Document:

Exhibit
10.1

 

$35,000,000

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of May 31, 2006

by and among

DIGITAL GENERATION SYSTEMS, INC.,

as Borrower,

the Lenders referred to herein,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent

and Issuing Lender

WACHOVIA CAPITAL MARKETS, LLC

as Sole Lead Arranger and
Sole Book Manager

 

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  Definitions

  	
   

  	
  1

  
	
  SECTION 1.2

  	
  Other Definitions and Provisions

  	
   

  	
  24

  
	
  SECTION 1.3

  	
  Accounting Terms; Financing Ratios

  	
   

  	
  25

  
	
  SECTION 1.4

  	
  UCC Terms

  	
   

  	
  25

  
	
  SECTION 1.5

  	
  Rounding

  	
   

  	
  25

  
	
  SECTION 1.6

  	
  References to Agreement and Laws

  	
   

  	
  25

  
	
  SECTION 1.7

  	
  Times of Day

  	
   

  	
  25

  
	
  SECTION 1.8

  	
  Letter of Credit Amounts

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  REVOLVING CREDIT FACILITY

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  Revolving Credit Loans

  	
   

  	
  26

  
	
  SECTION 2.2

  	
  Procedure for Advances of Revolving Credit Loans

  	
   

  	
  26

  
	
  SECTION 2.3

  	
  Repayment and Prepayment of Revolving Credit Loans

  	
   

  	
  27

  
	
  SECTION 2.4

  	
  Permanent Reduction of the Revolving Credit
  Commitment

  	
   

  	
  28

  
	
  SECTION 2.5

  	
  Termination of Revolving Credit Facility

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  LETTER OF CREDIT FACILITY

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  L/C Commitment

  	
   

  	
  29

  
	
  SECTION 3.2

  	
  Procedure for Issuance of Letters of Credit

  	
   

  	
  29

  
	
  SECTION 3.3

  	
  Commissions and Other Charges

  	
   

  	
  29

  
	
  SECTION 3.4

  	
  L/C Participations

  	
   

  	
  30

  
	
  SECTION 3.5

  	
  Reimbursement Obligation of the Borrower

  	
   

  	
  31

  
	
  SECTION 3.6

  	
  Obligations Absolute

  	
   

  	
  32

  
	
  SECTION 3.7

  	
  Effect of Letter of Credit Application

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  TERM LOAN FACILITY

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  Term Loan

  	
   

  	
  32

  
	
  SECTION 4.2

  	
  Procedure for Advance of Term Loan

  	
   

  	
  32

  
	
  SECTION 4.3

  	
  Repayment of Term Loan

  	
   

  	
  33

  
	
  SECTION 4.4

  	
  Prepayments of Term Loan

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  GENERAL LOAN PROVISIONS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  Interest

  	
   

  	
  35

  
	
  SECTION 5.2

  	
  Notice and Manner of Conversion or Continuation of
  Revolving Credit Loans

  	
   

  	
  37

  
	
  SECTION 5.3

  	
  Fees

  	
   

  	
  38

  
	
  SECTION 5.4

  	
  Manner of Payment

  	
   

  	
  38

  
	
  SECTION 5.5

  	
  Evidence of Indebtedness

  	
   

  	
  38

  
	
  SECTION 5.6

  	
  Adjustments

  	
   

  	
  39

  
	
  SECTION 5.7

  	
  Nature of Obligations of Lenders Regarding
  Extensions of Credit; Assumption by the Administrative Agent

  	
   

  	
  40

  
	
  SECTION 5.8

  	
  Changed Circumstances

  	
   

  	
  40

  
	
  SECTION 5.9

  	
  Indemnity

  	
   

  	
  41

  
	
  SECTION 5.10

  	
  Increased Costs

  	
   

  	
  41

  
	
  SECTION 5.11

  	
  Taxes

  	
   

  	
  43

  
	
  SECTION 5.12

  	
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
  45

  
					

 

 i
 

 

 

	
  SECTION 5.13

  	
  Security

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  CLOSING; CONDITIONS OF CLOSING AND BORROWING

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  Closing

  	
   

  	
  46

  
	
  SECTION 6.2

  	
  Conditions to Closing and Initial Extensions of
  Credit

  	
   

  	
  46

  
	
  SECTION 6.3

  	
  Conditions to All Extensions of Credit

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  REPRESENTATIONS AND WARRANTIES OF THE BORROWER

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  Representations and Warranties

  	
   

  	
  51

  
	
  SECTION 7.2

  	
  Survival of Representations and Warranties, Etc

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  FINANCIAL INFORMATION AND NOTICES

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  Financial Statements and Projections

  	
   

  	
  59

  
	
  SECTION 8.2

  	
  Officer’s Compliance Certificate

  	
   

  	
  60

  
	
  SECTION 8.3

  	
  Excess Cash Flow Certificate

  	
   

  	
  60

  
	
  SECTION 8.4

  	
  Accountants’ Certificate

  	
   

  	
  60

  
	
  SECTION 8.5

  	
  Other Reports

  	
   

  	
  61

  
	
  SECTION 8.6

  	
  Notice of Litigation and Other Matters

  	
   

  	
  61

  
	
  SECTION 8.7

  	
  Accuracy of Information

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  Preservation of Corporate Existence and Related
  Matters

  	
   

  	
  62

  
	
  SECTION 9.2

  	
  Maintenance of Property

  	
   

  	
  62

  
	
  SECTION 9.3

  	
  Insurance

  	
   

  	
  62

  
	
  SECTION 9.4

  	
  Accounting Methods and Financial Records

  	
   

  	
  62

  
	
  SECTION 9.5

  	
  Payment and Performance of Obligations

  	
   

  	
  63

  
	
  SECTION 9.6

  	
  Compliance With Laws and Approvals

  	
   

  	
  63

  
	
  SECTION 9.7

  	
  Environmental Laws

  	
   

  	
  63

  
	
  SECTION 9.8

  	
  Compliance with ERISA

  	
   

  	
  63

  
	
  SECTION 9.9

  	
  Compliance With Agreements

  	
   

  	
  64

  
	
  SECTION 9.10

  	
  Visits and Inspections

  	
   

  	
  64

  
	
  SECTION 9.11

  	
  Additional Subsidiaries

  	
   

  	
  64

  
	
  SECTION 9.12

  	
  DG III as Grantor

  	
   

  	
  65

  
	
  SECTION 9.13

  	
  Real Property Collateral

  	
   

  	
  65

  
	
  SECTION 9.14

  	
  Use of Proceeds

  	
   

  	
  65

  
	
  SECTION 9.15

  	
  Further Assurances

  	
   

  	
  65

  
	
  SECTION 9.16

  	
  Amendments to Acquisition Documents

  	
   

  	
  66

  
	
  SECTION 9.17

  	
  Landlord Waivers

  	
   

  	
  66

  
	
  SECTION 9.18

  	
  DG III Guaranty

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  FINANCIAL COVENANTS

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
  Consolidated Leverage Ratio

  	
   

  	
  66

  
	
  SECTION 10.2

  	
  Consolidated Fixed Charge Coverage Ratio

  	
   

  	
  66

  
	
  SECTION 10.3

  	
  Minimum Net Worth

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  NEGATIVE COVENANTS

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1

  	
  Limitations on Indebtedness

  	
   

  	
  67

  
					

 

 ii
 

 

 

	
  SECTION 11.2

  	
  Limitations on Liens

  	
   

  	
  68

  
	
  SECTION 11.3

  	
  Limitations on Loans, Advances, Investments and
  Acquisitions

  	
   

  	
  69

  
	
  SECTION 11.4

  	
  Limitations on Mergers and Liquidation

  	
   

  	
  70

  
	
  SECTION 11.5

  	
  Limitations on Asset Dispositions

  	
   

  	
  71

  
	
  SECTION 11.6

  	
  Limitations on Dividends and Distributions

  	
   

  	
  71

  
	
  SECTION 11.7

  	
  Limitations on Exchange and Issuance of Capital
  Stock

  	
   

  	
  72

  
	
  SECTION 11.8

  	
  Transactions with Affiliates

  	
   

  	
  72

  
	
  SECTION 11.9

  	
  Certain Accounting Changes; Organizational Documents

  	
   

  	
  72

  
	
  SECTION 11.10

  	
  Amendments; Payments and Prepayments of Subordinated
  Indebtedness

  	
   

  	
  72

  
	
  SECTION 11.11

  	
  Restrictive Agreements

  	
   

  	
  73

  
	
  SECTION 11.12

  	
  Nature of Business

  	
   

  	
  73

  
	
  SECTION 11.13

  	
  Impairment of Security Interests

  	
   

  	
  73

  
	
  SECTION 11.14

  	
  Prepayments of MDVX Indebtedness

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  DEFAULT AND REMEDIES

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.1

  	
  Events of Default

  	
   

  	
  74

  
	
  SECTION 12.2

  	
  Remedies

  	
   

  	
  76

  
	
  SECTION 12.3

  	
  Rights and Remedies Cumulative; Non-Waiver; etc

  	
   

  	
  77

  
	
  SECTION 12.4

  	
  Crediting of Payments and Proceeds

  	
   

  	
  77

  
	
  SECTION 12.5

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  THE ADMINISTRATIVE AGENT

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.1

  	
  Appointment and Authority

  	
   

  	
  79

  
	
  SECTION 13.2

  	
  Rights as a Lender

  	
   

  	
  79

  
	
  SECTION 13.3

  	
  Exculpatory Provisions

  	
   

  	
  79

  
	
  SECTION 13.4

  	
  Reliance by the Administrative Agent

  	
   

  	
  80

  
	
  SECTION 13.5

  	
  Delegation of Duties

  	
   

  	
  80

  
	
  SECTION 13.6

  	
  Resignation of Administrative Agent

  	
   

  	
  81

  
	
  SECTION 13.7

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
   

  	
  82

  
	
  SECTION 13.8

  	
  No Other Duties, etc

  	
   

  	
  82

  
	
  SECTION 13.9

  	
  Collateral and Guarantee Matters

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  MISCELLANEOUS

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.1

  	
  Notices

  	
   

  	
  83

  
	
  SECTION 14.2

  	
  Amendments, Waivers and Consents

  	
   

  	
  84

  
	
  SECTION 14.3

  	
  Expenses; Indemnity

  	
   

  	
  86

  
	
  SECTION 14.4

  	
  Right of Set-off

  	
   

  	
  88

  
	
  SECTION 14.5

  	
  Governing Law

  	
   

  	
  88

  
	
  SECTION 14.6

  	
  Waiver of Jury Trial

  	
   

  	
  89

  
	
  SECTION 14.7

  	
  Reversal of Payments

  	
   

  	
  90

  
	
  SECTION 14.8

  	
  Injunctive Relief; Punitive Damages

  	
   

  	
  90

  
	
  SECTION 14.9

  	
  Accounting Matters

  	
   

  	
  90

  
	
  SECTION 14.10

  	
  Successors and Assigns; Participations

  	
   

  	
  91

  
	
  SECTION 14.11

  	
  Confidentiality

  	
   

  	
  93

  
	
  SECTION 14.12

  	
  Performance of Duties

  	
   

  	
  94

  
	
  SECTION 14.13

  	
  All Powers Coupled with Interest

  	
   

  	
  94

  
	
  SECTION 14.14

  	
  Survival of Indemnities

  	
   

  	
  94

  
					

 

 iii
 

 

 

	
  SECTION 14.15

  	
  Titles and Captions

  	
   

  	
  95

  
	
  SECTION 14.16

  	
  Severability of Provisions

  	
   

  	
  95

  
	
  SECTION 14.17

  	
  Counterparts

  	
   

  	
  95

  
	
  SECTION 14.18

  	
  Integration

  	
   

  	
  95

  
	
  SECTION 14.19

  	
  Term of Agreement

  	
   

  	
  95

  
	
  SECTION 14.20

  	
  Advice of Counsel, No Strict Construction

  	
   

  	
  95

  
	
  SECTION 14.21

  	
  USA Patriot Act

  	
   

  	
  95

  
	
  SECTION 14.22

  	
  Inconsistencies With Other Documents; Independent
  Effect of Covenants

  	
   

  	
  96

  
	
  SECTION 14.23

  	
  Interest Rate Limitation

  	
   

  	
  96

  
	
  SECTION 14.24

  	
  Amendment and Restatement; No Novation

  	
   

  	
  97

  
	
  SECTION 14.25

  	
  Time of the Essence

  	
   

  	
  97

  
	
  SECTION 14.26

  	
  Entire Agreement

  	
   

  	
  97

  

 

 iv
 

 

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1

  	
  -

  	
  Form of Revolving Credit Note

  
	
  Exhibit A-2

  	
  -

  	
  Form of Term Note

  
	
  Exhibit B

  	
  -

  	
  Form of Notice of Borrowing

  
	
  Exhibit C

  	
  -

  	
  Form of Notice of Account Designation

  
	
  Exhibit D

  	
  -

  	
  Form of Notice of Prepayment

  
	
  Exhibit E

  	
  -

  	
  Form of Notice of Conversion/Continuation

  
	
  Exhibit F

  	
  -

  	
  Form of Officer’s Compliance Certificate

  
	
  Exhibit G

  	
  -

  	
  Form of Assignment and Assumption

  
	
  Exhibit H

  	
  -

  	
  Form of Amended and Restated Guarantee and
  Collateral Agreement

  
	
  Exhibit I

  	
  -

  	
  Form of Landlord Waiver

  
	
  Exhibit J

  	
  -

  	
  Form of Excess Cash Flow Certificate

  
	
  Exhibit K

  	
  -

  	
  Form of Closing Certificate

  
	
  Exhibit L

  	
  -

  	
  Form of Opinion of Legal Counsel

  
	
  Exhibit M

  	
  -

  	
  Form of Financial Condition Certificate

  
	
  Exhibit N

  	
  -

  	
  Form of Guaranty Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1

  	
  -

  	
  Lenders and Commitments

  
	
  Schedule 7.1(a)

  	
  -

  	
  Jurisdictions of Organization and Qualification

  
	
  Schedule 7.1(b)

  	
  -

  	
  Subsidiaries and Capitalization

  
	
  Schedule 7.1(i)

  	
  -

  	
  ERISA Plans

  
	
  Schedule 7.1(l)

  	
  -

  	
  Material Contracts

  
	
  Schedule 7.1(m)

  	
  -

  	
  Labor and Collective Bargaining Agreements

  
	
  Schedule 7.1(r)

  	
  -

  	
  Real Property

  
	
  Schedule 7.1(u)

  	
  -

  	
  Indebtedness and Guaranty Obligations

  
	
  Schedule 7.1(v)

  	
  -

  	
  Litigation

  
	
  Schedule 11.2

  	
  -

  	
  Existing Liens

  
	
  Schedule 11.3

  	
  -

  	
  Existing Loans, Advances and Investments

  
	
  Schedule 11.8

  	
  -

  	
  Transactions with Affiliates

  

 

 v

AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 31,
2006, by and among DIGITAL GENERATION SYSTEMS, INC., a Delaware corporation
(the “Borrower”), the lenders who are or may become a party to this
Agreement (collectively, the “Lenders”) and WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as Administrative Agent for the
Lenders.

STATEMENT OF PURPOSE

The Borrower, the lenders party thereto, the
Administrative Agent and certain other parties thereto entered into the
Existing Credit Agreement (hereinafter defined).  The Borrower now requests that the
Administrative Agent and the Lenders amend and restate the Existing Credit
Agreement and provide the Borrower with a credit facility pursuant to which the
Lenders will commit to make Revolving Credit Loans in a principal amount of up
to $15,000,000 outstanding at any time and a Term Loan in a principal amount of
$20,000,000.  

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties
hereto, such parties hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1                   Definitions.  The following terms when used in this
Agreement shall have the meanings assigned to them below:

“Acquisition Agreement” means the Second
Amended and Restated Agreement and Plan of Merger dated as of April 14, 2006,
by and among the Borrower, DG IV and FastChannel.

“Acquisition Documents” means the collective
reference to the Acquisition Agreement and all schedules, exhibits and annexes
thereto and all side letters and agreements affecting the terms thereof or
entered into in connection therewith.

“Adjusted Consolidated EBITDA” means, for any
period, with respect to the Borrower and its Subsidiaries determined on a
Consolidated basis, without duplication, in accordance with GAAP, (a)
Consolidated EBITDA less (b) the sum of (i) Capital Expenditures made
during such period, (ii) cash taxes paid during such period, (iii) cash
dividends and distributions for such period and (iv) treasury stock repurchases
made during such period.

“Administrative Agent” means Wachovia, in its
capacity as Administrative Agent hereunder, and any successor thereto appointed
pursuant to Section 13.6.

“Administrative Agent’s Office” means the
office of the Administrative Agent specified in or determined in accordance
with the provisions of Section 14.1(c).

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

 

“Affiliate” means, with respect to any Person,
any other Person which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. 
As used in this definition, the term “control” means (a) the power
to vote five percent (5%) or more of the securities or other equity interests
of a Person having ordinary voting power, or (b) the possession, directly
or indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.

“Aggregate Commitment” means the aggregate
amount of the Lenders’ Commitments hereunder, as such amount may be reduced or
otherwise modified at any time or from time to time pursuant to the terms
hereof.  On the Closing Date, the
Aggregate Commitment shall be Thirty-Five Million and No/100 Dollars ($35,000,000).

“Aggregate Exposure” means, with respect to any
Lender at any time, an amount equal to (a) until the Closing Date, the aggregate
amount of such Lender’s Commitments at such time and (b) thereafter, the sum of
(i) the aggregate then unpaid principal amount of such Lender’s Term Loans and
(ii) the amount of such Lender’s Revolving Commitment then in effect or, if the
Revolving Commitments have been terminated, the amount of such Lender’s
Revolving Credit Commitment then most recently in effect, giving effect to any
subsequent assignments.

“Aggregate Exposure Percentage” means, with
respect to any Lender at any time, the ratio (expressed as a percentage) of
such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all
Lenders at such time.

“Agreement” means this Credit Agreement, as
amended, restated, supplemented or otherwise modified from time to time.

“Applicable Law” means all applicable
provisions of constitutions, laws, statutes, ordinances, rules, treaties,
regulations, permits, licenses, approvals, interpretations and orders of courts
or Governmental Authorities and all orders and decrees of all courts and arbitrators.

“Applicable
Margin” means the corresponding percentages per annum as set forth below
based on the Consolidated Leverage Ratio:

 2
 

 

 

	
  Pricing

  	
   

  	
  Consolidated

  	
   

  	
  Commitment

  	
   

  	
  Revolving Credit Loans/ Term

  Loan

  	
   

  
	
  Level

  	
   

  	
  Leverage Ratio

  	
   

  	
  Fee

  	
   

  	
  LIBOR +

  	
   

  	
  Base Rate +

  	
   

  
	
  I

  	
   

  	
  Less
  than 2.25 to 1.00

  	
   

  	
  0.25

  	
  %

  	
  1.75

  	
  %

  	
  0.00

  	
  %

  
	
  II

  	
   

  	
  Greater
  than or equal to 2.25 to 1.00, but less than 2.50 to 1.00

  	
   

  	
  0.325

  	
  %

  	
  2.00

  	
  %

  	
  0.25

  	
  %

  
	
  III

  	
   

  	
  Greater
  than or equal to 2.50 to 1.00, but less than 2.75 to 1.00

  	
   

  	
  0.50

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  
	
  IV

  	
   

  	
  Greater
  than or equal to 2.75 to 1.00, but less then 3.00 to 1.00

  	
   

  	
  0.625

  	
  %

  	
  2.50

  	
  %

  	
  0.75

  	
  %

  
	
  V

  	
   

  	
  Greater than or equal to
  3.00 to 1.00

  	
   

  	
  0.75

  	
  %

  	
  2.75

  	
  %

  	
  1.00

  	
  %

  

The Applicable Margin
shall be determined and adjusted quarterly on the date (each a “Calculation
Date”) ten (10) Business Days after receipt by the Administrative Agent of
the Officer’s Compliance Certificate pursuant to Section 8.2 for the
most recently ended fiscal quarter of the Borrower (it being agreed that the
first Calculation Date shall relate to the fiscal quarter of the Borrower
ending on September 30, 2006); provided that (a) the Applicable Margin
shall be based on Pricing Level V until the first Calculation Date occurring
after the Closing Date and, thereafter the Pricing Level shall be determined by
reference to the Consolidated Leverage Ratio as
of the last day of the most recently ended fiscal quarter of the Borrower
preceding the applicable Calculation Date, and (b) if the Borrower fails to
provide the Officer’s Compliance Certificate as required by Section 8.2
for the most recently ended fiscal quarter of the Borrower preceding the
applicable Calculation Date, the Applicable Margin from such Calculation Date
shall be based on Pricing Level V until such time as an appropriate Officer’s
Compliance Certificate is provided, at which time the Pricing Level shall be
determined by reference to the Consolidated Leverage Ratio as of the last day
of the most recently ended fiscal quarter of the Borrower preceding such
Calculation Date.  The Applicable Margin
shall be effective from one Calculation Date until the next Calculation
Date.  Any adjustment in the Applicable
Margin shall be applicable to all Extensions of Credit then existing or
subsequently made or issued.

 3
 

 

“Approved Fund”
means any Person (other than a natural Person), including, without limitation,
any special purpose entity, that is (or will be) engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business; provided, that such
Approved Fund must be administered, managed or underwritten by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Asset Disposition” means the disposition of
any or all of the assets (including, without limitation, the Capital Stock of a
Subsidiary or any ownership interest in a joint venture) of any Credit Party or
any Subsidiary thereof whether by sale, lease, transfer or otherwise.  The
term “Asset Disposition” shall not include sales of inventory in the ordinary
course of business or any Equity Issuance.

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

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

“Banking Services” means each and any of the
following bank services provided to any Credit Party by a Lender or any of its
Affiliates: (a) commercial credit cards, (b) stored value cards and (c)
treasury management services (including, without limitation, cash management
services, electronic funds transfer, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).

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

“Base Rate” means, at any time, the higher of
(a) the Prime Rate and (b) the Federal Funds Rate plus 1/2 of 1%; each
change in the Base Rate shall take effect simultaneously with the corresponding
change or changes in the Prime Rate or the Federal Funds Rate.

“Base Rate Loan” means (a) any Revolving Credit
Loan bearing interest at a rate based upon the Base Rate, or (b) the Term Loan
bearing interest at a rate based upon the Base Rate.

“Borrower” has the meaning assigned thereto in
the introductory paragraph hereto.

“Business Day” means (a) for all purposes other
than as set forth in clause (b) below, any day other than a Saturday, Sunday or
legal holiday on which banks in Charlotte, North Carolina and New York, New
York, are open for the conduct of their commercial banking business, and

 4
 

 

(b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.

“Calculation Date” has the meaning assigned
thereto in the definition of Applicable Margin.

“Capital Asset” means, with respect to the
Borrower and its Subsidiaries, any asset that should, in accordance with GAAP,
be classified and accounted for as a capital asset on a Consolidated balance
sheet of the Borrower and its Subsidiaries.

“Capital Expenditures” means, with respect to
the Borrower and its Subsidiaries for any period, the aggregate cost of all
Capital Assets acquired by the Borrower and its Subsidiaries during such
period, as determined in accordance with GAAP.

“Capital Lease” means any lease of any property
by the Borrower or any of its Subsidiaries, as lessee, that should, in
accordance with GAAP, be classified and accounted for as a capital lease on a
Consolidated balance sheet of the Borrower and its Subsidiaries.

“Capital Stock” means (a) in the case of a
corporation, capital stock, (b) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (c) in the case of a
partnership, partnership interests (whether general or limited), (d) in the
case of a limited liability company, membership interests and (e) any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing
Person.

“Change in Control” means an event or series of
events by which (a) any person or group of persons (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, as amended), shall obtain
ownership or control in one or more series of transactions of more than thirty
percent (30%) of the Capital Stock or of the voting power of the Borrower
entitled to vote in the election of members of the board of directors of the
Borrower, (b) there shall have occurred under any indenture or other instrument
evidencing any Indebtedness in excess of $100,000 any “change in control” or
similar provision (as set forth in the indenture, agreement or other evidence
of such Indebtedness) obligating the Borrower to repurchase, redeem or repay
all or any part of the Indebtedness or Capital Stock provided for therein or
(c) Scott K. Ginsburg shall at any time for any reason cease to be active in
the management of the Borrower.

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

“Closing Date” means the date of this Agreement
or such later Business Day upon which each condition described in Section 6.2
shall be satisfied or waived in all respects in a manner acceptable to the
Administrative Agent, in its sole discretion.

 5
 

 

“Code” means the Internal Revenue Code of 1986,
and the rules and regulations thereunder, each as amended or modified from time
to time.

“Collateral” means the collateral security for
the Obligations pledged or granted pursuant to the Security Documents.

“Commitment” means, as to any Lender, such
Lender’s Revolving Credit Commitment or Term Loan Commitment, as applicable.

“Commitment Percentage” means, as to any
Lender, such Lender’s Revolving Credit Commitment Percentage or Term Loan
Commitment Percentage, as applicable.

“Consolidated” means, when used with reference
to financial statements or financial statement items of any Person, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.

“Consolidated EBITDA” means, for any period,
the sum of the following determined on a Consolidated basis, without
duplication, for the Borrower and its Subsidiaries in accordance with
GAAP:  (a) Consolidated Net Income for
such period plus (b) the sum of the following to the extent deducted in
determining Consolidated Net Income: (i) income and franchise taxes, (ii) Consolidated
Interest Expense, (iii) amortization, depreciation and other non-cash charges
(except to the extent that such non-cash charges are reserved for cash charges
to be taken in the future), (iv) extraordinary losses (other than from
discontinued operations), (v) Transaction Costs and (vi) any non-recurring
costs and any extraordinary expenses, in each case, identified on a separate
line item on the consolidated statements of income of the Borrower and its
Subsidiaries delivered to the Administrative Agent pursuant to Section 8.1,
provided, that the amounts referred to in this clause (vi) shall not, in
the aggregate, exceed $1,500,000 for such period less (c) interest
income and any extraordinary gains.  For
purposes of this Agreement, Consolidated EBITDA shall be adjusted, in a manner
reasonably acceptable to the Administrative Agent, on a pro  forma
basis to include, as of the first day of any applicable period, any Permitted
Acquisitions and any Asset Dispositions closed during such period, including,
without limitation, adjustments reflecting any non-recurring costs and any
extraordinary expenses of any Permitted Acquisitions and any Asset Dispositions
closed during such period calculated on a basis consistent with GAAP and
Regulation S-X of the Securities Exchange Act of 1934, as amended, or as
approved by the Administrative Agent.

“Consolidated Fixed Charges” means, for any
period, the sum of the following determined on a Consolidated basis for such
period, without duplication, for the Borrower and its Subsidiaries in
accordance with GAAP: (a) Consolidated Interest Expense and (b) scheduled
principal payments with respect to long term Indebtedness (which, for the
avoidance of doubt, shall not include mandatory principal payments pursuant to Section
4.4(b)).

“Consolidated Fixed Charge Ratio” means, for
any period, the ratio of (a) Adjusted Consolidated EBITDA to (b) Consolidated
Fixed Charges for such period.

“Consolidated Funded Indebtedness” means, as to
any Person, all Indebtedness of such Person that matures more than one year
from the date of its creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more than

 6
 

 

one year from such date
or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date, including all current maturities and current sinking fund payments
in respect of such Indebtedness whether or not required to be paid within one
year from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans and Letters of Credit.

“Consolidated Interest Expense” means, with
respect to the Borrower and its Subsidiaries for any period, the gross interest
expense (including, without limitation, interest expense attributable to
Capital Leases, Synthetic Leases and all net payment obligations pursuant to
Hedging Agreements) of the Borrower and its Subsidiaries, all determined for
such period on a Consolidated basis, without duplication, in accordance with
GAAP; provided, however, that Consolidated Interest Expense shall
not include the costs associated with refinancing Indebtedness under the
Existing Facility (as defined in the Existing Credit Agreement) pursuant to the
Existing Credit Agreement.

“Consolidated Leverage Ratio” means, as of any
date of determination, the ratio of (a) Consolidated Funded Indebtedness on
such date to (b) Consolidated EBITDA for the period
of four (4) consecutive fiscal quarters ending on or immediately prior to such
date; provided that for purposes of computing the Consolidated Leverage
Ratio, Consolidated Funded Indebtedness shall not include the letters of credit
listed on Schedule 7.1(u) to the extent that they are cash secured.

“Consolidated Net Income” means, with respect
to the Borrower and its Subsidiaries, for any period of determination, the net
income (or loss) of the Borrower and its Subsidiaries for such period,
determined on a Consolidated basis in accordance with GAAP; provided
that there shall be excluded from Consolidated Net Income (a) the net income
(or loss) of any Person (other than a Subsidiary which shall be subject to
clause (c) below), in which the Borrower or any of its Subsidiaries has a joint
interest with a third party, except to the extent such net income is actually
paid in cash to the Borrower or any of its Subsidiaries by dividend or other
distribution during such period, (b) the net income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary of such Person or is merged
into or consolidated with such Person or any of its Subsidiaries or that Person’s
assets are acquired by such Person or any of its Subsidiaries except to the
extent included pursuant to the foregoing clause (a), and (c) the net income
(if positive) of any Subsidiary to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary to the Borrower or any
of its Subsidiaries of such net income (i) is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute rule or governmental regulation applicable to such
Subsidiary or (ii) would be subject to any taxes payable on such dividends or
distributions.

“Consolidated Net Worth” means, at any date, all
amounts that would, in conformity with GAAP, be included on a consolidated
balance sheet of the Borrower and its Subsidiaries under stockholders’ equity
on such date; provided that the cash securing any letter of credit
listed on Schedule 7.1(u) shall be excluded from the computation of
Consolidated Net Worth.

“Credit Facility” means, collectively, the
Revolving Credit Facility, the Term Loan Facility and the L/C Facility.

 7
 

 

“Credit Parties” means, collectively, the
Borrower and each Subsidiary of the Borrower (including FastChannel and its
Subsidiaries, but excluding DG III).

“Debt Issuance” shall mean the issuance of any
Indebtedness for borrowed money by the Borrower or any of its Subsidiaries,
excluding any Equity Issuance or any Indebtedness of the Borrower and its
Subsidiaries permitted to be incurred pursuant to Section 11.1.

“Default” means any of the events specified in Section
12.1 which with the passage of time, the giving of notice or any other
condition, would constitute an Event of Default.

“Defaulting Lender” means any Lender that (a)
has failed to fund any portion of the Revolving Credit Loans, the Term Loan, or
participations in L/C Obligations to be funded by it hereunder within one
Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of
the date when due, unless such amount is the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

“DG III” means DG Systems Acquisition III
Corporation, a Delaware corporation.

“DG IV” means DG Acquisition Corp. IV, a
Delaware corporation.

“DG III Guaranty” means the Guaranty Agreement
substantially in the form of Exhibit N
made by DG III in favor of the Administrative Agent, as amended, restated,
supplemented or otherwise modified from time to time.

“Dollars” or “$” means, unless otherwise
qualified, dollars in lawful currency of the United States.

“Domestic Subsidiary” means any Subsidiary organized
under the laws of any political subdivision of the United States.

“Eligible Assignee” means
(a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any
other Person (other than a natural person) approved by (i) the Administrative
Agent, (ii) in the case of any assignment of a Revolving Credit Commitment, the
Issuing Lender, and (iii) unless a Default or Event of Default has occurred and
is continuing, the Borrower (each such approval not to be unreasonably withheld
or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.

“Employee Benefit Plan” means any employee
benefit plan within the meaning of Section 3(3) of ERISA which (a) is
maintained for employees of any Credit Party, DG III, or any ERISA Affiliate or
(b) has at any time within the preceding six (6) years been maintained for the
employees of any Credit Party, DG III or any current or former ERISA Affiliate.

“Environmental Claims” means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, accusations, allegations, notices of noncompliance or violation,
investigations (other than internal reports prepared by any Person in the
ordinary

 8
 

 

course of business and
not in response to any third party action or request of any kind) or
proceedings relating in any way to any actual or alleged violation of or
liability under any Environmental Law or relating to any permit issued, or any
approval given, under any such Environmental Law, including, without
limitation, any and all claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, contribution,
indemnification cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to human
health or the environment.

“Environmental Laws” means any and all federal,
foreign, state, provincial and local laws, statutes, ordinances, codes, rules,
standards and regulations, permits, licenses, approvals, interpretations and
orders of courts or Governmental Authorities, relating to the protection of
human health or the environment, including, but not limited to, requirements
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of Hazardous Materials.

“Equity Issuance” means any issuance by the
Borrower or any Subsidiary to any Person which is not a Credit Party or a
Subsidiary of a Credit Party of (a) shares of its Capital Stock, (b) any shares
of its Capital Stock pursuant to the exercise of options or warrants or (c) any
shares of its Capital Stock pursuant to the conversion of any debt securities
to equity.  The term “Equity Issuance”
shall not include any Asset Disposition or Debt Issuance.

“ERISA” means the Employee Retirement Income
Security Act of 1974, and the rules and regulations thereunder, each as amended
or modified from time to time.

“ERISA Affiliate” means any Person who together
with any Credit Party or DG III is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.

“Eurodollar Reserve Percentage” means, for any
day, the percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
basic, supplemental or emergency reserves) in respect of eurocurrency
liabilities or any similar category of liabilities for a member bank of the
Federal Reserve System in New York City.

“Event of Default” means any of the events
specified in Section 12.1; provided that any requirement for
passage of time, giving of notice, or any other condition, has been satisfied.

“Excess Cash Flow” means, for any period of
determination, the sum of the following determined on a Consolidated basis,
without duplication, for the Borrower and its Subsidiaries in accordance with
GAAP and based on the most recent audited financial statements of the Borrower
and its Subsidiaries delivered pursuant to Section 8.1(b): (a)
Consolidated EBITDA for such period minus (b) the sum of the following:
(i) cash taxes and Consolidated Interest Expense paid in cash for such period,
(ii) all scheduled principal payments made in respect of Indebtedness during
such period and (iii) all Capital Expenditures made during such period.

 9
 

 

“Excess Cash Flow Certificate” means an Excess
Cash Flow Certificate duly executed and properly completed by a Responsible
Officer substantially in the form of Exhibit J.

“Excluded Taxes” means,
with respect to the Administrative Agent, any Lender, the Issuing Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) taxes imposed on or measured by its overall net
income (however denominated), and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable Lending
Office is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 5.12(b)), any withholding tax
that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party hereto (or designates a new Lending Office) or
is attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section 5.11(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 5.11(a).

“Existing Credit Agreement” means the Credit
Agreement dated as of February 10, 2006 by and among the Borrower, the lenders
party thereto from time to time and Wachovia, as administrative agent and
issuing lender.

“Extensions of Credit” means, as to any Lender
at any time, (a) an amount equal to the sum of (i) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding, (ii)
such Lender’s Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding and (iii) the aggregate principal amount of the Term Loan made
by such Lender then outstanding or (b) the making of any Loan or participation
in any Letter of Credit by such Lender, as the context requires.

