectively connected. “Treaty State” means a jurisdiction having a Treaty
with the United Kingdom which makes provision for full exemption from Tax imposed by the United
Kingdom on any payment of interest. “Treaty” means a double taxation convention.

          (i) Notwithstanding anything else in this Agreement, in respect of United Kingdom
Taxes only, so long as no Event of Default shall have occurred and be continuing, no Lender shall
be able to assign the benefit of Section 15.11(a) (pursuant to Section 13 or
otherwise) unless the Assignee represents to Borrower Agent, Agent, and the assigning Lender that
it is a Treaty Lender or a Qualifying Lender at the date of that assignment. “Qualifying
Lender” means a bank within the charge to United Kingdom corporation tax or a company resident
in the United Kingdom for United Kingdom Tax purposes (provided that such company or bank does not
carry on any business through a permanent establishment outside of the United Kingdom with which
that Lender’s receipt of any payments hereunder is effectively connected).

     15.12 Collateral Matters.

          (a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole
discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and
payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being
sold or disposed of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is permitted under
Section 6.4 or the other Loan Documents (and Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which neither Parent nor any
of its Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time

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thereafter, (iv) constituting property leased to Parent or its Subsidiaries under a lease that
has expired or is terminated in a transaction permitted under this Agreement, or (v) constituting
property of a Subsidiary, the Stock of which is being sold in accordance with the terms of this
Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on
any Collateral without the prior written authorization of (y) if the release is of all or
substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing
Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to
this Section 15.12; provided, however, that (1) Agent shall not be required
to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would
expose Agent to liability or create any obligation or entail any consequence other than the release
of such Lien without recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of Parent or any of its Subsidiaries in respect of) all interests
retained by Parent or any of its Subsidiaries, including, the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.

          (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that
the Collateral exists or is owned by Parent or any of its Subsidiaries or is cared for, protected,
or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity,
or to continue exercising, any of the rights, authorities and powers granted or available to Agent
pursuant to any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given
Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall
have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.

     15.13 Restrictions on Actions by Lenders; Sharing of Payments.

          (a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the
written request of Agent, set off against the Obligations, any amounts owing by such Lender to
Parent, or any of its Subsidiaries, or any deposit accounts of Parent, or any of its Subsidiaries,
now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so in writing by Agent, take or cause to be taken any
action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien
on, or otherwise enforce any security interest in, any of the Collateral.

          (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations,
except for any such proceeds or payments received by such Lender from Agent pursuant to the terms
of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all
such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or in immediately
available funds, as applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably as among the
Lenders in accordance with their Pro Rata Shares; provided, however, that to the
extent that such excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such purchasing party,
but without interest except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

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     15.14 Agency for Perfection. Agent hereby appoints each other Lender as its agent
(and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens
in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected only by possession or control. Should any Lender obtain possession or control of any
such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in accordance with
Agent’s instructions.

     15.15 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire
transfer instructions as each party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, fees, or interest of the Obligations.

     15.16 Concerning the Collateral and Related Loan Documents. Each member of the Lender
Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each
member of the Lender Group agrees that any action taken by Agent in accordance with the terms of
this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of
its powers set forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

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

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

          (b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report,

          (c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or examination will inspect
only specific information regarding Parent and its Subsidiaries and will rely significantly upon
Parent’s and its Subsidiaries’ books and records, as well as on representations of such Person’s
personnel,

          (d) agrees to keep all Reports and other material, non-public information
regarding Parent and its Subsidiaries and their operations, assets, and existing and contemplated
business plans in a confidential manner in accordance with Section 16.7, and

          (e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion
the indemnifying Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans
of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other
Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any
such other Lender preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.

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In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing
that Agent provide to such Lender a copy of any report or document provided by Parent or its
Subsidiaries to Agent that has not been contemporaneously provided by Parent or its Subsidiaries to
such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such
Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Parent or its Subsidiaries, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice
to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports
or information reasonably specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent
renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy
of such statement to each Lender.

     15.18 Several Obligations; No Liability. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor of Agent in its
capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of
Agent (if any) to make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time
outstanding, the amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the
business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan Documents to the
extent any such notice may be required, and no Lender shall have any obligation, duty, or liability
to any Participant of any other Lender. Except as provided in Section 15.7, no member of
the Lender Group shall have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to Parent, any Borrower or any other Person for any failure by any
other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it
or on its behalf in connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.

     15.19 Bank Product Providers. Each Bank Product Provider shall be deemed a party
hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it
being understood and agreed that the rights and benefits of such Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, Agent shall be entitled to assume no amounts are due to
any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the
amount of any such liability owed to it prior to such distribution.

16. GENERAL PROVISIONS.

     16.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrowers, Agent, and each Lender whose signature is provided for on the signature
pages hereof.

     16.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything contained in each
Section applies equally to this entire Agreement.

     16.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed against the Lender Group, Parent, or Borrowers, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

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     16.4 Severability of Provisions. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.

     16.5 Counterparts; Electronic Execution. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission shall be equally as effective as
delivery of an original executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of transmission also
shall deliver an original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

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

     16.7 Confidentiality.

          (a) Agent and Lenders each individually (and not jointly or jointly and severally)
agree that material, non-public information regarding Parent and its Subsidiaries, their
operations, assets, and existing and contemplated business plans shall be treated by Agent and the
Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons
who are not parties to this Agreement, except: (i) to attorneys for and other advisors,
accountants, auditors, and consultants to any member of the Lender Group, (ii) to Subsidiaries and
Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that
any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this Section 16.7, (iii) as may be required by statute, decision, or judicial
or administrative order, rule, or regulation, (iv) as may be agreed to in advance by Parent or its
Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (v) as to any such information that is or becomes generally available to the
public (other than as a result of prohibited disclosure by Agent or the Lenders), (vi) in
connection with any assignment, participation or pledge of any Lender’s interest under this
Agreement, provided that any such assignee, participant, or pledgee shall have agreed in writing to
receive such information hereunder subject to the terms of this Section, and (vii) in connection
with any litigation or other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such parties under this
Agreement or the other Loan Documents. The provisions of this Section 16.7(a) shall
survive for 2 years after the payment in full of the Obligations.

          (b) Anything in this Agreement to the contrary notwithstanding, Agent may provide
information concerning the terms and conditions of this Agreement and the other Loan Documents to
loan syndication and pricing reporting services.

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     16.8 Lender Group Expenses. Borrowers agree to pay any and all Lender Group Expenses
promptly after demand therefor by Agent and agrees that their obligations contained in this
Section 16.8 shall survive payment or satisfaction in full of all other Obligations.

     16.9 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA
Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
hereby notifies Parent and Borrowers that pursuant to the requirements of the Act, it is required
to obtain, verify and record information that identifies Parent and Borrowers, which information
includes the name and address of Parent and Borrowers and other information that will allow such
Lender to identify Parent and Borrowers in accordance with the Act.

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

     16.11 Bookham UK as Agent for Borrowers. Each Borrower hereby irrevocably appoints
Bookham UK as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative
Borrower”) which appointment shall remain in full force and effect unless and until Agent shall
have received prior written notice signed by each Borrower that such appointment has been revoked
and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all
notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and
all other notices and instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit
and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of
this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers
in a combined fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient
and economical manner and at their request, and that Lender Group shall not incur liability to any
Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance of the integrated
group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify each member of the Lender Group and hold each member of
the Lender Group harmless against any and all liability, expense, loss or claim of damage or
injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from
or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c)
any other action taken by the Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person
under this Section 16.10 with respect to any liability that has been finally determined by
a court of competent jurisdiction to have resulted solely from the gross negligence or willful
misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

     16.12 Judgment Currency. The specification under this Agreement of Dollars is of the
essence. Each Obligor’s obligations hereunder and under the other Loan Documents to make payments
in Dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than Dollars, except to the extent that such
tender or recovery results in the effective receipt by the Lender Group of the full amount of
Dollars expressed to be payable to the Lender Group under this Agreement or the other Loan
Documents. If, for the purpose of obtaining or enforcing judgment in any court, it is necessary to
convert into or from any currency other than Dollars (such other currency being hereinafter
referred to as the “Judgment Currency”) an amount due in Dollars, the rate of exchange used
shall be that at which Agent could, in accordance with normal banking procedures, purchase Dollars
with the Judgment Currency on the Business Day preceding that on which final judgment is given.
The obligation of

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each Obligor in respect of any such sum due from it to Agent or Lenders
hereunder shall, notwithstanding any judgment in such Judgment Currency, be discharged only to the
extent that, on the Business Day immediately following the date on which Agent or such Lenders
receive any sum adjudged to be so due in the Judgment Currency, Agent or such Lenders may, in
accordance with normal banking procedures, purchase Dollars with the Judgment Currency. If the
Dollars so purchased are less than the sum originally due to Agent or such Lenders in Dollars, each
Obligor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify Agent
or such Lenders, as the case may be, against such loss, and if the Dollars so purchased exceed the
sum originally due to Agent or Lenders in Dollars, Agent or Lenders, as the case may be, agree to
remit to such Obligor such excess.

