Document:

Exhibit 10.1

 

Published CUSIP Number:
          

Revolving Loan CUSIP Number:
          

Term Loan CUSIP Number:
          

 

SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

 

Dated as of August 5, 2008

among

 

L-1 IDENTITY SOLUTIONS OPERATING COMPANY,

as the Borrower,

 

L-1 IDENTITY SOLUTIONS, INC.,

as Holdings,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and L/C Issuer

 

and

 

the Lenders party hereto,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agent

 

ROYAL BANK OF CANADA,

SOCIÉTÉ GÉNÉRALE

and

TD BANK, N.A.,

each as a Documentation Agent

 

BANC OF AMERICA SECURITIES LLC and

WACHOVIA CAPITAL MARKETS, LLC,

as Joint Lead Arrangers and Joint Book Managers

 

 

 

TABLE OF CONTENTS

 

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE I

  	
   

  
	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
  1

  
	
  1.01.

  	
  Defined Terms

  	
  1

  
	
  1.02.

  	
  Other Interpretive Provisions

  	
  29

  
	
  1.03.

  	
  Accounting Terms

  	
  30

  
	
  1.04.

  	
  Rounding

  	
  31

  
	
  1.05.

  	
  Times of Day

  	
  31

  
	
  1.06.

  	
  Letter of Credit Amounts

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II

  	
   

  
	
  THE
  COMMITMENTS AND CREDIT EXTENSIONS

  	
  31

  
	
  2.01.

  	
  Revolving Loans and Term Loans

  	
  31

  
	
  2.02.

  	
  Borrowings, Conversions and
  Continuations of Loans

  	
  32

  
	
  2.03.

  	
  Letters of Credit

  	
  33

  
	
  2.04.

  	
  Swing Line Loans

  	
  42

  
	
  2.05.

  	
  Prepayments

  	
  45

  
	
  2.06.

  	
  Termination or Reduction of
  Aggregate Revolving Commitments

  	
  48

  
	
  2.07.

  	
  Repayment of Loans

  	
  49

  
	
  2.08.

  	
  Interest

  	
  50

  
	
  2.09.

  	
  Fees

  	
  51

  
	
  2.10.

  	
  Computation of Interest and Fees;
  Retroactive Adjustments of Applicable Rate

  	
  51

  
	
  2.11.

  	
  Evidence of Debt

  	
  52

  
	
  2.12.

  	
  Payments Generally; Administrative
  Agent’s Clawback

  	
  52

  
	
  2.13.

  	
  Sharing of Payments by Lenders

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III

  	
   

  
	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
  55

  
	
  3.01.

  	
  Taxes

  	
  55

  
	
  3.02.

  	
  Illegality

  	
  59

  
	
  3.03.

  	
  Inability to Determine Eurodollar
  Rate

  	
  59

  
	
  3.04.

  	
  Increased Costs; Reserves on
  Eurodollar Rate Loans

  	
  59

  
	
  3.05.

  	
  Compensation for Losses

  	
  61

  
	
  3.06.

  	
  Mitigation Obligations; Replacement
  of Lenders

  	
  62

  
	
  3.07.

  	
  Survival

  	
  62

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV

  	
   

  
	
  CONDITIONS
  PRECEDENT TO CLOSING AND CREDIT EXTENSIONS

  	
  62

  
	
  4.01.

  	
  Conditions of Closing and Initial
  Credit Extensions

  	
  62

  
	
  4.02.

  	
  Conditions of Release of Funds on
  Digimarc Release Date

  	
  67

  
	
  4.03.

  	
  Conditions to all Credit Extensions

  	
  69

  

 

i

 

	
   

  	
  ARTICLE V

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  	
  71

  
	
  5.01.

  	
  Existence, Qualification and Power

  	
  71

  
	
  5.02.

  	
  Authorization; No Contravention

  	
  72

  
	
  5.03.

  	
  Governmental Authorization; Other
  Consents

  	
  72

  
	
  5.04.

  	
  Binding Effect

  	
  72

  
	
  5.05.

  	
  Financial Statements; No Material
  Adverse Effect

  	
  72

  
	
  5.06.

  	
  Litigation

  	
  73

  
	
  5.07.

  	
  No Default

  	
  73

  
	
  5.08.

  	
  Ownership of Property; Liens

  	
  73

  
	
  5.09.

  	
  Environmental
  Compliance

  	
  74

  
	
  5.10.

  	
  Insurance

  	
  74

  
	
  5.11.

  	
  Taxes

  	
  74

  
	
  5.12.

  	
  ERISA
  Compliance

  	
  74

  
	
  5.13.

  	
  Subsidiaries; Equity Interests

  	
  75

  
	
  5.14.

  	
  Margin Regulations; Investment
  Company Act

  	
  75

  
	
  5.15.

  	
  Disclosure

  	
  76

  
	
  5.16.

  	
  Compliance with Laws

  	
  76

  
	
  5.17.

  	
  Labor Matters

  	
  76

  
	
  5.18.

  	
  Solvency

  	
  76

  
	
  5.19.

  	
  Intellectual Property; Licenses,
  Etc.

  	
  76

  
	
  5.20.

  	
  No Burdensome Restrictions

  	
  77

  
	
  5.21.

  	
  Security Interests

  	
  77

  
	
  5.22.