“Extraordinary Receipts” means proceeds from
the disposition (including but not limited to any sale, lease, assignment,
conveyance, or transfer) of any assets of the Borrower or any of its
Subsidiaries which are received by or on behalf of such Person not in the
ordinary course of business (and not consisting of proceeds of an Equity
Issuance, Asset Disposition or Insurance and Condemnation Event) including,
without limitation, (a) foreign, United States, state or local tax refunds, (b)
pension plan reversions, (c) judgments, proceeds of settlements or other
consideration of any kind in connection with any claim or cause of action, (d)
indemnity payments, and (e) purchase price received in connection with any
asset purchase and sale agreement.

“Facility” means the Revolving Credit Facility and
the Term Loan Facility.

“FastChannel” means FastChannel Network, Inc.,
a Delaware corporation.

“FastChannel Acquisition” means the acquisition
by DG IV of the equity interests of FastChannel pursuant to the Acquisition
Agreement.

 10

 

“FDIC” means the Federal Deposit Insurance Corporation
or any successor thereto.

“Federal Funds Rate” means, the rate per annum
(rounded upwards, if necessary, to the next higher 1/100th of 1%) representing
the daily effective federal funds rate as quoted by the Administrative Agent
and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any
successor or substitute publication selected by the Administrative Agent.  If, for any reason, such rate is not
available, then “Federal Funds Rate” means a daily rate which is determined, in
the opinion of the Administrative Agent, to be the rate at which federal funds
are being offered for sale in the national federal funds market at 9:00 a.m.  Rates for weekends or holidays shall be the
same as the rate for the most immediately preceding Business Day.

“Fee Letter” means the separate fee letter
agreement executed by the Borrower and the Administrative Agent and/or certain
of its affiliates dated as of January 19, 2006.

“fiscal quarter” means any of the four quarters
of each Fiscal Year.

“Fiscal Year” means the fiscal year of the
Borrower and its Subsidiaries ending on December 31st.

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

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

“GAAP” means generally accepted accounting
principles, as recognized by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, consistently applied
and maintained on a consistent basis for the Borrower and its Subsidiaries
throughout the period indicated and (subject to Section 14.9) consistent
with the prior financial practice of the Borrower and its Subsidiaries.

“Governmental Approvals” means all
authorizations, consents, approvals, permits, licenses and exemptions of,
registrations and filings with, and reports to, all Governmental Authorities.

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

“Guarantee and Collateral Agreement” means the Amended
and Restated Guarantee and Collateral Agreement in substantially the form of Exhibit H, executed by the Credit
Parties in favor of the Administrative Agent for the benefit of itself and the other
Secured Parties, as amended, restated, supplemented or otherwise modified from
time to time.

 11
 

 

“Guaranty Obligation” means, with respect to any
Person, without duplication, any obligation, contingent or otherwise, of such
Person pursuant to which such Person has directly or indirectly guaranteed any Indebtedness,
leases, dividends or other obligations (the “primary obligations”) of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of any such Person
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) any such primary obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in
any other manner the obligee of any such primary obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, that the term Guaranty Obligation shall not include
endorsements for collection or deposit in the ordinary course of business.

“Hazardous Materials” means any substances or
materials (a) which are or become defined as hazardous wastes, hazardous
substances, pollutants, contaminants, chemical substances or mixtures or toxic
substances under any Environmental Law, (b) which are toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
harmful to human health or the environment and are or become regulated by any
Governmental Authority, (c) the presence of which require investigation or
remediation under any Environmental Law or common law, (d) the discharge or
emission or release of which requires a permit or license under any
Environmental Law or other Governmental Approval, (e) which are deemed to
constitute a nuisance or a trespass which pose a health or safety hazard to
Persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.

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

“Hedging Agreement” means (a) any agreement (including
terms and conditions incorporated by reference therein) which is a rate swap
agreement, basis swap, forward rate agreement, commodity swap, interest rate
option, forward foreign exchange agreement, spot foreign exchange agreement,
rate cap agreement, rate floor agreement, rate collar agreement, currency swap
agreement, cross-currency rate swap agreement, currency option, any other
similar agreement or arrangement (including any option to enter into any of the
foregoing) designed to alter the risks of any Person arising from fluctuations
in interest rates, currency values or commodity prices, (b) any combination of
the foregoing, and (c) a master agreement for any of the foregoing together
with all supplements, all as amended, restated, supplemented or otherwise
modified from time to time.

“Hedging Obligations” means all existing or
future payment and other obligations, including obligations arising from early
termination, of the Borrower arising under or in connection with any Hedging
Agreement (which such Hedging Agreement is permitted under Section 11.1(b))
with any Hedge Lender.

 12
 

 

“Highest Lawful Rate” means, with respect to
the Administrative Agent, the Issuing Lender or any Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations under
laws applicable to such Administrative Agent, Issuing Lender or Lender which
are currently in effect or, to the extent allowed by Applicable Law, under such
Applicable Laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than Applicable Laws now allow.  On each day, if any, that Texas law
establishes the Highest Lawful Rate, the Highest Lawful Rate shall be the “weekly
ceiling” (as defined in Section 303 of the Texas Finance Code) for that day.

“Indebtedness” means, with respect to the
Borrower and its Subsidiaries, without duplication, the sum of the following
calculated in accordance with GAAP:

(a)           all liabilities, obligations and
indebtedness for borrowed money of such Person including, but not limited to,
obligations evidenced by bonds, debentures, notes or other similar instruments
of such Person;

(b)           all obligations for the deferred
purchase price of property or services of any such Person (including, without
limitation, all obligations under non-competition, earn-out or similar
agreements), except trade payables arising in the ordinary course of business
not more than ninety (90) days past due;

(c)           the Attributable Indebtedness of such
Person with respect to such Person’s obligations in respect of Capital Leases
and Synthetic Leases (regardless of whether accounted for as indebtedness under
GAAP);

(d)           all indebtedness created under or
arising under any conditional sale or other title retention agreement with
respect to property acquired, whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;

(e)           all Guaranty Obligations of such
Person;

(f)            all obligations, contingent or
otherwise, of such Person relative to the face amount of letters of credit,
whether or not drawn, including, without limitation, any Reimbursement
Obligation, and banker’s acceptances issued for the account of such Person;

(g)           all obligations of such Person to
redeem, repurchase, exchange, defease or otherwise make payments in respect of
Capital Stock of such Person; and

(h)           all Net Hedging Obligations.

For all purposes hereof, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person.

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

 13
 

 

“Insurance and Condemnation Event” means the
receipt by the Borrower or any of its Subsidiaries of any cash insurance
proceeds or condemnation award payable by reason of theft, loss, physical
destruction or damage, taking or similar event with respect to any of their
respective property or assets.

“Intellectual Property Security Agreement” has
the meaning specified in the Guarantee and Collateral Agreement.

“Interest Period” has the meaning assigned
thereto in Section 5.1(b).

“Investment” has the meaning assigned thereto
in Section 11.3.

“IP Security Agreement Supplement” has the
meaning specified in the Guarantee and Collateral Agreement.

“ISP98” means the International Standby
Practices (1998 Revision, effective January 1, 1999), International Chamber of
Commerce Publication No. 590.

“Issuing Lender” means Wachovia, in its
capacity as issuer of any Letter of Credit, or any successor thereto.

“L/C Commitment” means the lesser of (a) Two
Million-Five Hundred Thousand and No/100 Dollars ($2,500,000) and (b) the
Revolving Credit Commitment.

“L/C Facility” means the letter of credit
facility established pursuant to Article III.

“L/C Obligations” means at any time, an amount
equal to the sum of (a) the aggregate undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to Section
3.5.

“L/C Participants” means the collective
reference to all the Lenders other than the Issuing Lender.

“Lender” means each Person executing this
Agreement as a Lender (including, without limitation, the Issuing Lender unless
the context otherwise requires) set forth on the signature pages hereto and
each Person that hereafter becomes a party to this Agreement as a Lender
pursuant to Section 14.10.

“Lending Office” means, with respect to any
Lender, the office of such Lender maintaining such Lender’s Extensions of
Credit.

“Letter of Credit Application” means an
application, in the form specified by the Issuing Lender from time to time,
requesting the Issuing Lender to issue a Letter of Credit.

“Letters of Credit” has the meaning assigned
thereto in Section 3.1.

 14
 

 

“LIBOR” means the rate of interest per annum determined
on the basis of the rate for deposits in Dollars for a period equal to the
applicable Interest Period which appears on the Telerate Page 3750 at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable Interest Period (rounded upward, if necessary, to the
nearest 1/100th of 1%). 
If, for any reason, such rate does not appear on Telerate Page 3750,
then “LIBOR” shall be determined by the Administrative Agent to be the
arithmetic average of the rate per annum at which deposits in Dollars would be
offered by first class banks in the London interbank market to the Administrative
Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to
the first day of the applicable Interest Period for a period equal to such
Interest Period.  Each calculation by the
Administrative Agent of LIBOR shall be conclusive and binding for all purposes,
absent manifest error.

“LIBOR Rate” means a rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1%) determined by the
Administrative Agent pursuant to the following formula:

LIBOR Rate =                     
LIBOR    
           

1.00-Eurodollar
Reserve Percentage

“LIBOR Rate Loan” means any Loan bearing
interest at a rate based upon the LIBOR Rate as provided in Section 5.1(a).

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

“Loan Documents” means, collectively, this
Agreement, each Note, the Letter of Credit Applications, the Security Documents,
the DG III Guaranty (as defined in the Existing Credit Agreement), the DG III Guaranty
and each other document, instrument, certificate, consent, ratification and
agreement executed and delivered by the Borrower or any Subsidiary in
connection with this Agreement or otherwise referred to herein or contemplated
hereby (excluding any Hedging Agreement and any agreement, arrangement,
document or other instrument pertaining to Banking Services), all as may be
amended, restated, supplemented or otherwise modified from time to time.

“Loans” means the collective reference to the
Revolving Credit Loans and the Term Loans and “Loan” means any of such Loans.

“Material Adverse Effect” means, with respect
to the Borrower or any of its Subsidiaries, a material adverse effect on (a) the
Acquisition, (b) the properties, business, prospects, operations or condition
(financial or otherwise) of any such Person, (c) the ability of any such Person
to perform its obligations under the Loan Documents to which it is a party or (d)
the rights and remedies of the Administrative Agent or the Lenders under the
Loan Documents.

“Material Contract” means (a) any Acquisition
Document, (b) any contract or other agreement, written or oral, of the Borrower
or any of its Subsidiaries involving monetary liability

 15
 

 

of or to any such Person
in an amount in excess of $500,000 per annum, or (c) any other contract or
agreement, written or oral, of the Borrower or any of its Subsidiaries the
failure to comply with which could reasonably be expected to have a Material
Adverse Effect.

“MDVX” means MDVX, Inc., a Delaware
corporation.

“MDVX Consent” has the meaning specified in
Section 6.2(d)(i).

“MDVX Indebtedness” means all obligations of DG
III to MDVX pursuant to the MDVX Loan Documents.

“MDVX Loan Agreement” means the Loan Agreement
dated as of April 15, 2005 between DG III and MDVX.

“MDVX Loan Documents” means the MDVX Loan
Agreement, the MDVX Note and the MDVX Security Agreement.

“MDVX Note” means the Promissory Note dated
April 15, 2005 made by DG III to MDVX in the original principal amount of
$6,500,000.

“MDVX Security Agreement” means the Pledge and
Security Agreement dated April 15, 2005 by and among DG III, the Borrower and
MDVX.

“Merger” has the meaning specified in the
Acquisition Agreement.

“Mortgages” means the collective reference to
each mortgage, deed of trust or other real property security document,
encumbering all real property now or hereafter owned or leased by the Borrower
or any other Credit Party, in each case, in form and substance reasonably
satisfactory to the Administrative Agent and executed by the Borrower or such
Credit Party in favor of the Administrative Agent, for the benefit of itself
and the Secured Parties, as any such document may be amended, restated,
supplemented or otherwise modified from time to time.

“Multiemployer Plan” means a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any
ERISA Affiliate is making, or is accruing an obligation to make, or has accrued
an obligation to make contributions within the preceding six (6) years.

“Net Cash Proceeds” means, as applicable, (a)
with respect to any Asset Disposition by any Credit Party, the gross cash
proceeds received by the Borrower or any of its Subsidiaries from such sale less
the sum of (i) all income taxes and other taxes assessed by a Governmental
Authority as a result of such sale and any other fees and expenses incurred in
connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Indebtedness secured by a Lien on the asset (or a portion
thereof) sold, which Indebtedness is required to be repaid in connection with
such sale, (b) with respect to any Equity Issuance or issuance of Indebtedness,
the gross cash proceeds received by the Borrower or any of its Subsidiaries
therefrom less all legal, underwriting and other fees and expenses
incurred in connection therewith, (c) with respect to any payment under an
insurance policy or in connection with a condemnation proceeding, the gross
cash proceeds received by the Borrower or its Subsidiaries from an insurance
company or Governmental Authority, as applicable, less the sum of (i)
all fees

 16
 

 

and expenses in
connection therewith and (ii) the principal amount of, premium, if any, and
interest on any Indebtedness secured by a Lien on the asset (or a portion
thereof) subject to such loss or condemnation proceeding, which Indebtedness is
required to be repaid in connection with such loss or condemnation proceeding
and (d) with respect to Extraordinary Receipts, the gross cash proceeds
received by the Borrower or its Subsidiaries therefrom less all fees and
expenses in connection therewith.

“Net Hedging Obligations” means, as of any
date, the Termination Value of any such Hedging Agreement on such date.

“Notes” means the collective reference to the
Revolving Credit Notes and the Term Notes.

“Notice of Account Designation” has the meaning
assigned thereto in Section 2.2(b).

“Notice of Borrowing” has the meaning assigned
thereto in Section 2.2(a).

“Notice of Conversion/Continuation” has the
meaning assigned thereto in Section 5.2.

“Notice of Prepayment” has the meaning assigned
thereto in Section 2.3(c).

“Obligations” means, in each case, whether now
in existence or hereafter arising: (a) the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Credit Party, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans, (b) the L/C Obligations, (c)
all Hedging Obligations, (d) all Banking Services Obligations and (e) all other
fees and commissions (including attorneys’ fees), charges, indebtedness, loans,
liabilities, financial accommodations, obligations, covenants and duties owing
by the Borrower or any of its Subsidiaries to the Lenders or the Administrative
Agent, in each case under any Loan Document or otherwise, with respect to any
Loan or Letter of Credit of every kind, nature and description, direct or
indirect, absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by any note.

“OFAC” means the U.S. Department of the
Treasury’s Office of Foreign Assets Control.

“Officer’s Compliance Certificate” means a
certificate of the chief financial officer or the treasurer of the Borrower
substantially in the form of Exhibit F.

“Operating Lease” means, as to any Person as
determined in accordance with GAAP, any lease of property (whether real,
personal or mixed) by such Person as lessee which is not a Capital Lease.

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

 17
 

 

“Participant” has the
meaning assigned thereto in Section 14.10(d).

“PBGC” means the Pension Benefit Guaranty
Corporation or any successor agency.

“Pension Plan” means any Employee Benefit Plan,
other than a Multiemployer Plan, which is subject to the provisions of Title IV
of ERISA or Section 412 of the Code and which (a) is maintained for the
employees of the Borrower or any ERISA Affiliates or (b) has at any time within
the preceding six (6) years been maintained for the employees of the Borrower
or any of its current or former ERISA Affiliates.

“Permitted Acquisition” means any investment by
the Borrower or any other Credit Party in the form of acquisitions of all or
substantially all of the business or a line of business (whether by the
acquisition of Capital Stock, assets or any combination thereof) of any other
Person if each such acquisition meets all of the following requirements:

(a)           no less than fifteen (15) Business
Days prior to the proposed closing date of such acquisition, the Borrower shall
have delivered written notice of such acquisition to the Administrative Agent
and the Lenders, which notice shall include the proposed closing date of such
acquisition;

(b)           the Borrower shall have certified
on or before the closing date of such acquisition, in writing and in a form reasonably acceptable to the Administrative
Agent, that such acquisition has
been approved by the board of directors or equivalent governing body of the
Person to be acquired;

(c)           the Person or business to be acquired
shall be in a substantially similar line of business as the Borrower and its
Subsidiaries;

(d)           if such transaction is a merger or
consolidation, the Borrower or such Credit Party shall be the surviving Person
and no Change of Control shall have been effected thereby;

(e)           the Borrower shall have delivered to
the Administrative Agent such documents reasonably requested by the
Administrative Agent or the Required Lenders (through the Administrative Agent)
pursuant to Section 9.11 to be delivered at the time required pursuant
to Section 9.11;

(f)            no later than five (5) Business Days
prior to the proposed closing date of such acquisition, the Borrower shall have
delivered to the Administrative Agent and the Lenders an Officer’s Compliance
Certificate for the most recent fiscal quarter end preceding such acquisition
demonstrating, in form and substance reasonably satisfactory thereto, (A) pro
forma compliance (as of the date of the acquisition and after giving effect
thereto and any Extensions of Credit made or to be made in connection
therewith) with each covenant contained in Article X and (B) a pro forma
Consolidated Leverage Ratio (as of the proposed closing date of the acquisition
and after giving effect thereto and any Extensions of Credit made or to be made
in connection therewith) at least 0.25 below the applicable ratio set forth in Section
10.1;

(g)           no later than five (5) Business Days
prior to the proposed closing date of such acquisition, the Borrower, to the
extent requested by the Administrative Agent, (A) shall have

 18
 

 

delivered to the Administrative Agent promptly upon
the finalization thereof copies of substantially final Permitted Acquisition
Documents, which shall be in form and substance reasonably satisfactory to the
Administrative Agent, and (B) shall have delivered to, or made available
for inspection by, the Administrative Agent substantially complete Permitted
Acquisition Diligence Information, which shall be in form and substance
reasonably satisfactory to the Administrative Agent;

(h)           no Event of Default or Default shall
have occurred and be continuing both before and after giving effect to such
acquisition;

(i)            the Borrower shall have obtained the
prior written consent of the Administrative Agent and the Required Lenders
prior to the consummation of such acquisition if (A) the Permitted Acquisition
Consideration for any such acquisition (or series of related acquisitions),
together with all other acquisitions consummated during the previous twelve
(12) month period, and (B) the Permitted Acquisition Consideration for all
acquisitions (or series of related acquisitions), together with all other
acquisitions consummated during the term of this Agreement exceeds $5,000,000 in
the aggregate;

(j)            the
Borrower shall demonstrate, in form and substance reasonably satisfactory to
the Administrative Agent, that the entity to be acquired had positive Consolidated
EBITDA for the four (4) fiscal quarter period ended prior to the proposed
closing date of such acquisition; and

(k)           the
Borrower shall provide such other documents and other information as may be
reasonably requested by the Administrative Agent or the Required Lenders
(through the Administrative Agent) in connection with the acquisition.

“Permitted Acquisition Consideration” means the
aggregate amount of the purchase price (including, but not limited to, any
assumed debt, earn-outs (valued at the maximum amount payable thereunder),
deferred payments, or Capital Stock of the Borrower, net of the applicable
acquired company’s cash balance as shown on its most recent financial
statements delivered in connection with the applicable Permitted Acquisition)
to be paid on a singular basis in connection with any applicable Permitted
Acquisition as set forth in the applicable Permitted Acquisition Documents
executed by the Borrower or any of its Subsidiaries in order to consummate the
applicable Permitted Acquisition.

“Permitted Acquisition Diligence Information”
means with respect to any acquisition proposed by the Borrower or any other
Credit Party, to the extent applicable, all material financial information, all
material contracts, all material customer lists, all material supply
agreements, and all other material information, in each case, reasonably
requested to be delivered to the Administrative Agent in connection with such
acquisition (except to the extent that any such information is (a) subject to
any confidentiality agreement, unless mutually agreeable arrangements can be
made to preserve such information as confidential, (b) classified or (c) subject
to any attorney-client privilege).

“Permitted Acquisition Documents” means with
respect to any acquisition proposed by the Borrower or any other Credit Party,
final copies or substantially final drafts if not executed at the required time
of delivery of the purchase agreement, sale agreement, merger agreement or

 19
 

 

other agreement
evidencing such acquisition, including, without limitation, all legal opinions
and each other document executed, delivered, contemplated by or prepared in
connection therewith and any amendment, modification or supplement to any of
the foregoing.

“Permitted Liens” means the Liens permitted
pursuant to Section 11.2.

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

“Prime Rate” means, at any time, the rate of
interest per annum publicly announced from time to time by Wachovia as its
prime rate.  Each change in the Prime
Rate shall be effective as of the opening of business on the day such change in
such prime rate occurs.  The parties
hereto acknowledge that the rate announced publicly by Wachovia as its prime
rate is an index or base rate and shall not necessarily be its lowest or best
rate charged to its customers or other banks.

“Register” has the meaning assigned thereto in Section
14.10(c).

“Reimbursement Obligation” means the obligation
of the Borrower to reimburse the Issuing Lender pursuant to Section 3.5
for amounts drawn under Letters of Credit.

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

“Required Facility Lenders”
means, at any date, with respect to any Facility, any combination of
Lenders whose Commitments under such Facility aggregate more than fifty percent
(50%) of the Aggregate Commitments under such Facility or, if the Commitments under
such Facility have been terminated pursuant to Section 12.2, any combination
of Lenders holding more than fifty percent (50%) of the aggregate Extensions of
Credit under such Facility; provided that the Commitment of, and the
portion of the Extensions of Credit, as applicable, held or deemed held by, any
Defaulting Lender under such Facility shall be excluded for purposes of making
a determination of Required Facility Lenders; provided further that if
at any time there are fewer than three (3) Lenders under any Facility, “Required
Facility Lenders” shall mean all of the Lenders under such Facility.

“Required Lenders” means, at any date, any
combination of Lenders whose Commitments aggregate more than fifty percent
(50%) of the Aggregate Commitment or, if the Commitments have been terminated
pursuant to Section 12.2, any combination of Lenders holding more than
fifty percent (50%) of the aggregate Extensions of Credit; provided that
the Commitment of, and the portion of the Extensions of Credit, as applicable,
held or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders; provided further that if at
any time there are fewer than three (3) Lenders party to this Agreement, “Required
Lenders” shall mean all of the Lenders.

“Responsible Officer” means, with respect to the
Borrower and its Subsidiaries, the chief executive officer, president, chief
financial officer, controller, treasurer or assistant treasurer of such Person
or any other officer of such Person reasonably acceptable to the Administrative
Agent.  Any document delivered hereunder
that is signed by a Responsible Officer of the Borrower or any Subsidiary shall
be conclusively presumed to have been authorized by all

 20
 

 

necessary corporate,
partnership and/or other action on the part of such Person and such Responsible
Officer shall be conclusively presumed to have acted on behalf of such Person.

“Revolving Credit Commitment” means (a) as to
any Revolving Credit Lender, the obligation of such Revolving Credit Lender to issue
or participate in Letters of Credit and make Revolving Credit Loans to the
account of the Borrower hereunder in an aggregate principal amount at any time
outstanding not to exceed the amount set forth opposite such Revolving Credit Lender’s
name on Schedule 1.1 or in the Assignment and Assumption pursuant to
which such Revolving Credit Lender became a party hereto, as such amounts may
be reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Revolving Credit Lenders, the aggregate commitment of
all Revolving Credit Lenders to make Revolving Credit Loans and issue or participate
in Letters of Credit, as such amounts may be reduced at any time or from time
to time pursuant to the terms hereof. 
The Revolving Credit Commitment of all Revolving Credit Lenders on the
Closing Date shall be $15,000,000.00.

“Revolving Credit Commitment Percentage” means,
as to any Revolving Lender at any time, the ratio of (a) the amount of the
Revolving Credit Commitment of such Revolving Credit Lender to (b) the
Revolving Credit Commitments of all Revolving Credit Lenders.

“Revolving Credit Facility” means the revolving
credit facility established pursuant to Article II.

“Revolving Credit Lenders” means Lenders with a
Revolving Credit Commitment.

“Revolving Credit Loans” means any revolving
loan made to the Borrower pursuant to Section 2.1, and all such
revolving loans collectively as the context requires.

“Revolving Credit Maturity Date” means the
earliest to occur of (a) May 31, 2009, (b) the date of termination by the
Borrower pursuant to Section 2.4, or (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a).

“Revolving Credit Note” means a promissory note
made by the Borrower in favor of a Lender evidencing the Revolving Credit Loans
made by such Lender, substantially in the form of Exhibit
A-1, and any amendments, supplements and modifications thereto,
any substitutes therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part.

“Sanctioned Entity” means (i) an agency of the
government of, (ii) an organization directly or indirectly controlled by, or
(iii) a person resident in a country that is subject to a sanctions program
identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html,
or as otherwise published from time to time as such program may be applicable
to such agency, organization or person.

“Sanctioned Person” means a person named on the
list of Specially Designated Nationals or Blocked Persons maintained by OFAC
available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html,
or as otherwise published from time to time.

“Secured Parties” has the meaning assigned
thereto in the Guarantee and Collateral Agreement.

 21

 

“Security Documents” means the collective
reference to the Guarantee and Collateral Agreement, the Intellectual Property
Security Agreement, each IP Security Agreement Supplement, any Mortgage and
each other agreement or writing pursuant to which any Credit Party purports to
pledge or grant a security interest in any property or assets securing the
Obligations or any such Person purports to guarantee the payment and/or
performance of the Obligations, in each case, as amended, restated,
supplemented or otherwise modified from time to time.

“Solvent” means, as to the Borrower and its
Subsidiaries on a particular date, that any such Person (a) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as
they mature, (b) has assets having a value, both at fair valuation and at
present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that
it will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.

“Subordinated Indebtedness” means the
collective reference to any Indebtedness of the Borrower or any Subsidiary that
(a) is subordinated in right and time of payment to the Obligations on such
terms and conditions as are satisfactory to the Required Lenders and (b) contains
such other terms and conditions as are satisfactory to the Required Lenders.

“Subsidiary” means as to any Person, any corporation,
partnership, limited liability company or other entity of which more than fifty
percent (50%) of the outstanding Capital Stock having ordinary voting power to
elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity is at the
time owned by or the management is otherwise controlled by such Person
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such corporation, partnership, limited liability company or other
entity shall have or might have voting power by reason of the happening of any
contingency).  Unless otherwise qualified
references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the
Borrower.

“Synthetic Lease” means any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease in accordance
with GAAP.

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

“Term Loan” means the term loan to be made to
the Borrower by the Lenders pursuant to Section 4.1.

“Term Loan Commitment” means (a) as to any
Lender, the obligation of such Lender to make a portion of the Term Loan to the
account of the Borrower hereunder on the Closing Date in an aggregate principal
amount not to exceed the amount set forth opposite such Lender’s name on Schedule 1.1
or in the Assignment and Assumption pursuant to which such Lender became a

 22
 

 

party hereto, as such
amount may be reduced or otherwise modified at any time or from time to time
pursuant to the terms hereof and (b) as to all Lenders, the aggregate
commitment of all Lenders to make the Term Loan hereunder on the Closing
Date.  The Term Loan Commitment of all
Lenders on the Closing Date shall be $20,000,000.

“Term Loan Commitment Percentage” means, as to
any Lender, (a) prior to making the Term Loan, the ratio of (i) the Term Loan
Commitment of such Lender to (ii) the Term Loan Commitments of all Lenders and
(b) after the Term Loan is made, the ratio of (i) the outstanding principal
balance of the Term Loan held by such Lender to (ii) the aggregate outstanding
principal balance of the Term Loan held by all Lenders.

“Term Loan Facility” means the term loan
facility established pursuant to Article IV.

“Term Loan Maturity Date” means the first to
occur of (a) June 30, 2011, or (b) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a).

“Term Note” means a promissory note made by the
Borrower in favor of a Lender evidencing the portion of the Term Loan made by
such Lender, substantially in the form of Exhibit A-2,
and any amendments, supplements and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part.

“Termination Event” means except for any such
event or condition that could not reasonably be expected to have a Material
Adverse Effect: (a) a “Reportable Event” described in Section 4043 of
ERISA for which the notice requirement has not been waived by the PBGC, or
(b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the
filing of a notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination, under Section 4041 of ERISA, if the
plan assets are not sufficient to pay all plan liabilities, or (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC, or (e) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan, or (f) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA, or (g) the partial or complete withdrawal of the
Borrower of any ERISA Affiliate from a Multiemployer Plan if withdrawal
liability is asserted by such plan, or (h) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.

“Termination Value” means, in respect of any
one or more Hedging Agreements, after taking into account the effect of any
legally enforceable netting agreement relating to such Hedging Agreements, (a)
for any date on or after the date such Hedging Agreements have been closed out
and termination value(s) determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Hedging Agreements, as
determined based upon one or

 23
 

 

more mid-market or other
readily available quotations provided by any recognized dealer in such Hedging
Agreements (which may include a Lender or any Affiliate of a Lender).

“Transaction Costs” means all transaction fees,
charges and other amounts related to this Credit Facility or any Permitted
Acquisitions (including, without limitation, any financing fees, merger and
acquisition fees, legal fees and expenses, due diligence fees or any other fees
and expenses in connection therewith), all such transaction fees as approved by
the Administrative Agent.

“Type” means, as to any Loan, its nature as a
Base Rate Loan or a LIBOR Rate Loan.

“UCC” means the Uniform Commercial Code as in
effect in the State of Texas, as amended or modified from time to time.

“Uniform Customs” means the Uniform Customs and
Practice for Documentary Credits (1993 Revision), effective January, 1994
International Chamber of Commerce Publication No. 500.

“United States” means the United States of
America.

“Wachovia” means Wachovia Bank, National
Association, a national banking association, and its successors.

“Wholly-Owned” means, with respect to a
Subsidiary, that all of the shares of Capital Stock of such Subsidiary are,
directly or indirectly, owned or controlled by the Borrower and/or one or more
of its Wholly-Owned Subsidiaries (except for directors’ qualifying shares or
other shares required by Applicable Law to be owned by a Person other than the
Borrower).

SECTION 1.2                   Other
Definitions and Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:  (a) the definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined, (b) whenever the context
may require, any pronoun shall include the corresponding masculine, feminine
and neuter forms, (c) the words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”, (d) the word “will” shall be construed to have the
same meaning and effect as the word “shall”, (e) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, restated,
supplemented or otherwise modified (subject to any restrictions on such amendments,
restatements, supplements or modifications set forth herein), (f) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (g) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (h) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement, (i) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (j) the term “documents”
includes any and all instruments, documents, agreements, certificates, notices,
reports, financial statements and other writings, however evidenced, whether in
physical or

 24
 

 

electronic form, (k) in the computation of periods of
time from a specified date to a later specified date, the word “from” means “from
and including;” the words “to” and “until” each mean “to but excluding;” and
the word “through” means “to and including”, and (l) Section headings herein
and in the other Loan Documents are included for convenience of reference only
and shall not affect the interpretation of this Agreement or any other Loan
Document.

SECTION 1.3                   Accounting
Terms; Financing Ratios.

(a)           All
accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied
on a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the audited financial statements
required by Section 8.1(b), except as otherwise specifically
prescribed herein.

(b)           In
computing or determining compliance with the financial covenants and financial
ratios in this Agreement (including, without limitation, the Consolidated
Leverage Ratio, the Consolidated Fixed Charge Coverage Ratio and Excess Cash
Flow and Section 10.3), the financial performance and financial numbers of
FastChannel and its Subsidiaries prior to the Closing Date shall not be used or
included in such computations or determinations.

SECTION 1.4                   UCC
Terms.  Terms defined in the UCC in
effect on the Closing Date and not otherwise defined herein shall, unless the
context otherwise indicates, have the meanings provided by those
definitions.  Subject to the foregoing,
the term “UCC” refers, as of any date of determination, to the UCC then
in effect.

SECTION 1.5                   Rounding.  Any financial ratios required to be
maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

SECTION 1.6                   References
to Agreement and Laws.  Unless
otherwise expressly provided herein, (a) references to formation documents,
governing documents, agreements (including the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Loan Document; and (b) references
to any Applicable Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Applicable Law.

SECTION 1.7                   Times
of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Central time
(daylight or standard, as applicable).

SECTION 1.8                   Letter
of Credit Amounts.  Unless otherwise
specified, all references herein to the amount of a Letter of Credit at any
time shall be deemed to mean the maximum face amount of such Letter of Credit
after giving effect to all increases thereof contemplated by

 25
 

 

such Letter of Credit or the Letter of Credit
Application therefor, whether or not such maximum face amount is in effect at
such time.

ARTICLE
II

REVOLVING CREDIT FACILITY

SECTION 2.1                   Revolving
Credit Loans.  Subject to the terms
and conditions of this Agreement, and in reliance upon the representations and
warranties set forth herein, each Revolving Credit Lender severally agrees to
make Revolving Credit Loans to the Borrower from time to time from the Closing
Date up to, but not including, the Revolving Credit Maturity Date as requested
by the Borrower in accordance with the terms of Section 2.2; provided,
that (a) the aggregate principal amount of all outstanding Revolving Credit
Loans (after giving effect to any amount requested) shall not exceed the
Revolving Credit Commitment less the sum of all outstanding L/C
Obligations and (b) the principal amount of outstanding Revolving Credit Loans
from any Revolving Credit Lender to the Borrower shall not at any time exceed
such Revolving Credit Lender’s Revolving Credit Commitment less such Revolving
Credit Lender’s Revolving Credit Commitment Percentage of outstanding L/C
Obligations.  Each Revolving Credit Loan
by a Revolving Credit Lender shall be in a principal amount equal to such Revolving
Lender’s Revolving Credit Commitment Percentage of the aggregate principal
amount of Revolving Credit Loans requested on such occasion.  Subject to the terms and conditions hereof,
the Borrower may borrow, prepay and reborrow Revolving Credit Loans hereunder up
to, but not including, the Revolving Credit Maturity Date.

SECTION 2.2                   Procedure
for Advances of Revolving Credit Loans.

(a)           Requests
for Borrowing.  The Borrower shall
give the Administrative Agent irrevocable prior written notice substantially in
the form of Exhibit B (a “Notice
of Borrowing”) not later than 11:00 a.m. (i) on the same Business Day as
each Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR
Rate Loan, of its intention to borrow, specifying (A) the date of such
borrowing, which shall be a Business Day, (B) the amount of such borrowing,
which shall be, (x) with respect to Base Rate Loans in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof and (y)
with respect to LIBOR Rate Loans in an aggregate principal amount of $500,000
or a whole multiple of $100,000 in excess thereof, (C) whether the Revolving
Credit Loans are to be LIBOR Rate Loans or Base Rate Loans, and (D) in the case
of a LIBOR Rate Loan, the duration of the Interest Period applicable
thereto.  A Notice of Borrowing received
after 11:00 a.m. shall be deemed received on the next Business Day.  The Administrative Agent shall promptly
notify the Lenders of each Notice of Borrowing.