[signature pages to follow]

 

 

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

	 	 	 	 	 
	 	 	BOOKHAM, INC.,

a Delaware corporation, as Parent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

Chief Financial Officer
	 
	 	 	 	 
	 	 	BOOKHAM TECHNOLOGY PLC,

a limited liability company incorporated under

the laws of England and Wales, as a Borrower
	 
	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

Director
	 
	 	 	 	 
	 	 	NEW FOCUS, INC.,

a Delaware corporation, as a Borrower
	 
	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President
	 
	 	 	 	 
	 	 	BOOKHAM (US) INC.,

a Delaware corporation, as a Borrower
	 
	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President

S-1

Credit Agreement

 

 

	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent and as a Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ Alex Hechler
	 

	 	 	 	 
	 

	 	Name:

Title
	 	Alex Hechler

Vice President

S-2

Credit Agreement

 

 

EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

     This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of
                                         between                                          (“Assignor”) and
                                         (“Assignee”). Reference is made to the Agreement described in Annex
I hereto (the “Credit Agreement”). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Credit Agreement.

     1. In accordance with the terms and conditions of Section 13 of the Credit Agreement,
the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the
Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and
Assignor’s portion of the Commitments, all to the extent specified on Annex I.

     2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and clear of any adverse
claim and (ii) it has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes
no representation or warranty and assumes no responsibility with respect to (i) any statements,
representations or warranties made in or in connection with the Loan Documents, or (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Borrower or any Guarantor or the performance or observance by any Borrower or any Guarantor of
any of their respective obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the
Purchase Price on Annex I represents the amount owed by Borrowers to Assignor with respect
to Assignor’s share of the Advances assigned hereunder, as reflected on Assignor’s books and
records.

     3. The Assignee (a) confirms that it has received copies of the Credit Agreement and the other
Loan Documents, together with copies of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment Agreement; (b) agrees that it will, independently and without
reliance upon Agent, Assignor, or any other Lender, based upon such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking any action under the Loan Documents; (c) confirms that it is an Eligible Transferee; (d)
appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender; [and (f) attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee’s status for purposes of determining exemption
from United States withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement or such other documents as are necessary to indicate that all such payments
are subject to such rates at a rate reduced by an applicable tax treaty.]

     4. Following the execution of this Assignment Agreement by the Assignor and Assignee, the
Assignor will deliver this Assignment Agreement to the Agent for recording by the Agent. The
effective date of this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the
date of the execution and delivery hereof by the Assignor and the Assignee, (b) the receipt by
Agent for its sole and separate account a

1

 

processing fee in the amount of $5,000 (if required by the Credit Agreement), (c) the receipt
of any required consent of the Agent, and (d) the date specified in Annex I.

     5. As of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to
the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall,
to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement and the other Loan Documents,
provided, however, that nothing contained herein shall release any assigning Lender
from obligations that survive the termination of this Agreement, including such assigning Lender’s
obligations under Article 15 and Section 16.7 of the Credit Agreement.

     6. Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set forth
in Annex I). From and after the Settlement Date, Agent shall make all payments that are
due and payable to the holder of the interest assigned hereunder (including payments of principal,
interest, fees and other amounts) to Assignor for amounts which have accrued up to but excluding
the Settlement Date and to Assignee for amounts which have accrued from and after the Settlement
Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to the portion of any
interest, fee, or any other charge that was paid to Assignor prior to the Settlement Date on
account of the interest assigned hereunder and that are due and payable to Assignee with respect
thereto, to the extent that such interest, fee or other charge relates to the period of time from
and after the Settlement Date.

     7. This Assignment Agreement may be executed in counterparts and by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. This Assignment Agreement may be
executed and delivered by telecopier or other facsimile transmission all with the same force and
effect as if the same were a fully executed and delivered original manual counterpart.

     8. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA.

2

 

     IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex
I hereto to be executed by their respective officers, as of the first date written above.

	 	 	 
	[NAME OF ASSIGNOR]
	as Assignor
	 
	 	 
	By
	 	 
	 

	 	 
	Name:
	 	 
	Title:
	 	 
	 
	 	 
	[NAME OF ASSIGNEE]
	as Assignee
	 
	 	 
	By
	 	 
	 

	 	 
	Name:
	 	 
	Title:
	 	 

[ACCEPTED THIS ___DAY OF

                                        ]

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By                                                            

Name:

Title:

3

 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

	1.	 	Borrowers: Bookham Technology PLC and New Focus Inc.
	 
	2.	 	Name and Date of Credit Agreement:
	 
	 	 	Credit Agreement, dated as of July ___, 2006, by and among Bookham Inc., a Delaware
corporation (“Parent”), the subsidiaries of Parent party thereto as Borrowers, the
lenders from time to time a party thereto (the “Lenders”), and Wells Fargo Foothill,
Inc., a California corporation, as the arranger and administrative agent for the
Lenders

	 	 	 	 	 	 	 
	3.	 	Date of Assignment Agreement:	 	                                          
	 
	 	 	 	 	 	 
	4.	 	Amounts:	 	 
	 
	 	 	 	 	 	 
	 

	 	(a)
	 	Assigned Amount of Revolver Commitment
	 	$                                        
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	Assigned Amount of Advances
	 	$                                        
	 
	 	 	 	 	 	 
	5.	 	Settlement Date:	 	                                          
	 
	 	 	 	 	 	 
	6.	 	Purchase Price	 	$                                        

	7.	 	Notice and Payment Instructions, etc.

	 	 	 	 	 
	Assignee:

	 	Assignor:
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

Annex I-1

 

	8.	 	Agreed and Accepted:

	 	 	 	 	 
	[ASSIGNOR]

	 	[ASSIGNEE]
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

Accepted:

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By                                        

Name:

Title:

Annex I-2

 

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Parent’s letterhead]

	 	 	 
	To:

	 	Wells Fargo Foothill, Inc.
	 

	 	2450 Colorado Avenue
	 

	 	Suite 3000 West
	 

	 	Santa Monica, CA 90404
	 

	 	Attn: Business Finance Division Manager

	 	 	 
	Re:

	 	Compliance Certificate dated                     , 20___

Ladies and Gentlemen:

     Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”) dated as
of July ___, 2006, by and among the lenders identified on the signature pages thereof (such
lenders, together with their respective successors and permitted assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO
FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders
(“Agent”), Bookham, Inc., a Delaware corporation (“Parent”), and each of its
Subsidiaries party thereto. Initially capitalized terms used in this Compliance Certificate have
the meanings set forth in the Credit Agreement unless specifically defined herein.

     Pursuant to Schedule 5.3 of the Credit Agreement, the undersigned officer of Parent
hereby certifies that:

     1. The financial information of Parent and its Subsidiaries furnished in Schedule 1
attached hereto, has been prepared in accordance with GAAP (except for year-end adjustments and the
lack of footnotes), and fairly presents in all material respects the financial condition of Parent
and its Subsidiaries.

     2. Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be
made under his/her supervision, a review in reasonable detail of the transactions and condition of
Parent and its Subsidiaries during the accounting period covered by the financial statements
delivered pursuant to Schedule 5.3 of the Credit Agreement.

     3. Such review has not disclosed the existence on and as of the date hereof, and the
undersigned does not have knowledge of the existence as of the date hereof, of any event or
condition that constitutes a Default or Event of Default, except for such conditions or events
listed on Schedule 2 attached hereto, specifying the nature and period of existence thereof
and what action Parent and its Subsidiaries have taken, are taking, or propose to take with respect
thereto.

     4. The representations and warranties of Parent and its Subsidiaries set forth in the Credit
Agreement and the other Loan Documents are true and correct in all material respects on and as of
the date hereof (except to the extent they relate to a specified date), except as set forth on
Schedule 3 attached hereto.