  	
  Compliance with Anti-Terrorism Laws

  	
  77

  
	
  5.23.

  	
  Subordination

  	
  78

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI

  	
   

  
	
  AFFIRMATIVE COVENANTS

  	
  78

  
	
  6.01.

  	
  Financial Statements

  	
  78

  
	
  6.02.

  	
  Certificates; Other Information

  	
  79

  
	
  6.03.

  	
  Notices

  	
  81

  
	
  6.04.

  	
  Payment of Obligations

  	
  81

  
	
  6.05.

  	
  Preservation of Existence, Etc.

  	
  82

  
	
  6.06.

  	
  Maintenance of Properties

  	
  82

  
	
  6.07.

  	
  Maintenance of Insurance

  	
  82

  
	
  6.08.

  	
  Compliance with Laws and Material
  Contractual Provisions

  	
  82

  
	
  6.09.

  	
  Compliance with Environmental Laws

  	
  82

  
	
  6.10.

  	
  Books and Records

  	
  83

  
	
  6.11.

  	
  Inspection Rights

  	
  83

  
	
  6.12.

  	
  Use of Proceeds

  	
  83

  
	
  6.13.

  	
  Security Interests; Further
  Assurances

  	
  84

  
	
  6.14.

  	
  New Subsidiaries; Collateral

  	
  85

  
	
  6.15.

  	
  Designation of Material
  Subsidiaries

  	
  86

  
	
  6.16.

  	
  Interest Rate Protection Agreements

  	
  86

  
	
  6.17.

  	
  Designation as Senior Indebtedness

  	
  86

  
	
  6.18.

  	
  Post Closing Requirements

  	
  86

  

 

ii

 

	
   

  	
  ARTICLE VII

  	
   

  
	
  NEGATIVE COVENANTS

  	
  87

  
	
  7.01.

  	
  Liens

  	
  87

  
	
  7.02.

  	
  Investments

  	
  89

  
	
  7.03.

  	
  Indebtedness

  	
  90

  
	
  7.04.

  	
  Fundamental Changes

  	
  93

  
	
  7.05.

  	
  Dispositions

  	
  93

  
	
  7.06.

  	
  Restricted Payments

  	
  94

  
	
  7.07.

  	
  Change in Nature of Business

  	
  95

  
	
  7.08.

  	
  Transactions with Affiliates

  	
  95

  
	
  7.09.

  	
  Burdensome Agreements

  	
  95

  
	
  7.10.

  	
  Use of Proceeds

  	
  96

  
	
  7.11.

  	
  Financial Covenants

  	
  96

  
	
  7.12.

  	
  Capital Expenditures

  	
  96

  
	
  7.13.

  	
  Change in Fiscal Year

  	
  97

  
	
  7.14.

  	
  Modifications of Material
  Agreements

  	
  97

  
	
  7.15.

  	
  Payments of Certain Debt

  	
  97

  
	
  7.16.

  	
  Holding Company

  	
  97

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII

  	
   

  
	
  EVENTS
  OF DEFAULT AND REMEDIES

  	
  98

  
	
  8.01.

  	
  Events of Default

  	
  98

  
	
  8.02.

  	
  Remedies Upon Event of Default

  	
  100

  
	
  8.03.

  	
  Application of Funds

  	
  101

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX

  	
   

  
	
  ADMINISTRATIVE
  AGENT

  	
  102

  
	
  9.01.

  	
  Appointment and Authority

  	
  102

  
	
  9.02.

  	
  Rights as a Lender

  	
  102

  
	
  9.03.

  	
  Exculpatory Provisions

  	
  102

  
	
  9.04.

  	
  Reliance by Administrative Agent

  	
  103

  
	
  9.05.

  	
  Delegation of Duties

  	
  104

  
	
  9.06.

  	
  Resignation of Administrative Agent

  	
  104

  
	
  9.07.

  	
  Non-Reliance on Administrative
  Agent and Other Lenders

  	
  105

  
	
  9.08.

  	
  No Other Duties, Etc.

  	
  105

  
	
  9.09.

  	
  Administrative Agent May File
  Proofs of Claim

  	
  105

  
	
  9.10.

  	
  Collateral and Guaranty Matters

  	
  106

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE X

  	
   

  
	
  MISCELLANEOUS

  	
  107

  
	
  10.01.

  	
  Amendments; Etc.

  	
  107

  
	
  10.02.

  	
  Notices; Effectiveness; Electronic
  Communication

  	
  109

  
	
  10.03.

  	
  No Waiver; Cumulative Remedies;
  Enforcement

  	
  111

  
	
  10.04.

  	
  Expenses; Indemnity; Damage Waiver

  	
  111

  
	
  10.05.

  	
  Payments Set Aside

  	
  113

  
	
  10.06.

  	
  Successors and Assigns

  	
  114

  
	
  10.07.

  	
  Confidentiality

  	
  118

  

 

iii

 

	
  10.08.

  	
  Right of Setoff

  	
  119

  
	
  10.09.

  	
  Interest Rate Limitation

  	
  120

  
	
  10.10.

  	
  Counterparts; Integration;
  Effectiveness

  	
  120

  
	
  10.11.

  	
  Survival of Representations and
  Warranties

  	
  120

  
	
  10.12.