(b)           Disbursement
of Revolving Credit Loans.  Not later
than 1:00 p.m. on the proposed borrowing date, each Lender will make available
to the Administrative Agent, for the account of the Borrower, at the office of
the Administrative Agent in funds immediately available to the Administrative
Agent, such Lender’s Revolving Credit Commitment Percentage of the Revolving
Credit Loans to be made on such borrowing date. 
The Borrower hereby irrevocably authorizes the Administrative Agent to
disburse the proceeds of each borrowing requested pursuant to this Section in
immediately available funds by crediting or wiring such

 26
 

 

proceeds to the deposit account of the Borrower
identified in the most recent notice substantially in the form of Exhibit C (a “Notice of Account
Designation”) delivered by the Borrower to the Administrative Agent or as
may be otherwise agreed upon by the Borrower and the Administrative Agent from
time to time.  Subject to Section 5.7
hereof, the Administrative Agent shall not be obligated to disburse the portion
of the proceeds of any Revolving Credit Loan requested pursuant to this Section
to the extent that any Lender has not made available to the Administrative
Agent its Revolving Credit Commitment Percentage of such Revolving Credit Loan.

SECTION
2.3                   Repayment
and Prepayment of Revolving Credit Loans.

(a)           Repayment
on Termination Date.  The Borrower
hereby agrees to repay the outstanding principal amount of all Revolving Credit
Loans in full on the Revolving Credit Maturity Date together with all accrued
but unpaid interest thereon.

(b)           Mandatory
Prepayments.  If at any time the
outstanding principal amount of all Revolving Credit Loans plus the sum of all
outstanding L/C Obligations exceeds the Revolving Credit Commitment, the
Borrower agrees to repay immediately upon notice from the Administrative Agent,
by payment to the Administrative Agent for the account of the Lenders, Revolving
Credit Loans in an amount equal to such excess with each such repayment applied
first to the principal amount of outstanding Revolving Credit Loans and second,
with respect to any Letters of Credit then outstanding, a payment of cash
collateral into a cash collateral account opened by the Administrative Agent,
for the benefit of the Lenders in an amount equal to the aggregate then undrawn
and unexpired amount of such Letters of Credit (such cash collateral to be
applied in accordance with Section 12.2(b)).

(c)           Optional
Prepayments.  The Borrower may at any
time and from time to time prepay Revolving Credit Loans, in whole or in part,
with irrevocable prior written notice to the Administrative Agent substantially
in the form of Exhibit D (a “Notice
of Prepayment”) given not later than 11:00 a.m. (i) on the same
Business Day with respect to prepayments of any Base Rate Loan and (ii) on
a day that is at least three (3) Business Days prior to the proposed date of
prepayment with respect to prepayments of any LIBOR Rate Loan, specifying the
date and amount of prepayment and whether the prepayment is of LIBOR Rate
Loans, Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. 
Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender.  If any such notice
is given, the amount specified in such notice shall be due and payable on the
date set forth in such notice.  Partial
prepayments shall be in an aggregate amount of $500,000 or a whole multiple of
$100,000 in excess thereof with respect to Base Rate Loans and $500,000 or a
whole multiple of $100,000 in excess thereof with respect to LIBOR Rate
Loans.  A Notice of Prepayment received
after 11:00 a.m. shall be deemed received on the next Business Day.  Each such prepayment shall be accompanied by
any amount required to be paid pursuant to Section 5.9 hereof.

(d)           Limitation
on Prepayment of LIBOR Rate Loans. 
The Borrower may not prepay any LIBOR Rate Loan on any day other than on
the last day of the Interest Period applicable thereto unless such prepayment
is accompanied by any amount required to be paid pursuant to Section 5.9
hereof.

 27
 

 

(e)           Hedging
Agreements.  All Hedging Agreements,
if any, between the Borrower and a Lender or an Affiliate of a Lender are
independent agreements governed by the written provisions of such Hedging
Agreement, which will remain in full force and effect, unaffected by any
repayment, prepayment, acceleration, reduction, increase or change in the terms
of this Agreement, except as otherwise expressly provided in such Hedging
Agreement, and any payoff statement from such Lender or Affiliate relating to
this Agreement and the Notes shall not apply to such Hedging Agreement except
as otherwise expressly provided in such payoff statement.

SECTION
2.4                   Permanent
Reduction of the Revolving Credit Commitment.

(a)           Voluntary
Reduction.  The Borrower shall have
the right at any time and from time to time, upon at least five (5) Business
Days prior written notice to the Administrative Agent, to terminate or permanently
reduce (as applicable), without premium or penalty, (i) the entire Revolving
Credit Commitment at any time or (ii) portions of the Revolving Credit
Commitment, from time to time, in an aggregate principal amount not less than $500,000
or any whole multiple of $100,000 in excess thereof.  Any reduction of the Revolving Credit
Commitments shall be applied to the Revolving Credit Commitment of each Revolving
Credit Lender according to its Revolving Credit Commitment Percentage.  All commitment fees accrued until the
effective date of any termination of the Revolving Credit Commitments shall be
paid on the effective date of such termination.

(b)           Corresponding
Payment.  Each permanent reduction
permitted pursuant to this Section shall be accompanied by a payment of
principal sufficient to reduce the aggregate outstanding Revolving Credit Loans
and L/C Obligations, as applicable, after such reduction to the Revolving
Credit Commitment as so reduced and if the Revolving Credit Commitment as so
reduced is less than the aggregate amount of all outstanding Letters of Credit,
the Borrower shall be required to deposit cash collateral in a cash collateral
account opened by the Administrative Agent in an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit.  Such cash collateral shall be applied in
accordance with Section 12.2(b). 
Any reduction of the Revolving Credit Commitment to zero shall be
accompanied by payment of all outstanding Revolving Credit Loans (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and shall result in the termination of the Revolving Credit
Commitment and the Revolving Credit Facility. 
Such cash collateral shall be applied in accordance with Section
12.2(b).  If the reduction of the
Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such
repayment shall be accompanied by any amount required to be paid pursuant to Section
5.9 hereof.

(c)           Mandatory
Reduction.  In the event proceeds
remain after the prepayment of the Term Loan pursuant to Section 4.4(b),
the Revolving Credit Commitment shall be permanently reduced on the date of the
required prepayment under Section 4.4(b) by an amount equal to such
excess proceeds.

SECTION 2.5                   Termination
of Revolving Credit Facility.  The
Revolving Credit Facility shall terminate on the Revolving Credit Maturity
Date.

 28
 

 

ARTICLE
III

LETTER OF CREDIT FACILITY

SECTION 3.1                   L/C
Commitment.  Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in Section 3.4(a), agrees to issue standby
letters of credit (“Letters of Credit”) for the account of the Borrower
on any Business Day from the Closing Date through but not including the
Revolving Credit Maturity Date in such form as may be approved from time to
time by the Issuing Lender; provided, that the Issuing Lender shall have
no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b) the
aggregate principal amount of outstanding Revolving Credit Loans, plus
the aggregate amount of L/C Obligations would exceed the Revolving Credit
Commitment.  Each Letter of Credit shall
(i) be denominated in Dollars in a minimum amount of $500,000, (ii) be a
standby letter of credit issued to support obligations of the Borrower or any
of its Subsidiaries, contingent or otherwise, incurred in the ordinary course
of business, (iii) expire on a date no more than twelve (12) months after the
date of issuance or last renewal of such Letter of Credit, which date shall be
no later than the fifth (5th)
Business Day prior to the Revolving Credit Maturity Date and (iv) be subject to
the Uniform Customs and/or ISP98, as set forth in the Letter of Credit
Application or as determined by the Issuing Lender and, to the extent not
inconsistent therewith, the laws of the State of Texas.  The Issuing Lender shall not at any time be
obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any Applicable Law. 
References herein to “issue” and derivations thereof with respect to
Letters of Credit shall also include extensions or modifications of any
outstanding Letters of Credit, unless the context otherwise requires.

SECTION 3.2                   Procedure
for Issuance of Letters of Credit. 
The Borrower may from time to time request that the Issuing Lender issue
a Letter of Credit by delivering to the Issuing Lender at the Administrative
Agent’s Office a Letter of Credit Application therefor, completed to the
satisfaction of the Issuing Lender, and such other certificates, documents and
other papers and information as the Issuing Lender may request.  Upon receipt of any Letter of Credit
Application, the Issuing Lender shall process such Letter of Credit Application
and the certificates, documents and other papers and information delivered to
it in connection therewith in accordance with its customary procedures and
shall, subject to Section 3.1 and Article VI, promptly issue the
Letter of Credit requested thereby (but in no event shall the Issuing Lender be
required to issue any Letter of Credit earlier than three (3) Business Days
after its receipt of the Letter of Credit Application therefor and all such
other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the beneficiary thereof
or as otherwise may be agreed by the Issuing Lender and the Borrower.  The Issuing Lender shall promptly furnish to
the Borrower a copy of such Letter of Credit and promptly notify each Lender of
the issuance and upon request by any Lender, furnish to such Lender a copy of
such Letter of Credit and the amount of such Lender’s participation therein.

SECTION
3.3                   Commissions
and Other Charges.

(a)           Letter
of Credit Commissions.  The Borrower
shall pay to the Administrative Agent, for the account of the Issuing Lender
and the L/C Participants, a letter of credit

 29
 

 

commission with respect to each Letter of Credit in an
amount equal to the face amount of such Letter of Credit multiplied by the
Applicable Margin with respect to Revolving Credit Loans that are LIBOR Rate
Loans (determined on a per annum basis). 
Such commission shall be payable quarterly in arrears on the last
Business Day of each calendar quarter, on the Revolving Credit Maturity Date
and thereafter on demand of the Administrative Agent.  The Administrative Agent shall, promptly
following its receipt thereof, distribute to the Issuing Lender and the L/C
Participants all commissions received pursuant to this Section in accordance
with their respective Revolving Credit Commitment Percentages.

(b)           Issuance
Fee.  In addition to the foregoing
commission, the Borrower shall pay to the Administrative Agent, for the account
of the Issuing Lender, an issuance fee with respect to each Letter of Credit in
an amount equal to the face amount of such Letter of Credit multiplied by the
Applicable Margin with respect to Revolving Credit Loans that are LIBOR Rate
Loans (determined on a per annum basis). 
Such issuance fee shall be payable quarterly in arrears on the last
Business Day of each calendar quarter commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Revolving Credit
Maturity Date and thereafter on demand of the Administrative Agent.

(c)           Other
Costs.  In addition to the foregoing
fees and commissions, the Borrower shall pay or reimburse the Issuing Lender
for such normal and customary costs and expenses as are incurred or charged by
the Issuing Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.

SECTION 3.4                   L/C
Participations.

(a)           The
Issuing Lender irrevocably agrees to grant and hereby grants to each L/C
Participant, and, to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant’s own account and risk,
an undivided interest equal to such L/C Participant’s Revolving Credit
Commitment Percentage in the Issuing Lender’s obligations and rights under and
in respect of each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. 
Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which
the Issuing Lender is not reimbursed in full by the Borrower through a
Revolving Credit Loan or otherwise in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender’s address for notices specified herein an amount equal to
such L/C Participant’s Revolving Credit Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed.

(b)           Upon
becoming aware of any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date.  If any such amount is paid to the Issuing
Lender after the date such payment is due, such L/C Participant shall pay to
the Issuing Lender on demand, in addition to such amount, the product of

 30
 

 

(i) such amount, times (ii) the daily average Federal
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360.  A
certificate of the Issuing Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.  With respect to payment to the Issuing Lender
of the unreimbursed amounts described in this Section, if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. on any
Business Day, such payment shall be due that Business Day, and (B) after 1:00
p.m. on any Business Day, such payment shall be due on the following Business
Day.

(c)           Whenever,
at any time after the Issuing Lender has made payment under any Letter of
Credit and has received from any L/C Participant its Revolving Credit
Commitment Percentage of such payment in accordance with this Section, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, that in the event that any such payment received
by the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.

SECTION 3.5                   Reimbursement
Obligation of the Borrower.  In the
event of any drawing under any Letter of Credit, the Borrower agrees to
reimburse (either with the proceeds of a Revolving Credit Loan as provided for
in this Section or with funds from other sources), in same day funds, the
Issuing Lender on each date on which the Issuing Lender notifies the Borrower
of the date and amount of a draft paid under any Letter of Credit for the
amount of (a) such draft so paid and (b) any amounts referred to in Section
3.3(c) incurred by the Issuing Lender in connection with such payment.  Unless the Borrower shall immediately notify
the Issuing Lender that the Borrower intends to reimburse the Issuing Lender
for such drawing from other sources or funds, the Borrower shall be deemed to
have timely given a Notice of Borrowing to the Administrative Agent requesting
that the Revolving Credit Lenders make a Revolving Credit Loan bearing interest
at the Base Rate on such date in the amount of (a) such draft so paid and (b)
any amounts referred to in Section 3.3(c) incurred by the Issuing Lender
in connection with such payment, and the Revolving Credit Lenders shall make a
Revolving Credit Loan bearing interest at the Base Rate in such amount, the
proceeds of which shall be applied to reimburse the Issuing Lender for the
amount of the related drawing and costs and expenses.  Each Revolving Credit Lender acknowledges and
agrees that its obligation to fund a Revolving Credit Loan in accordance with
this Section to reimburse the Issuing Lender for any draft paid under a Letter
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Section 2.2(a) or Article VI.  If the Borrower has elected to pay the amount
of such drawing with funds from other sources and shall fail to reimburse the
Issuing Lender as provided above, the unreimbursed amount of such drawing shall
bear interest at the rate which would be payable on any outstanding Base Rate
Loans which were then overdue from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in
full.

 31

 

SECTION 3.6                   Obligations Absolute.  The Borrower’s obligations under this Article III
(including, without limitation, the Reimbursement Obligation) shall be absolute
and unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may have or have
had against the Issuing Lender or any beneficiary of a Letter of Credit or any
other Person.  The Borrower also agrees
that the Issuing Lender and the L/C Participants shall not be responsible for,
and the Borrower’s Reimbursement Obligation under Section 3.5 shall
not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee.  The Issuing Lender shall not
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions caused by
the Issuing Lender’s gross negligence or willful misconduct, as determined by a
court of competent jurisdiction by final nonappealable judgment.  The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct shall be binding on the Borrower and shall not result in
any liability of the Issuing Lender or any L/C Participant to the
Borrower.  The responsibility of the
Issuing Lender to the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.

SECTION 3.7                   Effect of Letter of Credit
Application.  To the extent that any
provision of any Letter of Credit Application related to any Letter of Credit
is inconsistent with the provisions of this Article III, the
provisions of this Article III shall apply.

ARTICLE
IV

TERM LOAN FACILITY

SECTION 4.1                   Term Loan.  Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make a Term Loan to the Borrower on
the Closing Date in a principal amount equal to such Lender’s Term Loan
Commitment as of the Closing Date.

SECTION 4.2                   Procedure for Advance of
Term Loan.  The Borrower shall give
the Administrative Agent an irrevocable Notice of Borrowing prior to 11:00 a.m.
one Business Day prior to the Closing Date requesting that the Lenders make the
Term Loan on the Closing Date.  Upon
receipt of such Notice of Borrowing from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof. 
Not later than 1:00 p.m. on the Closing Date, each Lender will make
available to the Administrative Agent for the account of the Borrower, at the
Administrative Agent’s Office in immediately available funds, the amount of
such Term Loan to be made by such Lender on such borrowing date.  The Borrower hereby irrevocably authorizes
the Administrative Agent to disburse the proceeds of the Term Loan in
immediately available

 32
 

 

funds by wire transfer to such Person or Persons as
may be designated by the Borrower in the Notice of Borrowing.

SECTION 4.3                   Repayment of Term Loan.  The Borrower shall repay the aggregate
outstanding principal amount of the Term Loan in consecutive quarterly
installments on the last day of each of March, June, September and December
commencing June 30, 2006 as set forth below, except as the amounts of
individual installments may be adjusted pursuant to Section 4.4 hereof:

 

	
  FISCAL YEAR

  	
   

  	
  PAYMENT DATE

  	
   

  	
  PRINCIPAL

  INSTALLMENT

  ($)

  	
   

  
	
  2006

  	
   

  	
  September 30

  	
   

  	
  $

  	
  400,000

  	
   

  
	
   

  	
  December 31

  	
   

  	
  $

  	
  650,000

  	
   

  
	
  2007

  	
   

  	
  March
  31

  	
   

  	
  $

  	
  800,000

  	
   

  
	
   

  	
  June
  30

  	
   

  	
  $

  	
  800,000

  	
   

  
	
   

  	
  September
  30

  	
   

  	
  $

  	
  850,000

  	
   

  
	
   

  	
  December
  31

  	
   

  	
  $

  	
  850,000

  	
   

  
	
  2008

  	
   

  	
  March 31

  	
   

  	
  $

  	
  850,000

  	
   

  
	
   

  	
  June 30

  	
   

  	
  $

  	
  850,000

  	
   

  
	
   

  	
  September 30

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
  December 31

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  2009

  	
   

  	
  March
  31

  	
   

  	
  $

  	
  1,100,000

  	
   

  
	
   

  	
  June
  30

  	
   

  	
  $

  	
  1,100,000

  	
   

  
	
   

  	
  September
  30

  	
   

  	
  $

  	
  1,100,000

  	
   

  
	
   

  	
  December
  31

  	
   

  	
  $

  	
  1,100,000

  	
   

  
	
  2010

  	
   

  	
  March 31

  	
   

  	
  $

  	
  1,200,000

  	
   

  
	
   

  	
  June 30

  	
   

  	
  $

  	
  1,200,000

  	
   

  
	
   

  	
  September 30

  	
   

  	
  $

  	
  1,287,500

  	
   

  
	
   

  	
  December 31

  	
   

  	
  $

  	
  1,287,500

  	
   

  
	
  2011

  	
   

  	
  March
  31

  	
   

  	
  $

  	
  1,287,500

  	
   

  
	
   

  	
  June 30

  	
   

  	
  $

  	
  1,287,500

  	
   

  

 

If not sooner paid, the Term Loan shall be paid in
full, together with accrued interest thereon, on the Term Loan Maturity Date.  Each repayment shall be accompanied by any
amount required to be paid pursuant to Section 5.9 hereof.

SECTION
4.4                   Prepayments of
Term Loan.

(a)           Optional Prepayments.  The Borrower shall have the right at any time
and from time to time, without premium or penalty, to prepay the Term Loan, in
whole or in part, upon delivery to the Administrative Agent of a Notice of
Prepayment given not later than 11:00 a.m. on the day that is at least three
(3) Business Days prior to the proposed date of prepayment, specifying the date
and amount of repayment.  Each optional
prepayment of the Term Loan hereunder shall be in an aggregate principal amount
of at least $500,000 or any whole multiple of $100,000 in excess thereof and
shall be applied, in inverse order of maturity, to the outstanding scheduled
principal installments of the Term Loan. 
A Notice of Prepayment received after 11:00 a.m. shall be deemed
received on the next Business Day.  The

 33
 

 

Administrative Agent shall promptly notify the Lenders
of each Notice of Prepayment.  Each such
prepayment shall be accompanied by any amount required to be paid pursuant to Section 5.9
hereof.

(b)           Mandatory Prepayments.

(i)            Debt Issuances.  The Borrower shall prepay the Loans and/or
cash collateralize the L/C Obligations in the manner set forth in clause (vii) below in amounts
equal to one hundred percent (100%) of the aggregate Net Cash Proceeds from any
Debt Issuance by the Borrower or any of its Subsidiaries.  Such prepayment shall be made within three
(3) Business Days after the date of receipt of the Net Cash Proceeds of any
such transaction.

(ii)           Equity Issuances.  The Borrower shall prepay the Loans and/or
cash collateralize the L/C Obligations in the manner set forth in clause (vii)
below in amounts equal to fifty percent (50%) of the aggregate Net Cash
Proceeds from any Equity Issuance by the Borrower or any of its Subsidiaries
other than the exercise price on stock options issued as part of employee
compensation; provided, that so long as no Event of Default has occurred
and is continuing, no prepayments shall be required from the Net Cash Proceeds
from Equity Issuances the proceeds of which are used to finance a Permitted
Acquisition.  Such prepayment shall be
made within three (3) Business Days after the date of receipt of the Net Cash
Proceeds of any such transaction.

(iii)          Asset Dispositions.  The Borrower shall prepay the Loans and/or
cash collateralize the L/C Obligations in the manner set forth in clause (vii)
below in amounts equal to one hundred percent (100%) of the aggregate Net Cash
Proceeds from any Asset Disposition by the Borrower or any of its
Subsidiaries.  Such prepayments shall be
made within three (3) Business Days after receipt of the Net Cash Proceeds of
any such transaction by the Borrower or any of its Subsidiaries; provided
that, so long as no Default or Event of Default has occurred and is continuing,
no prepayments shall be required hereunder in connection with up to $500,000 of
aggregate Net Cash Proceeds in any Fiscal Year from Asset Dispositions by the
Borrower or any of its Subsidiaries which is reinvested within ninety (90) days
after receipt of such Net Cash Proceeds by the Borrower or any of its
Subsidiaries in similar replacement assets.

(iv)          Extraordinary Receipts.  The Borrower shall prepay the Loans and/or
cash collateralize the L/C Obligations in the manner set forth in clause (vii)
below in amounts equal to one hundred percent (100%) of the aggregate Net Cash
Proceeds from any Extraordinary Receipts by the Borrower or any of its
Subsidiaries.  Such prepayment shall be
made within three (3) Business Days after the date of receipt of the Net Cash
Proceeds of any such transaction.

(v)           Insurance and Condemnation Events.
 The Borrower shall prepay the Loans
and/or cash collateralize the L/C Obligations in the manner set forth in clause
(vii) below in amounts equal to one hundred percent (100%) of the aggregate
Net Cash Proceeds from any Insurance and Condemnation Event by the Borrower or
any of its Subsidiaries.  Such
prepayments shall be made within three (3) Business Days after receipt of Net
Cash Proceeds of any such transaction by the Borrower or any of its
Subsidiaries; provided that, so long as no Default or Event of Default
has occurred and is continuing, no prepayments shall be required hereunder in
connection with up to $500,000 of aggregate Net Cash Proceeds in any Fiscal
Year

 34
 

 

from Insurance and Condemnation Events by the Borrower
or any of its Subsidiaries which is reinvested within ninety (90) days after
receipt of such Net Cash Proceeds by the Borrower or any of its Subsidiaries in
similar replacement assets.

(vi)          Excess Cash Flow.  No later than ninety (90) days after the end
of any Fiscal Year (commencing with the Fiscal Year ending on December 31, 2006),
the Borrower shall make mandatory principal prepayments of the Loans in the
manner set forth in clause (vii) below in an amount equal to fifty
percent (50%) of Excess Cash Flow, if any, for such Fiscal Year.

(vii)         Notice; Manner of Payment.  Upon the occurrence of any event triggering
the prepayment requirement under clauses (i) through and including (vi)
above, the Borrower shall promptly deliver a Notice of Prepayment to the
Administrative Agent and upon receipt of such notice, the Administrative Agent
shall promptly so notify the Lenders. 
Each prepayment of the Loans under this Section shall be applied as
follows: first, to reduce in inverse order of maturity the remaining
scheduled principal installments of the Term Loans, pursuant to Section 4.3
and (ii) second, to the extent of any excess, to reduce permanently the
Revolving Credit Commitment, pursuant to Section 2.4(c).

Amounts repaid or prepaid under the Term Loan may not
be reborrowed.  Each prepayment shall be
accompanied by any amount required to be paid pursuant to Section 5.9.

ARTICLE V

GENERAL LOAN PROVISIONS

SECTION
5.1                   Interest.

(a)           Interest Rate Options.

(i)            Subject to the provisions of this
Section, at the election of the Borrower, Revolving Credit Loans shall bear
interest at (A) the Base Rate plus the Applicable Margin or (B) the LIBOR Rate
plus the Applicable Margin (provided that the LIBOR Rate shall not be available
until three (3) Business Days after the Closing Date).  The Borrower shall select the Type of Loan and
Interest Period, if any, applicable to any Revolving Credit Loan at the time a
Notice of Borrowing is given or at the time a Notice of Conversion/Continuation
is given pursuant to Section 5.2. 
Any Revolving Credit Loan or any portion thereof as to which the
Borrower has not duly specified an interest rate as provided herein shall be
deemed a Base Rate Loan.

(ii)           Subject to the provisions of this
Section and Section 5.8, the Term Loan shall bear interest at the LIBOR Rate
plus the Applicable Margin.  If, pursuant
to Section 5.8, the Term Loan is a Base Rate Loan, the Term Loan shall bear
interest at the Base Rate plus the Applicable Margin.

(b)           Interest Periods.  In connection with each LIBOR Rate Loan under
the Revolving Credit Facility, the Borrower, by giving notice at the times
described in Section 2.2 or 5.2, as applicable, shall elect an
interest period (each, an “Interest Period”) to be applicable to such

 35
 

 

Revolving Credit Loan, which Interest Period shall be
a period of one (1), two (2), or three (3) months; provided that:

(i)            the Interest Period shall commence
on the date of advance of or conversion to any LIBOR Rate Loan and, in the case
of immediately successive Interest Periods, each successive Interest Period
shall commence on the date on which the immediately preceding Interest Period
expires;

(ii)           if any Interest Period under the
Revolving Credit Facility would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided, that if any Interest Period with respect to a LIBOR Rate
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;

(iii)          any Interest Period with respect to a
LIBOR Rate Loan under the Revolving Credit Facility that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month at the end of
such Interest Period;

(iv)          no Interest Period under the Revolving
Credit Facility shall extend beyond the Revolving Credit Maturity Date, and
Interest Periods shall be selected by the Borrower so as to permit the Borrower
to make the quarterly principal installment payments pursuant to Section 4.3
without payment of any amounts pursuant to Section 5.9;

(v)           there shall be no more than six (6)
Interest Periods for LIBOR Rate Loans under the Revolving Credit Facility in
effect at any time;

provided, further that, with respect
to the Term Loan, the term “Interest Period” shall mean the following:

(i)            the period from the Closing Date
through and including June 30, 2006, and thereafter; and

(ii)           each three-month period commencing on
the first day of January, April, July and October of each year, and ending on
the last day of March, June, September and December, as applicable, with the
first such period beginning on July 1, 2006;

provided, further that no Interest
Period with respect to the Term Loan shall extend beyond the Term Loan Maturity
Date; provided, further that, if any Interest Period under the Term Loan
Facility would otherwise expire on a day that is not a Business Day, such
Interest Period shall expire on the immediately preceding Business Day.

(c)           Default Rate.  Subject to Section 12.2, (i)
immediately upon the occurrence and during the continuance of an Event of
Default under Section 12.1(a), (b), (j) or (k), or
(ii) at the election of the Required Lenders, upon the occurrence and during
the continuance of any other Event of Default, (A) the Borrower shall no longer
have the option to request LIBOR Rate Loans

 36
 

 

or Letters of Credit under the Revolving Credit
Facility, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate
per annum of two percent (2%) in excess of the rate then applicable to LIBOR
Rate Loans until the end of the applicable Interest Period and thereafter at a
rate equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (C) all outstanding Base Rate Loans and other Obligations
arising hereunder or under any other Loan Document shall bear interest at a
rate per annum equal to two percent (2%) in excess of the rate then applicable
to Base Rate Loans or such other Obligations arising hereunder or under any
other Loan Document.  Interest shall
continue to accrue on the Obligations after the filing by or against the
Borrower of any petition seeking any relief in bankruptcy or under any act or
law pertaining to insolvency or debtor relief, whether state, federal or
foreign.  Interest payable pursuant to
this Section 5.1(c) shall be payable by the Borrower from time to time
on demand by the Administrative Agent.

(d)           Interest Payment and Computation.  Interest on each Base Rate Loan shall be due
and payable in arrears on the last day of each March, June, September and
December of each calendar year, commencing on June 30, 2006, and on the
Revolving Credit Maturity Date and Term Loan Maturity Date, as applicable; and
interest on each LIBOR Rate Loan shall be due and payable on the last day of
each Interest Period applicable thereto and on the Revolving Credit Maturity
Date and Term Loan Maturity Date, as applicable.  Interest on LIBOR Rate Loans and all fees
payable hereunder shall be computed on the basis of a 360-day year and assessed
for the actual number of days elapsed and interest on Base Rate Loans shall be
computed on the basis of a 365/366-day year and assessed for the actual number
of days elapsed.

SECTION 5.2                   Notice and Manner of
Conversion or Continuation of Revolving Credit Loans.  Provided that no Default or Event of Default
has occurred and is then continuing, the Borrower shall have the option to (a)
convert at any time following the third Business Day after the Closing Date all
or any portion of any outstanding Base Rate Loans under the Revolving Credit
Facility in a principal amount equal to $500,000 or any whole multiple of
$100,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the
expiration of any Interest Period with respect to the Revolving Credit Facility,
(i) convert all or any part of its outstanding LIBOR Rate Loans under the
Revolving Credit Facility in a principal amount equal to $500,000 or a whole
multiple of $100,000 in excess thereof into Base Rate Loans or (ii) continue
such LIBOR Rate Loans as LIBOR Rate Loans. 
Whenever the Borrower desires to convert or continue Revolving Credit
Loans as provided above, the Borrower shall give the Administrative Agent
irrevocable prior written notice in the form attached as Exhibit E (a “Notice
of Conversion/Continuation”) not later than 11:00 a.m. three (3) Business
Days before the day on which a proposed conversion or continuation of such
Revolving Credit Loan is to be effective specifying (A) the Revolving Credit Loans
to be converted or continued, and, in the case of any LIBOR Rate Loan to be
converted or continued, the last day of the Interest Period therefor, (B) the
effective date of such conversion or continuation (which shall be a Business
Day), (C) the principal amount of such Revolving Credit Loans to be converted
or continued, and (D) the Interest Period to be applicable to such converted or
continued LIBOR Rate Loan.  The
Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.

 37
 

 

SECTION
5.3                   Fees.

(a)           Commitment Fee.  Commencing on the Closing Date, the Borrower
shall pay to the Administrative Agent, for the account of the Revolving Credit Lenders,
a non-refundable commitment fee at a rate per annum equal to the Applicable
Margin on the average daily unused portion of the Revolving Credit Commitment.  The commitment fee shall be payable in
arrears on the last Business Day of each calendar quarter during the term of
this Agreement commencing on June 30, 2006, and ending on the Revolving Credit
Maturity Date.  Such commitment fee shall
be distributed by the Administrative Agent to the Revolving Credit Lenders pro
rata in accordance with the Lenders’ respective Revolving Credit Commitment
Percentages.

(b)           Administrative Agent’s and Other
Fees.  In order to compensate the
Administrative Agent for structuring and syndicating the Lenders for their
obligations hereunder, the Borrower agrees to pay to the Administrative Agent,
for the account of the Administrative Agent, the Lenders and their Affiliates,
any fees set forth in the Fee Letter.

SECTION 5.4                   Manner of Payment.  Each payment by the Borrower on account of
the principal of or interest on the Loans or of any fee, commission or other
amounts (including the Reimbursement Obligation) payable to the Lenders under
this Agreement shall be made not later than 1:00 p.m. on the date specified for
payment under this Agreement to the Administrative Agent at the Administrative
Agent’s Office for the account of the Lenders (other than as set forth below) pro
rata in accordance with their respective Commitment Percentages, (except
as specified below), in Dollars, in immediately available funds and shall be
made without any set-off, counterclaim or deduction whatsoever.  Any payment received after such time but
before 2:00 p.m. on such day shall be deemed a payment on such date for the
purposes of Section 12.1, but for all other purposes shall be deemed to
have been made on the next succeeding Business Day.  Any payment received after 2:00 p.m. shall be
deemed to have been made on the next succeeding Business Day for all
purposes.  Upon receipt by the
Administrative Agent of each such payment, the Administrative Agent shall
distribute to each Lender at its address for notices set forth herein its pro
rata share of such payment in accordance with such Lender’s Commitment
Percentage, (except as specified below) and shall wire advice of the amount of
such credit to each Lender.  Each payment
to the Administrative Agent of the Issuing Lender’s fees or L/C Participants’
commissions shall be made in like manner, but for the account of the Issuing
Lender or the L/C Participants, as the case may be.  Each payment to the Administrative Agent of
Administrative Agent’s fees or expenses shall be made for the account of the
Administrative Agent and any amount payable to any Lender under Sections 5.9,
5.10, 5.11 or 14.3 shall be paid to the Administrative
Agent for the account of the applicable Lender. 
Subject to Section 5.1(b)(ii) if any payment under this Agreement
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day and such extension
of time shall in such case be included in computing any interest if payable
along with such payment.

SECTION
5.5                   Evidence of
Indebtedness.

(a)           Extensions of Credit.  The Extensions of Credit made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the

 38
 

 

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

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

SECTION
5.6                   Adjustments.  If any
Lender shall, by exercising any right of setoff or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans
or other obligations hereunder resulting in such Lender’s receiving payment of
a proportion of the aggregate amount of its Loans and accrued interest thereon
or other such obligations (other than pursuant to Sections 5.9, 5.10,
5.11 or 14.3 hereof) greater
than its pro  rata share thereof as provided herein, then the
Lender receiving such greater proportion shall (a) notify the Administrative
Agent of such fact, and (b) purchase (for cash at face value) participations in
the Loans and such other obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and other
amounts owing them; provided that

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

(b)           the provisions of this paragraph
shall not be construed to apply to (x) any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or (y)
any payment obtained by a Lender as consideration for the assignment of or sale
of a participation in any of its Loans or participations in Letters of Credit
to any assignee or participant, other than to the Borrower or any Subsidiary
thereof (as to which the provisions of this paragraph shall apply).

 39
 

 

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

SECTION 5.7                   Nature of Obligations of
Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent.  The obligations of the Lenders under this
Agreement to make the Loans and issue or participate in Letters of Credit are
several and are not joint or joint and several. 
Unless the Administrative Agent shall have received notice from a Lender
prior to a proposed borrowing date that such Lender will not make available to
the Administrative Agent such Lender’s ratable portion of the amount to be
borrowed on such date (which notice shall not release such Lender of its
obligations hereunder), the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the proposed
borrowing date in accordance with Section 2.2(b), and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount.  If
such amount is made available to the Administrative Agent on a date after such
borrowing date, such Lender shall pay to the Administrative Agent on demand an
amount, until paid, equal to the product of (a) the amount not made available
by such Lender in accordance with the terms hereof, times (b) the daily
average Federal Funds Rate during such period as determined by the
Administrative Agent, times (c) a fraction the numerator of which is the
number of days that elapse from and including such borrowing date to the date
on which such amount not made available by such Lender in accordance with the
terms hereof shall have become immediately available to the Administrative
Agent and the denominator of which is 360. 
A certificate of the Administrative Agent with respect to any amounts
owing under this Section shall be conclusive, absent manifest error.  If such Lender’s Commitment Percentage of
such borrowing is not made available to the Administrative Agent by such Lender
within three (3) Business Days after such borrowing date, the Administrative
Agent shall be entitled to recover such amount made available by the
Administrative Agent with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower.  The failure of any Lender to make available
its Commitment Percentage of any Loan requested by the Borrower shall not
relieve it or any other Lender of its obligation, if any, hereunder to make its
Commitment Percentage of such Loan available on the borrowing date, but no
Lender shall be responsible for the failure of any other Lender to make its
Commitment Percentage of such Loan available on the borrowing date.

SECTION
5.8                   Changed
Circumstances.