     5. Parent and its Subsidiaries are in compliance with the applicable covenants contained in
Section 6.16 of the Credit Agreement as demonstrated on Schedule 4 hereof.

1

 

     IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this ___day
of                                         ,                     .

	 	 	 
	BOOKHAM, INC.,
	a Delaware corporation
	 
	 	 
	By:
	 	 
	 

	 	 
	Name:
	 	 
	Title:
	 	 

2

 

SCHEDULE 4

Financial Covenants

	1.	 	Minimum EBITDA.

     Parent’s and its Subsidiaries’ EBITDA, measured on a quarter-end basis, for the quarter period
ending                     ,                      is $                    , which amount [is/is not] greater than or equal to
the amount set forth in Section 6.16(a) of the Credit Agreement for the corresponding
period.

	2.	 	Capital Expenditures.

     Parent’s and its Subsidiaries Capital Expenditures from the beginning of Parent’s most recent
Fiscal Year to the date hereof is                     , which [is/is not] greater than or equal to the
amount set forth in Section 6.16(b) of the Credit Agreement for the corresponding period.

Schedule 4

 

EXHIBIT L-1

FORM OF LIBOR NOTICE

Wells Fargo Foothill, Inc., as Agent

under the below referenced Credit Agreement

2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404

Ladies and Gentlemen:

     Reference hereby is made to that certain Credit Agreement, dated as of July ___, 2006 (the
“Credit Agreement”), among Bookham, Inc., a Delaware corporation (“Parent”), each
of its Subsidiaries signatory thereto (such Subsidiaries, each, a “Borrower” and
collectively, jointly and severally, “Borrowers”), the lenders signatory thereto (the
“Lenders”), and Wells Fargo Foothill, Inc., a California corporation, as the arranger and
administrative agent for the Lenders (“Agent”). Initially capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

     This LIBOR Notice represents Borrowers’ request to elect the LIBOR Option with respect to
outstanding Advances in the amount of $                     (the “LIBOR Rate Advance”)[, and is a
written confirmation of the telephonic notice of such election given to Agent].

     The LIBOR Rate Advance will have an Interest Period of [1, 2, [or] 3] month(s) commencing on
                                        .

     This LIBOR Notice further confirms Borrowers’ acceptance, for purposes of determining the rate
of interest based on the LIBOR Rate under the Credit Agreement, of the LIBOR Rate as determined
pursuant to the Credit Agreement.

     Administrative Borrower represents and warrants that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document or any agreement,
instrument, certificate, document or other writing furnished at any time under or in connection
with any Loan Document, and as of the effective date of any advance, continuation or conversion
requested above, is true and correct in all material respects (except to the extent any
representation or warranty expressly related to an earlier date), (ii) each of the covenants and
agreements contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), and (iii) no Default or Event
of Default has occurred and is continuing on the date hereof, nor will any thereof occur after
giving effect to the request above.

 

 

Wells Fargo Foothill, Inc., as Agent

Page 2

	 	 	 
	Dated:
	 	 
	 

	 	 
	 
	 	 
	BOOKHAM TECHNOLOGY PLC,
	a company incorporated under the laws of England and
	Wales, as Administrative Borrower
	 
	 	 
	By
	 	 
	 

	 	 
	Name:
	 	 
	Title:
	 	 

Acknowledged by:

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent

By:                                        

Name:

Title:

 

 

SCHEDULE F-1

Foreign Security Documents

	•	 	Debenture, dated as of the Closing Date, granted by Bookham UK and Bookham Nominees Limited, a company incorporated
under the laws of England and Wales (“BNL”), in favor of Agent.
	 
	•	 	Mortgage Over Shares, dated as of the Closing Date, granted by Parent and BNL in favor of Agent.
	 
	•	 	Deed of Charge, dated as of the Closing Date, by and among Bookham International Limited, an exempted company
incorporated with limited liability under the laws of the Cayman Islands, and Agent.
	 
	•	 	Charge Over Shares, dated as of the Closing Date, by and between Bookham UK and Agent.
	 
	•	 	Confirmatory Assignment of Security Interest for filing under the Patent Act (Canada), dated as of the Closing Date, by
and between Bookham UK and Agent.

 

Schedule 1.1

As used in the Agreement, the following terms shall have the following definitions:

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

     “Account Debtor” means any Person who is obligated on an Account, chattel paper, or a
general intangible.

     “ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve
Fedline system) provided by a Bank Product Provider for the account of Parent or its Subsidiaries.

     “Active Obligor” means each Obligor that is not an Inactive Obligor.

     “Additional Documents” has the meaning specified therefor in Section 5.17.

     “Administrative Borrower” has the meaning specified therefor in Section 16.10.

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

     “Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more intermediaries, of the
power to direct the management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 6.13 of the Agreement: (a) any Person which owns directly or
indirectly 10% or more of the Stock having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the partnership or other
ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership in which a Person is a general partner
shall be deemed an Affiliate of such Person.

     “Agent” has the meaning specified therefor in the preamble to the Agreement.

     “Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

     “Agent’s Account” means the Deposit Account of Agent identified on Schedule
A-1.

     “Agent’s Liens” means the Liens granted by Borrowers or their Subsidiaries to Agent
under the Loan Documents.

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

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

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

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

1

 

     “Availability” means, as of any date of determination, the amount that Borrowers are
entitled to borrow as Advances under Section 2.1 of the Agreement (after giving effect to
all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and
reserves then applicable hereunder).

     “Bank Product” means any financial accommodation extended to Parent or its
Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement) including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.

     “Bank Product Agreements” means those agreements entered into from time to time by
Parent or its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of
the Bank Products.

     “Bank Product Obligations” means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by Parent or its Subsidiaries to any Bank
Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of
whether for the payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts that Parent or its
Subsidiaries are obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations from, or executing indemnities
or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided
by such Bank Product Provider to Parent or its Subsidiaries.

     “Bank Product Provider” means Wells Fargo or any of its Affiliates.

     “Bank Product Reserve” means, as of any date of determination, the amount of reserves
that Agent has established (based upon the Bank Product Providers’ reasonable determination of the
credit exposure of Parent and its Subsidiaries in respect of Bank Products) in respect of Bank
Products then provided or outstanding.

     “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to
time.

     “Base LIBOR Rate” means the rate per annum, determined by Agent in accordance with its
customary procedures, and utilizing such electronic or other quotation sources as it considers
appropriate, to be the rate at which Dollar deposits (for delivery on the first day of the
requested Interest Period) are offered to major banks in the London interbank market 2 Business
Days prior to the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate
Loan to a LIBOR Rate Loan) by Administrative Borrower in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error.

     “Base Rate” means, the rate of interest announced, from time to time, within Wells
Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the
“prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate.

     “Base Rate Loan” means the portion of the Advances that bears interest at a rate
determined by reference to the Base Rate.

     “Base Rate Margin” means 1.25 percentage points.

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

2

 

     “Board of Directors” means the board of directors (or comparable managers) of Person
or any committee thereof duly authorized to act on behalf of the board of directors (or comparable
managers).

     “Bookham Canada” means Bookham (Canada) Inc., a company organized under the federal
laws of Canada.

     “Bookham China” means Bookham Technology (Shenzhen) (FFTZ) Co. Ltd., a company
organized under the laws of The People’s Republic of China.

     “Bookham China Sale and Leaseback” means a sale and leaseback financing transaction by
Bookham China with respect to its operating facility in Shenzhen, China.

     “Bookham Switzerland” means Bookham (Switzerland) AG, a company organized under the
laws of Switzerland.

     “Bookham UK” means Bookham Technology plc, a limited liability company incorporated
under the laws of England and Wales.

     “Bookham (US)” means Bookham (US) Inc., a Delaware corporation.

     “Borrower” and “Borrowers” have the respective meanings specified therefor in
the preamble to the Agreement.

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

     “Borrowing Base” means, as of any date of determination, 80% of the amount of Eligible
Accounts, minus the sum of (i) the amount, if any, of the Dilution Reserve, (ii) the Bank Product
Reserve, and (iii) the aggregate amount of reserves, if any, established by Agent under Section
2.1(b).

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

     “Business Day” means any day that is not a Saturday, Sunday, or other day on which
banks are authorized or required to close in the state of California, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also
shall exclude any day on which banks are closed for dealings in Dollar deposits in the London
interbank market.