  	
  Severability

  	
  120

  
	
  10.13.

  	
  Replacement of Lenders

  	
  121

  
	
  10.14.

  	
  Governing Law; Jurisdiction; Etc.

  	
  121

  
	
  10.15.

  	
  Waiver of Jury Trial

  	
  122

  
	
  10.16.

  	
  USA Patriot Act Notice

  	
  123

  
	
  10.17.

  	
  No Advisory or Fiduciary
  Responsibility

  	
  123

  
	
  10.18.

  	
  Amendment and Restatement; Binding
  Effect

  	
  124

  
	
  10.19.

  	
  Electronic Execution of Assignments
  and Certain Other Documents

  	
  124

  

 

iv

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  1.01(a)

  	
   

  	
  [Reserved]

  
	
  1.01(b)

  	
   

  	
  Existing L-1 Letters of
  Credit

  
	
  1.01(c)

  	
   

  	
  Existing Digimarc Letters
  of Credit

  
	
  2.01

  	
   

  	
  Commitments and Applicable
  Percentages

  
	
  5.13

  	
   

  	
  Subsidiaries; Other Equity
  Investments

  
	
  6.15

  	
   

  	
  Material Subsidiaries

  
	
  6.18

  	
   

  	
  Post Closing Requirements

  
	
  7.01

  	
   

  	
  Existing Liens

  
	
  7.02

  	
   

  	
  Existing Investments

  
	
  7.03

  	
   

  	
  Existing Indebtedness

  
	
  7.08

  	
   

  	
  Transactions With
  Affiliates

  
	
  10.02

  	
   

  	
  Lending Office, Addresses
  for Notices

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
   

  	
  Form of

  
	
  A

  	
  Assignment
  and Assumption

  
	
  B-1

  	
  Committed
  Loan Notice

  
	
  B-2

  	
  Swing
  Line Loan Notice

  
	
  C-1

  	
  Revolving
  Note

  
	
  C-2

  	
  Term
  Note

  
	
  D

  	
  Guaranty

  
	
  E

  	
  Security
  Agreement

  
	
  F

  	
  Pledge
  Agreement

  
	
  G

  	
  Compliance
  Certificate

  
	
  H

  	
  Autoborrow
  Agreement

  

 

v

 

SECOND
AMENDED AND RESTATED

CREDIT AGREEMENT

 

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this “Agreement”) is entered into as of August 5, 2008 among L-1
Identity Solutions Operating Company (formerly known as L-1 Identity Solutions, Inc.),
a Delaware corporation (the “Borrower”), L-1 Identity Solutions, Inc.,
a Delaware corporation (“Holdings”), each lender from time to time party
hereto (the “Lenders” and, each individually, a “Lender”) and
Bank of America, N.A., as Administrative Agent.

 

The Borrower is a party to the Existing Credit
Agreement (as defined below).

 

The Borrower desires to amend and restate the
Existing Credit Agreement on and subject to the terms and conditions set forth
herein.

 

This Agreement, on the terms and subject to the
conditions set forth herein, shall amend and restate the Existing Credit
Agreement in its entirety as of the Closing Date and from and after the Closing
Date, the Existing Credit Agreement shall be of no further force or effect
except to evidence the Obligations (as defined therein) incurred, the
representations and warranties made and the actions or omissions performed or
required to be performed thereunder prior to the Closing Date. This Agreement
shall not constitute a novation of the obligations and liabilities existing
under the Existing Credit Agreement or evidence payment of all or any of such
obligations and liabilities.

 

In consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

1.01.       Defined Terms.  As
used in this Agreement, the following terms shall have the meanings set forth
below:

 

“Acquired Entity” has
the meaning specified in Section 7.02(g).

 

“Administrative Agency Fee Letter” means that
certain letter agreement, dated as of June 28, 2008, among the
Administrative Agent, Banc of America Securities LLC and the Borrower.

 

“Administrative Agent” means Bank of America,
in its capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

 

“Administrative Agent’s Office” means the
Administrative Agent’s address and, as appropriate, account as set forth on Schedule
10.02, or such other address or account as the Administrative Agent may
from time to time notify to the Borrower and the Lenders.

 

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

 

 

 

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

 

“Aggregate Revolving Commitments” means the
Revolving Commitments of all the Revolving Lenders.  The initial amount of the Aggregate Revolving
Commitments in effect on the Closing Date is $135,000,000.

 

“Agreement” has the meaning specified in the
preamble.

 

“Anti-Terrorism Laws” means Executive Order No. 13224,
the PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act and
the laws administered by the United States Treasury Department’s Office of
Foreign Asset Control (each as from time to time in effect) and any similar
laws relating to terrorism.

 

“Applicable Percentage” means (a) with
respect to any Revolving Lender at any time, the percentage (carried out to the
ninth decimal place) of the Aggregate Revolving Commitments represented by such
Revolving Lender’s Revolving Commitment at such time; provided that if
the commitment of each Revolving Lender to make Revolving Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02 or if the Aggregate Revolving Commitments
have expired, then the Applicable Percentage of each Revolving Lender shall be
determined based on the Applicable Percentage of such Revolving Lender most
recently in effect, giving effect to any subsequent assignments and (b) with
respect to such Lender’s portion of the outstanding Term Loan at any time, the
percentage (carried out to the ninth decimal place) of the outstanding
principal amount of the Term Loan held by such Term Loan Lender at such
time.  The initial Applicable Percentage
of each Lender is set forth opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.