(a)           Circumstances Affecting LIBOR Rate
Availability.  If with respect to any
Interest Period the Administrative Agent or any Lender (after consultation with
the Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars, in the applicable amounts are not being quoted via the Telerate
Page 3750 or offered to the Administrative Agent or such Lender for such
Interest Period, then the Administrative Agent shall forthwith give notice
thereof to the Borrower.  Thereafter,
until the Administrative Agent notifies the Borrower that such circumstances no
longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the
right of the Borrower to convert any Loan to or continue any Loan as a LIBOR
Rate Loan shall

 40
 

 

be suspended, and the Borrower shall repay in full (or
cause to be repaid in full) the then outstanding principal amount of each such
LIBOR Rate Loan together with accrued interest thereon, on the last day of the
then current Interest Period applicable to such LIBOR Rate Loan or convert the
then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate
Loan as of the last day of such Interest Period.

(b)           Laws Affecting LIBOR Rate
Availability.  If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any of the Lenders (or any of their
respective Lending Offices) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, shall make it unlawful or impossible for any of the Lenders
(or any of their respective Lending Offices) to honor its obligations hereunder
to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice
thereof to the Administrative Agent and the Administrative Agent shall promptly
give notice to the Borrower and the other Lenders.  Thereafter, until the Administrative Agent
notifies the Borrower that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrower to convert any Loan or continue or maintain any Loan as a LIBOR Rate
Loan shall be suspended and thereafter the Borrower may select only Base Rate
Loans hereunder, and (ii) if any of the Lenders may not lawfully continue to
maintain a LIBOR Rate Loan to the end of the then current Interest Period
applicable thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall
immediately be converted to a Base Rate Loan for the remainder of such Interest
Period.

SECTION 5.9                   Indemnity.  The Borrower hereby indemnifies each of the
Lenders against any loss or expense which may arise or be attributable to each
Lender’s obtaining, liquidating or employing deposits or other funds acquired
to effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow,
continue or convert on a date specified therefor in a Notice of Borrowing or
Notice of Conversion/Continuation or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor.  The amount of
such loss or expense shall be determined, in the applicable Lender’s sole
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the LIBOR Rate Loans in the London interbank market and using any
reasonable attribution or averaging methods which such Lender deems appropriate
and practical.  A certificate of such
Lender setting forth the basis for determining such amount or amounts necessary
to compensate such Lender shall be forwarded to the Borrower through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.

SECTION
5.10                 Increased Costs.

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

(i)            impose, modify or deem applicable
any reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for

 41
 

 

the account of, or advances,
loans or other credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;

(ii)           subject any Lender or the Issuing
Lender to any tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any participation in a Letter of Credit or any LIBOR Rate
Loan made by it, or change the basis of taxation of payments to such Lender or
the Issuing Lender in respect thereof (except for Indemnified Taxes or Other
Taxes covered by Section 5.11 and the imposition of, or any change in
the rate of any Excluded Tax payable by such Lender or the Issuing Lender); or

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

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

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

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

 42
 

 

certificate within ten (10) days
after receipt thereof.  All
payments by the Borrower hereunder shall be made without any offset, abatement,
withholding, deduction, counterclaim, or reduction.

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the Issuing Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender’s or the Issuing Lender’s right to demand
such compensation; provided that the Borrower shall not be required to
compensate a Lender or the Issuing Lender pursuant to this Section for any
increased costs incurred or reductions suffered more than nine (9) months prior
to the date that such Lender or the Issuing Lender, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the Issuing Lender’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

SECTION
5.11                 Taxes.

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

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

(c)           Indemnification by the Borrower.
 The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Lender, within ten (10) days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the Issuing Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Lender
(with a copy to the Administrative Agent), or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Lender, shall be
conclusive absent manifest error.

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

 43
 

 

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

(e)           Status of Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by Applicable Law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by Applicable Law as will permit such
payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.  Without limiting the generality of the foregoing,
in the event that the Borrower is a resident for tax purposes in the United
States, any Foreign Lender shall deliver to the Borrower and the Administrative
Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the request of the Borrower or
the Administrative Agent, but only if such Foreign Lender is legally entitled
to do so), whichever of the following is applicable:

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

(ii)           duly completed copies of Internal
Revenue Service Form W-8ECI,

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

(iv)          any other form prescribed by Applicable
Law as a basis for claiming exemption from or a reduction in United States
Federal withholding tax duly completed together with such supplementary
documentation as may be prescribed by Applicable Law to permit the Borrower to
determine the withholding or deduction required to be made.

(f)            Treatment of Certain Refunds.
 If the Administrative Agent, a Lender or
the Issuing Lender determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section with respect to the Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent, such Lender or the Issuing Lender, as the case may
be, and without interest (other than any interest

 44
 

 

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

(g)           Survival.  Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section shall survive the payment in full of the
Obligations and the termination of the Commitments.

SECTION
5.12                 Mitigation
Obligations; Replacement of Lenders.

(a)           Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 5.10, or requires the Borrower to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 5.11, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 5.10 or 5.11, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender
in connection with any such designation or assignment.

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 5.10,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
5.11, or if any Lender defaults in its obligation to fund Loans hereunder,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 14.10), all of its
interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that

(i)            the Borrower shall have paid to the
Administrative Agent the assignment fee specified in Section 14.10,

(ii)           such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in Letters of Credit, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 5.9) from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts),

 45

 

(iii)          in the case of any such assignment
resulting from a claim for compensation under Section 5.10 or payments
required to be made pursuant to Section 5.11, such assignment will
result in a reduction in such compensation or payments thereafter, and

(iv)          such assignment does not conflict with
Applicable Law.

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

SECTION 5.13                 Security.  The Obligations of the Borrower, the other
Credit Parties and DG III shall be secured or guaranteed as provided in the
Security Documents and the DG III Guaranty.

ARTICLE VI

CLOSING; CONDITIONS OF CLOSING AND BORROWING

SECTION 6.1                   Closing.  The closing shall take place at the offices
of Bracewell & Giuliani LLP at 10:00 a.m. on May 31, 2006, or on such
other place, date and time as the parties hereto shall mutually agree.

SECTION 6.2                   Conditions to Closing and
Initial Extensions of Credit.  The
obligation of the Lenders to close this Agreement and to make the initial Loan
or issue or participate in the initial Letter of Credit, if any, is subject to
the satisfaction of each of the following conditions:

(a)           Executed Loan Documents.  This Agreement, a Revolving Credit Note in
favor of each Lender requesting a Revolving Credit Note, a Term Note in favor
of each Lender requesting a Term Note, the Security Documents, the DG III
Guaranty (or a ratification by DG III of the DG III Guaranty (as defined in the
Existing Credit Agreement) satisfactory in form and substance to the
Administrative Agent), together with any other applicable Loan Document, shall
have been duly authorized, executed and delivered to the Administrative Agent
by the parties thereto, shall be in full force and effect and no Default or
Event of Default shall exist hereunder or thereunder.

(b)           Closing Certificates; Etc.  The Administrative Agent shall have received
each of the following in form and substance reasonably satisfactory to the
Administrative Agent:

(i)            Certificate of Secretary of each
Credit Party and DG III.  A
certificate from a Responsible Officer of each Credit Party and DG III substantially
in the form attached hereto as Exhibit K certifying
(A) as to the incumbency and genuineness of the signature of each officer of
such Person executing Loan Documents to which it is a party, (B) that attached
thereto is a true, correct and complete copy of (1) the articles or certificate
of incorporation or formation of such Person and all amendments thereto,
certified as of a recent date by the appropriate Governmental Authority in its
jurisdiction of incorporation or formation, (2) the bylaws or other governing
document of such Person as in effect on the Closing Date, (3) resolutions duly
adopted by the board of directors or other governing body of such Person
authorizing the transactions contemplated hereunder and the execution, delivery
and performance of this Agreement and the

 46
 

 

other Loan Documents to which it is a party, and (4)
each certificate required to be delivered pursuant to Section 6.2(b)(ii),
and (C) that (1) all representations and warranties of the Credit Parties
contained in this Agreement and the other Loan Documents are true, correct and
complete, (2) none of the Credit Parties or DG III is in violation of any of
the covenants contained in this Agreement and the other Loan Documents, (3) after
giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing and (4) each of the Credit
Parties and DG III, as applicable, has satisfied each of the conditions set
forth in Section 6.2 and Section 6.3.

(ii)           Certificates of Good Standing.  Certificates as of a recent date of the good
standing of each Credit Party and DG III under the laws of its jurisdiction of
organization and, to the extent requested by the Administrative Agent, each
other jurisdiction where such Person is qualified to do business and, to the
extent available, a certificate of the relevant taxing authorities of such
jurisdictions certifying that such Person has filed required tax returns and
owes no delinquent taxes.

(iii)          Opinions of Counsel.  Favorable opinions of counsel to the Credit
Parties and DG III substantially in the form attached hereto as Exhibit L and addressed to the
Administrative Agent and the Lenders with respect to the Credit Parties and DG
III, the Loan Documents and such other matters as the Lenders shall request.  Each legal opinion, if any, delivered in
connection with the Acquisition Agreement shall provide that the Administrative
Agent and the Lenders may rely on such legal opinion.

(iv)          Tax Forms.  Copies of the United States Internal Revenue
Service forms required by Section 5.11(e).

(c)           Personal Property Collateral.

(i)            Filings and Recordings.  The Administrative Agent shall have received
all filings and recordations that are necessary to perfect the security
interests of the Administrative Agent, on behalf of itself and the Lenders, in
the Collateral shall have been received by the Administrative Agent and the
Administrative Agent shall have received evidence reasonably satisfactory to
the Administrative Agent that upon such filings and recordations such security
interests constitute valid and perfected first priority Liens thereon.

(ii)           Pledged Collateral.  The Administrative Agent shall have received
(A) original stock certificates or other certificates evidencing the Capital
Stock pledged pursuant to the Security Documents, together with an undated
stock power for each such certificate duly executed in blank by the registered
owner thereof and (B) each original promissory note pledged pursuant to the
Security Documents.

(iii)          Lien Search.  The Administrative Agent shall have received
the results of a Lien search (including a search as to judgments, pending
litigation and tax matters), in form and substance reasonably satisfactory
thereto, made against the Credit Parties and DG III under the Uniform
Commercial Code (or applicable judicial docket) as in effect in any state in
which any of the assets of such Person are located, indicating among other
things that its assets are free and clear of any Lien except for Permitted
Liens.

 47
 

 

(iv)          Hazard and Liability Insurance.  The Administrative Agent shall have received
certificates of property hazard, business interruption and liability insurance,
evidence of payment of all insurance premiums for the current policy year of
each (naming the Administrative Agent as loss payee (and mortgagee, as
applicable) on all certificates for property hazard insurance and as additional
insured on all certificates for liability insurance), and, if requested by the
Administrative Agent, copies (certified by a Responsible Officer) of insurance
policies in form and substance reasonably satisfactory to the Administrative
Agent.

(d)           Consents; Defaults.

(i)            Governmental and Third Party
Approvals.  The Credit Parties and DG
III shall have received all material governmental, shareholder and third party
consents (including, if obtainable on or before the Closing Date, a written consent
by MDVX to the DG III Guaranty, satisfactory in form and substance to the
Administrative Agent (“the MDVX Consent”)) and approvals necessary (or any
other material consents as determined in the reasonable discretion of the
Administrative Agent) in connection with the transactions contemplated by this
Agreement, the other Loan Documents and the Acquisition Documents and all
applicable waiting periods shall have expired without any action being taken by
any Person that could reasonably be expected to restrain, prevent or impose any
material adverse conditions on any of the Credit Parties or DG III or such
other transactions or that could seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the reasonable judgment of the
Administrative Agent could reasonably be expected to have such effect.

(ii)           No Injunction, Litigation, Etc.  No action, suit, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to
obtain substantial damages in respect of, or which is related to or arises out
of this Agreement, the other Loan Documents or the Acquisition Documents or the
consummation of the transactions contemplated by the Loan Documents and the
Acquisition Documents, or which, in the Administrative Agent’s sole discretion,
would make it inadvisable to consummate the transactions contemplated by this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby.

(e)           Financial Matters.

(i)            Financial Statements.  The Administrative Agent shall have received (A)
the audited Consolidated balance sheet of the Borrower and its Subsidiaries as
of December 31, 2005 and the related audited statements of income and retained
earnings and cash flows for the Fiscal Year then ended and (B) unaudited
Consolidated balance sheet of the Borrower and its Subsidiaries as of March 31,
2006 and related unaudited interim statements of income and retained earnings
and cash flows for fiscal quarter of the Borrower then ended.

(ii)           Financial Projections.  Pro forma Consolidated financial statements
for the Borrower and its Subsidiaries, and forecasts prepared by management of
the Borrower, of balance sheets, income statements and cash flow statements on
a quarterly basis for the first year following the Closing Date and on an
annual basis for each year thereafter during the term of the Credit Agreement.

 48
 

 

(iii)          Financial Condition Certificate.  The Borrower shall have delivered to the
Administrative Agent a certificate from the chief financial officer of the
Borrower substantially in the form attached hereto as Exhibit
M certifying that (A) the Borrower and each Subsidiary are each
Solvent (after giving effect to the FastChannel Acquisition, the Extensions of
Credit on the Closing Date and the incurrence of all other Indebtedness in
connection with this Agreement and the FastChannel Acquisition) and (B) the
financial projections previously delivered to the Administrative Agent
represent the good faith estimates (utilizing reasonable assumptions) of the
financial condition and operations of the Borrower and its Subsidiaries.

(iv)          Payment at Closing; Fee Letters.
 The Borrower shall have paid to the
Administrative Agent and the Lenders the fees set forth or referenced in Section
5.3 and any other accrued and unpaid fees or commissions due hereunder
(including, without limitation, accrued and unpaid interest and commitment fees
under the Existing Credit Agreement and legal fees and expenses) and to any
other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges
in connection with the execution, delivery, recording, filing and registration
of any of the Loan Documents.

(f)            Merger.  The Administrative Agent shall have received
certified copies of a certificate of merger or other confirmation satisfactory
to the Administrative Agent of the consummation of the Merger strictly in
accordance with all requirements of Applicable Law and the Acquisition
Documents, without any waiver or amendment not consented to by the Lenders.

(g)           Miscellaneous.

(i)            Notice of Borrowing.  The Administrative Agent shall have received
a Notice of Borrowing from the Borrower in accordance with Section 2.2(a),
and a Notice of Account Designation specifying the account or accounts to which
the proceeds of any Loans made after the Closing Date are to be disbursed.

(ii)           Due Diligence.  The Administrative Agent shall have
completed, to its satisfaction, all legal, tax, business and other due
diligence with respect to the business, assets, liabilities, operations and
condition (financial or otherwise) of the Borrower and its Subsidiaries in
scope and determination satisfactory to the Administrative Agent in its sole
discretion.

(iii)          Availability.  After giving effect to the funding of the Revolving
Credit Loans and the issuance of Letters of Credit on the Closing Date, at
least $3,000,000 in availability shall exist under the Revolving Credit
Facility.

(iv)          Material Adverse Effect.  There shall have occurred no change,
occurrence, or development since September 30, 2005, in the business,
assets, properties, liabilities (actual or contingent), operations, condition
(financial or otherwise), or prospects of the Borrower or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect on the Borrower
and its Subsidiaries, taken as a whole.

(v)           MDVX Indebtedness.  The collateral securing the MDVX Indebtedness
pursuant to the MDVX Security Agreement (the “MDVX Collateral”) and its
relationship with the Collateral is satisfactory to the Administrative Agent.

 49
 

 

(vi)          Capital Structure.  Administrative Agent shall have approved the
legal, capital or ownership structure and the shareholder arrangements of the
Borrower and each Subsidiary.

(vii)         [Reserved].

(viii)        Other Documents.  All opinions, certificates and other
instruments and all proceedings in connection with the transactions
contemplated by this Agreement, the other Loan Documents and the Acquisition
Documents shall be satisfactory in form and substance to the Administrative
Agent.  The Administrative Agent shall
have received copies of all other documents, certificates and instruments
reasonably requested thereby, with respect to the transactions contemplated by
this Agreement.

(h)           Acquisition, Etc.  The following transactions shall have been
consummated, in each case on terms and conditions satisfactory to the Lenders:

(i)            The FastChannel Acquisition;

(ii)           the Administrative Agent shall have
received satisfactory evidence that the fees and expenses to be incurred in
connection with the FastChannel Acquisition shall not exceed $2,529,000; and

(iii)          the Administrative Agent shall have
received satisfactory evidence that FastChannel’s revolving credit facility
with Comerica Bank shall have been terminated and all amounts thereunder shall
have been paid in full and satisfactory arrangements shall have been made for
the termination of all Liens granted in connection therewith; provided, however,
that (x) letters of credit issued by Comerica Bank for the account of
FastChannel and outstanding on the Closing Date in an aggregate face amount of
$370,955 may remain outstanding and secured by cash collateral in an amount not
to exceed $370,955, and (y) letters of credit issued by Silicon Valley Bank for
the account of FastChannel and outstanding on the Closing Date in an aggregate
face amount of $580,000 may remain outstanding and secured by cash collateral
in an amount not to exceed $580,000.

(i)            Acquisition Documents.  The Administrative Agent shall have received
true and correct copies, certified as to authenticity by the Borrower, of the Acquisition
Documents and such other documents or instruments as may be requested by the
Administrative Agent, including a copy of each debt instrument, security
agreement, mortgage, deed of trust, or other Material Contract to which any
Credit Party or any of its Subsidiaries may be a party and a copy of each
employment agreement and other compensation agreement with each executive
officer of any Credit Party.

SECTION 6.3                   Conditions to All
Extensions of Credit.  The
obligations of the Lenders to make any Extensions of Credit (including the
initial Extension of Credit), convert or continue any Loan and/or the Issuing
Lender to issue or extend any Letter of Credit are subject to the satisfaction
of the following conditions precedent on the relevant borrowing, continuation,
conversion, issuance or extension date:

 50
 

 

(a)           Continuation of Representations
and Warranties.  The representations
and warranties of the Credit Parties contained in the Loan Documents shall be
true and correct on and as of such borrowing, continuation, conversion,
issuance or extension date with the same effect as if made on and as of such
date, except for any representation and warranty that specifically refers to an
earlier date, which representation and warranty shall remain true and correct
as of such earlier date.

(b)           No Existing Default.  No Default or Event of Default shall have
occurred and be continuing (i) on the borrowing, continuation or conversion
date with respect to such Loan or after giving effect to the Loans to be made,
continued or converted on such date or (ii) on the issuance or extension date
with respect to such Letter of Credit or after giving effect to the issuance or
extension of such Letter of Credit on such date.

(c)           Notices.  The Administrative Agent shall have received
a Notice of Borrowing or Notice of Conversion/Continuation, as applicable, from
the Borrower in accordance with Sections 2.2(a), 4.2 or 5.2,
as applicable.

(d)           Additional Documents.  The Administrative Agent shall have received
each additional document, instrument, legal opinion or other item reasonably
requested by it.

ARTICLE
VII

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

SECTION 7.1                   Representations and
Warranties.  To induce the
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make Extensions of Credit, the Borrower hereby represents and
warrants to the Administrative Agent and Lenders both before and after giving
effect to the transactions contemplated hereunder that:

(a)           Organization; Power; Qualification.  Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has the power and authority to
own its properties and to carry on its business as now being and hereafter
proposed to be conducted and is duly qualified and authorized to do business in
each jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization except in jurisdictions
where the failure to be so qualified or in good standing could not reasonably
be expected to result in a Material Adverse Effect.  The jurisdictions in which the Borrower and
its Subsidiaries are organized and qualified to do business as of the Closing
Date are described on Schedule 7.1(a).

(b)           Ownership.  Each Subsidiary of the Borrower as of the
Closing Date is listed on Schedule 7.1(b).  As of the Closing Date, the capitalization of
the Subsidiaries of the Borrower consists of the number of shares, authorized,
issued and outstanding, of such classes and series, with or without par value,
described on Schedule 7.1(b).  All
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable, with no personal liability attaching to the ownership
thereof, and not subject to any preemptive or similar rights, except as
described in Schedule 7.1(b).  The
shareholders of the Subsidiaries of the Borrower and the number of shares owned
by each as of the Closing Date are described on Schedule 7.1(b).  As of

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the Closing Date, there are no outstanding stock
purchase warrants, subscriptions, options, securities, instruments or other
rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of Capital
Stock of the Subsidiaries of the Borrower, except as described on Schedule
7.1(b).

(c)           Authorization of Agreement, Loan
Documents and Borrowing.  Each of the
Borrower and its Subsidiaries has the right, power and authority and has taken
all necessary corporate and other action to authorize the execution, delivery
and performance of this Agreement and each of the other Loan Documents to which
it is a party in accordance with their respective terms.  This Agreement and each of the other Loan
Documents have been duly executed and delivered by the duly authorized officers
of the Borrower and each of its Subsidiaries party thereto, and each such
document constitutes the legal, valid and binding obligation of the Borrower or
its Subsidiary party thereto, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor relief laws from
time to time in effect which affect the enforcement of creditors’ rights in
general and the availability of equitable remedies.

(d)           Compliance of Agreement, Loan
Documents and Borrowing with Laws, Etc. 
The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the Extensions of Credit hereunder and
the transactions contemplated hereby do not and will not, by the passage of
time, the giving of notice or otherwise, (i) require any Governmental Approval
or violate any Applicable Law relating to the Borrower or any of its
Subsidiaries where the failure to obtain such Governmental Approval could
reasonably be expected to have a Material Adverse Effect, (ii) conflict with,
result in a breach of or constitute a default under the articles of
incorporation, bylaws or other organizational documents of the Borrower or any
of its Subsidiaries, (iii) conflict with, result in a breach of or constitute a
default under any indenture, agreement or other instrument to which such Person
is a party or by which any of its properties may be bound or any Governmental
Approval relating to such Person, which could reasonably be expected to have a
Material Adverse Effect, (iv) result in or require the creation or imposition
of any Lien upon or with respect to any property now owned or hereafter
acquired by such Person other than Liens arising under the Loan Documents or
(v) require any consent or authorization of, filing with, or other act in
respect of, an arbitrator or Governmental Authority and no consent of any other
Person is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement other than consents,
authorizations, filings or other acts or consents for which the failure to
obtain or make could not reasonably be expected to have a Material Adverse
Effect and other than consents or filings under the UCC.

(e)           Compliance with Law; Governmental
Approvals.  Each of the Borrower and
its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to
it or any of its respective properties and (iii) has timely filed all material
reports, documents and other materials required to be filed by it under all
Applicable Laws with any Governmental Authority and has retained all material
records and documents required to be retained by it under Applicable Law

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except in each case (i), (ii) or (iii) where the
failure to have, comply or file could not reasonably be expected to have a
Material Adverse Effect.  The Acquisition
and the Acquisition Documents comply with all Applicable Laws relating thereto.

(f)            Tax Returns and Payments.  Each of the Borrower and its Subsidiaries has
duly filed or caused to be filed all federal, state, local and other tax
returns required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all federal, state, local and other taxes,
assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable.  Such returns accurately reflect in all
material respects all liability for taxes of the Borrower and its Subsidiaries
for the periods covered thereby.  There
is no ongoing audit or examination or, to the knowledge of the Borrower, other
investigation by any Governmental Authority of the tax liability of the Borrower
and its Subsidiaries.  No Governmental
Authority has asserted any Lien or other claim against the Borrower or any
Subsidiary thereof with respect to unpaid taxes which has not been discharged
or resolved other than Permitted Liens. 
The charges, accruals and reserves on the books of the Borrower and any
of its Subsidiaries in respect of federal, state, local and other taxes for all
Fiscal Years and portions thereof since the organization of the Borrower and any
of its Subsidiaries are in the judgment of the Borrower adequate, and the
Borrower does not anticipate any additional taxes or assessments for any of
such years.

(g)           Intellectual Property Matters.  Each of the Borrower and its Subsidiaries
owns or possesses rights to use all material franchises, licenses, copyrights,
copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, service mark, service mark rights,
trade names, trade name rights, copyrights and other rights with respect to the
foregoing which are reasonably necessary to conduct its business.  No event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation or termination of
any such rights, and neither the Borrower nor any Subsidiary thereof is liable
to any Person for infringement under Applicable Law with respect to any such
rights as a result of its business operations except as could not reasonably be
expected to have a Material Adverse Effect.

(h)           Environmental Matters.

(i)            The properties owned, leased or
operated by the Borrower and its Subsidiaries now, and to their knowledge have
not previously, contained any Hazardous Materials in amounts or concentrations
which (A) constitute or constituted a violation of applicable Environmental
Laws or (B) could give rise to liability under applicable Environmental Laws;

(ii)           The Borrower, each of its
Subsidiaries and their respective properties and all operations conducted in
connection thereon are in compliance in all material respects, and have been in
compliance in all material respects, with all applicable Environmental Laws, to
the their knowledge, there is no contamination at, under or about such
properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof;

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(iii)          Neither the Borrower nor any
Subsidiary thereof has received any written notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental Laws,
nor does the Borrower or any Subsidiary thereof have knowledge or reason to
believe that any such notice will be received or is being threatened;

(iv)          Hazardous Materials have not been
transported or disposed of to or from the properties owned, leased or operated
by the Borrower and its Subsidiaries in violation of, or in a manner or to a
location which could give rise to liability under, Environmental Laws with
respect to the Borrower or its Subsidiaries, nor have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of such
properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Laws with respect to the Borrower or its
Subsidiaries;

(v)           No judicial proceedings or
governmental or administrative action is pending, or, to the knowledge of the
Borrower, threatened, under any Environmental Law to which the Borrower or any
Subsidiary thereof is or will be named as a potentially responsible party with
respect to such properties or operations conducted in connection therewith, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to Borrower, any
Subsidiary or such properties or such operations that could reasonably be
expected to have a Material Adverse Effect; and

(vi)          There has been no release, or to the
best of the Borrower’s knowledge, threat of release, of Hazardous Materials at
or from properties owned, leased or operated by the Borrower or any Subsidiary,
now or in the past, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws that could reasonably be
expected to have a Material Adverse Effect.

(i)            ERISA.

(i)            As of the Closing Date, neither the
Borrower nor any ERISA Affiliate maintains or contributes to, or has any
obligation under, any Employee Benefit Plans other than those identified on Schedule
7.1(i);

(ii)           The Borrower and each ERISA Affiliate
is in material compliance with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all
Employee Benefit Plans except for any required amendments for which the
remedial amendment period as defined in Section 401(b) of the Code has not yet
expired and except where a failure to so comply could not reasonably be
expected to have a Material Adverse Effect. 
Each Employee Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such plan has been determined to
be exempt under Section 501(a) of the Code except for such plans that have not
yet received determination letters but for which the remedial amendment period
for submitting a determination letter has not yet expired.  No liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes

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or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan except for a liability that could not reasonably be
expected to have a Material Adverse Effect;

(iii)          As of the Closing Date, no Pension
Plan has been terminated, nor has any accumulated funding deficiency (as
defined in Section 412 of the Code) been incurred (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the
Internal Revenue Service been received or requested with respect to any Pension
Plan, nor has the Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by Section 412 of
the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the
due dates of such contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure under Section
4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;

(iv)          Except where the failure of any of the
following representations to be correct in all material respects could not
reasonably be expected to have a Material Adverse Effect, neither the Borrower
nor any ERISA Affiliate has:  (A) engaged
in a nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid, (C) failed to make a required contribution
or payment to a Multiemployer Plan, or (D) failed to make a required
installment or other required payment under Section 412 of the Code;

(v)           No Termination Event has occurred or
is reasonably expected to occur; and

(vi)          Except where the failure of any of the
following representations to be correct in all material respects could not
reasonably be expected to have a Material Adverse Effect, no proceeding, claim
(other than a benefits claim in the ordinary course of business), lawsuit
and/or investigation is existing or, to the best knowledge of the Borrower
after due inquiry, threatened concerning or involving any (A) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by the Borrower or any ERISA Affiliate, (B) Pension Plan or (C)
Multiemployer Plan.

(j)            Margin Stock.  Neither the Borrower nor any Subsidiary
thereof is engaged principally or as one of its activities in the business of
extending credit for the purpose of “purchasing” or “carrying” any “margin
stock” (as each such term is defined or used, directly or indirectly, in
Regulation U of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any of the Loans
or Letters of Credit will be used for purchasing or carrying margin stock or
for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation T, U or X of such Board of Governors.

(k)           Government Regulation.  Neither the Borrower nor any Subsidiary
thereof is an “investment company” or a company “controlled” by an “investment
company” (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Borrower nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Interstate Commerce Act, as amended, or any other Applicable Law
which limits its ability to incur or consummate the transactions contemplated
hereby.

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(l)            Material Contracts.  Schedule 7.1(l) sets forth a complete
and accurate list of all Material Contracts of the Borrower and its
Subsidiaries in effect as of the Closing Date not listed on any other Schedule
hereto; other than as set forth in Schedule 7.1(l), each such Material
Contract is, and after giving effect to the consummation of the transactions
contemplated by the Loan Documents will be, in full force and effect in
accordance with the terms thereof.  To
the extent requested by the Administrative Agent, the Borrower and its
Subsidiaries have delivered to the Administrative Agent a true and complete
copy of each Material Contract required to be listed on Schedule 7.1(l)
or any other Schedule hereto.  Neither
the Borrower nor any Subsidiary (nor, to the knowledge of the Borrower, any
other party thereto) is in breach of or in default under any Material Contract
in any material respect.

(m)          Employee Relations.  Each of the Borrower and its Subsidiaries has
a stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 7.1(m).  The Borrower knows of no pending, threatened
or contemplated strikes, work stoppage or other collective labor disputes
involving its employees or those of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect.

(n)           Burdensome Provisions.  Neither the Borrower nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect.  The Borrower and its Subsidiaries do not
presently anticipate that future expenditures needed to meet the provisions of
any statutes, orders, rules or regulations of a Governmental Authority will be
so burdensome as to have a Material Adverse Effect.  No Subsidiary is party to any agreement or
instrument or otherwise subject to any restriction or encumbrance that
restricts or limits its ability to make dividend payments or other
distributions in respect of its Capital Stock to the Borrower or any Subsidiary
or to transfer any of its assets or properties to the Borrower or any other
Subsidiary in each case other than existing under or by reason of the Loan
Documents or Applicable Law.

(o)           Financial Statements.  The audited and unaudited financial
statements delivered pursuant to Section 6.2(e)(i) are complete and
correct and fairly present on a Consolidated basis the assets, liabilities and
financial position of the Borrower and its Subsidiaries as at such dates, and
the results of the operations and changes of financial position for the periods
then ended (other than customary year-end adjustments for unaudited financial
statements).  All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP.  Such
financial statements show all material indebtedness and other material
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of
the date thereof, including material liabilities for taxes, material commitments,
and Indebtedness, in each case, to the extent required to be disclosed under
GAAP.  The pro forma financial statements
delivered pursuant to Section 6.2(e)(ii) were prepared in good faith on
the basis of the assumptions stated therein, which assumptions are believed to
be reasonable in light of then existing conditions except that such financial
statements and forecasts shall be subject to normal year end closing and audit
adjustments.

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(p)           No Material Adverse Change.  Since September 30, 2005, there has been
no material adverse change in the properties, business, operations, prospects,
or condition (financial or otherwise) of the Borrower and its Subsidiaries,
taken as a whole, and no event has occurred or condition arisen that could
reasonably be expected to have a Material Adverse Effect.

(q)           Solvency.  As of the Closing Date and after giving
effect to each Extension of Credit made hereunder, the Borrower and each of its
Subsidiaries will be Solvent.

(r)            Real Property; Titles to
Properties.  All real property
currently owned or leased by the Borrower or any Subsidiary is listed on Schedule 7.1(r).  Each of the Borrower and its Subsidiaries has
such title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and valid and legal title to all of
its personal property and assets, including, but not limited to, those
reflected on the balance sheets of the Borrower and its Subsidiaries delivered
pursuant to Section 6.2(e), except those which have been disposed of by
the Borrower or its Subsidiaries subsequent to such date which dispositions
have been in the ordinary course of business or as otherwise expressly
permitted hereunder.

(s)           Insurance.  The properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in locations where
the Borrower or the applicable Subsidiary operates.

(t)            Liens.  None of the properties and assets of the
Borrower or any Subsidiary thereof is subject to any Lien, except Permitted
Liens.  Neither the Borrower nor any
Subsidiary thereof has signed any financing statement or any security agreement
authorizing any secured party thereunder to file any financing statement,
except to perfect those Permitted Liens.

(u)           Indebtedness and Guaranty
Obligations.  Schedule 7.1(u)
is a complete and correct listing of all Indebtedness and Guaranty Obligations
of the Borrower and its Subsidiaries as of the Closing Date in excess of $100,000.  The Borrower and its Subsidiaries have
performed and are in compliance with all of the material terms of such
Indebtedness and Guaranty Obligations and all instruments and agreements
relating thereto, and no default or event of default, or event or condition
which with notice or lapse of time or both would constitute such a default or
event of default on the part of the Borrower or any of its Subsidiaries exists
with respect to any such Indebtedness or Guaranty Obligation.

(v)           Litigation.  Except for matters existing on the Closing
Date and set forth on Schedule 7.1(v), there are no actions, suits or
proceedings pending nor, to the knowledge of the Borrower, threatened against
or in any other way relating adversely to or affecting the Borrower or any
Subsidiary thereof or any of their respective properties in any court or before
any arbitrator of any kind or before or by any Governmental Authority that
(i) has or could reasonably be expected to have a Material Adverse Effect,
or (ii) materially adversely affects any of the Loan Documents or the
Acquisition Documents or any of the transactions contemplated hereby or
thereby.

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(w)          Absence of Defaults.  No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a
default or event of default by the Borrower or any Subsidiary thereof under any
Material Contract or judgment, decree or order to which the Borrower or its
Subsidiaries is a party or by which the Borrower or its Subsidiaries or any of
their respective properties may be bound or which would require the Borrower or
its Subsidiaries to make any payment thereunder prior to the scheduled maturity
date therefor.

(x)            Senior Indebtedness Status.  The Obligations of the Borrower and each Subsidiary
under this Agreement and each of the other Loan Documents ranks and shall
continue to rank at least senior in priority of payment to all Subordinated
Indebtedness permitted hereunder and all senior unsecured Indebtedness of each
such Person and is designated as “Senior Indebtedness” under all instruments
and documents, now or in the future, relating to all Subordinated Indebtedness
and all senior unsecured Indebtedness of such Person.  The security interests created by
the Security Documents are valid and perfected first priority security
interests (subject to Permitted Liens) in the Collateral in favor of
Administrative Agent, for itself and for the benefit of the Secured Parties,
securing, in accordance with the terms of the Security Documents, the
outstanding Obligations, and the Collateral is subject to no Liens other than
Permitted Liens.  The Liens created by
the Security Documents are enforceable as security for the outstanding
Obligations in accordance with their terms with respect to the Collateral
subject, as to enforcement of remedies, to the following qualifications:
(i) an order of specific performance and an injunction are discretionary
remedies and, in particular, may not be available where damages are considered
an adequate remedy at law, (ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors’ rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of any Credit Party or DG
III), and (iii) enforcement may be subject to general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) and may be limited by Applicable Law that may affect the enforcement
of certain rights or remedies provided for in such Loan Documents.