     “Capital Expenditures” means, with respect to any Person for any period, the aggregate
of all expenditures by such Person and its Subsidiaries during such period that are capital
expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or
financed.

     “Capitalized Lease Obligation” means that portion of the obligations under a Capital
Lease that is required to be capitalized in accordance with GAAP.

     “Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

     “Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within 1 year from the date of
acquisition thereof, (b) marketable direct obligations issued by any state of the United States or
by the United Kingdom or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof

3

 

and, at the time of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the
date of acquisition thereof issued by any bank organized under the laws of the United States or of
the United Kingdom or any state thereof having at the date of acquisition thereof combined capital
and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that
satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the
laws of the United States or any state thereof so long as the amount maintained with any such other
bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation,
and (f) Investments in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (e) above.

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

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

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

     “Change of Control” means that (a) any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act), becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 35%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors of Parent, or (b) a
majority of the members of the Board of Directors of Parent do not constitute Continuing Directors,
or (c) any Obligor ceases to own and control, directly or indirectly, 100% (or such lesser
percentage owned by such Obligor as of the Closing Date) of the outstanding capital Stock of each
of its respective Subsidiaries existing as of the Closing Date, other than as a result of a
Permitted Disposition or as otherwise specifically permitted under the Agreement.

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

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

     “Collateral” means all assets and interests in assets and proceeds thereof now owned
or hereafter acquired by Parent or its Subsidiaries in or upon which a Lien is granted under any of
the Loan Documents.

     “Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in Parent’s or its Subsidiaries’
books and records, Equipment, or Inventory, in each case, in form and substance satisfactory to
Agent.

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

     “Commitment” means, with respect to each Lender, its Revolver Commitment, or its Total
Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments,
or their Total Commitments, as the context requires, in each case as such Dollar amounts are set
forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the
Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts
may be reduced or increased from time to time pursuant to assignments made in accordance with the
provisions of Section 13.1.

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

     “Continuing Director” means (a) any member of the Board of Directors of Parent who was
a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who
becomes a member of the Board of Directors of Parent after the Closing Date if such individual was
appointed or nominated for election to the Board of Directors of Parent by a majority of the
Continuing Directors, but excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Closing Date in an actual or threatened
election contest relating to the election of the directors (or comparable managers) of Parent and
whose initial assumption of office resulted from such contest or the settlement thereof.

     “Control Agreement” means a control agreement, in form and substance satisfactory to
Agent, executed and delivered by Parent or one of its Subsidiaries, Agent, and the applicable
securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit
Account).

     “Copyright Security Agreement” has the meaning specified therefor in the Security
Agreement.

     “Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

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

     “Defaulting Lender” means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it is required to do so
hereunder.

     “Defaulting Lender Rate” means (a) for the first 3 days from and after the date the
relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to
Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).

     “Deposit Account” means any deposit account (as that term is defined in the Code).

     “Designated Account” means the Deposit Account of Administrative Borrower identified
on Schedule D-1.

     “Designated Account Bank” has the meaning specified therefor in Schedule D-1.

     “Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 90 consecutive days, that is the result of dividing the Dollar
amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive
items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’ billings with
respect to Accounts during such period.

     “Dilution Reserve” means, as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts by 1 percentage point for each percentage point
by which Dilution is in excess of 5%.

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

     “EBITDA” means, with respect to any fiscal period, the sum of:

          (a) Parent’s and its Subsidiaries’ consolidated net earnings (or loss) for such period, plus

5

 

          (b) without duplication, the sum of the following amounts for such period, to the extent such
amounts were deducted in determining such consolidated net earnings (or loss) for such period: (i)
interest expense, plus (ii) income tax expense, plus (iii) depreciation and amortization, plus (iv)
restructuring charges of not more than $8,000,000, to the extent incurred on or before March 31,
2007, plus (v) non-cash extraordinary or unusual losses, plus (vi) non-cash impairment and non-cash
charges related to the issuance of stock and options, minus

          (c) without duplication, the sum of the following amounts, to the extent such amounts were
included in determining such consolidated net earnings (or loss) for such period: (i) extraordinary
or unusual gains, plus (ii) interest income.

     “Eligible Accounts” means, without duplication, (i) the Eligible Wuhan Accounts, (ii)
the Eligible Marconi Accounts, (iii) the Eligible Siemens Accounts, and (iv) those Accounts created
by a Borrower in the ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and warranties respecting
Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of
one or more of the excluding criteria set forth below; provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the
results of any audit performed by Agent from time to time after the Closing Date. In determining
the amount to be included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash. Eligible Accounts shall not include the following:

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

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

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

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

          (e) Accounts that are not payable in Dollars,

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

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

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

          (i) Accounts with respect to an Account Debtor whose total obligations owing to Borrowers
exceed 10% (or 30% with respect to Flextronics Canada, Inc., or 20% with respect to Huawei Tech
Investment Co. Ltd. or Nortel) of all Eligible Accounts (such percentage, as applied to a
particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates), to the extent of the obligations owing by
such Account Debtor in excess of such percentage; provided, however, that, in each
case, the amount of Eligible Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to
giving effect to any eliminations based upon the foregoing concentration limit,

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

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

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

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

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

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

     “Eligible Marconi Accounts” means Accounts created by a Borrower owing from Marconi
SUD SPA (“Marconi”) to Borrowers that (i) would otherwise constitute Eligible Accounts but
for the exclusionary criteria set forth in parts (a) or (f) of the definition of Eligible Accounts;
(ii) Marconi has not failed to pay within the earlier of 120 days of original invoice date or 60
days after the due date; and (iii) do not contain selling terms of more than 120 days.

     “Eligible Siemens Accounts” means Accounts created by a Borrower owing from Siemens AG
(“Siemens”) to Borrowers that (i) would otherwise constitute Eligible Accounts but for the
exclusionary criteria set forth in parts (a) or (f) of the definition of Eligible Accounts; (ii)
Siemens has not failed to pay within the earlier of 120 days of original invoice date or 60 days
after the due date; and (iii) do not contain selling terms of more than 120 days.

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

     “Eligible Wuhan Accounts” means Accounts created by a Borrower owing from Wuhan
Research Institute of Posts (“Wuhan”) to Borrowers that (i) would otherwise constitute
Eligible Accounts but for the exclusionary criteria set forth in parts (a) or (f) of the definition
of Eligible Accounts; (ii) do not exceed $2,000,000 in the aggregate; (iii) Wuhan has not failed to
pay within the earlier of 120 days of original invoice date or 60 days after the due date; (iv) do
not contain selling terms of more than 120 days; and (v) are supported by an irrevocable letter of
credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Agent.

     “Environmental Actions” means any complaint, summons, citation, notice, directive,
order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter,
or other communication from any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Parent, any Subsidiary of Parent, or any of their predecessors in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Parent, any Subsidiary of Parent, or any of their predecessors in interest.

     “Environmental Law” means any applicable federal, state, provincial, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy, or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent binding on Parent or
any Subsidiary of Parent, relating to the environment, the effect of the environment on employee
health, or Hazardous Materials, in each case as amended from time to time.

     “Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental Authority or any
third party, and which relate to any Environmental Action.

     “Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

     “Equipment” means equipment (as that term is defined in the Code).

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto.

     “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as
employed by the same employer as the employees of Parent or a Subsidiary of a Parent under IRC
Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed
by the same employer as the

8

 

employees of Parent or a Subsidiary of Parent under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that
is a member of an affiliated service group of which Parent or a Subsidiary of Parent is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the
IRC, any Person subject to ERISA that is a party to an arrangement with Parent or a Subsidiary of
Parent and whose employees are aggregated with the employees of Parent or a Subsidiary of Parent
under IRC Section 414(o).

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

     “Excess Availability” means, as of any date of determination, the amount equal to
Availability minus the aggregate amount, if any, of all trade payables of Parent and its
Subsidiaries aged in excess of their historical levels with respect thereto and all book overdrafts
of Parent and its Subsidiaries in excess of their historical practices with respect thereto, in
each case as determined by Agent in its Permitted Discretion.

     “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to
time.

     “Fee Letter” means that certain fee letter between Borrowers and Agent, in form and
substance satisfactory to Agent.

     “Foreign Security Documents” means, collectively, the documents set forth on
Schedule F-1 together with the documents, agreements, or instruments executed or delivered
in connection therewith, and “Foreign Security Document” means any one of them.