 

“Applicable
Rate” means the following percentages per annum:

 

(a)         with respect to Term Loans, 4.50% in the
case of Eurodollar Rate Loans and 3.50% in the case of Base Rate Loans; and

 

(b)        with respect to Revolving Loans, the
following percentages per annum, based upon the Consolidated Leverage Ratio of
the Borrower and its Subsidiaries as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 6.02(b):

 

	
  Level

  	
   

  	
  Consolidated

  Leverage Ratio of

  the Borrower and

  its Subsidiaries

  	
   

  	
  Commitment

  Fee (bps)

  	
   

  	
  Applicable

  Rate for

  Eurodollar Rate

  Loans (bps)

  	
   

  	
  Letter of Credit

  Fee (bps)

  	
   

  	
  Applicable

  Rate for Base

  Rate Loans

  (bps)

  	
   

  
	
  I

  	
   

  	
  Less than 1.25 to 1.00

  	
   

  	
  35

  	
   

  	
  275

  	
   

  	
  275

  	
   

  	
  175

  	
   

  
	
  II

  	
   

  	
  Greater than or equal
  to 1.25 to 1.00 but less than 1.75 to 1.00

  	
   

  	
  40

  	
   

  	
  300

  	
   

  	
  300

  	
   

  	
  200

  	
   

  
	
  III

  	
   

  	
  Greater than or equal
  to 1.75 to 1.00 but less than 2.25 to 1.00

  	
   

  	
  50

  	
   

  	
  325

  	
   

  	
  325

  	
   

  	
  225

  	
   

  
	
  IV

  	
   

  	
  Greater than or equal
  to 2.25 to 1.00 but less than 2.75 to 1.00

  	
   

  	
  50

  	
   

  	
  350

  	
   

  	
  350

  	
   

  	
  250

  	
   

  
	
  V

  	
   

  	
  Greater than or equal
  to 2.75 to 1.00

  	
   

  	
  50

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  275

  	
   

  

 

2

 

Any increase or decrease in
the Applicable Rate resulting from a change in the Consolidated Leverage Ratio
of the Borrower and its Subsidiaries shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with
such Section, then Pricing Level V shall apply as of the first Business Day
after the date on which such Compliance Certificate was required to have been
delivered.  The Applicable Rate in effect
from the Closing Date until receipt by the Administrative Agent of the Borrower’s
Compliance Certificate for the fiscal quarter ended December 31, 2008
shall be determined based upon Pricing Level V.

 

“Approved Fund” means any Fund that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

“Arrangers” means Banc of America Securities
LLC and Wachovia Capital Markets, LLC, in their respective capacities as joint
lead arrangers and joint book managers.

 

“Assignee Group” means (a) two or more
Eligible Assignees that are Affiliates of one another or (b) two or more
Approved Funds managed or administered by the same investment advisor.

 

“Assignment and Assumption” means an
assignment and assumption entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 10.06(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit A
or any other form approved by the Administrative Agent.

 

3

 

“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 Obligation, the capitalized 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.

 

“Audited Financial Statements” means,
collectively, (a) the audited consolidated balance sheet of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 2007, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto and (b) the audited consolidated balance sheet
of Digimarc and its Subsidiaries for the fiscal year ended December 31,
2007, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year of Digimarc and its
Subsidiaries, including the notes thereto.

 

“Autoborrow Agreement” means an agreement by
and between the Borrower and the Swing Line Lender in substantially the form of
Exhibit H hereto, or such other form as is reasonably approved by
the Borrower, the Swing Line Lender and the Administrative Agent, providing for
the automatic advance of Swing Line Loans by the Swing Line Lender under the
conditions set forth therein.

 

“Availability Period” means, with respect to
the Revolving Commitments, the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of
the Aggregate Revolving Commitments pursuant to Section 2.06 and (c) the
date of termination of the commitment of each Revolving Lender to make
Revolving Loans and of the obligation of the L/C Issuer to make L/C Credit
Extensions pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A.
and its successors.

 

“Base Rate” means for any day a fluctuating
rate per annum equal to the higher of (a) the Federal Funds Rate plus
0.50%; and (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate”.  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.  Notwithstanding the foregoing, in no event
shall the Base Rate applicable to Term Loans that are Base Rate Loans be less
than 2.00% per annum.

 

“Base Rate Loan” means a Loan that bears
interest based on the Base Rate plus the Applicable Rate.

 

“Borrower” has the meaning specified in the
preamble.

 

“Borrower Materials” has the meaning
specified in Section 6.02.

 

4

 

“Borrowing” means a borrowing consisting of
simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans,
having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close
under the Laws of, or are in fact closed in, the state where the Administrative
Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan,
means any such day on which dealings in Dollar deposits are conducted by and
between banks in the London interbank eurodollar market.

 

“Cash Collateralize” has the meaning
specified in Section 2.03(g).