(y)           OFAC.  None of the Borrower, any Subsidiary of the
Borrower or any Affiliate of the Borrower: (i) is a Sanctioned Person, (ii) has
more than 10% of its assets in Sanctioned Entities, or (iii) derives more than
10% of its operating income from investments in, or transactions with
Sanctioned Persons or Sanctioned Entities. 
The proceeds of any Loan will not be used and have not been used to fund
any operations in, finance any investments or activities in, or make any
payments to, a Sanctioned Person or a Sanctioned Entity.

(z)            Disclosure.  The Borrower and/or its Subsidiaries have
disclosed to the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which the Borrower or any of
its Subsidiaries are subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No financial
statement, material report, material certificate or other material information furnished
(whether in writing or orally), taken together as a whole, by or on behalf of
any of the Borrower or any of its Subsidiaries to the Administrative Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact

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necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, pro forma financial
information, estimated financial information and other projected or estimated
information, such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

(aa)         Acquisition.  As of the date hereof, all of the
representations and warranties contained in the Acquisition Documents are true
and correct in all material respects. 
The Borrower has delivered to the Administrative Agent complete and
correct copies of the Acquisition Documents, including any amendments,
supplements or modifications with respect to any of the foregoing.

SECTION 7.2                   Survival of Representations
and Warranties, Etc.  All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including, but not limited to, any such representation or warranty
made in or in connection with any amendment thereto) shall constitute
representations and warranties made under this Agreement.  All representations and warranties made under
this Agreement shall be made or deemed to be made at and as of the Closing Date
(except those that are expressly made as of a specific date), shall survive the
Closing Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.

ARTICLE VIII

FINANCIAL INFORMATION AND NOTICES

Until all the Obligations have been paid and satisfied
in full and the Commitments terminated, unless consent has been obtained in the
manner set forth in Section 14.2, the Borrower will furnish or cause to
be furnished to the Administrative Agent at the Administrative Agent’s Office
at the address set forth in Section 14.1 and to the Lenders at their
respective addresses as set forth on the Register, or such other office as may
be designated by the Administrative Agent and Lenders from time to time:

SECTION
8.1                   Financial
Statements and Projections.

(a)           Quarterly Financial Statements.  As soon as practicable and in any event
within forty-five (45) days (or, if earlier, on the date of any required public
filing thereof) after the end of each fiscal quarter of each Fiscal Year, an
unaudited Consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated
and consolidating statements of income, retained earnings and cash flows and a
report containing management’s discussion and analysis of such financial
statements for the fiscal quarter then ended and that portion of the Fiscal
Year then ended, including the notes thereto, all in reasonable detail setting
forth in comparative form the corresponding figures as of the end of and for
the corresponding period in the preceding Fiscal Year and prepared by the
Borrower in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the period, and
certified by the chief financial officer of the

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Borrower to present fairly in all material respects
the financial condition of the Borrower and its Subsidiaries on a Consolidated
and consolidating basis as of their respective dates and the results of
operations of the Borrower and its Subsidiaries for the respective periods then
ended, subject to normal year end adjustments.

(b)           Annual Financial Statements.  As soon as practicable and in any event
within ninety (90) days (or, if earlier, on the date of any required public
filing thereof) after the end of each Fiscal Year, an audited Consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
close of such Fiscal Year and audited Consolidated and consolidating statements
of income, retained earnings and cash flows and a report containing management’s
discussion and analysis of such financial statements for the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures as of the end of and for the
preceding Fiscal Year and prepared in accordance with GAAP and, if applicable,
containing disclosure of the effect on the financial position or results of
operations of any change in the application of accounting principles and
practices during the year.  Such annual
financial statements shall be audited by an independent certified public accounting
firm acceptable to the Administrative Agent, and accompanied by a report
thereon by such certified public accountants that does not contain a “going
concern” or like qualification or exception or a qualification with respect to
scope limitations imposed by the Borrower or any of its Subsidiaries or with
respect to accounting principles followed by the Borrower or any of its
Subsidiaries not in accordance with GAAP.

(c)           Annual Business Plan and Financial
Projections.  As soon as practicable
and in any event within forty-five (45) days prior to the beginning of each
Fiscal Year, a business plan of the Borrower and its Subsidiaries for the
ensuing four (4) fiscal quarters, such plan to be prepared in accordance with
GAAP and to include, on a quarterly basis, the following:  a quarterly operating and capital budget, a
projected income statement, statement of cash flows and balance sheet and a
report containing management’s discussion and analysis of such projections,
accompanied by a certificate from a Responsible Officer of the Borrower to the
effect that, to the best of such officer’s knowledge, such projections are good
faith estimates (utilizing reasonable assumptions) of the financial condition
and operations of the Borrower and its Subsidiaries for such four (4) quarter
period.

SECTION 8.2                   Officer’s Compliance
Certificate.  At each time financial
statements are delivered pursuant to Section 8.1(a) or (b) and at
such other times as the Administrative Agent shall reasonably request, an
Officer’s Compliance Certificate.

SECTION 8.3                   Excess Cash Flow
Certificate.  At each time financial
statements are delivered pursuant to Section 8.1(b), an Excess Cash Flow
Certificate.

SECTION 8.4                   Accountants’ Certificate.  At each time financial statements are
delivered pursuant to Section 8.1(b), a certificate of the independent
public accountants certifying such financial statements that in connection with
their audit, nothing came to their attention that caused them to believe that
the Borrower failed to comply with the terms, covenants, provisions or
conditions of Article X, insofar as they relate to financial and
accounting matters or, if such is not the case, specifying such non-compliance
and its nature and period of existence.

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SECTION
8.5                   Other Reports.

(a)           Promptly upon receipt thereof, copies
of all reports, if any, submitted to the Borrower or its Board of Directors by
its independent public accountants in connection with their auditing function,
including, without limitation, any management report and any management
responses thereto; and

(b)           such other information regarding the
operations, business affairs and financial condition of the Borrower or any of
its Subsidiaries as the Administrative Agent or any Lender may reasonably
request.

SECTION 8.6                   Notice of Litigation and
Other Matters.  Prompt (but in no
event later than ten (10) days after an officer of the Borrower obtains
knowledge thereof) telephonic and written notice of:

(a)           the commencement of all proceedings
and investigations by or before any Governmental Authority and all actions and
proceedings in any court or before any arbitrator against or involving the
Borrower or any Subsidiary thereof or any of their respective properties,
assets or businesses that if adversely determined could reasonably be expected
to result in material liability to the Borrower and its Subsidiaries;

(b)           any notice of any violation received
by the Borrower or any Subsidiary thereof from any Governmental Authority
including, without limitation, any notice of violation of Environmental Laws
which in any such case could reasonably be expected to have a Material Adverse
Effect;

(c)           any labor controversy that has
resulted in, or threatens to result in, a strike or other work action against
the Borrower or any Subsidiary thereof;

(d)           any attachment, judgment, lien, levy
or order exceeding $250,000 that may be assessed against or threatened against
the Borrower or any Subsidiary thereof;

(e)           (i) any Default or Event of Default
or (ii) any event which constitutes or which with the passage of time or
giving of notice or both would constitute a default or event of default under
any Material Contract to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any Subsidiary thereof or any of their
respective properties may be bound which could reasonably be expected to have a
Material Adverse Effect;

(f)            (i) any unfavorable determination
letter from the Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code (along with a copy
thereof), (ii) all notices received by the Borrower or any ERISA Affiliate of
the PBGC’s intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan, (iii) all notices received by the Borrower or
any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv)
the Borrower obtaining knowledge or reason to know that the Borrower or any
ERISA Affiliate has filed or intends to file a notice of intent to terminate
any Pension Plan under a distress termination within the meaning of Section
4041(c) of ERISA; and

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(g)           any event which makes any of the
representations set forth in Section 7.1 that is subject to materiality
or Material Adverse Effect qualifications inaccurate in any respect or any
event which makes any of the representations set forth in Section 7.1
that is not subject to materiality or Material Adverse Effect qualifications
inaccurate in any material respect.

SECTION 8.7                   Accuracy of Information.  All written information, reports, statements
and other papers and data furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender whether pursuant to this Article VIII
or any other provision of this Agreement, or any of the Security Documents,
shall, at the time the same is so furnished, comply with the representations
and warranties set forth in Section 7.1(y).

ARTICLE
IX

AFFIRMATIVE COVENANTS

Until all of the Obligations have been paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 14.2, the Borrower will,
and will cause each of its Subsidiaries to:

SECTION 9.1                   Preservation of Corporate
Existence and Related Matters. 
Except as permitted by Section 11.4, preserve and maintain its
separate corporate existence and all rights, franchises, licenses and
privileges necessary to the conduct of its business, and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect.

SECTION 9.2                   Maintenance of Property.  In addition to the requirements of any of the
Security Documents, protect and preserve all properties necessary in and
material to its business, including copyrights, patents, trade names, service
marks and trademarks; maintain in good working order and condition, ordinary
wear and tear excepted, all buildings, equipment and other tangible real and
personal property; and from time to time make or cause to be made all repairs,
renewals and replacements thereof and additions to such property necessary for
the conduct of its business, so that the business carried on in connection therewith
may be conducted in a commercially reasonable manner.

SECTION 9.3                   Insurance.  Maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law and as are required by this Agreement and any Security Document
(including, without limitation, hazard and business interruption insurance),
and on the Closing Date and from time to time thereafter deliver to the Administrative
Agent upon its request information in reasonable detail as to the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the properties
and risks covered thereby.

SECTION 9.4                   Accounting Methods and
Financial Records.  Maintain a system
of accounting, and keep proper books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be
necessary to permit the preparation of

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financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.

SECTION 9.5                   Payment and Performance of
Obligations.  Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that the Borrower or such Subsidiary may contest
any item described in clauses (a) or (b) of this Section in good faith so long
as adequate reserves are maintained with respect thereto in accordance with
GAAP.

SECTION 9.6                   Compliance With Laws and
Approvals.  Observe and remain in
compliance in all material respects with all Applicable Laws and maintain in
full force and effect all Governmental Approvals, in each case applicable to
the conduct of its business.

SECTION 9.7                   Environmental Laws.  In addition to and without limiting the
generality of Section 9.6, (a) comply with, and ensure such
compliance by all tenants and subtenants with all applicable Environmental Laws
and obtain and comply with and maintain, and ensure that all tenants and
subtenants, if any, obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws, (b) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws, and promptly comply with all lawful orders and
directives of any Governmental Authority regarding Environmental Laws, and (c)
defend, indemnify and hold harmless the Administrative Agent and the Lenders,
and their respective parents, Subsidiaries, Affiliates, employees, agents,
officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the presence of Hazardous Materials, or the violation of,
noncompliance with or liability under any Environmental Laws applicable to the
operations of the Borrower or any such Subsidiary, or any orders, requirements
or demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney’s and consultant’s fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor, as
determined by a court of competent jurisdiction by final nonappealable
judgment.

SECTION 9.8                   Compliance with ERISA.
 In addition to and without limiting the
generality of Section 9.6, (a) except where the failure to so comply
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (i) comply with all material applicable provisions of
ERISA and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans, (ii) not take any action or fail to take action
the result of which could be a liability to the PBGC or to a Multiemployer
Plan, (iii) not participate in any prohibited transaction that could result in
any civil penalty under ERISA or tax under the Code and (iv) operate each
Employee Benefit Plan in such a manner that will not incur any tax liability
under Section 4980B of the Code or any liability to any qualified beneficiary
as defined in Section 4980B of the Code and (b) furnish to the Administrative
Agent upon the

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Administrative Agent’s request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent.

SECTION 9.9         Compliance With Agreements.  Comply in all material respects with each
term, condition and provision of all leases, agreements and other instruments
entered into in the conduct of its business including, without limitation, any
Material Contract.

SECTION 9.10                 Visits and Inspections.  Permit representatives of the Administrative
Agent or any Lender, from time to time upon prior reasonable notice and at such
times during normal business hours, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files, including,
but not limited to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects.  Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent or
any Lender may do any of the foregoing at any time without advance notice.

SECTION
9.11                 Additional
Subsidiaries.

(a)           Additional Domestic Subsidiaries.  Notify the Administrative Agent of the
creation or acquisition of any Domestic Subsidiary and promptly thereafter (and
in any event within thirty (30) days), cause such Person to (i) become a
Guarantor and grant to the Administrative Agent a first priority security
interest in all assets owned by such Subsidiary and guarantee the Obligations by
delivering to the Administrative Agent a duly executed assumption agreement to
the Guarantee and Collateral Agreement substantially in the form of Annex 1
thereto and such other documents as the Administrative Agent shall deem
appropriate for such purpose, (ii) deliver to the Administrative Agent such
documents and certificates referred to in Section 6.2 as may be
reasonably requested by the Administrative Agent, (iii) deliver to the
Administrative Agent such original Capital Stock or other certificates and
stock or other transfer powers evidencing the Capital Stock of such Person, (iv)
deliver to the Administrative Agent such updated Schedules to the Loan
Documents as requested by the Administrative Agent with respect to such Person,
and (v) deliver to the Administrative Agent such other documents as may be
reasonably requested by the Administrative Agent, all in form, content and
scope reasonably satisfactory to the Administrative Agent.

(b)           Additional Foreign Subsidiaries.  Notify the Administrative Agent at the time
that any Person becomes a first tier Foreign Subsidiary of the Borrower or any
Subsidiary, and promptly thereafter (and in any event within forty-five (45)
days after creation of such Foreign Subsidiary), cause (i) the Borrower or the
applicable Subsidiary to deliver to the Administrative Agent, Security
Documents pledging sixty-six percent (66%) of the total outstanding Capital
Stock of such new Foreign Subsidiary and a consent thereto executed by such new
Foreign Subsidiary (including, without limitation, if applicable, original
stock certificates (or the equivalent thereof pursuant to the Applicable Laws
and practices of any relevant foreign jurisdiction) evidencing the Capital
Stock of such new Foreign Subsidiary, together with an appropriate undated
stock power for each certificate duly executed in blank by the registered owner
thereof), provided, however, that the Borrower or applicable Subsidiary shall
pledge one hundred percent (100%) of the total outstanding Capital Stock of
such new Foreign Subsidiary if, in the good faith judgment of the Borrower or
such Subsidiary, no material adverse tax

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consequences would result from such 100% pledge, (ii)
such Person to guarantee the Obligations by delivering to the Administrative
Agent an executed assumption and supplement to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent shall deem
appropriate for such purpose (provided that, in the good faith judgment of the
Borrower or such Subsidiary, no material adverse tax consequences would result
from such Person guaranteeing the Obligations), (iii) such Person to deliver to
the Administrative Agent such documents and certificates referred to in Section
6.2 as may be reasonably requested by the Administrative Agent, (iv) such
Person to deliver to the Administrative Agent such updated Schedules to the
Loan Documents as requested by the Administrative Agent with regard to such
Person and (v) such Person to deliver to the Administrative Agent such other
documents as may be reasonably requested by the Administrative Agent, all in
form, content and scope reasonably satisfactory to the Administrative Agent.

SECTION 9.12                 DG III as Grantor.  Notify the Administrative Agent of the
payment in full of the MDVX Indebtedness and promptly thereafter (and in any
event within ten (10) days), cause DG III to (i) grant to the
Administrative Agent a first priority security interest in all assets owned by
DG III and guarantee the Obligations by delivering to the Administrative Agent
a duly executed assumption agreement to the Guarantee and Collateral Agreement
substantially in the form of Annex 1 thereto and such other documents as
the Administrative Agent shall deem appropriate for such purpose, (ii) deliver
to the Administrative Agent such documents and certificates referred to in Section
6.2 as may be reasonably requested by the Administrative Agent, (iii)
deliver to the Administrative Agent such original Capital Stock or other
certificates and stock or other transfer powers evidencing the Capital Stock of
DG III, (iv) deliver to the Administrative Agent such updated Schedules to the
Loan Documents as requested by the Administrative Agent with respect to such
Person, and (v) deliver to the Administrative Agent such other documents as may
be reasonably requested by the Administrative Agent, all in form, content and
scope reasonably satisfactory to the Administrative Agent.

SECTION 9.13                 Real Property Collateral.  Notify the Administrative Agent, within ten
(10) days after the acquisition or lease by any Credit Party of any real
property that is not subject to the existing Security Documents, and within
sixty (60) days following request by the Administrative Agent, deliver such
Mortgages, deeds of trust, title insurance policies, environmental assessments,
surveys, landlord waivers and other documents reasonably requested by the
Administrative Agent in connection with granting and perfecting a first
priority Lien, other than Permitted Liens, on such real property in favor of
the Administrative Agent, for the benefit of itself and the Secured Parties,
all in form and substance acceptable to the Administrative Agent.

SECTION 9.14                 Use of Proceeds.  The Borrower shall use the proceeds of the
Extensions of Credit (a) to refinance the Existing Credit Agreement, (b) to finance
the FastChannel Acquisition, and (c) for working capital and general corporate
purposes of the Borrower and its Subsidiaries, including the payment of certain
fees and expenses incurred in connection with the transactions.

SECTION 9.15                 Further Assurances.  Make, execute and deliver all such additional
and further acts, things, deeds and instruments as the Administrative Agent or
the Required Lenders (through the Administrative Agent) may reasonably require
to document and

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consummate the transactions contemplated hereby and to
vest completely in and insure the Administrative Agent and the Lenders their
respective rights under this Agreement, the Letters of Credit and the other
Loan Documents.

SECTION 9.16                 Amendments to Acquisition
Documents.  No later than ten (10)
Business Days prior to the effectiveness thereof, copies of substantially final
drafts of any proposed amendment, supplement, waiver or other modification
under or pursuant to the Acquisition Documents.

SECTION 9.17                 Landlord Waivers.  On or before June 30, 2006, the Borrower
shall deliver to the Administrative Agent a duly executed Landlord Waiver from
each landlord of the Borrower or any Subsidiary (except for the landlord of
1105 Battery Street, San Francisco, CA), pursuant to a landlord waiver in
substantially the form of Exhibit I
or in such other form as is reasonably acceptable to the Administrative Agent.

SECTION 9.18                 DG III Guaranty.  In the event that the Borrower is unable to
obtain the MDVX Consent on or before the Closing Date, the Borrower shall, on
or before June 30, 2006, (a) execute and deliver to the Administrative Agent
the DG III Guaranty, and (b) deliver to the Administrative Agent the MDVX
Consent duly executed by MDVX.

ARTICLE X

FINANCIAL COVENANTS

Until all of the Obligations have been paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 14.2, the Borrower will not on
a Consolidated basis:

SECTION 10.1                 Consolidated Leverage Ratio.  Permit the Consolidated Leverage Ratio as at
the last day of any fiscal quarter of the Borrower set forth below to exceed the
ratio set forth below opposite such fiscal quarter:

	
  For Fiscal Quarter Ending

  	
   

  	
  Maximum Ratio

  
	
  September 30,
  2006

  	
   

  	
  3.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31,
  2006 and the last day of each fiscal quarter thereafter

  	
   

  	
  3.00 to 1.00

  

SECTION 10.2                 Consolidated Fixed Charge
Coverage Ratio.  Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four (4) consecutive
fiscal quarters of the Borrower ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:

	
  For Fiscal Quarter Ending

  	
   

  	
  Minimum Ratio

  
	
  September 30, 2006

  	
   

  	
  1.15 to 1.00

  
	
   

  	
   

  	
   

  
	
  December 31, 2006 and the last day of each fiscal quarter thereafter

  	
   

  	
  1.20 to 1.00

  

 

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SECTION 10.3                 Minimum Net Worth.  Permit Consolidated Net Worth at the end of
any fiscal quarter (it being agreed that the first test date under this Section
10.3 shall be September 30, 2006) to be less than the sum of (i)
$80,000,000, (ii) an amount equal to 50% of Consolidated Net Income earned in
each full fiscal quarter ending after March 31, 2006 (with no deduction for a
net loss in any such fiscal quarter) and (iii) an amount equal to 50% of the
aggregate increases in shareholders equity of the Borrower and its Subsidiaries
after the date hereof by reason of the issuance and sale of Capital Stock of
the Borrower or any Subsidiary (other than issuances to the Borrower or a
wholly-owned Subsidiary), including upon any conversion of debt securities of
the Borrower into such Capital Stock.

ARTICLE XI

NEGATIVE COVENANTS

Until all of the Obligations have been paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 14.2, the Borrower will not
and will not permit any of its Subsidiaries to, directly or indirectly:

SECTION 11.1                 Limitations on Indebtedness.  Create, incur, assume or permit to exist any
Indebtedness except:

(a)           the Obligations (excluding Hedging
Obligations permitted pursuant to Section 11.1(b));

(b)           Indebtedness of the Borrower incurred
in connection with a Hedging Agreement with a counterparty and upon terms and
conditions (including interest rate) reasonably satisfactory to the
Administrative Agent; provided, that any counterparty that is a Lender shall be
deemed satisfactory to the Administrative Agent;

(c)           Indebtedness of any Credit Party
existing on the Closing Date and not otherwise permitted under this Section and
listed on Schedule 7.1(u), and any refinancings, refundings, renewals or
extensions thereof; provided that the principal amount of such Indebtedness is
not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing;

(d)           Indebtedness of any Credit Party and
DG III pursuant to any Loan Document;

(e)           Unsecured Guaranty Obligations with
respect to Indebtedness permitted pursuant to subsection (c) of this Section;

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(f)            Unsecured Subordinated Indebtedness
owing by any Credit Party to another Credit Party;

(g)           Indebtedness of DG III to MDVX
pursuant to the MDVX Loan Agreement and the MDVX Note; and

(h)           Additional Indebtedness of the
Borrower and its Subsidiaries (other than DG III) in an aggregate amount outstanding
not to exceed $1,500,000 at any time;

provided, that no agreement or
instrument with respect to Indebtedness permitted to be incurred by this
Section shall restrict, limit or otherwise encumber (by covenant or otherwise)
the ability of any Subsidiary of the Borrower to make any payment to the
Borrower or any of its Subsidiaries (in the form of dividends, intercompany
advances or otherwise) for the purpose of enabling the Borrower to pay the
Obligations.

SECTION 11.2                 Limitations on Liens.  Create, incur, assume or permit to exist, any
Lien on or with respect to any of its assets or properties (including, without
limitation, shares of Capital Stock), real or personal, whether now owned or hereafter
acquired, except the following (each, a “Permitted Lien”):

(a)           Liens for taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to
any of the provisions of ERISA or Environmental Laws) not yet due or as to which
the period of grace (not to exceed thirty (30) days), if any, related thereto
has not expired or which are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by GAAP;

(b)           the claims of materialmen, mechanics,
carriers, warehousemen, processors or landlords for labor, materials, supplies
or rentals incurred in the ordinary course of business, (i) which are not
overdue for a period of more than thirty (30) days or (ii) which are being contested
in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP;

(c)           Liens consisting of deposits or
pledges made in the ordinary course of business in connection with, or to
secure payment of, obligations under workers’ compensation, unemployment
insurance or similar legislation;

(d)           Liens constituting encumbrances in
the nature of zoning restrictions, easements and rights or restrictions of
record on the use of real property, which in the aggregate are not substantial
in amount and which do not, in any case, detract from the value of such
property or impair the use thereof in the ordinary conduct of business;

(e)           Liens of the Administrative Agent for
the benefit of (i) the Administrative Agent and the Secured Parties under the
Loan Documents and in connection with any Banking Services Obligations and (ii)
each Hedge Lender under any Hedging Agreement permitted under Section 11.1(b);

(f)            Liens existing on any asset of any
Person at the time such Person becomes a Subsidiary or is merged or
consolidated with or into a Subsidiary which (i)were not created in

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contemplation of or in connection with such event and
(ii) do not extend to or cover any other property or assets of Borrower or any
Subsidiary, so long as any Indebtedness related to any such Liens are permitted
under Section 11.1;

(g)           Liens not otherwise permitted by this
Section and in existence on the Closing Date and described on Schedule 11.2;
and

(h)           Liens securing Capital Leases of the
Borrower or any other Credit Party, in each case as such Indebtedness is permitted
under Section 11.1(h); provided that (i) such Liens shall be created
substantially simultaneously with the acquisition or lease of the related
asset, as the case may be, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (iii) the
amount of Indebtedness secured thereby is not increased and (iv) the principal
amount of Indebtedness secured by any such Lien shall at no time exceed the
cost or fair market value, whichever is lower, of such property or lease
payment amount of such property at the time it was acquired.

SECTION 11.3                 Limitations on Loans,
Advances, Investments and Acquisitions. 
Purchase, own, invest in or otherwise acquire, directly or indirectly,
any Capital Stock, interests in any partnership or joint venture (including,
without limitation, the creation or capitalization of any Subsidiary), evidence
of Indebtedness or other obligation or security, substantially all or a portion
of the business or assets of any other Person or any other investment or
interest whatsoever in any other Person, or make or permit to exist, directly
or indirectly, any loans, advances or extensions of credit to, any investment
in cash or by delivery of property in, or Guaranty Obligation in favor of, any
Person (each, an “Investment”) except:

(a)           Investments (i) in any Credit Party,
(ii) in Subsidiaries formed after the Closing Date so long as the Borrower
complies with the applicable provisions of Section 9.11 and
(iii) the Investments described on Schedule 11.3 existing on the
Closing Date;

(b)           Investments in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or
any agency thereof maturing within one hundred twenty (120) days from the date
of acquisition thereof, (ii) commercial paper maturing no more than one
hundred twenty (120) days from the date of creation thereof and currently
having the highest rating obtainable from either Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody’s
Investors Service, Inc., (iii) certificates of deposit maturing no more
than one hundred twenty (120) days from the date of creation thereof issued by
commercial banks incorporated under the laws of the United States, each having
combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of “A” or better by a nationally recognized rating agency;
provided, that the aggregate amount invested in such certificates of deposit
shall not at any time exceed $5,000,000 for any one such certificate of deposit
and $10,000,000 for any one such bank, or (iv) time deposits maturing no
more than thirty (30) days from the date of creation thereof with commercial
banks or savings banks or savings and loan associations each having membership
either in the FDIC or the deposits of which are insured by the FDIC and in
amounts not exceeding the maximum amounts of insurance thereunder;

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(c)           Investments by the Borrower or any Credit
Party in the form of Permitted Acquisitions;

(d)           Hedging Agreements permitted pursuant
to Section 11.1(b);

(e)           purchases of assets in the ordinary
course of business;

(f)            Investments in the form of loans and
advances to employees in the ordinary course of business, which, in the
aggregate, do not exceed at any time $200,000;

(g)           intercompany Indebtedness permitted
pursuant to Section 11.1(f);

(h)           Guaranty Obligations permitted
pursuant to Section 11.1(e);

(i)            Investments in the form of loans and
advances by the Borrower to DG III made solely to enable DG III to make
regularly scheduled payments of principal and interest on the MDVX Indebtedness
provided that such payments do not violate Section 11.14 below and no
Default or Event of Default has occurred and is continuing prior to (or would
occur after giving effect to) such Investment;

(j)            Permitted Acquisitions;

(k)           the FastChannel Acquisition; and

(l)            other additional Investments by any
Credit Party not otherwise permitted pursuant to this Section not exceeding $200,000
in the aggregate in any Fiscal Year.

SECTION 11.4                 Limitations on Mergers and
Liquidation.  Merge, consolidate or
enter into any similar combination with any other Person or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution) except:

(a)           any Wholly-Owned Subsidiary of the
Borrower (other than DG III) may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or surviving
Person) or with or into any other Credit Party (other than a Foreign Subsidiary
of the Borrower) (provided that such Credit Party shall be the continuing or
surviving Person);

(b)           any Wholly-Owned Subsidiary of any
Credit Party (other than DG III) may sell, lease, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any other Credit Party (other than a Foreign Subsidiary of the
Borrower); (provided that if the transferor in such a transaction is a Credit
Party, then the transferee must either be the Borrower or any other Credit
Party that is not a Foreign Subsidiary of the Borrower);

(c)           any Wholly-Owned Subsidiary of the
Borrower (other than DG III) may merge into the Person such Wholly-Owned
Subsidiary was formed to acquire in connection with a Permitted Acquisition;

 70
 

 

(d)           any Subsidiary of the Borrower (other
than DG III) may wind-up into the Borrower or any other Credit Party; and

(e)           the Merger.

SECTION 11.5                 Limitations on Asset
Dispositions.  Make any Asset
Disposition (including, without limitation, the sale of any receivables and
leasehold interests and any sale-leaseback or similar transaction) except:

(a)           the sale of inventory in the ordinary
course of business;

(b)           the sale of obsolete, worn-out or
surplus assets no longer used or usable in the business of the Borrower or any of
its Subsidiaries;

(c)           the transfer of assets to the
Borrower or any other Credit Party pursuant to Section 11.4(b);

(d)           the sale or discount without recourse
of accounts receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;

(e)           the disposition of any Hedging
Agreement permitted pursuant to Section 11.1(b); and

(f)            additional Asset Dispositions by any
Credit Party not otherwise permitted pursuant to this Section in an aggregate
amount not to exceed $500,000 in any Fiscal
Year.

SECTION 11.6                 Limitations on Dividends and
Distributions.  Declare or pay any
dividends upon any of its Capital Stock, or purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its Capital Stock, or
make any distribution of cash, property or assets on account of shares of its
Capital Stock, or make any change in its capital structure; provided
that:

(a)           the Borrower or any Subsidiary (other
than DG III and any of its Subsidiaries) may pay dividends payable solely in
shares of its own Capital Stock;

(b)           any Subsidiary may pay cash dividends
to the Borrower or to a Wholly-Owned Subsidiary that is a Credit Party;

(c)           the Borrower may pay cash dividends
on its Capital Stock after December 31, 2006, provided that (i) no
Default or Event of Default exists at the time of any such dividend or would
result therefrom, and (ii) the Consolidated Fixed Charge Coverage Ratio on a
pro forma basis, computed as at the last day of the most recently ended
fiscal quarter of the Borrower as if such dividend (and all other dividends
paid by the Borrower after such date) had occurred on the first day of the
relevant period for testing such compliance, is greater than or equal to 1.20
to 1.00; and

(d)           the Borrower may spend up to $1,000,000
during each fiscal year of the Borrower after December 31, 2006, to repurchase
common stock of the Borrower, provided that (i) no

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Default or Event of Default exists at the time of any
such repurchase or would result therefrom, and (ii) the Consolidated Fixed
Charge Coverage Ratio on a pro forma basis, computed as at the last day of
the most recently ended fiscal quarter of the Borrower as if such repurchase
(and all other repurchases of common stock after such date) had occurred on the
first day of the relevant period for testing such compliance, is greater than
or equal to 1.20 to 1.00.

SECTION 11.7                 Limitations on Exchange and
Issuance of Capital Stock.  Issue,
sell or otherwise dispose of any class or series of Capital Stock that, by its
terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would
be, (a) convertible or exchangeable into Indebtedness or (b) required to be
redeemed or repurchased, including at the option of the holder, in whole or in
part, or has, or upon the happening of an event or passage of time would have,
a redemption or similar payment due.

SECTION 11.8                 Transactions with Affiliates.  Directly or indirectly (a) make any loan or
advance to, or purchase or assume any note or other obligation to or from, any
of its officers, directors, shareholders or other Affiliates, or to or from any
member of the immediate family of any of its officers, directors, shareholders
or other Affiliates, or subcontract any operations to any of its Affiliates or
(b) enter into, or be a party to, any other transaction not described in clause
(a) above with any of its Affiliates other than:

(i)            transactions permitted by Section 11.3,
11.4, 11.6 and 11.7;

(ii)           transactions existing on the Closing
Date and described on Schedule 11.8;

(iii)          normal compensation and reimbursement
of reasonable expenses of officers and directors; and

(iv)          other transactions in the ordinary
course of business on terms as favorable as would be obtained by it on a
comparable arms-length transaction with an independent, unrelated third party
as determined in good faith by the board of directors of the Borrower.

SECTION 11.9                 Certain Accounting Changes;
Organizational Documents.  (a) Change
its Fiscal Year end, or make any change in its accounting treatment and
reporting practices except as required by GAAP or (b) amend, modify or change
its articles of incorporation (or corporate charter or other similar
organizational documents) or amend, modify or change its bylaws (or other
similar documents) in any manner adverse in any respect to the rights or
interests of the Lenders.

SECTION
11.10               Amendments;
Payments and Prepayments of Subordinated Indebtedness.

(a)           Amend or modify (or permit the
modification or amendment of) any of the terms or provisions of any
Subordinated Indebtedness in any respect which would materially adversely
affect the rights or interests of the Administrative Agent and Lenders
hereunder;

(b)           Amend, supplement or otherwise modify
(or permit the modification or amendment of) any of the terms or provisions of
any MDVX Loan Document in any respect

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which would (i) increase the principal amount of, or
the interest rate attributable to, the MDVX Indebtedness, (ii) increase or
otherwise modify the collateral securing the MDVX Indebtedness, (iii) shorten
the maturity of the MDVX Indebtedness, (iv) increase the interest rate on, or
the rate of amortization of, the MDVX Indebtedness or (v) otherwise adversely
affect any of the rights or interests of the Administrative Agent and the Lenders
as determined in their sole discretion;

(c)           Cancel, forgive, make any payment or
prepayment on, or redeem, repurchase or acquire for value (including, without
limitation, (i) by way of depositing with any trustee with respect thereto
money or securities before due for the purpose of paying when due and (ii) at
the maturity thereof) any Subordinated Indebtedness; or

(d)           (i) Amend, supplement or otherwise
modify (pursuant to a waiver or otherwise) the terms and conditions of the
indemnities and licenses furnished to the Borrower or any of its Subsidiaries
pursuant to the Acquisition Documents or any other document delivered in
connection therewith such that after giving effect thereto such indemnities or
licenses shall be materially less favorable to the interests of the Credit
Parties or the Lenders with respect thereto or (ii) otherwise amend, supplement
or otherwise modify the terms and conditions of any of the Acquisition
Documents or any such other documents except for any such amendment, supplement
or modification that (A) becomes effective after the Closing Date and (B) could
not reasonably be expected to have a Material Adverse Effect.

SECTION
11.11               Restrictive
Agreements.

(a)           Enter into any Indebtedness which
contains any negative pledge on assets or any covenants more restrictive than
the provisions of Articles IX, X and XI hereof, or which
restricts, limits or otherwise encumbers its ability to incur Liens on or with
respect to any of its assets or properties other than the assets or properties
securing such Indebtedness.

(b)           Enter into or permit to exist any
agreement which impairs or limits the ability of any Subsidiary of the Borrower
to pay dividends to the Borrower.

SECTION 11.12               Nature of Business.  Alter in any material respect the character
or conduct of the business conducted by the Borrower and its Subsidiaries as of
the Closing Date.