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

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

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

     “Governing Documents” means, with respect to any Person, the certificate or articles
of incorporation, by-laws, or other organizational documents of such Person.

     “Governmental Authority” means any domestic or foreign federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body.

     “Guarantors” means, collectively, Parent and each other person which from time to time
executes a Guaranty, and “Guarantor” means any one of them.

     “Guaranties” means those certain general continuing guaranties executed and delivered
by each Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product
Providers, in form and substance satisfactory to Agent, and “Guaranty” means any one of
them.

     “Hazardous Materials” means (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous
materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million.

9

 

     “Hedge Agreement” means any and all agreements, or documents now existing or hereafter
entered into by Parent or any of its Subsidiaries that provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Parent’s or any of its Subsidiaries’ exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency
valuations or commodity prices.

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

     “Inactive Obligors” means, collectively, Onetta Inc, a Delaware corporation; Focused
Research Inc., a California corporation; and Globe Y Technology, Inc., a California corporation and
“Inactive Obligor” means any one of them.

     “Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any
other Person that constitutes Indebtedness under any of clauses (a) through (f) above.

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

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

     “Insolvency Proceeding” means any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency
law or any equivalent laws in any other jurisdiction, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief and including, in the case of any
Person incorporated in England and Wales, any corporate action, legal proceedings or other
procedure or step is taken (including the making of an application, the presentation of a petition,
the filing or service of a notice or the passing of a resolution) in relation to:

	 	(a)	 	the suspension of payments, a moratorium or any indebtedness, winding-up,
dissolution, administration or reorganization (by way of voluntary arrangement scheme
of arrangement or otherwise) of such Person other than a solvent liquidation or
reorganization of such Person;
	 
	 	(b)	 	a composition, assignment or arrangement with any creditor of such Person;
	 
	 	(c)	 	the appointment of a liquidator, supervisor, receiver, administrator,
administrative receiver, compulsory manager, trustee or other similar officer in
respect of such Person or any of its assets.

     “Intercompany Advances” means loans or advances or the repayment of loans or advances
from Parent or one of its Subsidiaries to Parent or one of its Subsidiaries, and includes the
repayment of intercompany payables owing on the Closing Date.

     “Intercompany Subordination Agreement” means a subordination agreement executed and
delivered by Parent, each of Parent’s Subsidiaries, and Agent, the form and substance of which is
satisfactory to Agent.

10

 

     “Interest Expense” means, for any period, the aggregate of the interest expense of
Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with
GAAP.

     “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on
the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the
conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter;
provided, however, that (a) if any Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next
succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the day on which any
Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next preceding Business Day,
(d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the end of
such Interest Period), the Interest Period shall end on the last Business Day of the calendar month
that is 1, 2, or 3 months after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which
will end after the Maturity Date.

     “Inventory” means inventory (as that term is defined in the Code).

     “Investment” means, with respect to any Person, any investment by such Person in any
other Person (including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to officers and employees of
such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

     “IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

     “Issuing Lender” means WFF or any other Lender that, at the request of Administrative
Borrower and with the consent of Agent, agrees, in such Lender’s sole discretion, to become an
Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section
2.12.

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

     “L/C Disbursement” means a payment made by the Issuing Lender pursuant to a Letter of
Credit.

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

     “Lender” and “Lenders” have the respective meanings set forth in the preamble
to the Agreement, and shall include any other Person made a party to the Agreement in accordance
with the provisions of Section 13.1.

     “Lender Group” means, individually and collectively, each of the Lenders (including
the Issuing Lender) and Agent.

     “Lender Group Expenses” means, subject to the terms and provisions of the Fee Letter,
all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by Parent
or any of its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by
the Lender Group, (b) fees or charges paid or incurred by Agent in connection with the Lender
Group’s transactions with Parent or its Subsidiaries, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches (including tax
lien, litigation, and UCC searches and including searches with the patent and

11

 

trademark office, the copyright office, or the department of motor vehicles), filing,
recording, publication, appraisal (including periodic collateral appraisals or business
valuations), real estate surveys, real estate title policies and endorsements, and environmental
audits, (c) costs and expenses incurred by Agent in the disbursement of funds to Borrowers or other
members of the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent
resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of the Loan Documents, or after the
occurrence of any Default or Event of Default in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral,
or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses
of Agent related to any inspections or audits to the extent of the fees and charges (and up to the
amount of any limitation) contained in the Agreement or the Fee Letter, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing
or defending the Loan Documents or third party claims or any other suit in connection with the
transactions contemplated by the Loan Documents or the Lender Group’s relationship with Parent or
any Subsidiary of Parent, (h) Agent’s reasonable costs and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the
Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and expenses (including
attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning
Parent or any Subsidiary of Parent or in exercising rights or remedies under the Loan Documents),
or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.

     “Lender-Related Person” means, with respect to any Lender, such Lender, together with
such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

     “Letter of Credit” means an L/C or an L/C Undertaking, as the context requires.

     “Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit.

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

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

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

     “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate per
annum determined by Agent by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.

     “LIBOR Rate Loan” means each portion of an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.

     “LIBOR Rate Margin” means 2.75 percentage points.

     “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other
security arrangement and any other preference, priority, or preferential arrangement of any kind or
nature whatsoever, including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.

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

     “Loan Documents” means the Agreement, the Bank Product Agreements, any Borrowing Base
Certificate, the Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the Fee Letter, the Foreign Security Documents, the Guaranties, the Intercompany
Subordination Agreement, the Letters of Credit, the Patent Security Agreement, the Security
Agreement, the Trademark Security Agreement, any note or notes executed by a Borrower in connection
with the Agreement and payable to a member of the Lender Group, and any other agreement entered
into, now or in the future, by any Obligor and the Lender Group in connection with the Agreement.

     “Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or financial condition of Parent and its
Subsidiaries taken as a whole, (b) a material impairment of Parent’s and its Subsidiaries’ ability,
taken as a whole, to perform their obligations under the Loan Documents to which it is a party or
of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of the Agent’s Liens with respect to the
Collateral as a result of an action or failure to act on the part of Parent or a Subsidiary of
Parent.

     “Maturity Date” has the meaning specified therefor in Section 3.3.

     “Maximum Revolver Amount” means $25,000,000.

     “Moody’s” has the meaning specified therefor in the definition of Cash Equivalents.

     “Obligations” means (a) all loans, Advances, debts, principal, interest (including any
interest that accrues after the commencement of an Insolvency Proceeding regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), contingent
reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers’ Loan Account pursuant to the Agreement), obligations
(including indemnification obligations), fees (including the fees provided for in the Fee Letter),
charges, costs, Lender Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), lease payments, guaranties, covenants, and
duties of any kind and description owing by Borrowers to the Lender Group pursuant to or evidenced
by the Loan Documents and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all other expenses or other amounts that Borrowers are
required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the
Loan Documents, and (b) all Bank Product Obligations. Any reference in the Agreement or in the
Loan Documents to the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.

     “Obligor” means any Person that is a Borrower or a Guarantor.

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

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

     “Parent” has the meaning specified therefor in the preamble to the Agreement.