 

“Cash Equivalents” means (a) marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition and issued by any Revolving Lender
or by any commercial bank organized under the laws of the United States or any
state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by
S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within
six months from the date of acquisition; (d) repurchase obligations of any
Revolving Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 30 days,
with respect to securities issued or fully guaranteed or insured by the United
States government; (e) securities with maturities of one year or less from
the date of acquisition and issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition and backed by
standby letters of credit issued by any Revolving Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g) shares
of money market mutual or similar funds which invest substantially all of their
assets in assets satisfying the requirements of clauses (a) through (f) of
this definition or money market funds that (i) comply with the criteria
set forth in Securities and Exchange Commission Rule 2a-7 under the
Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P
and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

 

“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.

 

“Change of Control” means an event or series
of events by which:

 

 

5

 

(a)           any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial ownership”
of all securities that such person or group has the right to acquire pursuant
to any option, warrant, convertible security or similar derivative security
held by such person or group (such right, an “option right”), whether such
right is exercisable immediately or only after the passage of time), directly
or indirectly, of 35% or more of the equity securities of Holdings entitled to
vote for members of the board of directors or equivalent governing body of
Holdings on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or

 

(b)           during any period of 12 consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of Holdings cease to be composed of individuals (i) who
were members of that board or equivalent governing body on the first day of
such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as result
of an actual or threatened solicitation of proxies or consents for the election
or removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors); or

 

(c)           the occurrence of a “Change of
Control” (or any comparable term) under, and as defined in, any Subordinated
Debt Document; or

 

(d)           Holdings shall cease to own and
control of record and beneficially, directly, 100% of each class of outstanding
capital stock of the Borrower free and clear of all Liens (other than Liens
permitted by Section 7.01(a)).

 

“Closing Date” means the first date all the
conditions precedent in Section 4.01 are satisfied or waived in
accordance with Section 10.01.

 

“Code” means the Internal Revenue Code of
1986.

 

“Collateral” means, collectively, all
personal and real property of Holdings, the Borrower, any Subsidiary or any
other Person in which the Administrative Agent or any Lender is granted a Lien
under any Security Instrument as security for all or any portion of the
Obligations or any other obligation arising under any Loan Document.

 

6

 

“Commitment” means, as to each Lender, the
Revolving Commitment (if any) of such Lender and/or the Term Loan Commitment
(if any) of such Lender.

 

“Commitment Fee” has the meaning specified in
Section 2.09(a).

 

“Committed Loan Notice” means a notice of (a) a
Borrowing of Revolving Loans or Term Loans, (b) a conversion of Loans from
one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be
substantially in the form of Exhibit B-1.

 

“Compliance Certificate” means a certificate
substantially in the form of Exhibit G.

 

“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 Debt Amortization” means, as of
any date of determination, the sum of all scheduled
payments of Consolidated Funded Indebtedness for the period of twelve
consecutive months ended on or immediately prior to such date.

 

“Consolidated Debt Service Coverage Ratio”
means, as of any date of determination, the ratio of (a) Consolidated
EBITDA of the Borrower and its Consolidated Subsidiaries for the Reference
Period ending on or immediately prior to such date to (b) the sum of (i) Consolidated
Interest Charges of the Borrower and its Consolidated Subsidiaries paid or
payable in cash during the Reference Period ended on or immediately prior to
such date, plus (ii) Consolidated Debt Amortization of the Borrower
and its Consolidated Subsidiaries as of such date.

 

“Consolidated EBITDA” means, for any period,
for any Person, an amount equal to Consolidated Net Income for such period plus
(a) the following to the extent deducted in calculating such Consolidated
Net Income and without duplication: (i) Consolidated Interest Charges for
such period, (ii) the provision for United States Federal, state, local
and foreign income taxes payable by such Person for such period, (iii) depreciation
and amortization expense (including stock-based compensation expense) for such
period, (iv) impairments on property, plant and equipment, goodwill and
general intangibles for such period and (v) other non-recurring expenses
of such Person reducing such Consolidated Net Income which do not represent a
cash item in such period or any future period, and minus (b) the
following to the extent included in calculating such Consolidated Net Income
and without duplication: (i) United States Federal, state, local and
foreign income tax credits for such period and (ii) all non-cash items
increasing Consolidated Net Income for such period (other than amortization of
deferred revenue which shall be included in Consolidated EBITDA only when
earned in accordance with GAAP).

 

For the purposes of calculating Consolidated EBITDA
for any Reference Period pursuant to any determination of (A) the
Consolidated Leverage Ratio of the Borrower and its Consolidated Subsidiaries
or Holdings and its Subsidiaries, as applicable, (B) the Consolidated Debt
Service Coverage Ratio and (C) the Consolidated EBITDA threshold set forth
in the definition of Material Subsidiaries, (i) if, at any time during
such Reference Period, the Borrower or any Subsidiary shall have made any
Material Disposition, Consolidated EBITDA for such 

 

7

 