SECTION 11.13               Impairment of Security
Interests.  Take or omit to take any
action, which might or would have the result of materially impairing the
security interests in favor of the Administrative Agent with respect to the
Collateral or grant to any Person (other than the Administrative Agent for the
benefit of itself and the Secured Parties pursuant to the Security Documents)
any interest whatsoever in the Collateral, except for Permitted Liens and asset
sales permitted under Section 11.5.

SECTION 11.14               Prepayments of MDVX
Indebtedness.  Prepay, repurchase or
redeem the MDVX Indebtedness or any part thereof prior to the date it is due without
the prior written consent of the Administrative Agent.

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ARTICLE
XII

DEFAULT AND REMEDIES

SECTION 12.1                 Events of Default.  Each of the following shall constitute an Event
of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:

(a)           Default in Payment of Principal of
Loans and Reimbursement Obligations. 
The Borrower shall default in any payment of principal of any Loan or
Reimbursement Obligation when and as due (whether at maturity, by reason of
acceleration or otherwise).

(b)           Other Payment Default.  The Borrower or any Subsidiary shall default
in the payment when and as due (whether at maturity, by reason of acceleration
or otherwise) of interest on any Loan or Reimbursement Obligation or the
payment of any other Obligation, and such default shall continue for a period
of three (3) Business Days.

(c)           Misrepresentation.  Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Credit Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith that is subject to materiality or
Material Adverse Effect qualifications, shall be incorrect or misleading in any
respect when made or deemed made or any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
Subsidiary herein, any other Loan Document, or in any document delivered in
connection herewith or therewith that is not subject to materiality or Material
Adverse Effect qualifications, shall be incorrect or misleading in any material
respect when made or deemed made.

(d)           Default in Performance of Certain
Covenants.  The Borrower or any
Subsidiary shall default in the performance or observance of any covenant or
agreement contained in  Sections 8.1,
8.2, 8.5(e)(i) , 9.17, or 9.18 or Articles X
or XI.

(e)           Default in Performance of Other
Covenants and Conditions.  The
Borrower or any Subsidiary shall default in the performance or observance of
any term, covenant, condition or agreement contained in this Agreement (other
than as specifically provided for otherwise in this Section) or any other Loan
Document and such default shall continue for a period of thirty (30) days after
written notice thereof has been given to the Borrower by the Administrative
Agent.

(f)            Hedging Agreement.  (i) The Borrower shall default in the
performance or observance of any terms, covenant, condition or agreement (after
giving effect to any applicable grace or cure period) under any Hedging
Agreement with a Lender or an Affiliate of a Lender or (ii) the Borrower shall
default in the performance or observance of any terms, covenant, condition or
agreement (after giving effect to any applicable grace or cure period) under
any other Hedging Agreement permitted hereunder and such default causes the
termination of such Hedging Agreement and the Termination Value owed by the
Borrower as a result thereof exceeds $100,000.

(g)           Indebtedness Cross-Default.  The Borrower or any Subsidiary shall (i)
default in the payment of any Indebtedness (including, without limitation, any
MDVX Indebtedness but excluding the Loans or any Reimbursement Obligation) the
aggregate outstanding amount of which Indebtedness is in excess of $500,000
beyond the period of grace if any, provided in the

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instrument or agreement under which such Indebtedness
was created, or (ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness (including, without
limitation, the MDVX Indebtedness but excluding the Loans or any Reimbursement
Obligation) the aggregate outstanding amount of which Indebtedness is in excess
of $500,000 or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause, with the giving of notice if required, any such
Indebtedness to become due prior to its stated maturity (any applicable grace
period having expired).

(h)           Other Cross-Defaults.  The Borrower or any Subsidiary shall default
in the payment when due, or in the performance or observance, of any obligation
or condition of any Material Contract unless, but only as long as, the
existence of any such default is being contested by the Borrower or any such
Subsidiary in good faith by appropriate proceedings and adequate reserves in
respect thereof have been established on the books of the Borrower or such Subsidiary
to the extent required by GAAP.

(i)            Change in Control.  Any Change in Control shall occur.

(j)            Voluntary Bankruptcy Proceeding.  The Borrower or any Subsidiary thereof shall
(i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii)
consent to or fail to contest in a timely and appropriate manner any petition
filed against it in an involuntary case under such bankruptcy laws or other
laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of a substantial part of its
property, domestic or foreign, (v) admit in writing its inability to pay its
debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate or other organizational action for the
purpose of authorizing any of the foregoing.

(k)           Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be commenced
against the Borrower or any Subsidiary thereof in any court of competent
jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
for the Borrower or such Subsidiary for all or any substantial part of their
respective assets, domestic or foreign, and such case or proceeding shall
continue without dismissal or stay for a period of sixty (60) consecutive days,
or an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal bankruptcy
laws) shall be entered.

(l)            Failure of Agreements.  Any provision of this Agreement or any
provision of any other Loan Document shall for any reason cease to be valid and
binding on the Borrower or any Subsidiary party thereto or any such Person shall
so state in writing, or any Loan Document shall for any reason cease to create
a valid and perfected first priority Lien on, or security interest in,

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any of the Collateral purported to be covered thereby,
in each case other than in accordance with the express terms hereof or thereof.

(m)          Termination Event.  The occurrence of any of the following
events:  (i) the Borrower or any ERISA
Affiliate fails to make full payment when due of all amounts which, under the
provisions of any Pension Plan or Section 412 of the Code, the Borrower or any
ERISA Affiliate is required to pay as contributions thereto, (ii) an
accumulated funding deficiency in excess of $250,000 occurs or exists, whether
or not waived, with respect to any Pension Plan, (iii) a Termination Event or
(iv) the Borrower or any ERISA Affiliate as employers under one or more
Multiemployer Plans makes a complete or partial withdrawal from any such
Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies
such withdrawing employer that such employer has incurred a withdrawal
liability requiring payments in an amount exceeding $250,000.

(n)           Judgment.  A judgment or order for the payment of money
which causes the aggregate amount of all such judgments to exceed $250,000 in
any Fiscal Year shall be entered against the Borrower or any Subsidiary by any
court and such judgment or order shall continue without having been discharged,
vacated or stayed for a period of thirty (30) days after the entry thereof.

(o)           Environmental.  Any one or more Environmental Claims shall
have been asserted against the Borrower or any Subsidiary; the Borrower or such
Subsidiary would be reasonably likely to incur liability as a result thereof;
and such liability would be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.

(p)           Material Adverse Effect.  There shall occur a Material Adverse Effect
with respect to the Borrower and its Subsidiaries, taken as a whole.

SECTION 12.2                 Remedies.  Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower:

(a)           Acceleration; Termination of Credit
Facility.  Terminate the Commitments and
declare the principal of and interest on the Loans and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Administrative Agent under this Agreement or any of the other Loan
Documents (including, without limitation, all L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented or shall be entitled to present the documents required thereunder)
and all other Obligations (other than Hedging Obligations), to be forthwith due
and payable, whereupon the same shall immediately become due and payable
without presentment, demand, protest, notice of acceleration, notice of intent
to accelerate or any other notice of any kind, all of which are expressly waived
by each Credit Party and DG III, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the Credit Facility
and any right of the Borrower to request borrowings or Letters of Credit
thereunder; provided, that upon the occurrence of an Event of Default specified
in Section 12.1(j) or (k), the Credit Facility shall be
automatically terminated and all Obligations (other than Hedging Obligations)
shall automatically become due and payable without presentment, demand, protest,
notice of

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acceleration, notice of intent to accelerate or any other
notice of any kind, all of which are expressly waived by each Credit Party and DG
III, anything in this Agreement or in any other Loan Document to the contrary
notwithstanding.

(b)           Letters of Credit.  With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of
an acceleration pursuant to the preceding paragraph, the Borrower shall at such
time deposit in a cash collateral account opened by the Administrative Agent an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit.  Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon,
if any, shall be applied to repay the other Obligations on a pro rata basis.  After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrower.

(c)           Rights of Collection.  Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrower’s Obligations.

SECTION 12.3                 Rights and Remedies
Cumulative; Non-Waiver; etc.  The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which shall
be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the other Loan Documents or that may now or hereafter exist
at law or in equity or by suit or otherwise. 
No delay or failure to take action on the part of the Administrative
Agent or any Lender in exercising any right, power or privilege shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege or shall be construed to be a
waiver of any Event of Default.  No
course of dealing between the Borrower, the Administrative Agent and the
Lenders or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the other Loan
Documents or to constitute a waiver of any Event of Default.

SECTION 12.4                 Crediting of Payments and Proceeds.  In the event that the Borrower shall fail to
pay any of the Obligations when due and the Obligations have been accelerated
pursuant to Section 12.2, all payments received by the Lenders upon the
Obligations, all net proceeds from the enforcement of the Obligations and all
proceeds of the Collateral shall be applied:

First, to payment of that portion of
the Obligations constituting fees, indemnities, expenses and other amounts,
including attorney fees, payable to the Administrative Agent in its capacity as
such and the Issuing Lender in its capacity as such (ratably among the
Administrative Agent and the Issuing Lender in proportion to the respective
amounts described in this clause First payable to them);

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Second, to payment of that portion
of the Obligations constituting fees, indemnities and other amounts (other than
principal and interest) payable to the Lenders, including attorney fees
(ratably among the Lenders in proportion to the respective amounts described in
this clause Second payable to them);

Third, to payment of that portion of
the Obligations constituting accrued and unpaid interest on the Loans and
Reimbursement Obligations and any Hedging Obligations (including any
termination payments and any accrued and unpaid interest thereon) (ratably
among the Lenders and, with respect to Hedging Obligations, any Hedge Lender in
proportion to the respective amounts described in this clause Third
payable to them);

Fourth, ratably, (a) to payment of
that portion of the Obligations constituting unpaid principal of the Loans and
Reimbursement Obligations and any Banking Services Obligations and (b) to the
Administrative Agent for the account of the Issuing Lender, to cash
collateralize any L/C Obligations then outstanding (ratably among the Lenders
and, with respect to Banking Services Obligations, any Affiliate of a Lender in
proportion to the respective amounts described in this clause Fourth
held by them); and

Last, the balance, if any, after all
of the Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by Applicable Law.

SECTION 12.5                 Administrative Agent May
File Proofs of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to the
Borrower or any Subsidiary, the Administrative Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

(a)           to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans,
L/C Obligations and all other Obligations that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the
claims of the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders
and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders and the Administrative Agent under Sections
3.3, 5.3 and 14.3) allowed in such judicial proceeding; and

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 5.3
and 14.3.

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Nothing contained herein shall be deemed to authorize
the Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any
Lender in any such proceeding.

ARTICLE
XIII

THE ADMINISTRATIVE AGENT

SECTION 13.1                 Appointment and Authority.  Each of the Lenders and the Issuing Lender
hereby irrevocably appoints Wachovia to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  The provisions of this Article
are solely for the benefit of the Administrative Agent, the Lenders and the
Issuing Lender, and neither the Borrower nor any Subsidiary thereof shall have
rights as a third party beneficiary of any of such provisions.

SECTION 13.2                 Rights as a Lender.  The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual
capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.

SECTION 13.3                 Exculpatory Provisions.  The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the
generality of the foregoing, the Administrative Agent:

(a)           shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing;

(b)           shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise as directed in writing by
the Required Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for herein or in the other Loan Documents),
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or Applicable
Law; and

(c)           shall not, except as expressly set
forth herein and in the other Loan Documents, have any duty to disclose, and
shall not be liable for the failure to disclose, any information

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relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative
Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in Section 14.2
and Section 12.2) or (ii) in the absence of its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction by final nonappealable judgment. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the
Administrative Agent by the Borrower, a Lender or the Issuing Lender.

The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any
condition set forth in Article VI or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

SECTION 13.4                 Reliance by the
Administrative Agent.  The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed
by it to be genuine and to have been signed, sent or otherwise authenticated by
the proper Person.  The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the Issuing Lender, the Administrative Agent may
presume that such condition is satisfactory to such Lender or the Issuing
Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender or the Issuing Lender prior to the making of such
Loan or the issuance of such Letter of Credit. 
The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.

SECTION 13.5                 Delegation of Duties.  The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in

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connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

SECTION 13.6                 Resignation
of Administrative Agent.

(a)           The Administrative Agent may at any
time give notice of its resignation to the Lenders, the Issuing Lender and the
Borrower.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States.  If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may on behalf of the Lenders and the Issuing Lender, appoint a successor
Administrative Agent meeting the qualifications set forth above provided that
if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
or the Issuing Lender under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such
time as a successor Administrative Agent is appointed) and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the Issuing Lender directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this paragraph.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this paragraph).  The fees
payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor.  After the
retiring Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 14.2 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Administrative Agent
was acting as Administrative Agent.

(b)           Any resignation by Wachovia as
Administrative Agent pursuant to this Section shall also constitute its
resignation as Issuing Lender.  Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, (a)
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Issuing Lender, (b) the retiring
Issuing Lender shall be discharged from all of their respective duties and
obligations hereunder or under the other Loan Documents, and (c) the successor
Issuing Lender shall issue letters of credit in substitution for the Letters of
Credit, if any, outstanding at the time of such succession or make other
arrangement satisfactory to the retiring Issuing Lender to effectively assume
the obligations of the retiring Issuing Lender with respect to such Letters of
Credit.

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SECTION 13.7                 Non-Reliance on
Administrative Agent and Other Lenders. 
Each Lender and the Issuing Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.

SECTION 13.8                 No Other Duties, etc.  Anything herein to the contrary
notwithstanding, none of the syndication agents, documentation agents,
co-agents, book manager, lead manager, arranger, lead arranger or co-arranger
listed on the cover page or signature pages hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent,
a Lender or the Issuing Lender hereunder.

SECTION 13.9                 Collateral and Guarantee
Matters.  The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion:

(a)           to release any Lien on any Collateral
granted to or held by the Administrative Agent, for the benefit of itself and
the other Secured Parties, under any Loan Document (i) upon payment in full of
the Obligations, (ii) that is sold or to be sold as part of or in connection with
any Asset Disposition expressly permitted hereunder, or (iii) subject to Section
14.2, if approved, authorized or ratified in writing by the Required
Lenders and each Hedge Lender;

(b)           to subordinate or release any Lien on
any Collateral granted to or held by the Administrative Agent under any Loan
Document to the holder of any Permitted Lien, if approved, authorized or
ratified in writing by each Hedge Lender; and

(c)           to release any Credit Party from its
obligations under the Guarantee and Collateral Agreement if such Person ceases
to be a Subsidiary as a result of a transaction expressly permitted hereunder
and if no Default or an Event of Default shall have occurred and be continuing.

Upon request by the Administrative Agent at any time,
the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items
of property, or to release any Credit Party from its obligations under the Guarantee
and Collateral Agreement pursuant to this Section.

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ARTICLE
XIV

MISCELLANEOUS

SECTION
14.1                 Notices.

(a)           Method of Communication.  Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing (for
purposes hereof, the term “writing” shall include information in electronic
format such as electronic mail and internet web pages), or by telephone
subsequently confirmed in writing.  Any
notice shall be effective if delivered by hand delivery or sent via electronic
mail, posting on an internet web page, telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to
be received by a party hereto (i) on the date of delivery if delivered by hand
or sent by electronic mail, posting on an internet web page, telecopy, (ii) on
the next Business Day if sent by recognized overnight courier service and (iii)
on the third Business Day following the date sent by certified mail, return
receipt requested.  A telephonic notice
to the Administrative Agent as understood by the Administrative Agent will be
deemed to be the controlling and proper notice in the event of a discrepancy
with or failure to receive a confirming written notice.

(b)           Addresses for Notices.  Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.

	
  If to the Borrower:

  	
  750 W. John W. Carpenter Freeway, Suite 700

  Irving, Texas 75039

  Attention: Omar Choucair

  Telephone No.: 972-581-2000

  Telecopy No.: 972-581-2100

  
	
   

  	
   

  
	
  With copies to:

  	
  Gardere Wynne Sewell LLP

  1601 Elm Street, Suite 3000

  Dallas, Texas 75201-4761

  Attention: Steven S. Camp

  Telephone No.: 214-999-4354

  Telecopy No.: 214-999-3354

  
	
   

  	
   

  
	
  If to Wachovia
  as

  Administrative Agent:

  	
  

  Wachovia Bank, National Association

  Charlotte Plaza, CP-8

  201 South College Street

  Charlotte, North Carolina 28288-0680

  Attention: Syndication Agency Services

  Telephone No.: (704) 374-2698

  Telecopy No.: (704) 383-0288

  
	
   

  	
   

  
	
  With copies to:

  	
  Bracewell & Giuliani LLP

  500 N. Akard
  St., Suite 4000

  Dallas, TX 75201-3387

  T: (214) 758-1004

  M:(214) 228-1680
Attention: Mark Knowles

  

 

 83
 

 

 

	
  

  	
  Telephone No.: (214) 758-1004

  Telecopy No.: (214)
  758-8304

  
	
   

  	
   

  
	
  If to any
  Lender:

  	
  To the address set forth on the Register.

  

 

(c)           Administrative Agent’s Office.  The Administrative Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrower and Lenders, as the Administrative Agent’s Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit requested.

SECTION 14.2                 Amendments, Waivers and
Consents.  Except as set forth below
or as specifically provided in any Loan Document, any term, covenant, agreement
or condition of this Agreement or any of the other Loan Documents may be
amended or waived by the Lenders, and any consent given by the Lenders, if, but
only if, such amendment, waiver or consent is in writing signed by the Required
Lenders (or by the Administrative Agent with the consent of the Required
Lenders) and delivered to the Administrative Agent and, in the case of an
amendment, signed by the Borrower; provided, that no amendment, waiver
or consent shall:

(a)           waive any condition set forth in Section
6.2 without the written consent of each Lender;

(b)           extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 12.2)
or the amount of Loans of any Lender without the written consent of such
Lender;

(c)           postpone any date fixed by this
Agreement or any other Loan Document for any payment or mandatory prepayment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under any other Loan Document without the written consent of each
Lender directly affected thereby;

(d)           reduce the principal of, or the rate
of interest specified herein on, any Loan or Reimbursement Obligation, or
(subject to clause (iii) of the second proviso to this Section) any fees or
other amounts payable hereunder or under any other Loan Document, or change the
manner of computation of any financial ratio (including any change in any
applicable defined term) used in determining the Applicable Margin that would
result in a reduction of any interest rate on any Loan or any fee payable
hereunder, in each case, without the written consent of each Lender directly
affected thereby; provided that only the consent of the Required Lenders shall
be necessary to waive any obligation of the Borrower to pay interest at the
rate set forth in Section 5.1(c) during the continuance of an Event
of Default;

(e)           change (i) Section 5.4 in a
manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender or (ii) Section 12.4 in a
manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender and, with respect to Hedging
Obligations, each Hedge Lender;

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(f)            change Section 4.4(b)(vii) in a
manner that would alter the order of application of amounts prepaid pursuant
thereto without the written consent of each Lender;

(g)           change any provision of this Section
or the definition of “Required Lenders” or “Required Facility Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

(h)           amend or otherwise modify the
definition of “Obligations” or “Hedging Obligations”, without the written
consent of each Lender and Hedge Lender;

(i)            amend or otherwise modify the
definition of “Secured Parties” in this Agreement or in the Guarantee and
Collateral Agreement, without the written consent of each Lender and Hedge
Lender;

(j)            release all of the Credit Parties or
release Credit Parties comprising substantially all of the credit support for
the Obligations, in either case, from the Guarantee and Collateral Agreement
(other than as authorized in Section 13.8), without the written consent
of each Lender;

(k)           release all or a material part of the
Collateral or release any Security Document (other than as authorized in Section
13.8 or as otherwise specifically permitted or contemplated in this
Agreement or the applicable Security Document) without the written consent of
each Lender;

(l)            amend, modify or waive any condition
precedent to any Extension of Credit under the Revolving Credit Facility as set
forth in Section 6.3 (including in connection with any waiver of an
existing Default or Event of Default) without the written consent of Required
Facility Lenders with respect to the Revolving Credit Facility; or

(m)          impose any greater restriction on the
ability of any Lender under a Facility to assign any of its rights or obligations
thereunder with the written consent of the Required Facility Lenders under such
Facility;

provided  further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the Issuing
Lender in addition to the Lenders required above, affect the rights or duties
of the Issuing Lender under this Agreement or any Letter of Credit Application
relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender.

 85
 

 

SECTION
14.3                 Expenses;
Indemnity.

(a)           Costs and Expenses.  The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Lender in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
Issuing Lender (including the fees, charges and disbursements of any counsel
for the Administrative Agent, any Lender or the Issuing Lender), in connection
with the enforcement or protection of its rights (A) in connection with
this Agreement and the other Loan Documents, including its rights under this
Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

(b)           Indemnification by the Borrower.  THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY
SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING LENDER, AND EACH RELATED PARTY
OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”)
AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS
(INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL CLAIMS OR CIVIL PENALTIES OR
FINES ASSESSED BY OFAC), DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING
THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE),
INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD
PARTY OR BY THE BORROWER OR ANY SUBSIDIARY ARISING OUT OF, IN CONNECTION WITH,
OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, (II) ANY LOAN OR LETTER OF CREDIT OR THE USE OR
PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING
LENDER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS
PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS
OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE
BORROWER OR ANY SUBSIDIARY, OR ANY ENVIRONMENTAL CLAIM RELATED IN ANY WAY TO
THE BORROWER OR ANY SUBSIDIARY, (IV) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD
PARTY OR BY THE BORROWER

 86
 

 

OR ANY SUBSIDIARY, AND
REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, OR (V) ANY CLAIM
(INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL CLAIMS OR CIVIL PENALTIES OR
FINES ASSESSED BY THE U.S. DEPARTMENT OF THE TREASURY’S OFFICE OF FOREIGN
ASSETS CONTROL), INVESTIGATION, LITIGATION OR OTHER PROCEEDING (WHETHER OR NOT
THE ADMINISTRATIVE AGENT OR ANY LENDER IS A PARTY THERETO) AND THE PROSECUTION
AND DEFENSE THEREOF, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE LOANS,
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY DOCUMENTS CONTEMPLATED BY OR
REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, INCLUDING WITHOUT LIMITATION, REASONABLE ATTORNEYS AND CONSULTANT’S
FEES, INCLUDING ANY LOSSES, CLAIMS,
DAMAGES, LIABILITIES, OR RELATED EXPENSES CAUSED BY ANY INDEMNITEE’S OWN
NEGLIGENCE, PROVIDED THAT
SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT
SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) ARE
DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE
JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER OR ANY
SUBSIDIARY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE’S
OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH
SUBSIDIARY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH
CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

(c)           Reimbursement by Lenders.  TO THE EXTENT THAT THE BORROWER FOR ANY REASON FAILS TO INDEFEASIBLY
PAY ANY AMOUNT REQUIRED UNDER CLAUSE (A) OR (B) OF THIS SECTION TO BE PAID
BY IT TO THE ADMINISTRATIVE AGENT (OR ANY SUB-AGENT THEREOF), THE ISSUING
LENDER OR ANY RELATED PARTY OF ANY OF THE FOREGOING, EACH LENDER SEVERALLY
AGREES TO PAY TO THE ADMINISTRATIVE AGENT (OR ANY SUCH SUB-AGENT), THE ISSUING
LENDER OR SUCH RELATED PARTY, AS THE CASE MAY BE, SUCH LENDER’S AGGREGATE
EXPOSURE PERCENTAGE (DETERMINED AS OF THE TIME THAT THE APPLICABLE UNREIMBURSED
EXPENSE OR INDEMNITY PAYMENT IS SOUGHT) OF SUCH UNPAID AMOUNT, PROVIDED THAT
THE UNREIMBURSED EXPENSE OR INDEMNIFIED LOSS, CLAIM, DAMAGE, LIABILITY OR
RELATED EXPENSE, AS THE CASE MAY BE, WAS INCURRED BY OR ASSERTED AGAINST THE
ADMINISTRATIVE AGENT (OR ANY SUCH SUB-AGENT) OR THE ISSUING LENDER IN ITS
CAPACITY AS SUCH, OR AGAINST ANY RELATED PARTY OF ANY OF THE FOREGOING ACTING
FOR THE ADMINISTRATIVE AGENT (OR ANY SUCH SUB-AGENT) OR ISSUING LENDER IN
CONNECTION WITH SUCH CAPACITY.  THE
OBLIGATIONS OF THE LENDERS UNDER THIS CLAUSE (C) ARE SUBJECT TO THE PROVISIONS
OF SECTION 5.7.

(d)           Waiver of Consequential
Damages, Etc.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST ANY
INDEMNITEE, ON ANY THEORY OF

 87
 

 

LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, ANY LOAN OR LETTER OF CREDIT OR
THE USE OF THE PROCEEDS THEREOF.  NO
INDEMNITEE REFERRED TO IN CLAUSE (B) ABOVE SHALL BE LIABLE FOR ANY DAMAGES
ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER
MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER
INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

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

SECTION 14.4                 Right of Set-off.  If an
Event of Default shall have occurred and be continuing, each Lender, the
Issuing Lender and each of their respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by Applicable
Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the
Issuing Lender or any such Affiliate to or for the credit or the account of the
Borrower or any Subsidiary against any and all of the obligations of the
Borrower or such Subsidiary now or hereafter existing under this Agreement or
any other Loan Document to such Lender or the Issuing Lender, irrespective of
whether or not such Lender or the Issuing Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
of the Borrower or such Subsidiary may be contingent or unmatured or are owed
to a branch or office of such Lender or the Issuing Lender different from the
branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender or the Issuing
Lender and their respective Affiliates under this Section are in addition to
other rights and remedies (including other rights of setoff) that such Lender
or the Issuing Lender or their respective Affiliates may have.  Each Lender and the Issuing Lender agrees to
notify the Borrower and the Administrative Agent promptly after any such setoff
and application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.

SECTION
14.5                 Governing Law.

(a)           Governing Law.  This Agreement and the other Loan Documents,
unless expressly set forth therein, shall be governed by, and construed in
accordance with, the law of the State of Texas, without reference to the
conflicts or choice of law principles thereof.

(b)           Submission to Jurisdiction.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY
AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF TEXAS AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO

 88
 

 

THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE COURT OR,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY APPLICABLE LAW.  NOTHING IN
THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING LENDER MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY SUBSIDIARY OR ITS PROPERTIES IN THE COURTS
OF ANY JURISDICTION.

(c)           Waiver of Venue.  THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

(d)           Service of Process.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.1.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

SECTION
14.6                 Waiver of Jury
Trial.

(a)           EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY).  EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 89

 

(a)           Preservation of Certain Remedies.  The parties hereto and the other Loan
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute.  Each such Person shall have and
hereby reserves the right to proceed in any court of proper jurisdiction or by
self help to exercise or prosecute the following remedies, as applicable:  (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted in
the Loan Documents or under Applicable Law or by judicial foreclosure and sale,
including a proceeding to confirm the sale, (ii) all rights of self help
including peaceful occupation of property and collection of rents, set off, and
peaceful possession of property, (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and in filing an involuntary bankruptcy proceeding, and
(iv) when applicable, a judgment by confession of judgment.  

SECTION 14.7                 Reversal of Payments.  To the extent the Borrower makes a payment or
payments to the Administrative Agent for the ratable benefit of the Lenders or
the Administrative Agent receives any payment or proceeds of the collateral
which payments or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of
such payment or proceeds repaid, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such
payment or proceeds had not been received by the Administrative Agent.

SECTION
14.8                 Injunctive Relief;
Punitive Damages.

(a)           The Borrower recognizes that, in the
event the Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy of law may prove to
be inadequate relief to the Lenders.  Therefore, the Borrower agrees that the
Lenders, at the Lenders’ option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.

(b)           THE ADMINISTRATIVE AGENT, THE LENDERS
AND THE BORROWER (ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) HEREBY AGREE THAT
NO SUCH PERSON SHALL HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST ANY
OTHER PARTY TO A LOAN DOCUMENT AND EACH SUCH PERSON HEREBY WAIVES ANY RIGHT OR
CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THAT THEY MAY NOW HAVE OR MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE.

SECTION 14.9                 Accounting Matters.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either the Borrower or the Required Lenders shall so
request, the Administrative Agent, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the
Required Lenders); provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative
Agent and the Lenders financial statements and

 90
 

 

other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations
of such ratio or requirement made before and after giving effect to such change
in GAAP.

SECTION
14.10               Successors and
Assigns; Participations.

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of paragraph (b) of this Section, (ii) by way of participation in accordance
with the provisions of paragraph (d) of this Section or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of paragraph
(f) of this Section (and any other attempted assignment or transfer by any
party hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
paragraph (d) of this Section and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that:

(i)            except
in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the applicable Commitment is not then in effect,
the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $2,500,000, unless (A) such
assignment is made to an existing Lender, to an Affiliate thereof, or to an
Approved Fund, in which case no minimum amount shall apply, or (B) each of the Administrative Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrower otherwise consent (each such consent not to be unreasonably
withheld or delayed); provided that the Borrower shall be deemed to have
given its consent five (5) Business Days after the date written notice thereof
has been delivered by the assigning Lender (through the Administrative Agent)
unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day;

(ii)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement with respect to the Loan or the Commitment
assigned;

 91
 

 

(iii)          any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent and the Issuing Lender
unless the Person that is the proposed assignee is itself a Lender with a
Revolving Credit Commitment (whether or not the proposed assignee would
otherwise qualify as an Eligible Assignee); and

(iv)          the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500 for each assignment, and the Eligible Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.

Subject to acceptance and
recording thereof by the Administrative Agent pursuant to paragraph (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 5.8, 5.9, 5.10, 5.11 and 14.3
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (d) of this Section.

(c)           Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrower, shall maintain at one of its offices
in Charlotte, North Carolina, a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrower or
any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing
to it); provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 92
 

 

Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver or modification described in Section 14.2 that directly affects
such Participant.  Subject to paragraph
(e) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 5.8, 5.9, 5.10 and 5.11
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 14.4 as
though it were a Lender, provided such Participant agrees to be subject to Section
5.6 as though it were a Lender.

(e)           Limitations upon Participant
Rights.  A Participant shall not be
entitled to receive any greater payment under Sections 5.10 and 5.11 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 5.11 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 5.11(e) as though it
were a Lender.

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

SECTION 14.11               Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by, or required to be disclosed to, any rating agency, or
regulatory or similar authority (including any self-regulatory authority, such
as the National Association of Insurance Commissioners), (c) to the extent
required by Applicable Laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the exercise of
any remedies under this Agreement or under any other Loan Document (or any Hedging
Agreement with a Hedge Lender) or any action or proceeding relating to this
Agreement or any other Loan Document (or any Hedging Agreement with a Hedge Lender)
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this
Section, to (i) any purchasing Lender, proposed purchasing Lender, Participant
or proposed Participant, (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and
its obligations, (iii) to an investor or prospective investor in an Approved
Fund that also agrees that Information shall be used solely for the purpose of
evaluating an investment in such Approved Fund, (iv) to a trustee, collateral
manager, servicer,

 93
 

 

backup servicer, noteholder or secured party in an
Approved Fund in connection with the administration, servicing and reporting on
the assets serving as collateral for an Approved Fund, or (v) to a nationally
recognized rating agency that requires access to information regarding the
Borrower and its Subsidiaries, the Loans and Loan Documents in connection with
ratings issued with respect to an Approved Fund, (g) with the consent of the
Borrower, (h) to Gold Sheets and other similar bank trade publications,
such information to consist of deal terms and other information customarily
found in such publications, or (i) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y)
becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower or (j) to
governmental regulatory authorities in connection with any regulatory
examination of the Administrative Agent or any Lender or in accordance with the
Administrative Agent’s or any Lender’s regulatory compliance policy if the
Administrative Agent or such Lender deems necessary for the mitigation of
claims by those authorities against the Administrative Agent or such Lender or
any of its subsidiaries or affiliates. 
For purposes of this Section, “Information” means all information
received from any Credit Party and DG III relating to any Credit Party, DG III
or any of their respective businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by any Credit Party or DG III; provided that, in the
case of information received from a Credit Party or DG III after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

SECTION 14.12               Performance
of Duties.

(a)           The obligations of the Borrower and
any Subsidiary under this Agreement and each of the other Loan Documents shall
be performed by such Person at the sole cost and expense of the Borrower.

(b)           The Administrative Agent shall be
entitled, after consultation with the Borrower, to change the pricing, terms or
structure of the Credit Facility, either before or after the Closing Date, if
the Administrative Agent determines in its sole discretion that such changes
are advisable in order to ensure a successful syndication or an optimal capital
structure; provided that the aggregate amount of the Credit Facility shall
remain unchanged.

SECTION 14.13               All Powers Coupled with
Interest.  All powers of attorney and
other authorizations granted to the Lenders, the Administrative Agent and any
Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied, any of the Commitments remain in
effect or the Credit Facility has not been terminated.

SECTION 14.14               Survival of Indemnities.  Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the Lenders
are entitled under the provisions of this Article XIV and any other
provision of this Agreement and the other

 94
 

 

Loan Documents shall continue in full force and effect
and shall protect the Administrative Agent and the Lenders against events
arising after such termination as well as before.

SECTION 14.15               Titles and Captions.  Titles and captions of Articles, Sections and
subsections in, and the table of contents of, this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.

SECTION 14.16               Severability of Provisions.  Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating the remainder of such provision or the
remaining provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

SECTION 14.17               Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.

SECTION 14.18               Integration.  This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on
the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. 
In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall
control; provided that the inclusion of supplemental rights or remedies
in favor of the Administrative Agent or the Lenders in any other Loan Document
shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

SECTION 14.19               Term of Agreement.  This Agreement shall remain in effect from
the Closing Date through and including the date upon which all Obligations
arising hereunder or under any other Loan Document shall have been indefeasibly
and irrevocably paid and satisfied in full and all Commitments have been
terminated.  No termination of this
Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination or in respect of any provision of this Agreement
which survives such termination.

SECTION 14.20               Advice of Counsel, No Strict
Construction.  Each of the parties
represents to each other party hereto that it has discussed this Agreement with
its counsel.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.

SECTION 14.21               USA Patriot Act.  The Administrative Agent and each Lender
hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information
that identifies the Borrower and each Subsidiary, which information includes

 95
 

 

the name and address of the Borrower and such
Subsidiary and other information that will allow such Lender to identify such Person
in accordance with the Act.

SECTION
14.22               Inconsistencies With
Other Documents; Independent Effect of Covenants.

(a)           In the event there is a conflict or
inconsistency between this Agreement and any other Loan Document, the terms of
this Agreement shall control; provided that any provision of the Security
Documents which imposes additional burdens on the Borrower or its Subsidiaries or
further restricts the rights of the Borrower or its Subsidiaries or gives the
Administrative Agent or Lenders additional rights shall not be deemed to be in
conflict or inconsistent with this Agreement and shall be given full force and
effect.

(b)           The Borrower expressly acknowledges
and agrees that each covenant contained in Articles IX, X, or XI
hereof shall be given independent effect. 
Accordingly, the Borrower shall not engage in any transaction or other
act otherwise permitted under any covenant contained in Articles IX, X,
or XI if, before or after giving effect to such transaction or act, the
Borrower shall or would be in breach of any other covenant contained in Articles
IX, X, or XI.

SECTION
14.23               Interest Rate
Limitation.