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

     “Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

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

     “Permitted Dispositions” means (a) sales of Inventory to buyers in the ordinary course
of business, (b) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents, (c) the licensing, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in
the ordinary course of business, (d) the transfer of assets by an Obligor to an Active Obligor, (e)
so long as no Default or Event of Default has occurred and is continuing or would result therefrom,
dispositions of assets consisting of obsolete or surplus Equipment or surplus, obsolete, redundant,
or immaterial Intellectual Property (as such term is defined in the Security Agreement) not
otherwise permitted in clauses (a) through (d) so long as made at fair market value and the
aggregate amount of all such dispositions since the Closing Date would not exceed $20,000,000, (f)
the sales of New Focus Inc., a Delaware corporation, or the thin film filter operations of Bookham
(US), so long as, in either case, (i) Administrative Borrower provides Agent with not less than 30
days prior written notice of such sale, together with written confirmation, supported by detailed
calculations satisfactory to Agent, that on a pro forma basis, Borrowers will have positive
Availability after giving effect to any such sale and that no Overadvance would result therefrom,
(ii) no Default or Event of Default has occurred and is continuing or would result therefrom, (iii)
the cash proceeds of any such sale are remitted to a Deposit Account of Parent or a Borrower which
is subject to a Control Agreement and any non-cash proceeds of sale are subject to Agent’s Lien,
and (iv) on or before the consummation of any such sale, Parent delivers to Agent updated schedules
to the Loan Documents reflecting such sale, provided, that in no event may any schedule be updated
in a manner that would reflect or evidence a Default or an Event of Default, (g) the sale of the UK
Real Property Collateral, Bookham Switzerland, or the high powered laser operations of Bookham
Switzerland, so long as, in each case, (i) Parent provides Agent with not less than 15 days prior
written notice of such sale, (ii) no Default or Event of Default has occurred and is continuing or
would result therefrom, (iii) the cash proceeds of any such sale are remitted to a Deposit Account
of Parent or a Borrower which is subject to a Control Agreement and any non-cash proceeds of sale
are subject to Agent’s Lien, and (iv) on or before the consummation of any such sale, Parent
delivers to Agent updated schedules to the Loan Documents reflecting such sale, provided, that in
no event may any schedule be updated in a manner that would reflect or evidence a Default or an
Event of Default, and (h) the Bookham China Sale and Leaseback so long as (i) Parent provides Agent
with not less than 15 days prior written notice of such transaction, (ii) no Default or Event of
Default has occurred and is continuing or would result therefrom, and (iii) on or before the
consummation of such sale, Parent delivers to Agent updated schedules to the Loan Documents
reflecting such sale, provided, that in no event may any schedule be updated in a manner that would
reflect or evidence a Default or an Event of Default.

     “Permitted Intercompany Advance” means Intercompany Advances (a) made by any of
Parent’s Subsidiaries that is not an Obligor to any of Parent’s other Subsidiaries that is not an
Obligor; (b) made by Parent or any of Parent’s Subsidiaries to an Active Obligor so long as they
are the subject of the Intercompany Subordination Agreement; (c) made by any of Parent’s
Subsidiaries that is an Obligor to Bookham China, so long as (i) no Default or Event of Default has
occurred and is continuing or would result therefrom, and (ii) all such Intercompany Advances do
not exceed $4,500,000 per month (subject to annual increases requested by Borrowers and acceptable
to Agent, which increases must be based upon historic revenue growth since the Closing Date),
provided, that no such Intercompany Advances may be made following Bookham China’s receipt
of cash proceeds from the Bookham China Sale and Leaseback, until such cash proceeds have been
fully utilized to fund the ongoing business of Bookham China,; (d) made by any of Parent’s
Subsidiaries that is an Obligor to Bookham Switzerland, so long as (i) no Default or Event of
Default has occurred and is continuing or would result therefrom, and (ii) all such Intercompany
Advances do not exceed $1,400,000 per calendar month; (e) made by any of Parent’s Subsidiaries that
is an Obligor to any of Parent’s other Subsidiaries that is not an Obligor (other than Bookham
China or Bookham Switzerland), so long as (i) no Default or Event of Default has occurred and is
continuing or would result therefrom, and (ii) all such Intercompany Advances do not exceed
$100,000 outstanding at any one time; and (f) payments made by any Obligor to the Lender Group in
respect of obligations under this Agreement or the Loan Documents, to the

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extent that the same are construed as “advances” for the benefit of one or more of the other
Obligors and so long as they are subject to the Intercompany Subordination Agreement.

     “Permitted Intercompany Transactions” means (a) each of the transactions set forth on
Schedule P-1 that are materially consistent with the past practices of Parent’s and its
Subsidiaries’ business operations as in effect on the Closing Date and disclosed to Agent on or
before the Closing Date, (b) transactions by and between Obligors that are materially consistent
with the past practices of Obligors’ business operations as in effect on the Closing Date and
disclosed to Agent on or before the Closing Date, and (c) transactions between Parent or its
Subsidiaries, on the one hand, and any Affiliate of Parent or its Subsidiaries, on the other hand,
so long as such transactions (i) are upon fair and reasonable terms, (ii) are fully disclosed to
Agent if they involve one or more payments by Parent or any of Subsidiary of Parent in excess of
$500,000 for any single transaction or series of transactions, and (iii) are no less favorable to
Parent or its Subsidiaries, as applicable, than would be obtained in an arm’s length transaction
with a non-Affiliate.

     “Permitted Investments” means (a) Permitted Intercompany Advances, (b) Investments in
cash and Cash Equivalents, (c) Investments in negotiable instruments for collection, (d) advances
made in connection with purchases of goods or services in the ordinary course of business, (e)
Investments received in settlement of amounts due to Parent or any Subsidiary of Parent effected in
the ordinary course of business or owing to Parent or any Subsidiary of Parent as a result of
Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any
Lien in favor of Parent or any Subsidiary of Parent, (f) so long as no Default or Event of Default
has occurred and is continuing, the consummation of the transfer of Equipment and Inventory with
respect to Bookham UK’s chip on carrier processes to Bookham China, (g) the forgiveness of any
Indebtedness owing from Bookham Switzerland to an Obligor, so long as such forgiveness is fully
disclosed to Agent by Parent and is made in the ordinary course of the Obligors’ business as in
effect on the Closing Date, (h) so long as no Default or Event of Default has occurred and is
continuing, the transfer of wafers and die banks from Bookham UK to Bookham China in the ordinary
course of Parent’s and its Subsidiaries’ business as in effect on the Closing Date and (i)
contributions by Bookham UK to Bookham China consisting of Equipment to be used by Bookham China in
the ordinary course of business so long as (i) no Default or Event of Default has occurred and is
continuing or would result therefrom, (ii) all such contributions do not exceed $5,000,000 in the
aggregate in any calendar year, and (iii) Agent is given prior written notice by Parent of any
single contribution in excess of $500,000.

     “Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b) Liens
for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet
delinquent, or (ii) do not have priority over the Agent’s Liens and the underlying taxes,
assessments, or charges or levies are the subject of Permitted Protests, (c) judgment Liens that do
not constitute an Event of Default under Section 7.7 of the Agreement, (d) Liens set forth
on Schedule P-3, provided that any such Lien only secures the Indebtedness that it secures
on the Closing Date and any Refinancing Indebtedness in respect thereof, (e) the interests of
lessors under operating leases, (f) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and
so long as (i) such Lien attaches only to the asset purchased or acquired and the proceeds thereof,
and (ii) such Lien only secures the Indebtedness that was incurred to acquire the asset purchased
or acquired or any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation of
law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers,
incurred in the ordinary course of business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests, (h) Liens on amounts deposited in connection with obtaining worker’s compensation or
other unemployment insurance, (i) Liens on amounts deposited in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business and not in connection
with the borrowing of money, (j) Liens on amounts deposited as security for surety or appeal bonds
in connection with obtaining such bonds in the ordinary course of business, and (k) with respect to
any Real Property, easements, rights of way, and zoning restrictions that do not materially
interfere with or impair the use or operation thereof.

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     “Permitted Liquidation” means the liquidation, winding up, or dissolution of any
Subsidiary of Parent that is not an Active Obligor, Bookham China, or Bookham Switzerland so long
as (i) Parent provides Agent with not less than 30 days prior written notice of such liquidation,
winding up, or dissolution, (ii) no Default or Event of Default has occurred and is continuing or
would result therefrom, and (iii) on or before the consummation of any such liquidation, winding
up, or dissolution, Parent delivers to Agent updated schedules to the Loan Documents reflecting
such liquidation, winding up, or dissolution, provided, that in no event may any schedule be
updated in a manner that would reflect or evidence a Default or an Event of Default.

     “Permitted Merger” means (a) the merger or consolidation of any Obligor with and into
a Borrower so long as the Borrower is the surviving entity, (b) the merger or consolidation of any
Guarantor with and into any other Guarantor, (c) the merger or consolidation of any Subsidiary of
Parent that is not an Obligor with any other Subsidiary of Parent that is not an Obligor, (d) the
merger or consolidation of any Subsidiary of Parent that is not an Obligor with any Obligor so long
as the Obligor is the surviving entity, provided that, in any of the forgoing cases, (i) Parent
provides Agent with not less than 30 days prior written notice of such merger or consolidation,
(ii) no Default or Event of Default has occurred and is continuing or would result therefrom, (iii)
Agent’s Liens on the Collateral pledged by any Obligor under the Loan Documents to which it is a
party are not adversely affected, and (iv) on or before the consummation of any such merger or
consolidation, Parent delivers to Agent updated schedules to the Loan Documents reflecting such
merger or consolidation, provided, that in no event may any schedule be updated in a manner that
would reflect or evidence a Default or an Event of Default.