Reference Period shall be
reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such Reference Period and (ii) if,
at any time during such Reference Period, the Borrower or any Subsidiary shall
have made a Material Acquisition (including the Digimarc Merger), Consolidated
EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition
occurred on the first day of such Reference Period (including (without
duplication) (x) reasonable nonrecurring transaction-related costs of the
Borrower and its Consolidated Subsidiaries (including the acquired company) in
connection with such Material Acquisition to the extent deducted in calculating
Consolidated Net Income (and not otherwise added back in calculating
Consolidated EBITDA) for such pro forma
Reference Period, and (y) those cost savings, including, but not limited
to, cost savings resulting from head count reduction and closure of facilities,
which would be permitted to be reflected in pro forma
financial information and are reasonably satisfactory to the Administrative
Agent); provided that such pro forma
adjustments to Consolidated EBITDA shall be specifically allocated to each of
the four quarters in the four-quarter period ending on the last day of the
fiscal quarter in which such Material Acquisition occurs, and amounts allocated
to any particular fiscal quarter shall not be included in the measurement of
Consolidated EBITDA for any Reference Period not including such fiscal
quarter.  As used in this definition, “Material
Acquisition” means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person, (b) involves the
payment of consideration by the Borrower and its Subsidiaries in excess of
$2,500,000 for any individual acquisition or series of related acquisitions or (c) causes
the aggregate consideration paid or payable for all acquisitions during any
applicable Reference Period to exceed $5,000,000; and “Material Disposition”
means any Disposition of property or series of related Dispositions of property
that (a) constitutes assets comprising all or substantially all of an
operating unit of a business or constitutes all or substantially all of the
common stock of a Person, (b) yields gross proceeds to the Borrower or any
of its Subsidiaries in excess of $2,500,000 for any individual Disposition or
series of related Dispositions or (c) which causes the aggregate gross
proceeds to the Borrower and its Subsidiaries for all Dispositions during any
applicable Reference Period to exceed $5,000,000.

 

“Consolidated Excess Cash Flow” means, for any period for Holdings and its
Subsidiaries on a Consolidated basis, an amount equal to:

 

(a)           the
sum (without duplication) of (i) Consolidated EBITDA for such period
plus (ii) decreases in Consolidated Working Capital during such
period plus (iii) any
transaction costs capitalized in a prior period that are expensed in such
period of measurement but are not added back to Consolidated Net Income in
calculating Consolidated EBITDA for such period of measurement,

 

minus

 

(b)           the
sum (without duplication) of (i) the unfinanced portion of Consolidated
capital expenditures (including for capitalized intangible assets) for
such period  plus (ii) the cash
portion of Consolidated Interest Charges for such period  plus (iii) cash taxes paid
during such period  plus  

 

8

 

(iv) Consolidated Debt Amortization plus (v) increases
in Consolidated Working Capital
during such period plus (vi) earnout payments paid in cash during
such period in connection with Permitted Acquisitions plus (vii) deferred
capitalized transaction costs paid in cash during such period related to
Permitted Acquisitions.

 

“Consolidated Funded Indebtedness” means,
without duplication, as of any date of determination, for any Person, the sum
of (a) the outstanding principal amount of all obligations, whether
current or long-term, for borrowed money (including Obligations hereunder) and
all obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all
direct obligations arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds (but excluding
the undrawn amount of surety bonds outstanding and obligations arising under
standby letters of credit issued to support surety bonds of the Borrower and
its Consolidated Subsidiaries) and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts and accrued liabilities payable in the ordinary
course of business), (e) Attributable Indebtedness in respect of capital
leases and Synthetic Lease Obligations, (f) all Guarantees with respect to
outstanding Indebtedness of the types specified in clauses (a) through (e) above
of other Persons, and (g) all Indebtedness of the types referred to in
clauses (a) through (f) above 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 joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person.

 

“Consolidated Interest Charges” means, for
any period, for any Person on a consolidated basis, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses
of such Person in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, (b) the
portion of rent expense of such Person with respect to such period under
capital leases that is treated as interest in accordance with GAAP and (c) any
Restricted Payments made by such Person to Holdings as permitted by Section 7.06(d);
provided that for purposes of calculating Consolidated Interest Charges
with respect to the denominator of the Consolidated Debt Service Coverage
Ratio, Consolidated Interest Charges of the Borrower and its Subsidiaries for
the Reference Period ending on (a) the fiscal quarter end immediately
following the Digimarc Merger Date shall be deemed to be Consolidated Interest
Charges of the Borrower and its Subsidiaries paid or payable in cash for such
fiscal quarter multiplied by four (4), (b) the second fiscal quarter end
immediately following the Digimarc Merger Date shall be deemed to be
Consolidated Interest Charges of the Borrower and its Subsidiaries paid or
payable in cash for the two-fiscal quarter period ending on such date
multiplied by two (2) and (c) of the third fiscal quarter end
immediately following the Digimarc Merger Date shall be deemed to be
Consolidated Interest Charges of the Borrower and its Subsidiaries paid or
payable in cash for the three-fiscal quarter period ending on such date
multiplied by the ratio of 4 to 3 (4/3).

 

“Consolidated Leverage Ratio” means, as of
any date of determination, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the Reference
Period ended on or immediately prior to such date.

 

“Consolidated Net Income” means, for any
period, for any Person on a consolidated basis, the net income of such Person
(excluding the cumulative non-cash effect of changes in 

 

9

 

accounting principles and
non-cash extraordinary gains and losses) for that period; provided that,
to the extent otherwise included therein, there shall be excluded (a) the
income (or deficit) of any other 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, (b) the income (or deficit) of any other Person
(other than a Subsidiary of such Person) in which such Person or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by such Person or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of
any Subsidiary of such Person that is not a Loan Party to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any Contractual Obligation (other
than under any Loan Document), its Organization Documents or any Requirement of
Law applicable to such Subsidiary.