(a)           It is the intent of the
Administrative Agent, the Lenders and the Borrower to conform to and contract
in strict compliance with all applicable usury laws from time to time in
effect.  Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the Highest Lawful Rate.  If the Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Highest Lawful Rate, the
excess interest shall be applied to the principal of the Loans and the
Reimbursement Obligations or, if it exceeds such unpaid principal, refunded to
the Borrower.  In determining whether the
interest contracted for, charged, or received by any Agent or any Lender
exceeds the Highest Lawful Rate, such Person may, to the extent permitted by Applicable
Law, (i) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated term of
the Obligations hereunder.  The right to
accelerate maturity of the Loans and the other Obligations does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and the Agents and the Lenders do not intend to charge or
receive any unearned interest in the event of acceleration.

(b)           If at any time the interest rate (the
“Stated Rate”) called for under this Agreement or any other Loan
Document exceeds or would exceed the Highest Lawful Rate, the rate at which
interest shall accrue thereunder shall automatically be limited to the Highest
Lawful Rate, and shall remain at the Highest Lawful Rate until the total amount
of interest accrued equals the total amount of interest which would have
accrued but for the operation of this sentence. 
Thereafter, interest shall accrue at the Stated Rate unless and until
the Stated Rate would again exceed the Highest Lawful Rate, in which case the
immediately preceding sentence shall apply.

 96
 

 

SECTION 14.24               Amendment and Restatement; No
Novation.  This Agreement constitutes
an amendment and restatement of the Existing Credit Agreement, as amended,
effective from and after the Closing Date. 
The execution and delivery of this Agreement shall not constitute a
novation of any indebtedness or other obligations owing to the Lenders or the
Administrative Agent under the Existing Credit Agreement based on facts or
events occurring or existing prior to the execution and delivery of this
Agreement.  On the Closing Date, the
credit facilities described in the Existing Credit Agreement, as amended, shall
be amended, supplemented, modified and restated in their entirety by the
facilities described herein, and all loans and other obligations of the
Borrower outstanding as of such date under the Existing Credit Agreement, as
amended, shall be deemed to be loans and obligations outstanding under the
corresponding facilities described herein, without any further action by any
Person, except that the Administrative Agent shall make such transfers of funds
as are necessary in order that the outstanding balance of such Loans, together
with any Loans funded on the Closing Date, reflect the Commitments of the
Lenders hereunder.

SECTION 14.25               Time of the Essence.  Time is the essence of this Agreement and the
other Loan Documents.

SECTION 14.26               Entire Agreement.  THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Signature page follows.]

 97
 

 

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

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIGITAL GENERATION SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Omar A. Choucair

  	
   

  
	
   

  	
  Name:

  	
  Omar A. Choucair

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial
  Officer and Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE AGENT, ISSUING

  LENDER AND LENDER:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael H. Keith

  	
   

  
	
   

  	
  Name:

  	
  Michael H. Keith

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
						

 

 98

 

SCHEDULE 1.1

LENDERS AND COMMITMENTS

	
   

  	
   

  	
  REVOLVING

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CREDIT

  	
   

  	
  TERM LOAN

  	
   

  
	
  LENDER

  	
   

  	
  COMMITMENTS

  	
   

  	
  COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National
  Association

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  $

  	
  20,000,000

  	
   

  
								

 

 99
 

 

SCHEDULE 7.1(a)

JURISDICTIONS OF
ORGANIZATION AND QUALIFICATION

 

	
  Borrower/Subsidiary

  	
   

  	
  Jurisdiction

  
	
  Digital Generation Systems, Inc.

  	
   

  	
  Delaware*

  California

  Kentucky

  New York

  Texas

  
	
  Digital Generation Systems of New York, Inc.

  (“DG NY”)

  	
   

  	
  New York*

  
	
  StarGuide Digital Networks, Inc.

  (“StarGuide”)

  	
   

  	
  Nevada*

  Texas

  
	
  StarCom Mediatech, Inc.

  (‘StarCom”)

  	
   

  	
  Delaware*

  California

  Illinois

  Kentucky

  Texas

  
	
  Corporate Computer Systems, Inc.

  (“CCS”)

  	
   

  	
  Delaware*

  New Jersey

  
	
  Corporate Computer Systems Consultants, Inc.

  (“CCSC”)

  	
   

  	
  Delaware*

  New Jersey

  
	
  Musicam Express, L.L.C.

  (“Musicam”)

  	
   

  	
  Delaware*

  California

  Kentucky

  Nevada

  
	
  DG Systems Acquisition Corporation

  (“DG Acq.”)

  	
   

  	
  Delaware*

  Ohio

  Michigan

  
	
  DG Systems Acquisition II Corporation

  (“DG Acq. II”)

  	
   

  	
  Delaware*

  Florida

  
	
  DG Systems Acquisition III Corporation

  (“DG Acq. III”)

  	
   

  	
  Delaware*

  
	
  DG Acquisition Corp. IV (“DG Acq. IV”)

  	
   

  	
  Delaware*

  
	
  FastChannel Network, Inc.

  	
   

  	
  Delaware*

  Massachusetts

  California

  
	
  eCreative Search, Inc.

  	
   

  	
  Delaware*

  
	
  Swan Systems, Inc.

  	
   

  	
  Delaware*

  

 

* Indicates jurisdiction
of organization.

 100
 

 

SCHEDULE 7.1(b)

SUBSIDIARIES AND
CAPITALIZATION

SUBSIDIARIES
OF DG SYSTEMS:

Digital Generation
Systems of New York, Inc., a New York corporation.

Authorized
and Outstanding Shares: (as of May 31, 2006)

Authorized:           200 shares of common stock, no par
value

Outstanding:         180 shares of common stock, no par value

StarCom Mediatech,
Inc., a Delaware corporation.

Authorized
and Outstanding Shares: (as of May 31, 2006)

Authorized:           5,000 shares of common stock, no par
value

Outstanding:         1,810 shares of common stock, no par
value

StarGuide Digital
Networks, Inc., a Nevada corporation.

Authorized
and Outstanding Shares: (as of May 31, 2006)

Authorized:           60,000,000 Class A common stock, $0.001
par value

60,000,000 Class B common
stock, $0.001 par value

Outstanding:                          1,000 shares of Class A
common stock, $0.001 par value

DG Systems Acquisition Corporation, a Delaware
corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           1,000 shares
of common stock, $0.001 par value

Outstanding:                          1,000 shares of common stock,
$0.001 par value

DG Systems Acquisition II Corporation, a Delaware
corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           1,000 shares
of common stock, $0.001 par value

Outstanding:                          1,000 shares of common stock,
$0.001 par value

DG Systems Acquisition III Corporation, a Delaware
corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           1,000 shares
of common stock, $0.001 par value

Outstanding:                          1,000 shares of common stock,
$0.001 par value

DG Acquisition Corp. IV, a Delaware corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           1,000 shares of common stock, $0.001
par value

 101
 

 

Outstanding:                          1,000 shares of common stock,
$0.001 par value

FastChannel Network, Inc., a Delaware corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           1,000 shares
of common stock, $.001 par value

Outstanding:                          1,000 shares of common stock,
$.001 par value

SUBSIDIARIES
OF STARGUIDE DIGITAL NETWORKS, INC.:

Corporate Computer
Systems, Inc., a Delaware corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           2,000 shares
of common stock, $0.10 par value

Outstanding:         105 shares of common stock, $0.10 par
value

Musicam Express, L.L.C.,
a Delaware limited liability company.

Ownership Interests:
(as of May 31, 2006)

100% owned by StarGuide
Digital Networks, Inc.

SUBSIDIARIES
OF CORPORATE COMPUTER SYSTEMS, INC.:

Corporate Computer
Systems Consultants, Inc., a Delaware corporation.

Authorized and Outstanding Shares:
(as of May 31, 2006)

Authorized:           2,000 shares
of common stock, $0.10 par value

Outstanding:         100 shares of common stock, $0.10 par
value

SUBSIDIARIES
OF FASTCHANNEL NETWORK, INC.:

eCreativeSearch,
Inc., a Delaware corporation.   Inactive

Authorized and Outstanding Shares:  (as of May 31, 2006)

Authorized:           100 shares
of common stock, $.01 par value

Outstanding:         100 shares of common stock, $.01 par
value

Swan Systems,
Inc., a Delaware corporation.  Inactive

Authorized and Outstanding Shares:  (as of May 31, 2006)

Authorized:           100 shares
of common stock, $.01 par value

Outstanding:         100 shares of common stock, $.01 par
value

 102
 

 

SCHEDULE 7.1(i)

ERISA PLANS

DG Systems:

·                  Borrower’s 1996 Employee Stock Purchase Plan

·                  Borrower’s 1992 Stock Option Plan

·                  StarGuide 1996
Stock Option Plan

·                  StarGuide 1999
Equity Incentive Plan

·                  Borrower’s 1995
Director Option Plan

·                  Aetna HMO and
PPO Medical Plans

·                  Aetna PPO Dental
Plan

·                  VSP Eyecare
Benefit Plan

·                  Employee
Assistance Program administered by MHN

·                  Flexible Benefit
Plan

·                  Long Term
Disability Coverage

·                  Temporary
Disability Income Coverage

·                  Term Life and
Accidental Death and Personal Loss Coverage

·                  401(k) Plan

FastChannel:

·                  Blue Cross Blue
Shield Health and Dental Insurance Plans

·                  Reliance Long
Term Disability, Short Term Disability and Life Insurance Plans

·                  FastChannel
Network, Inc. 401 (k) Plan

·                  FastChannel 2005
Incentive Compensation Plan

·                  FastChannel 2000
Stock Option and Incentive Plan

·                  The adDIRECT
1995 Plan

·                  The adDIRECT
2000 Plan

·                  The 1999 Stock
Option Plan of CMI

 103
 

 

SCHEDULE 7.1(l)

MATERIAL CONTRACTS

DG Systems:

Vendor
Agreements: 

·                  Satellite
Service Agreement dated July 13, 2005 between Clear Channel Satellite Services,
Inc. and Digital Generation Systems, Inc.

·                  Westar
Uplink agreement dated June 15, 2005 between Westar Satellite Services LP and
Digital Generation Systems, Inc.

·                  Custom
Service Agreement dated September 2, 2002 between Digital Generation Systems,
Inc and Sprint Communications Company L.P. (as amended to date)

·                  United
Parcel Service Carrier Agreement effective December 3, 2001 (as amended to
date).

·                  Preferred
Media Price Agreement effective July 1, 2005 between Preferred Media, Inc. and
DG Systems.

·                  Technology
License and Services Agreement effective September 30, 2004 and First Amendment
to Technology and License Agreement effective April 15, 2005 between Pathfire,
Inc. and Media DVX, Inc.

·                  Confirmedia
Data Agreement dated March 16, 2005 between Verance Corporation and Digital
Generation Systems, Inc.

·                  License
Agreement for Confirmedia Spot Distribution dated March 16, 2005 between
Verance Corporation and Digital Generation Systems, Inc.

·                  Borrower and Verance Services Agreement dated March 16, 2005 between
Verance Corporation and Digital Generation Systems, Inc.

·                  Verance
Joint Marketing and Sales Agreement dated March 16, 2005 between Verance
Corporation and Digital Generation Systems, Inc.

·                  Addendum
and Amendment Agreement dated July 22, 2005 between Verance Corporation and
Digital Generation Systems Inc.

Customer Agreement

·                  Development,
Sales and Service Agreement dated May 26, 1999 among StarGuide Digital
Networks, Inc., NSN Network Services, Ltd., Jacor Communications Co., Clear
Channel Broadcasting, Inc. and Musicam Express, L.L.C.

FastChannel:

Software
License and Hosting Arrangements:

·                  Software
Licensing Agreement dated September 8, 2004 between FastChannel Network, Inc.
and Idioma Ltd.

·                  Software
Licensing Agreement dated October 25, 2004 between FastChannel Network, Inc.
and Ische Ltd.

·                  Vericenter
– Provider of hosting services.
Contract ends on May 8, 2007.

 104
 

 

Customer Agreements:

·                  Services
Agreement dated as of May 19, 2005 by and between FastChannel Network, Inc. and
BBDO Detroit, a corporation.

·                  Services
Agreement dated as of June 10, 2005 by and between FastChannel Network, Inc.
and BBDO North America.

·                  Services
Agreement dated as of June 10, 2005 by and between FastChannel Network, Inc.
and BBDO New York for Mitsubishi.

·                  Advertiser
Agreement dated as of January 2, 2001 by and between FastChannel Network, Inc.
and Zimmerman & Partners, Inc., a corporation with offices at 2200 W.
Commercial Blvd., Fort Lauderdale, FL 
33309.

·                  Newspaper
Agreement dated as of March 15, 2002 by and between FastChannel Network, Inc.
and The Boston Globe, a corporation with offices at 135 Morrissey Blvd.,
Boston, MA  02107.  This agreement has expired, however, The
Boston Globe is still a customer on the same terms and conditions.

Miscellaneous: 

·                  On
July 29, 2005 the Company purchased the assets of Rewired Production
Management, LLC. The agreement provides for earn out consideration to be paid
based on achieving certain revenue. If the product is not launched by July 1,
2006 and net revenue earned from the product is les than $1 million 30 months
following the launch, then a $450,000 royalty payment will be due and earned.

 105
 

 

SCHEDULE 7.1(m)

LABOR AND
COLLECTIVE BARGAINING AGREEMENTS

DG Systems:  None

FastChannel:  None

 106
 

 

SCHEDULE 7.1(r)

REAL PROPERTY

DG Systems:

·                  Lease
dated June 15, 1999 between Miller Valentine Partners and Applied Graphics
Technologies, Inc. for space located at 1175-1191 Airport Road, Wilmington, OH
(as amended by Revised Amendment No. 1 to Lease dated July 21, 2004) **

·                  Lease
dated February 12, 1996, as amended, between 600 Third Avenue Associates and
Digital Generation Systems, Inc. (successor in interest to Winkler Video
Associates, Inc.) for space located at 600 Third Avenue, New York, NY

·                  Lease
dated January 31, 2005, as amended, between 600 Third Avenue Owner, LLC, and DG
Systems Acquisition Corporation for space located at 600 Third Avenue, New
York, NY

·                  Sublease
dated October 1, 2005 between ABX Air, Inc. and DG Systems Acquisition
Corporation for space located at 1175-1191 Airport Road, Wilmington, OH

**    ·                    Lease dated
October 14, 1998 between Southfield TechneCenter Properties, Inc. and Applied
Graphics Technologies, Inc. for space located at 21725 Melrose Avenue,
Southfield, MI **

*       ·                    Sublease dated
September     , 2005, between Big Brother and the Holding
Company, Inc. and DG Systems, Inc. for space located at 1105 Battery Street,
San Francisco, CA *

·                  Lease
dated July 1, 2005 between BRCP 3330 Cahuenga, LLC and DG Systems, Inc. for
space located at 3330 Cahuenga Blvd., Los Angeles, CA

·                  Lease
dated February 1, 2004 between AOP Partnership, LLP and Digital Generation
Systems, Inc. for space located at 200 High Rise Drive, Louisville, KY as
amended by Amendment to Lease

·                  Lease
dated January 1, 1994 between South Palm Beach Financial Corporation and The
Source Maythenyi, Inc. for space located at 1499 W. Palmetto Park Rd., Ste.
120, Boca Raton, FL

·                  Lease
dated January 13, 2005 between Debwal Investments, LLC and Corporate Computer
Systems, Inc. for space located at 15 Creative Circle, Rt. 520, Holmdel, NJ

·                  Lease
dated April 6, 2001 between Sterling Commerce (America), Inc. and DG Systems,
Inc. for space located at 750 W. John Carpenter Freeway, Ste. 700, Irving, TX

·                  Lease
dated January 7, 1997 between Tecumseh Properties and PDR Productions for the
space (second floor) located at 219 East 44th Street, New York,
New York.

·                  Commercial
Lease dated September 23, 2003 between 110 Development Company and Digital
Generation Systems, Inc. for space located at 110 W. Hubbard St., Chicago, IL

FastChannel:

·                  Lease
dated December 31, 2004 between JP Morgan Chase Attn: JBC Funds and FastChannel
Network, Inc. for the premises located at 200 W. Munroe, Suite 2000, Chicago,
IL

·                  Lease
dated July 16, 2002 between First Needham L.P. and FastChannel Network, Inc.
for the premises located at 250 First Avenue, Suite 201, Needham, MA.  (as amended by Second Amendment of lease dated
May 23, 2005 and as amended by a First Amendment of lease dated September 26,
2003.)

·                  Sublease
dated March 23, 2004 between Albert Sweet Development and FastChannel Network,
Inc. for the premises located at 931 North Cole Ave., 1st and 2nd Floor, Los Angeles, CA

 107
 

 

·                  Lease
dated October 18, 2004 between Memphis Investment Co. C/O Sigma Property
Management and FastChannel Network, Inc. for the premises located at Corporate
Park, Service Center A, 3599 Knight Road, Memphis, TN

·                  Lease
dated March 9, 2005 between Guinness Mahon Trust Corporation Limited and
Russell M Abrahams and FastChannel Network, Inc. for the premises located at 30
St. John’s Lane, 1st Floor, London, UK

·                  Month-to-Month
Lease between Moving Pictures Editorial, Inc. and FastChannel Network, Inc. for
the premises located at 3131 McKinney Ave., Suite 825, Dallas, TX

·                  Lease
dated August 11, 2004 between Tower Plaza Associates, L.P. C/O Lawrence Ruben
Co., Inc. and FastChannel Network, Inc. for the premises located at 1 Dag
Hammarskjold Plaza, New York, NY

*   Document not dated.

**
Digital Generation Systems, Inc. is successor in interest to Applied Graphics
Technologies, Inc.

 108

 

SCHEDULE 7.1(u)

INDEBTEDNESS AND
GUARANTY OBLIGATIONS

DG Systems
Personal Property (Capital) Leases:

·                  Promissory
Note, dated July 7, 2004, between Digital Generation Systems, Inc. and DeLage
Landen Financial Services, Inc. (sponsored by Microsoft Capital Corporation)
for $246,191.86 payable in twenty-four monthly payments.  

·                  Promissory
Note, dated October 25, 2004, between Digital Generation Systems, Inc. and
DeLage Landen Financial Services, Inc. (sponsored by Microsoft Capital
Corporation) for $488,517 payable in twenty-four monthly payments.  

·                  Promissory
Note, dated March 1, 2005, between Digital Generation Systems, Inc. and DeLage
Landen Financial Services, Inc. (sponsored by Microsoft Capital Corporation)
for $544,063 payable in twenty-four monthly payments.  

·                  Promissory
Note, dated May 25, 2005, between Digital Generations Systems, Inc. and DeLage
Landen Financial Services, Inc. (sponsored by Microsoft Capital Corporation)
for $420,641.43 payable in twenty-four monthly payments.

DG Systems Financial Agreements:

·                  Credit
Agreement dated February 10, 2006 between Digital Generation Systems, Inc. and
Wachovia Bank, National Association.  

·                  Loan
Agreement, dated as of April 15, 2005, by and between Media DVX, Inc., and DG
Systems Acquisition III Corporation.

FastChannel Financial Agreements:

·                  *Massachusetts
Capital Resource Company – On August 28, 2003, FastChannel Network, Inc.
entered into a Subordinated Note and Warrant Purchase Agreement with MCRC for
an aggregate amount of $3,500,000.  In
addition, 970,000 warrants to purchase common stock were issued to MCRC in
connection with the transaction.    

·                  *Comerica
Bank – On March 9, 2005, FastChannel Network, Inc. obtained a revolving line
from which the Company can borrow up to $4 million.  

·                  *Comerica
Bank – In March 2005 FastChannel Network, Inc. obtained an equipment line of
credit in the amount of $2 million.  The
Company borrowed $2 million and is currently making monthly principal payments
in the amount of $66,667 for 30 months.  

·                  *Ackerley
Partners, LLC – In March 2005 FastChannel Network, Inc. issued a $1,000,000
Senior Subordinated Promissory Note to Ackerley Partners, LLC.  The note bears interest at a rate of 8% per
annum and was due on December 31, 2005.  

·                  Comerica
Bank – On July 7, 2005, Comerica Bank issued a letter of credit with a face
amount of $272,916 for the benefit of Tower Plaza Associates, L.P.  This letter of credit is cash-collateralized.

·                  Comerica
Bank – On September 30, 2005, Comerica Bank issued a letter of credit with a
face amount of $98,039 for the benefit of Needham Development Corporation as
Trustee of 250 First Realty Trust.  This
letter of credit is cash-collateralized.

·                  Silicon
Valley Bank – On January 7, 2005, Silicon Valley Bank issued a letter of credit
with a face amount of $350,000 for the benefit of JBS Funds 200 West Monroe,
LLC.  This letter of credit is
cash-collateralized.

 109
 

 

·                  Silicon
Valley Bank – On February 3, 2005, Silicon Valley Bank issued a letter of
credit with a face amount of $155,000 for the benefit of Albert Sweet
Development.  This letter of credit is
cash-collateralized.

·                  Silicon
Valley Bank – On December 13, 2004, Silicon Valley Bank issued a letter of
credit with a face amount of $75,000 for the benefit of Memphis Investments A
Wisconsin LLC.  This letter of credit is
cash-collateralized.

·                  Capital
Lease dated August 15, 2005 between FastChannel Network, Inc. and Leasing
Technologies International, Inc.

*              Indebtedness to be paid in full on
the Closing Date.

 110
 

 

SCHEDULE 7.1(v)

DG SYSTEMS LITIGATION

·                  Borrower has a contractual arrangement with Verance Corporation. The
agreements between the companies provide for exclusivity in the automated
verification segment of the advertising delivery industry, as well as
joint promotional and marketing efforts. 
In addition, Borrower is to provide certain back office support services
(e.g., help desk, order processing) to Verance. 
Borrower has also made a $5 million investment in Verance and holds a
minority equity position in that company. Verance and Borrower have
several disagreements regarding the scope of this arrangement, and the status
of and each party’s responsibility for delays in the technological development
and integration of the Verance technology into Borrower’s delivery system.
Verance has threatened to terminate the relationship between Verance and
Borrower and to initiate litigation against
Borrower for various alleged breaches and
failures. The parties are actively discussing their various concerns and
disagreements and hope to reach an amicable resolution of their differences,
but no assurance can be given that there will be no litigation between them.

·                  Hank
Donaldson, former CEO of Borrower in 2000,
brought legal action against Borrower for Borrower’s refusal to allow Donaldson
to exercise certain stock options in 2001 and 2002.  A Dallas trial judge found in favor of
Borrower in October 2003.  Dallas Court
of Appeals affirmed the Dallas trial verdict in favor of Borrower in July
2005.  Donaldson has appealed to the
Texas Supreme Court, and the Texas Appeals Court advised the parties it will
not consider Donaldson’s appeal.  The
case is closed

·                  Gary
Worth, is a former CEO of Starcom Television Services, a company merged into
Mediatech.  Mediatech was purchased by
Borrower in July 1997.  Worth has claimed
Mediatech was obligated under an indemnification provision which Mediatech
supposedly assumed.  Worth is claiming up
to $50,000 of IRS penalties resulting from non-payment of his personal income
taxes.  Mediatech engaged California
counsel settled the suit for an $11,000 payment.

·                  In
connection with the acquisition of the assets Media DVX, Inc. (“MDVX”), DG Acq.
III assumed the obligations pursuant to the Pathfire Technology and License
Agreement effective September 30, 2004 and First Amendment to Technology and
License Agreement effective April 30, 2005 (“Agreement”).  Pathfire provided access to their network
resulting in additional server locations which MDVX did not have.  MDVX was obligated to make minimum royalty
payments to Pathfire and Pathfire among other obligations, was bound to a
non-compete provision for distributing advertising content through July
2007.  DG Acq. III received a termination
notice from Pathfire on January 20, 2006 citing several alleged violations of
certain provisions in the Agreement.  DG
Acq. III’s counsel responded with a letter dated January 24, 2006 noting that
Pathfire did not have a basis to terminate. 
On January 27, 2006, Point 360 and CBS Television/Pathfire announced
they had entered into an agreement to enable Point 360 to deliver advertising
content through the CBS Television Digital Store and Forward Platform, enabled
by Pathfire’s Digital Media Gateway.  On
February 1, 2006, counsel for DG Acq. III submitted a letter to Pathfire and
filed a statement of claim with the American Arbitration Association claiming
Pathfire violated the non-compete provisions of the Agreement by providing CBS
Television access to its proprietary Digital Media Gateway network.  DG Acq. III only used the Pathfire network for
a small number of deliveries and the suspension of service has little impact on
the day to day business of DG Acq. III. DG Acq. III will deliver any content to
these few locations via overnight courier service.  DG’s counsel is preparing for arbitration
hearings.    

·                   Borrower received a demand for arbitration on January 24, 2006 from
Rothenberg Sawasy Architectus, Inc. (“RSA”). 
RSA is an architectural services firm in Los Angeles, which Borrower
engaged to assist in the move into 3330 Cahuenga in Los Angeles.  Borrower entered into a services agreement
for approximately $45,000 and RSA eventually billed Borrower over $93,000 for
its services.  Borrower had tenant
improvement funds available to pay RSA, however RSA refused to discuss a credit
for approximately $10,000 and accordingly filed an arbitration notice for the
entire

 111
 

 

amount plus penalties. 
Borrower has engaged California counsel and believes the suit to be
without merit and intends to vigorously defend this action.

FASTCHANNEL
LITIGATION

·                  Curtis
Duplication has filed a lawsuit against FastChannel Network, Inc. in connection
with the Services Agreement between Curtis, Inc. and FastChannel Network, Inc.,
dated September 3, 2003.  A bench trial
has been scheduled for May 10, 2006.  

·                  In
early 2005 FastChannel Network, Inc. received email and telephone
correspondence from Digimarc Corporation (“Digimarc”) alleging infringement of
its patent rights, based on FastChannel Network, Inc.’s use of audio watermark
software licensed to FastChannel Network, Inc. by Ische Ltd. (“Ische”) and
suggesting that a license fee was due to them from either FastChannel Network,
Inc. or Ische.  Ische has warranted that
its software does not allege Digimar’s, or any other, patents and has provided
a limited contractual indemnity to FastChannel Network, Inc. in the License
Agreement set forth in Section 3.11.  In
late May 2005 FastChannel Network, Inc. informed Digimarc of Ische’s position
and requested further information from Digimarc regarding its position.  No response has been received to date.  

 112
 

 

SCHEDULE 11.2

EXISTING LIENS

	
  SECURED

  PARTY

  	
   

  	
  TYPE

  OF

  FILING

  	
   

  	
  JURISDICTION

  	
   

  	
  FILE

  NUMBER

  	
   

  	
  DATE

  OF

  FILING

  	
   

  	
  COLLATERAL/

  COMMENTS

  
	
  DIGITAL
  GENERATION SYSTEMS, INC.

  
	
  Dell Financial
  Services, L.P.

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  42307975

  	
   

  	
  8/16/04

  	
   

  	
  Leased computer equipment

  
	
  California First
  Leasing Corporation

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  43655372

  	
   

  	
  12/28/04

  	
   

  	
  Leased office equipment and furniture

  
	
  Media DVX, Inc.

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  51169227

  	
   

  	
  4/15/05

  	
   

  	
  100% of all Capital Stock (or other Equity
  Interests) issued by DG Systems Acquisition III Corporation

  
	
  STARGUIDE
  DIGITAL NETWORKS, INC.

  
	
  Arrow
  Electronics, Inc.

  	
   

  	
  Unsatisfied Judgment*

  	
   

  	
  The Second Judicial District Court, Reno, NV

  	
   

  	
  CV99-3159

  	
   

  	
  8/13/99

  	
   

  	
  $270,611

  
	
  DG
  SYSTEMS ACQUISITION III CORPORATION

  
	
  Media DVX, Inc.

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  5116932

  	
   

  	
  4/14/05

  	
   

  	
  All assets

  
	
  FASTCHANNEL
  NETWORK, INC.

  
	
  Inter-Tel
  Leasing, Inc.

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of Stated

  	
   

  	
  43574847

  	
   

  	
  12/17/04

  	
   

  	
  Leased telephone system

  
	
  Comerica Bank**

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  50852872

  	
   

  	
  3/14/05

  	
   

  	
  Accounts, intellectual property and other assets

  
	
  Cisco Systems
  Capital Corporation

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  51545004

  	
   

  	
  5/9/05

  	
   

  	
  Certain leased equipment

  
	
  National City
  Bank

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  53273936

  	
   

  	
  10/21/05

  	
   

  	
  Leased computer equipment

  
	
   

  	
   

  	
  Assignment

  	
   

  	
  11/10/05

  	
   

  	
  Assigned from Leasing Technologies International,
  Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  Leasing
  Technologies International, Inc.

  	
   

  	
  UCC-1

  	
   

  	
  Delaware Secretary of State

  	
   

  	
  53358760

  	
   

  	
  10/28/05

  	
   

  	
  Certain leased equipment

  
	
   

  	
   

  	
  Amendment

  	
   

  	
  3/9/06

  	
   

  	
  Restates collateral description (still leased
  equipment)

  	
   

  	
   

  	
   

  	
   

  

 

* Judgment has been paid in full.

** To be terminated on
the Closing Date.

 113
 

 

SCHEDULE 11.3

EXISTING LOANS,
ADVANCES AND INVESTMENTS

DG Systems:

·                  Effective
March 21, 2005, Parent purchased 6,286,146 shares of Series B Convertible
Preferred Stock, $0.0001 par value per share (the “Series B Preferred Stock”),
from Verance Corporation, a Delaware corporation (“Verance”), for $2.5 million
pursuant to that certain Series B Convertible Preferred Stock Purchase
Agreement, dated March 16, 2005, between Verance and Parent.

·                  Effective
July 22, 2005, Parent purchased 6,286,146 shares of Series B Convertible
Preferred Stock, $0.0001 par value per share (the “Series B Preferred Stock”),
from Verance, for $2.5 million pursuant to that certain Series B Convertible
Preferred Stock Purchase Agreement, dated March 16, 2005, between Verance and
Parent.

·                  Investments
in the form of equity interests in DG Systems Acquisition III Corporation on
the date hereof.

FastChannel:

·                  None

 114
 

 

SCHEDULE 11.8

TRANSACTIONS WITH
AFFILIATES

DG
Systems Affiliate Agreements

·                  Guarantee, dated
as of April 15, 2005, executed by Scott K. Ginsburg in favor of Media DVX, Inc.

FastChannel Affiliate Agreements

·                  None

 

 115CONFIDENTIAL

  	
   

  	
  EXHIBIT 10.1

  

 

EMPLOYMENT
AGREEMENT

This EMPLOYMENT AGREEMENT, dated as of July 10, 2006,
is between Hertz Global Holdings, Inc., a Delaware corporation (the “Company”),
and Mark P. Frissora (the “Executive”).

W  I  T  N  E
S  S  E  T  H :

WHEREAS, the Company desires to secure the services of
the Executive as Chief Executive Officer, a member of and, as provided herein,
Chairman of, its Board of Directors and the Executive desires to serve the
Company in such capacities and, in connection therewith, the Company and the
Executive desire to enter into this agreement (the “Agreement”) to,
among other things, set forth the terms of such employment; and

NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein and for other good and valuable
consideration, the Company and Executive hereby agree as follows:

1.             Agreement to Employ; Employment Period; No Conflict.

(a)           Upon the terms and
subject to the conditions of this Agreement, the Company hereby agrees to
employ the Executive, and the Executive hereby accepts such employment, for the
period commencing on or before July 19, 2006 (the “Commencement Date”)
until such employment terminates in accordance with Section 5.  The period during which the Executive is
employed pursuant to this Agreement shall be referred to as the “Employment
Period.”

(b)           The Executive
represents that he is entering into this Agreement voluntarily and that his
employment hereunder and compliance with the terms and conditions hereof will
not conflict with or result in the breach by him of any agreement to which he
is a party or by which he may be bound.

2.             Position and Responsibilities.  During the Employment Period, the Executive
will serve as Chief Executive Officer of the Company and The Hertz Corporation,
a Delaware corporation and the primary operating subsidiary of the Company,
with such duties and responsibilities as are customarily assigned to
individuals serving in such position and such other duties and responsibilities
consistent with his position and his duties and responsibilities as Chief
Executive Officer as may be specified by the Board of Directors of the Company
(the “Board”) from time to time. 
During the Employment Period, the Executive will serve as a member of
the Board and shall serve as Chairman of the Board commencing January 1,
2007 or, if the initial public offering of the Company’s common stock is
delayed beyond the time frame anticipated as of the date hereof as a result of
market 

 

conditions, he shall commence service as Chairman of
the Board by no later than March 31, 2007. 
The Executive will report directly to the Board.  During the Employment Period, the Executive
will devote all of his skill, knowledge and working time to the conscientious
performance of his duties and responsibilities hereunder, except for (i)
reasonable vacation time and absence for sickness or similar disability and (ii)
to the extent that it does not interfere with the performance of the Executive’s
duties hereunder, (A) such reasonable time as may be devoted to service
on boards of directors and the fulfillment of civic responsibilities and (B)
reasonable time as may be necessary from time to time for personal financial
matters.

3.             Compensation and Incentives.

(a)           Base
Salary.  As compensation for the
services performed by the Executive hereunder, during the Employment Period the
Executive will be paid an annual base salary of $950,000, payable in accordance
with the Company’s normal payroll practices applicable to senior executives.  The Board or authorized committee thereof will
review the Executive’s base salary at the same time it reviews the base salary
of the Company’s other senior executives (which currently occurs on a 18-month
cycle) and, in the discretion of the Board or such authorized committee, may
increase (but not decrease) such base salary from time to time (as in effect
from time to time, the “Base Salary”). 
Payment of the Base Salary payable under this Section 3(a) shall be
deferred to the extent that the Executive so elects under the terms of any
deferred compensation or savings plan that may be maintained or established by
the Company; provided, any such deferral shall be disregarded for purposes of
all references to Base Salary hereunder.

(b)           Annual Incentive
Bonus.  During the Employment Period,
the Executive will participate in the Company’s annual bonus plan as in effect
from time to time for the Company’s senior executives (the “Executive
Incentive Plan”) with a target annual incentive bonus of 100% of his Base Salary
(the “Target Annual Bonus”), with actual bonus payments determined based
on performance results versus the applicable targets established by the Board
or committee thereof under the Executive Incentive Plan in consultation with
the Executive.  With respect to the
calendar year 2006, the Executive shall receive an annual bonus under the
Executive Incentive Plan that is no less than his Target Annual Bonus (and
without pro ration for commencing employment after the start of the year); provided
that up to 50% of such bonus shall be reduced by the amount of any bonus paid
by the Executive’s prior employer with respect to the calendar year 2006.

(c)           Equity Incentives.