     “Permitted Protest” means the right of Parent or any of its Subsidiaries to protest
any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or
taxes that are the subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on Parent’s or any of its
Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or any of its Subsidiaries, as applicable,
in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent’s Liens.

     “Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred by Parent and its Subsidiaries after the Closing Date in an
aggregate principal amount outstanding at any one time not in excess of $5,000,000.

     “Permitted Restructuring Transaction” means a Permitted Merger or a Permitted
Liquidation.

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

     “Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s
historical financial statements, together with appropriate supporting details and a statement of
underlying assumptions.

     “Pro Rata Share” means, as of any date of determination:

          (a) with respect to a Lender’s obligation to make Advances and right to receive payments of
principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such
Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii)
from and after the time that the Revolver Commitments have been terminated or reduced to zero, the
percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender’s
Advances by (z) the aggregate outstanding principal amount of all Advances,

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          (b) with respect to a Lender’s obligation to participate in Letters of Credit, to reimburse
the Issuing Lender, and right to receive payments of fees with respect thereto, (i) prior to the
Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y)
such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and
(ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero,
the percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender’s
Advances by (z) the aggregate outstanding principal amount of all Advances, and

          (c) with respect to all other matters as to a particular Lender (including the indemnification
obligations arising under Section 15.7), the percentage obtained by dividing (i) such
Lender’s Revolver Commitment, by (ii) the aggregate amount of Revolver Commitments of all Lenders;
provided, however, that in the event the Revolver Commitments have been terminated
or reduced to zero, Pro Rata Share under this clause shall be the percentage obtained by dividing
(A) the outstanding principal amount of such Lender’s Advances plus such Lender’s ratable portion
of the Risk Participation Liability with respect to outstanding Letters of Credit, by (B) the
outstanding principal amount of all Advances plus the aggregate amount of the Risk Participation
Liability with respect to outstanding Letters of Credit.

     “Protective Advances” has the meaning specified therefor in Section 2.3(d)(i).

     “Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but
including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of the acquisition
cost thereof.

     “Qualified Cash” means, as of any date of determination, the amount of unrestricted
cash and Cash Equivalents of Parent, Borrowers, and Bookham Canada that is in Deposit Accounts or
in Securities Accounts, or any combination thereof, and which such Deposit Account or Securities
Account is the subject of a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States, Canada, or the United Kingdom.

     “Qualifying Lender” has the meaning specified therefor in Section 15.11(i).

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

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

     “Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness
so long as: (a) the terms and conditions of such refinancings, renewals, or extensions do not, in
Agent’s reasonable judgment, materially impair the prospects of repayment of the Obligations by
Obligors or materially impair Borrowers’ creditworthiness, (b) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended, (c) such refinancings, renewals, or extensions do not result in an increase
in the interest rate with respect to the Indebtedness so refinanced, renewed, or extended, (d) such
refinancings, renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions that, taken as a whole, are materially more burdensome or restrictive to Parent or any
of its Subsidiaries, (e) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension must include subordination terms and conditions that are at
least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (f) the Indebtedness that is refinanced, renewed, or extended is not
recourse to any Person that is liable on account of the Obligations other than those Persons which
were obligated with respect to the Indebtedness that was refinanced, renewed, or extended.

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     “Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain,
treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials
so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor
or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform
any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or
(e) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.

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

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

     “Required Availability” means that the sum of (a) Excess Availability, plus (b)
Qualified Cash exceeds $35,000,000.

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

     “Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic, supplemental, marginal,
or emergency reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is
not required or directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.

     “Revolver Commitment” means, with respect to each Lender, its Revolver Commitment,
and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts
are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in
the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments made in accordance
with the provisions of Section 13.1.

     “Revolver Usage” means, as of any date of determination, the sum of (a) the amount of
outstanding Advances, plus (b) the amount of the Letter of Credit Usage.

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

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

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

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

     “Series B Preferred Stock” means the shares of Series B Preferred Stock issued by
Parent subsequent to the Closing Date, containing dividend, mandatory and optional redemption
provisions, and other material terms that are consistent with the terms disclosed to and accepted
by Agent on or before the Closing Date.

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

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

     “Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s debts.

     “S&P” has the meaning specified therefor in the definition of Cash Equivalents.

     “Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

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

     “Swing Lender” means WFF or any other Lender that, at the request of Administrative
Borrower and with the consent of Agent agrees, in such Lender’s sole discretion, to become the
Swing Lender under Section 2.3(b).

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

     “Tax Clearance Waiting Period” has the meaning specified therefor in Section
2.13(b)(ii).

     “Tax Credit” has the meaning specified therefor in Section 15.11(g).

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

     “Total Commitment” means, with respect to each Lender, its Total Commitment, and, with
respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth
beside such Lender’s name under the applicable heading on Schedule C-1 attached hereto or
on the signature page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to
assignments made in accordance with the provisions of Section 13.1.

     “Trademark Security Agreement” has the meaning specified therefor in the Security
Agreement.

     “Treaty” has the meaning specified therefor in Section 15.11(h).

     “Treaty Lender” has the meaning specified therefor in Section 15.11(h).

     “Treaty State” has the meaning specified therefor in Section 15.11(h).

     “UK Real Property Collateral” means that certain real property commonly known as
Brixham Road, Paignton, Devon TQ4 7BE United Kingdom.

     “Underlying Issuer” means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of the Issuing Lender for the
benefit of Borrowers.

     “Underlying Letter of Credit” means a letter of credit that has been issued by an
Underlying Issuer.

     “United States” means the United States of America.

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     “Voidable Transfer” has the meaning specified therefor in Section 16.6.

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

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

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Schedule 3.1

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

     (a) the Closing Date shall occur on or before August 2, 2006;

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

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

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

          (i) the Cash Management Agreements,

          (ii) the Control Agreements,

          (iii) the Copyright Security Agreement,

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

          (v) the Fee Letter,

          (vi) the Foreign Security Documents,

          (vii) the Guaranties,

          (viii) the Intercompany Subordination Agreement,

          (ix) the Patent Security Agreement,

          (x) the Security Agreement,

          (xi) the Stock Pledge Agreement, together with all certificates representing the shares of
Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank, and

          (xii) the Trademark Security Agreement;

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

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

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

     (h) Agent shall have received certificates of status with respect to each Borrower, each dated
within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of
the jurisdictions (other than the jurisdiction of organization of such Borrower) in which its
failure to be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such jurisdictions;

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

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

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

     (l) Agent shall have received certificates of status with respect to each Guarantor, each
dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer
of the jurisdictions (other than the jurisdiction of organization of such Guarantor) in which its
failure to be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such jurisdictions;

     (m) Agent shall have received a certificate of insurance, together with the endorsements
thereto, as are required by Section 5.8, the form and substance of which shall be
satisfactory to Agent;

     (n) Agent shall have received a certificate from an officer of Parent attesting that there is
no (i) litigation, investigation or proceeding (judicial or administrative) pending or, to the best
knowledge of Parent, threatened, against any Obligor, or any of their respective Subsidiaries by
any Governmental Authority arising out of the transactions contemplated by or effected in
connection with the Loan Documents, (ii) injunction, writ or restraining order restraining or
prohibiting the transactions contemplated by the consummation of the financing arrangements
contemplated under the Loan Documents, or (iii) suit, action, investigation proceeding (judicial or
administrative) or ERISA Event pending or, to the best knowledge of Parent, threatened against any
Obligor or any of their respective Subsidiaries which could reasonably be expected to cause a
Material Adverse Change;

     (o) Agent shall have received satisfactory evidence (including a certificate of an officer of
Parent) that all tax returns required to be filed by Obligors have been timely filed and all taxes
upon each Obligor or any of its properties, assets, income, and franchises (including real property
taxes, sales taxes, and payroll taxes) have been paid prior to delinquency, except such taxes that
are the subject of a Permitted Protest;

2

 

     (p) Agent shall have received an opinion of Obligors’ counsel in form and substance
satisfactory to Agent;

     (q) Borrowers shall have the Required Availability after giving effect to the initial
extensions of credit hereunder and the payment of all fees and expenses required to be paid by
Borrowers on the Closing Date under this Agreement or the other Loan Documents;

     (r) Agent shall have completed its business, legal, and collateral due diligence, including
(i) a collateral audit and review of Parent’s and its Subsidiaries’ books and records and
verification of Parent’s and Borrowers’ representations and warranties to the Lender Group, the
results of which shall be satisfactory to Agent, and (ii) an inspection of each of the locations
where Parent’s and its Subsidiaries’ Inventory is located, the results of which shall be
satisfactory to Agent;

     (s) Agent shall have received completed reference checks (including compliance with Section
326 of the USA Patriot Act) with respect to Obligors’ senior management, the results of which are
satisfactory to Agent in its sole discretion;

     (t) Agent shall have received a set of Projections of the Parent, on a quarter by quarter
basis, through December 31, 2007, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent;

     (u) Borrowers shall have paid all Lender Group Expenses incurred in connection with the
transactions evidenced by this Agreement;

     (v) [Intentionally Omitted];

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

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

3

 

Schedule 5.2

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

	 	 	 
	Weekly

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

	 	(b) notice of all claims, offsets,
or disputes asserted by Account
Debtors with respect to Parent’s and
its Subsidiaries’ Accounts,
	 
	 	 
	 

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

	 	(d) copies of invoices together with
corresponding shipping and delivery
documents, and credit memos together
with corresponding supporting
documentation, with respect to
invoices and credit memos in excess
of an amount determined in the sole
discretion of Agent, from time to
time.
	 