 

“Consolidated Working Capital” means, for
Holdings and its Subsidiaries on a Consolidated basis and calculated in
accordance with GAAP, as of any date of determination, the excess of (a) current
assets (other than cash, cash equivalents and the current portion of deferred
income taxes) over (b) current liabilities, excluding, without
duplication, (i) the current portion of any long-term Indebtedness, (ii) outstanding
Revolving Loans and Swingline Loans, (iii) the current portion of deferred
income tax liabilities and (iv) the current portion of accrued
Consolidated Interest Charges.

 

“Contractual Obligation” means, as to any
Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

 

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

 

“Convertible Notes” means convertible senior
notes due 2027 of Holdings in an aggregate principal amount of $175,000,000
issued pursuant to that certain indenture dated as of May 17, 2007 between
Holdings and The Bank of New York, as trustee.

 

“Corporate Ratings” means the Borrower’s
corporate family rating from Moody’s and corporate rating from S&P, in each
case on the Closing Date after giving pro forma effect to the Transactions.

 

“Credit Extension” means each of the
following: (a) a Borrowing and (b) a L/C Credit Extension.

 

“Debtor Relief Laws” means the Bankruptcy
Code of the United States, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.

 

10

 

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

 

“Default Rate” means (a) when used with
respect to Obligations other than Letter of Credit Fees, an interest rate equal
to (i) the Base Rate plus (ii) the Applicable Rate, if any,
applicable to Base Rate Loans plus (iii) 2% per annum; provided,
however, that with respect to a Eurodollar Rate Loan, the Default Rate
shall be an interest rate equal to the interest rate (including any Applicable
Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when
used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate
plus 2% per annum, in all cases to the fullest extent permitted by
applicable Laws.

 

“Defaulting Lender” means any Lender that (a) has
failed to fund any portion of the Loans, participations in L/C Obligations or participations
in Swing Line Loans required to be funded by it hereunder within one Business
Day of the date required to be funded by it hereunder unless such failure has
been cured, (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 the subject of a good
faith dispute or unless such failure has been cured, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

 

“Digimarc” means Digimarc Corporation, a
Delaware corporation.

 

“Digimarc AcquisitionCo” means Dolomite
Acquisition Co., a Delaware corporation, and a direct wholly-owned Domestic
Subsidiary of the Borrower.

 

“Digimarc Common Stock” means “Company Common
Stock” as defined in the Digimarc Merger Agreement.

 

“Digimarc Escrow and Control Agreement” means
that certain Escrow and Control Agreement dated as of the Closing Date among
the Borrower, Bank of America, N.A., as depository bank and the Administrative
Agent.

 

“Digimarc Escrow Account” means that certain
escrow account of the Borrower maintained at Bank of America pursuant to the
Digimarc Escrow and Control Agreement.

 

“Digimarc Escrow Amount” means the amount of
the Term Loan that is not required to complete that portion of the Transactions
which will be completed on the Closing Date after giving effect to the prior
application of the net proceeds of the Digimarc PIPE.

 

“Digimarc Expiration Date” means the later of
the “Initial Expiration Date” or the “Extended Expiration Date,” in each case,
as defined in the Digimarc Merger Agreement.

 

“Digimarc Material Adverse Effect” means the “Company
Material Adverse Effect” as defined in the Digimarc Merger Agreement.

 

“Digimarc Merger” means the acquisition by
Digimarc AcquisitionCo of all of the Equity Interests in Digimarc in accordance
with the terms of the Digimarc Merger Agreement.

 

11

 

“Digimarc Merger Agreement” means the Amended
and Restated Agreement and Plan of Merger, dated as of June 29, 2008 by
and among Holdings, Digimarc AcquisitionCo and Digimarc, as amended by
Amendment No.1 dated of July 17, 2008.

 

“Digimarc Merger Date” means the date upon
which the Digimarc Merger is completed.

 

“Digimarc Minimum Condition” means the “Minimum
Condition” as defined in the Digimarc Merger Agreement.

 

“Digimarc Offer Documents” means the “Offer
Documents” as defined in the Digimarc Merger Agreement.

 

“Digimarc PIPE” means the issuance of common
and/or preferred stock of Holdings in one or more private investment in public
equity transactions.

 

“Digimarc Release Date” means the first date
on which all of the conditions precedent in Section 4.02 are
satisfied or waived in accordance with Section 10.01 (which date
shall be no earlier than the Digimarc Merger Date).

 

“Digimarc Tender Offer” means the tender
offer by Digimarc AcquisitionCo for all of the issued and outstanding Digimarc
Common Stock pursuant to the Digimarc Offer Documents and in accordance with
the Digimarc Merger Agreement.

 

“Direct Foreign Subsidiary” means a Foreign
Subsidiary a majority of whose Voting Equity Interests, or a majority of whose
Equity Interests, are owned by Holdings, the Borrower or a Domestic Subsidiary.

 

“Disposition” or “Dispose” means the
sale, transfer, license, lease or other disposition (including any sale and
leaseback transaction) of any property by any Person, including any sale,
assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith.

 

“Dollar” or “$” means lawful money of
the United States.