(i)            Opportunity to Purchase Shares.  On, or as soon as practicable after, the
Commencement Date, the Executive will purchase 1,056,338 shares 

 2
 

 

of the Common Stock of the Company, par value
$.01 per share (the “Common Stock”), at a per share purchase price of
$5.68 (the “Per Share Price”), for a total purchase price of
$6 million, pursuant to the Hertz Global Holdings, Inc. Stock Incentive
Plan (the “Stock Incentive Plan”). 
In no event will the Company be required to offer to sell or to sell any
shares of Common Stock to the Executive at any time at which making such an
offer or selling any such shares would violate any applicable securities
law.  The terms and conditions of the
Executive’s purchase of any shares of Common Stock (including certain
restrictions on resale of the shares, the right of the Executive to require the
repurchase of all or a portion of such shares by the Company under certain
circumstances, the right of the Company to repurchase all or a portion of such
shares from the Executive upon termination of the Executive’s employment and
the applicable repurchase price) shall be set forth in a separate Management
Stock Subscription Agreement, substantially in the form attached hereto as
Exhibit A, to be entered into between the Company and the Executive (the “Management
Stock Subscription Agreement”).

(ii)           Stock Options.

(A)          Matching Options.  Effective as of the closing of the purchase
of shares pursuant to Section 3(c)(i), the Company will grant the
Executive non-qualified stock options under the Stock Incentive Plan to
purchase 200,000 shares of Common Stock, representing twice the number of the
first 100,000 shares purchased by Executive pursuant to Section 3(c)(i)
(the “Matching Options”).  Subject
to Section 3(c)(iv), the exercise price per share of Common Stock covered by
the Matching Options will equal the Per Share Price.

(B)           Supplemental Options.  Executive will receive 500,000 non-qualified
stock options to purchase shares of Common Stock effective as of the
Commencement Date (the “Supplemental Options”).  Subject to Section 3(c)(iv), the exercise
price per share of Common Stock covered by the Supplemental Options will equal
the Per Share Price.

(C)           Homerun Options.  Executive will receive 800,000 non-qualified
stock options to purchase shares of Common Stock effective as of the
Commencement Date (the “Homerun Options”).  Subject to Section 3(c)(iv), the exercise
price per share of Common Stock covered by 400,000 of the Homerun Options will
be equal to $10.68 and the exercise price per share of Common Stock covered by
the remaining 400,000 of the Homerun Options will be $15.68.

 3
 

 

 

(iii)          Management Stock Option Agreement;
Plans.  The terms and conditions of
the Matching Options, the Supplemental Options and the Homerun Options
(collectively, the “Options”), including those provided for in this
Section 3(c)(ii) and the right of the Company to repurchase all or a
portion of the shares issued upon exercise of vested Options from the Executive
at a specified purchase price under certain circumstances, will be set forth in
one or more separate Management Stock Option Agreements, substantially in the
form attached hereto as Exhibit B, to be entered into between the Executive and
the Company at the time that such Options are granted and will be subject to
the terms and provisions of the Stock Incentive Plan (the “Management Stock
Option Agreement” and, together with the Management Stock Subscription
Agreement, the “Management Equity Agreements”) and Management Stock
Subscription Agreements.

(iv)          Adjustment.  If, at any time prior to the sale of the
shares of Common Stock or the grant of the Options contemplated by this
Section 3(c), the Compensation Committee of the Board determines that the “Fair
Market Value” per share of Common Stock for purposes of the Stock Incentive
Plan is higher than $5.68 per share (such higher value, the “Redetermined
Share Value”), then:

(A)          the purchase price per share for the
sale of shares contemplated by Section 3(c)(i) will not be adjusted but
the Company will pay the Executive by December 31, 2006 an amount equal to 80%
of the product of (1) the number of shares of Common Stock purchased
pursuant to such Section 3(c)(i) multiplied by (2) and the difference
between the Redetermined Share Value and $5.68 (the “Incremental Share Value”);

(B)           the exercise price per share of the
Options granted pursuant to Section 3(c)(ii) shall equal the greater of (1)
the applicable price specified therein (i.e., $5.68, $10.68 and $15.68, as the
case may be) and (2) the Redetermined Share Value; and

(C)           the Executive shall be granted an
additional number of Supplemental Options equal to the product of (1)
the Incremental Share Value and (2) 50,000.

(d)           Signing/Replacement
Award.  In order to address the
certain forfeitures that Executive will face upon termination of his employment
with his prior employer, the Executive shall be paid a special cash bonus of $2
million on December 31, 2006 and $2 million on December 31, 2007 (the “Replacement
Award”); provided that if the Executive’s employment terminates
before an 

 4
 

 

applicable payment date, the Replacement Award shall
be payable if and to the extent provided for in Section 5(f).

4.             Benefits; Perquisites, Etc.

(a)           Benefits.  During the Employment Period, all employee
and senior executive benefits (other than severance benefits), including life,
medical, dental and disability insurance, will be provided to the Executive in
accordance with the programs of the Company then available to its senior
executives, as the same may be amended and in effect from time to time.  During the Employment Period, subject to
generally applicable eligibility requirements, the Executive will also be
entitled to participate in all of the Company’s tax-qualified and non-qualified
profit sharing, pension, retirement, supplemental retirement (e.g., SERP,
Excess and Restoration plans), deferred compensation and savings plans then
available to its senior executives, as the same may be amended and in effect
from time to time, at levels and having interests commensurate with the
Executive’s then current period of service, compensation and position.  Notwithstanding the foregoing, the Executive
shall not participate in the Hertz Corporation Long-Term Compensation Plan,
under which the Company has ceased to make additional grants (and only
pre-existing awards remain outstanding).

(b)           Perquisites.  During the Employment Period, the Executive
will be entitled to participate in all perquisite programs generally available
from time to time to senior executives of the Company on the terms and
conditions then prevailing under such programs, a description of which has been
provided to the Executive.

(c)           Relocation.  The Company will directly pay or, upon
presentation of appropriate vouchers or other expense statements, reimburse the
Executive for all reasonable expenses incurred in connection with relocation of
his principal residence from Illinois to the New York metropolitan region
(including brokerage fees in connection with sale of Illinois house and
mortgage points paid on a new mortgage). 
The Company will also make available the services of Prudential
Relocation Services in connection with such relocation.  For purposes of the foregoing, “reasonable
expenses” include, without limitation, all physical packing and moving expenses
of household goods and all vehicles, 180 days’ temporary housing, travel
expenses for at least three house hunting trips for Executive and his
spouse.  The Company will gross up the
Executive, on an after-tax basis, to the extent that any relocation benefits
provided hereunder are taxable to him.

(d)           Business Expenses.  The Company will reimburse the Executive for
reasonable travel, lodging and meal expenses incurred by him in connection with
his performance of services hereunder upon submission of information required
to be provided under the Company’s policy for reimbursement of business
expenses.  The 

 5
 

 

Company will
pay the Executive’s reasonable costs of legal counsel incurred in connection
with the negotiation and preparation of this Agreement and will reimburse the
Executive for up to 60 days’ interest costs under the indebtedness the
Executive incurs to exercise his vested stock options granted by his prior
employer.

(e)           Vacation.  The Executive will be entitled to four weeks’
paid vacation annually.

(f)            Security.  The Company shall from time to time engage
the services of a third-party security consultant to consider security matters
regarding the Executive and Executive’s travel, etc.

5.             Termination of Employment.

(a)           Termination Due
to Death or Disability.  The
Executive’s employment with the Company shall terminate upon his death and the
Company may terminate the Executive’s employment as a result of the Executive’s
Disability (as defined below).  In the
event of either such termination of employment, the Executive shall only be
entitled to the payments and benefits provided for in Section 5(f)(i) and
Section 5(f)(ii).  For purposes of
this Agreement, “Disability” means a physical or mental disability that
prevents the performance by the Executive of his obligations hereunder lasting
(or likely to last, based on competent medical evidence presented to the Board)
for a continuous period of six months or longer.  The reasoned and good faith judgment of the
Board as to the Executive’s Disability will be final and will be based on such
competent medical evidence as shall be presented to it by the Executive or by
any physician or group of physicians or other competent medical experts
employed by the Executive, or by the Company and reasonably acceptable to the
Executive, to advise the Board.

(b)           Termination by
the Company for Cause.  The Company
may terminate the Executive’s employment for Cause.  In the event of such a termination of
employment, the Executive shall only be entitled to the payments and benefits
provided for in Section 5(f)(i).  “Cause”
means (i) Executive’s conviction of, or entering a plea of guilty or nolo
contendere to, a felony, (ii) Executive’s engaging in conduct
that constitutes willful gross neglect or willful gross misconduct with respect
to his employment duties which results in material economic harm to the
Company, (iii) Executive’s violation of the Company’s Standard of
Conduct or other material Company policy, or (iv) inaccuracy of any
representation or breach of covenant made by the Executive in connection with
securing employment hereunder; provided, the Company shall have delivered to
the Executive, a Notice of Termination that specifically identifies such
grounds for termination for Cause and, in the case of grounds pursuant to
clause (iii), the Executive shall have failed to cure such circumstance within
10 days of receipt of such notice.  A
termination of employment for “Cause” pursuant to this Section 5(b) shall
include a determination 

 6
 

 

following the
Executive’s termination of employment for any reason that the circumstances
existed prior to such termination for the Company to have terminated the
Executive’s employment for Cause.

(c)           Termination
Without Cause.  The Company may
terminate the Executive’s employment hereunder Without Cause.  In the event of such a termination of
employment, the Executive shall only be entitled to the payments and benefits
provided for in Section 5(f)(i) and to the termination benefits described in
Section 5(f)(iii) and, if applicable, Section 14 (subject to the terms and
conditions set forth therein).  A
termination “Without Cause” means a termination of the Executive’s
employment by the Company other than as a result of Disability or Cause or in a
Retirement (as defined in Section 5(e)).

(d)           Termination by
the Executive.  The Executive may
terminate his employment with or without Good Reason (as defined below).  In the event of a termination by the
Executive of his employment for Good Reason, the Executive shall only be
entitled to the payments and benefits provided for in Section 5(f)(i) and to
the termination benefits described in Section 5(f)(iii) and, if
applicable, Section 14 (subject to the terms and conditions set forth
therein).  In the event of a termination
by the Executive of his employment without Good Reason, the Executive shall
only be entitled to the payments and benefits provided for in
Section 5(f)(i).  “Good Reason”
means a termination of employment by the Executive following, without the
Executive’s consent, (i) reduction by the Company of Executive’s Base
Salary or Target Annual Bonus, (ii) failure by the Company to elect or
to reelect the Executive as a Director, (iii) a material diminution in
the Executive’s duties or responsibilities or the assignment to him of any
duties or responsibilities inconsistent with the Executive’s position and
status as Chief Executive Officer, (iv) a change in the Executive’s
reporting relationship such that he no longer reports directly to the Board, (v)
requiring the Executive to relocate his principal place of employment more than
30 miles from the Company’s Park Ridge, New Jersey offices, (vi) failure
of the Company to obtain a satisfactory agreement from any successor to all or
substantially all of the assets or business of the Company to assume and agree
to perform this Agreement within 15 days after a merger, consolidation, sale or
similar transaction, (vii) any purported termination by the Company of
the Executive’s employment otherwise than as expressly permitted by this
Agreement, or (viii) failure to elect Executive as Chairman of the Board
by January 1, 2007 or, if the initial public offering of the Common Stock is
delayed due to market conditions, the failure to be elected Chairman of the
Board by March 31, 2007; in each case provided that, within 30 days of any such
occurrence, the Executive shall have delivered to the Board and the Company a
Notice of Termination that specifically identifies such occurrence and the
Company shall have failed to cure such circumstance within 10 days of receipt
of such notice.

 7
 

 

(e)           Retirement.  Unless otherwise agreed to by the Executive
and the Company, the Executive’s employment hereunder shall terminate as of the
first day of the month coincident with or next following the Executive’s 65th birthday (“Retirement”).  In the event of such termination of
employment, the Executive shall only be entitled to the payments and benefits
provided for in Section 5(f)(i) and Section 5(f)(ii).

(f)            Payments Upon
Terminations.

(i)            All Terminations.  Following any termination of the Executive’s
employment hereunder (by the Executive or by the Company), the Company will pay
the Executive (A) his full Base Salary through the Date of Termination
only and (B) except in the case of a termination for Cause, earned but
unpaid annual bonus for the year preceding the year in which the Date of
Termination occurs and accrued but unpaid annual vacation.  The Executive shall also retain all of his
rights to benefits provided for under the terms of the employee and executive
benefit plans of the Company in which the Executive is a participant in
accordance with and subject to the terms of such plans as in effect from time
to time, as well as the Stock Incentive Plan and the Management Equity
Agreements.  The payments and benefits
provided hereunder shall be in lieu of any payments or benefits to which the
Executive may be entitled under the terms of any severance plan or program of
the Company, if any, as in effect on the Date of Termination.

(ii)           Death, Disability or Retirement.  In the case of termination upon the Executive’s
death, Disability or Retirement, the Executive (or his estate or beneficiary)
shall be entitled to prompt payment of the Retention Award (to the extent not
previously paid) and a payment of the annual bonus that would have been payable
under the Executive Incentive Plan for the calendar year that includes the Date
of Termination (and for which any subjective performance goals will be deemed
satisfied at target), except that such bonus shall be pro rated based on the
portion of such year that includes the Employment Period and shall be payable
when such bonuses are otherwise paid to the Company’s senior executives (the “Pro
Rata Bonus”).

(iii)          Without Cause/For Good Reason.  In the event of a termination of the
Executive’s employment by the Company Without Cause or a termination by the
Executive of his employment for Good Reason, subject to entering into a release
of claims in the form customarily used by the Company for such purpose and
Section 5, (A) the Company will pay to the Executive in a single lump
sum an amount equal to 2.5 times the sum of (1) the Executive’s
then-current Base Salary and (2) the Executive’s annual bonus under the
Executive Incentive Plan for the year preceding the year of 

 8
 

 

such
termination (or in the case of a termination in 2006 or 2007, the Executive’s
Target Annual Bonus for such year), (B) the Company will pay to the
Executive the Pro Rata Bonus and the Retention Award (to the extent not
previously paid), and (C) for two years following the Date of
Termination, the Executive and his eligible family members shall be entitled to
continue to receive benefits under (or benefits comparable to) the Company’s
medical, dental and disability insurance programs, except to the extent the
Executive has available to him substantially similar programs with a subsequent
employer.  The payment provided for in
clause (A) of this Section 5(f)(iii) and of the Retention Award shall be made
promptly following the Date of Termination and the payment of the Pro Rata
Bonus shall be paid when such bonuses are otherwise paid to the Company’s
senior executives; provided that if, as of the Date of Termination, the
Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(1) of the Internal Revenue Code (the “Code”) and the
regulations thereunder, to the extent required thereunder no such amounts shall
be paid any earlier than the first business day after the six month anniversary
of the Date of Termination.

(g)           Date of
Termination.  As used in this
Agreement, the term “Date of Termination” means (i) if the
Executive’s employment is terminated by his death, the date of his death, (ii) if
the Executive’s employment is terminated by the Company for Cause, the date
specified in the Notice of Termination, (iii) if the Executive
terminates his employment without Good Reason, the date specified in the Notice
of Termination (which shall be no less then 30 days following the date of
delivery of such Notice, or such earlier date as the Company choose at any time
after receipt of such Notice), (iv) if the Executive’s employment
terminates upon his Retirement, the date provided for in Section 5(e), and (v) if
the Executive’s employment is terminated by the Company Without Cause, as a
result of the Executive’s Disability or by the Executive for Good Reason, the
date specified in the Notice of Termination (which shall be no less than 20 and
no more than 40 days following the date of delivery of such notice).

(h)           Notice of
Termination.  Any termination by the
Company pursuant to Section 5(a), 5(b) or 5(c), or by Executive pursuant
to Section 5(d), shall be communicated by a written “Notice of Termination”
addressed to the other party or parties to this Agreement.  A “Notice of Termination” shall mean a
notice stating that the Executive’s employment hereunder has been or will be
terminated, indicating the specific termination provisions in this Agreement
relied upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination of employment.  In the event of a Notice of Termination
delivered by the Company pursuant to Section 5(c) or the Executive pursuant to
Section 5(d), if the recipient of the Notice of Termination cures the
circumstances giving rise to such notice within the time period provided for in
Section 5(c) or 

 9
 

 

Section 5(d),
as the case may be, the party delivering such notice may rescind the Notice of
Termination and, in the absence of such rescission, such notice shall be deemed
a Notice of Termination by the Company without Cause, or by the Executive
without Good Reason, as the case may be.

(i)            Resignation from
Board Memberships.  Effective as of
any Date of Termination under Section 5 or otherwise as of the date of the
Executive’s termination of employment, the Executive shall (unless otherwise
requested by the Board) resign, in writing, from membership on the Board and
the board of directors of any subsidiary of the Company.

(j)            No Obligation to
Mitigate Damages; No Offset.  The
Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise.  No amounts paid to or earned
by Executive following his termination of employment with the Company shall
reduce or be set off against any amounts payable to Executive under this
Agreement.

6.             Unauthorized Disclosure.  During and following termination of his
employment with the Company for any reason, except to the extent required by an
order of a court having apparent jurisdiction or under subpoena from an
appropriate government agency, in which event, the Executive shall use his best
efforts to consult with the Board prior to responding to any such order or
subpoena, and except in connection with the performance of his duties
hereunder, the Executive shall not, without the written consent of the Board or
a person authorized thereby, disclose to any person (other than an executive or
director of the Company or any of its subsidiaries or affiliates, or a person
to whom disclosure is reasonably necessary or appropriate in connection with
the performance by the Executive of his duties as an executive of the Company)
any confidential or proprietary information, knowledge or data that is not
theretofore publicly known and in the public domain obtained by him while in
the employ of the Company with respect to the Company or any of its subsidiaries
or affiliates or with respect to any products, improvements, customers, methods
of distribution, sales, prices, profits, costs, contracts, suppliers, business
prospects, business methods, techniques, research, trade secrets or know-how of
the Company or any of its subsidiaries or affiliates (collectively, “Proprietary
Information”), except for (i) publicly available information
(provided such information became publicly available other than as a result of
a breach of this confidentiality clause) or (ii) disclosure to the
Executive’s legal counsel to the extent such legal counsel needs to know the
information to protect the Executive’s legal rights, provided that such
counsel shall maintain the confidentiality of such information and shall be bound
by this Section 6 to the same extent as the Executive.  The Executive shall be fully responsible for
any disclosure by such counsel.

 10

 

7.             Non-Competition. 
During the period of the Executive’s employment with the Company or any
of its subsidiaries or affiliates and, as a condition to receiving severance
pay, thereafter during the two year period following any termination of the
Executive’s employment (the “Restriction Period”), the Executive shall
not engage directly or indirectly in, become employed by, serve as an agent or
consultant to, or become a partner, principal or stockholder of any
partnership, corporation or other entity which competes with the car or
equipment rental business of the Company or any of its subsidiaries in any
county within the United States or any comparable geographical area outside the
United States in which the Company or any of its subsidiaries is then engaged
in such business; provided that the Executive’s ownership of less than
1% of the outstanding voting shares of any publicly held company which
otherwise would be prohibited under this Section 7 shall not constitute
competition with the Company.

8.             Non-Solicitation of Employees.  During the period of the Executive’s
employment and, as a condition to receiving severance pay, thereafter during
the Restriction Period, the Executive shall not, directly or indirectly, for
his own account or for the account of any other person or entity with which he
is or becomes associated in any capacity, (a) solicit for
employment or otherwise interfere with the relationship of the Company or any
of its subsidiaries or affiliates with any person who at any time within the
six months preceding such solicitation, employment or interference is or was
employed in a managerial or other senior capacity by or otherwise so engaged to
perform services for the Company or any of its subsidiaries or affiliates,
other than any such solicitation or employment on behalf of or for the benefit
of the Company during the Executive’s employment with the Company, or (b) induce
any employee of the Company or any of its subsidiaries or affiliates who is a
member of management to engage in any activity which the Executive is
prohibited from engaging in under any of Sections 6, 7, 8 or 9 hereof or
to terminate his employment with the Company.

9.             Non-Solicitation of Clients.  During the period of the Executive’s
employment and, as a condition to receiving severance pay, thereafter during
the  Restriction Period, the Executive
shall not, directly or indirectly, solicit or otherwise attempt to establish
for himself or any other person, firm or entity any business relationship,
respecting any business that is one of the businesses conducted by the Company,
with any person, firm or entity which, at any time during the twelve-month
period preceding the date of the Executive’s termination of employment, was a
significant customer, client or distributor of the Company (in each case,
excluding any retail customer or client) or any of its subsidiaries, except
during the Executive’s employment with and on behalf of the Company.

10.           Return of
Documents and Company Property.  In
the event of the termination of the Executive’s employment for any reason, the
Executive will 

 11
 

 

promptly deliver to the Company all non-personal
documents and data of any nature and in whatever medium pertaining to the
Executive’s employment with the Company, or any of its subsidiaries or affiliates,
(for which purpose, the Executive’s rolodex or other address book shall be
considered personal) or any other property of the Company or any of its
subsidiaries or affiliates and he will not take with him any such property,
documents or data of any description or any reproduction thereof, or any
documents containing or pertaining to any Proprietary Information.

11.           Enforcement of Covenants.

(a)           Injunctive Relief.  Executive acknowledges and agrees that the
covenants, obligations and agreements of the Executive contained in Sections 6,
7, 8, 9 and 10 relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants, obligations or agreements will
cause the Company irreparable injury for which adequate remedies are not
available at law.  Therefore, the
Executive agrees that the Company will be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) as a court of competent jurisdiction may deem necessary or
appropriate to restrain the Executive from committing any violation of the
covenants, obligations or agreements referred to in this
Section 11(a).  These injunctive
remedies are cumulative and in addition to any other rights and remedies the
Company may have.  The Company and the
Executive hereby irrevocably submit to the exclusive jurisdiction of the courts
of the State of the city of the Company’s headquarters and the Federal courts
of the United States of America, in each case located in (or located nearest
to) the city of the Company’s headquarters, solely in respect of the injunctive
remedies set forth in this Section 11(a) and the interpretation and
enforcement of Sections 6, 7, 8, 9, 10 and 11 solely insofar as such
interpretation and enforcement relate to an application for injunctive relief
in accordance with the provisions of this Section 11(a), and the parties
hereto hereby irrevocably agree that (i) the sole and exclusive
appropriate venue for any suit or proceeding relating solely to such injunctive
relief shall be in such a court, (ii) all claims with respect
to any application solely for such injunctive relief shall be heard and
determined exclusively in such a court, (iii) any such court
shall have exclusive jurisdiction over the person of such parties and over the
subject matter of any dispute relating to an application solely for such
injunctive relief, and (iv) each hereby waives any and all
objections and defenses based on forum, venue or personal or subject matter
jurisdiction as they may relate to an application solely for such injunctive
relief in a suit or proceeding brought before such a court in
accordance with the provisions of this Section 11(a).

(b)           Forfeiture of
Payments.  Executive agrees that
receipt of severance pay under Section 5(f) is conditioned upon Executive’s
observance of Sections 6, 7, 8 and 9. 
Executive further agrees that in the event of his failure to observe the

 12
 

 

provisions of
Sections 6, 7, 8 or 9, (i) Executive shall forfeit the right to receive
any portion of his bonus (ii) the Company shall be entitled to
discontinue further severance payments under Section 5(f) and (iii) the
Company shall be entitled to recover from the Executive any payments made to
the Executive under Section 5(f).  The
foregoing shall be in addition to any other remedies or rights the Company may
have at law or at equity as a result of the Executive’s failure to observe such
provisions.

(c)           Certain
Acknowledgments.  The Executive
acknowledges and agrees that (i) the Executive has had and will have a
prominent role in the management of the business, and the development of the
goodwill, of the Company and its subsidiaries and will establish and develop
relations and contacts with the principal customers and suppliers of the
Company and its subsidiaries in the United States of America and the rest of
the world, all of which constitute valuable goodwill of, and could be used by
the Executive to compete unfairly with, the Company and its subsidiaries, (ii)
in the course of his employment with the Company, the Executive will obtain
confidential and proprietary information and trade secrets concerning the
business and operations of the Company and its subsidiaries and affiliates in
the United States of America and the rest of the world that could be used to
compete unfairly with the Company and its subsidiaries, (iii) the
covenants and restrictions contained in this Agreement are intended to protect
the legitimate interests of the Company and its affiliates in their respective
goodwill, trade secrets and other confidential and proprietary information, (iv)
the Executive desires to be bound by such covenants and restrictions, (v)
such covenants are a material inducement for the Company to enter into this
Agreement, and (vi) his economic means and circumstances are such that
the provisions of this Agreement, including the restrictive covenants in this
Agreement, will not prevent him from providing for himself and his family on a
basis satisfactory to him and them.

(d)           Blue Pencil.  It is the desire of the parties to this
Agreement that the provisions of Sections 6 through 11, in particular, be
interpreted and enforced to the greatest extent possible (and consistent with
Section 16(e)).

12.           Assumption of
Agreement.  The Company will require
any successor (by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive, to expressly
assume and agree to perform the obligations of the Company under this Agreement
in the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place.

13.           Indemnification.  The Company agrees that it shall indemnify
and hold harmless the Executive to the fullest extent permitted by Delaware law
from and against any and all liabilities, costs, claims and expenses including
without 

 13
 

 

limitation all costs and expenses incurred in defense
of litigation, including attorneys’ fees, arising out of the employment of the
Executive hereunder, except to the extent arising out of or based upon the
gross negligence or willful misconduct of the Executive.  Costs and expenses incurred by the Executive
in defense of any such litigation, including attorneys’ fees, shall be paid by
the Company in advance of the final disposition of such litigation promptly
upon receipt by the Company of (i) a written request for payment, (ii) appropriate
documentation evidencing the incurrence, amount and nature of the costs and
expenses for which payment is being sought, and (iii) an
undertaking adequate under Delaware law made by or on behalf of Executive to
repay the amounts so paid if it shall ultimately be determined that Executive
is not entitled to be indemnified by the Company under this Agreement.  The Company will insure the Executive, for
the duration of his employment and service as a member of the Board, and
thereafter, in respect of his acts and omission occurring during such employment
and Board membership, under a contract of directors and officers liability
insurance to the same extent as such insurance insures members of the Board.

14.           Excise Tax.

(a)           If, the Executive
would receive any payment, deemed payment or other benefit pursuant to this
Agreement, together with any other payment, deemed payment or other benefit the
Executive may receive under any other plan, program, policy or arrangement,
would constitute an “excess parachute payment” under Section 280G of the Code
(an “Excess Parachute Payment”), and would result in the imposition on
the Executive of an excise tax under Section 4999 of the Code or similar
provision of state or local law, then, in addition to any other benefits to
which the Executive is entitled under this Agreement, the Executive shall be
paid by the Company the excise taxes payable by the Executive by reason of
receiving the Excess Parachute Payment and the amount necessary to put the
Executive in the same after-tax position (including, without limitation,
income, employment and excise taxes) and any interest and penalties thereof, as
if no excise taxes under Section 4999 of the Code had been imposed with respect
to the Excess Parachute Payment (together, the “Gross-Up Amount”).

(b)           Whether and when a
payment or benefit results in the imposition of an excise tax and the Gross-Up
Amount, if any, under this Section 14 shall be determined by a
nationally-recognized certified public accounting firm designated by the
Company and reasonably acceptable to the Executive (the “Designated
Accountants”).  All fees and expenses
of such accounting firm shall be paid by the Company.  The Company and the Executive shall provide
to the Designated Accountants such information as the Designated Accountants
shall reasonably request in connection with their determinations under this
Section 14.  The Executive shall file his
tax returns in consistent with the determinations of the 

 14
 

 

Designated
Accountants under this Section 14. 
If the Designated Accountants determine that no excise tax is payable by
the Executive, they shall furnish the Executive a written opinion that failure
to report the excise tax on the Executive’s applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.

(c)           The Company shall
pay the Executive the Gross-Up Amount at such time (or times) as the Designated
Accountants determine that the tax payment to which such amount relates is due
and payable to the applicable taxing authority (taking into account any
applicable extensions).

(d)           The Executive shall
notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up
Amount in addition to that previously paid by the Company pursuant to this
Section 14.  Such notification shall be
given as soon as practicable but no later than 10 business days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due after
taking into account any available extensions). 
If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall: (i)
give the Company any information reasonably requested by it relating to such
claim; (ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect so such claim by
an attorney reasonably selected by the Company; (iii) cooperate with the
Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such
claim.  The Company shall pay all direct
costs and expenses (including any additional interest and penalties) incurred
in connection with any contest pursuant to this Section 14.

(e)           If the amount of any
payments made pursuant to this Section 14 exceeds the amount subsequently and
finally determined to have been due, the excess amounts made shall constitute a
loan by the Company to the Executive payable promptly, and in any event within
30 days, after receipt by the Executive of the refund from the Internal Revenue
Service or other taxing authority together with any interest received thereon.

15.           Entire Agreement.  Except as otherwise expressly provided or
referred to herein, this Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and all promises,
representations, understandings, arrangements and prior agreements relating to
such subject matter 

 15
 

 

(including those made to or with the Executive by any
other person or entity) are merged herein and superseded in their entirety
hereby.  In the event of any
inconsistency between the terms of this Agreement (or Exhibit hereto) and any
plan, program, practice or other agreement of the Company of which the
Executive is a participant or a party, this Agreement (and Exhibits hereto)
will control unless the Executive and the Company otherwise agree in writing.

16.           Miscellaneous.

(a)           Binding Effect.  This Agreement shall be binding on and inure
to the benefit of the Company and its successors and permitted assigns.  This Agreement shall also be binding on and
inure to the benefit of the Executive and his heirs, executors, administrators
and legal representatives.  If the
Executive dies before all amounts payable to him hereunder have been paid, the
unpaid amounts will be paid to his beneficiary designated by the Executive or,
if none (or otherwise not permitted), to his estate.

(b)           Governing Law,
Waiver of Jury Trial. 

(i)            Governing Law; Consent to
Jurisdiction.  This Agreement shall
be governed in all respects, including as to validity, interpretation and
effect, by the internal laws of the State of New Jersey without giving effect
to the conflict of laws rules thereof to the extent that the application of the
law of another jurisdiction would be required thereby, except that the
validity, interpretation and effect of Section 13 (Indemnification) shall be
governed by the laws of the State of Delaware. 
Each party hereby irrevocably submits to the exclusive jurisdiction of
the courts of the State of the city of the Company’s headquarters and the
Federal courts of the United States of America, in each case located in (or
located nearest to) the City of the Company’s headquarters, solely in respect
of the interpretation and enforcement of the provisions of this Agreement and
of the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby and thereby. 
Each party hereby waives and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation and enforcement hereof, or
any such document or in respect of any such transaction, that such action, suit
or proceeding may not be brought or is not maintainable in such courts or that
the venue thereof may not be appropriate or that this agreement or any such
document may not be enforced in or by such courts.  Each party hereby consents to and grants any
such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that the mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 16(f) or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.  In
the event of any dispute between the 

 16
 

 

Company and
the Executive (including, but not limited to, under or with respect to this
Agreement or the Management Equity Agreements), the Company will advance to the
Executive all attorneys fees and other litigation costs incurred by the
Executive in connection with such dispute; provided, Executive shall be
obligated to refund to the Company all such advances unless he prevails on at
least one material claim or issue asserted in such dispute.

(ii)           Waiver
of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT.  Each party certifies and acknowledges that (A)
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (B) each such party
understands and has considered the implications of this waiver, (C) each
such party makes this waiver voluntarily, and (D) each such party has
been induced to enter into this agreement by, among other things, the mutual
waivers and certifications in this Section 16(b)(ii).

(c)           Taxes.  The Company may withhold from any payments
made under the Agreement all federal, state, city or other applicable taxes as
shall be required pursuant to any law, governmental regulation or ruling.

(d)           Amendments.   No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Board or a person authorized thereby and is agreed to in
writing by the Executive and such officer as may be specifically directed by
the Board.  No waiver by any party hereto
at any time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. 
No waiver of any provision of this Agreement shall be implied from any
course of dealing between or among the parties hereto or from any failure by
any party hereto to assert its rights hereunder on any occasion or series of
occasions.

(e)           Severability.  It is the desire of the parties that the
provisions of this Agreement shall be enforced to the fullest extent
permissible under applicable law.  In the
event that any one or more of the provisions of this Agreement shall be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected 

 17
 

 

thereby.  In the event that any of Sections 6, 7, 8, 9,
10 or 11 is invalid, illegal or unenforceable in accordance with its terms, the
Executive and the Company agree that such provisions shall be reformed to make
such sections enforceable, in a manner which provides the Company with the
maximum rights permitted at law.

(f)            Notices.  Any notice or other communication required or
permitted to be delivered under this Agreement shall be (i) in
writing, (ii) delivered personally, by courier service or by
certified or registered mail, first-class postage prepaid and return receipt
requested, (iii) deemed to have been received on the date of
delivery or on the third business day after the mailing thereof, and (iv) addressed
as follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):

(A)         if
to the Company, to it at:

255 Brae Boulevard

Park Ridge, New Jersey 07656-0713

Attention:  General Counsel

Fax:  (201) 594-3122

(B)           if to Executive, to him at his last
known home address as shown on the records of the Company.

Copies of any
notices or other communications given under this Agreement shall also be given
to:

(C)          if
notice is given to the Company:

The Carlyle Group

1001 Pennsylvania Avenue, NW

Suite 220 South

Washington DC 20004-2505

Attention:  Mr. Gregory S. Ledford

Fax:  (202) 347-1818

and

Clayton, Dubilier & Rice, Inc. 

375 Park Avenue, 18th Floor

New York, New York

Attention: Mr. David Wasserman 

Fax: (212) 407-5252

and

 18
 

 

Merrill Lynch Global Private Equity

4 World Financial Center, 23rd Floor

New York, NY 10080

Attention:  Mr. George A. Bitar
&
               Mr. Robert F. End

Fax:  (212) 449-1119

and

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention:  John M. Allen, Jr.,
Esq.

Fax:  (212) 909-6836

(D)         if
notice is given to the Executive:

Vedder, Price, Kaufman & Kammholz, P.C.

222 N. LaSalle Street

Suite 2600

Chicago, Illinois 60601

Attention:  Robert J. Stucker,
Esq.

Fax:  (312) 609-5005

(g)           Survival.  Sections 6 through and including 16 and,
if Executive’s employment terminates in a manner giving rise to a payment under
Section 5(f), Section 5(f), shall survive the termination of the
employment of Executive hereunder.

(h)           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.

(i)            Headings.  The section and other headings contained in
this Agreement are for the convenience of the parties only and are not intended
to be a part hereof or to affect the meaning or interpretation hereof.

(j)            Assignment.  Neither party may assign this Agreement
without the consent of the other party except as provided herein except that
the Company may assign this Agreement if it complies with Section 12.

remainder of page intentionally left blank

 19
 

 

 

IN WITNESS WHEREOF, the Company has duly executed this
Agreement by its authorized representative and the Executive has hereunto set
his hand, in each case effective as of the date hereof.

	
  

  	
   

  	
  HERTZ GLOBAL HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ GEORGE W. TAMKE

  
	
   

  	
   

  	
  Name: 

  	
  George W. Tamke

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board of Directors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ MARK P. FRISSORA

  
	
   

  	
   

  	
  Name: 

  	
  Mark P. Frissora

  
					

 

 20

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