	 	 
	Monthly (no later
than the 10th day
of each month)

	 	(e) a Borrowing Base Certificate,
together with a detailed calculation
of Borrowers’ average Excess
Availability for the month most
recently ended,
	 
	 	 
	 

	 	(f) a detailed aging, by total, of
Parent’s and its Subsidiaries’
Accounts, together with a
reconciliation and supporting
documentation for any reconciling
items noted (delivered
electronically in an acceptable
format, if Borrowers have
implemented electronic reporting),
	 
	 	 
	 

	 	(g) a detailed calculation of those
Accounts that are not eligible for
the Borrowing Base, if Borrowers
have not implemented electronic
reporting,
	 
	 	 
	 

	 	(h) a summary aging, by vendor, of
Active Obligors’ accounts payable
and any book overdrafts (delivered
electronically in an acceptable
format, if Borrowers have
implemented electronic reporting)
and an aging, by vendor, of any held
checks, and
	 
	 	 
	 

	 	(i) a monthly Account roll-forward,
in a format acceptable to Agent in
its discretion, tied to the
beginning and ending account
receivable balances of Borrowers’
general ledgers.
	 
	 	 
	Monthly (no later
than the 30th day
of each month)

	 	(j) a reconciliation of Accounts and
trade accounts payable of Obligors’
general ledger accounts to their
monthly financial statements
including any book reserves related
to each category, and
(k) a report regarding Parent’s and
its Subsidiaries’ accrued, but
unpaid, ad valorem taxes.
	 
	 	 
	 

	 	
(k) a report regarding Parent’s and
its Subsidiaries’ accrued, but
unpaid, ad valorem taxes.
	 
	 	 
	Quarterly

	 	(l) a detailed report regarding
Parent’s and its Subsidiaries’
Permitted Dispositions including a
detailed list of the assets sold or
disposed of since the Closing Date
and the consideration received in
connection therewith.
	 
	 	 
	Annually

	 	(m) a detailed list of Active
Obligors’ customers, including
contract expiration dates, together
with address and contact
information.
	 
	 	 
	Upon request by

Agent

	 	(n) such other reports as to the
Collateral or the financial
condition of Parent and its

1

 

	 	 	 
	 

	 	Subsidiaries, as Agent may
reasonably request.

2

 

Schedule 5.3

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

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

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

	 	(b) a Compliance Certificate.
	 
	 	 
	as soon as available, but in any
event within 90 days after the
end of each of Parent’s fiscal
years

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

	 	(d) a Compliance Certificate.
	 
	 	 
	as soon as available, but in any
event within 30 days prior to the
start of each of Parent’s fiscal
years,

	 	(e) copies of Parent’s Projections, in form and substance
(including as to scope and underlying assumptions)
satisfactory to Agent, in its Permitted Discretion, for
the forthcoming 2 years, year by year, and for the
forthcoming fiscal year, quarter by quarter, certified by
the chief financial officer of Parent as being such
officer’s good faith estimate of the financial performance
of Parent during the period covered thereby.
	 
	 	 
	if and when filed by any Borrower,

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

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

and
	 
	 	 
	 

	 	(h) any other information that is provided by Parent to
its shareholders generally.
	 
	 	 
	promptly, but in any event within
5 days after an Active Obligor
has knowledge of any event or
condition that constitutes a
Default or an Event of Default,

	 	(i) notice of such event or condition and a statement of
the curative action that Parent and its Subsidiaries
proposes to take with respect thereto.
	 
	 	 
	promptly after the commencement
thereof, but in any event within
5 days after the service of

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

1

 

	 	 	 
	process with respect thereto on
Parent or any Subsidiary of a
Parent,
	 	 
	 
	 	 
	upon the request of Agent,

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

2

 

Schedule 5.20

     The continuing obligation of the Lender Group (or any member thereof) to make any Advances
hereunder at any time (or to extend any other credit hereunder) shall be subject to the
fulfillment, to the satisfaction of Agent (or waiver thereby), of each of the post-closing
covenants set forth below. The failure by Borrowers to satisfy any of the post-closing covenants
set forth below within such covenant’s prescribed time period shall, as set forth below, constitute
an Event of Default or result in the implementation by Agent (in its Permitted Discretion) of a
reserve against Availability.

     (a) Within 10 Business Days of the Closing Date, Borrowers shall deliver to Agent the Stock
certificates (to the extent such Stock is certificated) representing the Pledged Interests (as
defined in the Security Agreement) for each of the companies set forth on Schedule 5 to the
Security Agreement, together with Stock powers, in form and substance satisfactory to Agent,
endorsed in blank. The failure to timely deliver such materials shall constitute an Event of
Default;

     (b) Within 10 days of the Closing Date, Borrowers shall deliver to Agent the Cash Management
Agreements and Control Agreements over (i) Borrowers’ two Collections accounts at Mid-Peninsula
Bank (bearing numbers DDA 1101107413 and DDA 0107946801) and (ii) Bookham UK’s Collections account
at Barclay’s Bank (bearing number 67486544), and within 30 days of the Closing Date, Borrowers
shall deliver to Agent the Cash Management Agreements and Control Agreements over such other
Deposit Accounts and Securities Accounts set forth on Schedule 4.17 so that Borrowers are
in compliance with Section 6.12. The failure to timely deliver such agreements shall
constitute an Event of Default;

     (c) Within 30 days of the Closing Date, Borrowers shall have used their best efforts to
deliver a Collateral Access Agreement with respect to Obligors’ leasehold property located in (x)
Santa Rosa, California, USA, (y) San Jose, California, USA, and (z) Caswell, Northhamptonshire,
United Kingdom. The failure to timely deliver such agreements shall result in the continuation of
a 3 month rent reserve against Availability until delivered;

     (d) Within 10 days of the Closing Date, Borrowers shall have delivered a copy of the deed of
charge over credit balances dated October 10, 2005, between Bookham UK and Barclay’s Bank PLC
(“Barclay’s”). The failure to timely deliver such agreements shall constitute an Event of
Default;

     (e) Within 15 days of the Closing Date, Borrowers shall either (y) deliver satisfactory
evidence to Agent, in its sole discretion, that Barclay’s has no other security interest or Lien on
any asset of any Obligor other than a single account identified to Agent, and which account is
neither a Cash Management Account into which Collections of Accounts are received nor an account in
which Qualified Cash is held (the “Restricted Account”), or (z) have (i) transferred all of
the funds currently held at Barclay’s (other than funds held in the Restricted Account) to another
financial institution satisfactory to Agent, (ii) delivered, in connection therewith, Cash
Management and Control Agreements with respect to such new accounts so that Borrowers are in
compliance with Section 6.12, and (iii) provided satisfactory evidence that the accounts
currently held at Barclay’s have been closed. The failure to timely comply with the forgoing shall
constitute an Event of Default; and

     (f) Within 10 days of the Closing Date, Bookham UK shall either (x) deliver to Agent a form
403a in respect of the account assignment dated July 27, 1996, between Bookham UK and ING Lease
(UK) Limited, or (y) otherwise demonstrate to Agent’s satisfaction that failure to do so is
immaterial. The failure to timely comply with the foregoing shall constitute an Event of Default.

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