 

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

 

“Eligible Assignee” means any Person that
meets the requirements to be an assignee under Sections 10.06(b)(iii), (v) and
(vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“Environmental Laws” means any and all United
States Federal, state, local, and foreign Laws relating to pollution and the
protection of the environment or the release of any Hazardous Materials into
the environment.

 

“Environmental Liability” means any
liability, contingent or otherwise (including any liability for damages, costs
of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries,
resulting from or based 

 

12

 

upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials as the result of a release of such materials into the environment,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equity Interests” means, with respect to any
Person, all of the shares of capital stock of (or other ownership or profit
interests in) such Person, all of the warrants, options or other rights for the
purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities
convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options
for the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.

 

“Equity Issuance” means any issuance by
Holdings or any of its Subsidiaries to any Person of its Equity Interests,
other than (a) any issuance of its Equity Interests pursuant to the
exercise of options or warrants, (b) any issuance of its Equity Interests
pursuant to the conversion of any debt securities to equity or the conversion
of any class of equity securities to any other class of equity securities and (c) any
issuance of options or warrants relating to its Equity Interests.  The term “Equity Issuance” shall not be
deemed to include any Disposition.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974.

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with Holdings or any of its
Subsidiaries within the meaning of Section 414(b) or (c) of the
Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable
Event with respect to a Pension Plan; (b) a withdrawal by Holdings or any
of its Subsidiaries or any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a
complete or partial withdrawal by Holdings or any of its Subsidiaries or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to
terminate a Pension Plan, the treatment of a Pension Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of a Pension Plan, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Holdings or any of its
Subsidiaries or any ERISA Affiliate.

 

13

 

“Eurodollar Rate” means, for any Interest
Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA
LIBOR as designated by the Administrative Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period.  If the BBA LIBOR is not
available at such time for any reason, then the rate for such Interest Period
shall be the rate per annum determined by the Administrative Agent to be the
rate at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America’s London
Branch to major banks in the London interbank eurodollar market at their
request at approximately 11:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period. 
Notwithstanding the foregoing, in no event shall the Eurodollar Rate
applicable to Term Loans that are Eurodollar Rate Loans be less than 3.00% per
annum.

 

“Eurodollar Rate Loan” means a Loan that
bears interest based on the Eurodollar Rate plus the Applicable Rate.

 

“Event of Default” has the meaning specified
in Section 8.01.

 

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, the L/C Issuer 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 or similar 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 which imposes such taxes because such Person engages in
business in such jurisdiction other than solely as a result of this Agreement
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,
(c) backup withholding taxes imposed on amounts payable to a Lender that
is a “United States person,” as defined in Section 7701(a)(30) of the
Code, at the time such Lender becomes a party hereto or designates a new
Lending Office or is attributable to such Lender’s failure or inability (other
than as a result of a Change in Law subsequent to the date it becomes a Lender)
to comply with clause (A) of Section 3.01(e)(ii), except to
the extent that such 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 backup withholding tax pursuant
to Section 3.01(a), (d) in the case of a Foreign Lender (other
than an assignee pursuant to a request by the Borrower under Section 10.13),
any withholding tax that (i) is required to be imposed on amounts payable
to such Foreign Lender pursuant to the Laws in force at the time such Foreign
Lender becomes a party hereto (or designates a new Lending Office) or (ii) is
attributable to such Foreign Lender’s failure or inability (other than as a result
of a Change in Law subsequent to the date it becomes a Lender) to comply with
clause (B) of Section 3.01(e)(ii), 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 

 

14

 

amounts from the Borrower
with respect to such withholding tax pursuant to Section 3.01(a)(ii) and
(e) any interest, additions to Taxes or penalties with respect to any of
the foregoing.

 

“Existing Credit Agreement” means that
certain Amended and Restated Credit Agreement dated as of October 19,
2006, as amended from time to time through the date hereof, by and among the
Borrower, Holdings, the lenders party thereto and Bank of America, as
Administrative Agent.

 

“Existing L-1 Letters of Credit” means those
certain letters of credit identified on Schedule 1.01(b).

 

“Existing Digimarc Letters of Credit” means
those certain letters of credit issued for the account of Digimarc and/or one
of its Subsidiaries prior to the Closing Date and identified on Schedule
1.01(c).

 

 “Extraordinary
Receipts” means, with respect to Holdings and its Subsidiaries, any cash
received by or paid to or for the account of such Person not in the ordinary
course of business, including tax refunds, pension plan reversions, proceeds of
insurance (other than proceeds of business interruption insurance to the extent
such proceeds constitute compensation for lost earnings and proceeds of an involuntary
Disposition), indemnity payments and any purchase price adjustments; provided,
however, that an Extraordinary Receipt shall not include cash receipts
from proceeds of insurance or indemnity payments to the extent that such
proceeds, awards or payments are received by any Person in respect of any third
party claim against such Person and applied to pay (or to reimburse such Person
for its prior payment of) such claim and the costs and expenses of such Person
with respect thereto.

 

“Facility Ratings” means the long term senior
secured debt ratings of the facilities provided for in this Agreement from each
of Moody’s and S&P, in each case on the Closing Date after giving pro forma
effect to the Transactions.

 

“Federal Funds Rate” means, for any day, the
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Administrative Agent.

 

“Fee Letters” means, collectively, the Joint
Fee Letter and the Administrative Agency Fee Letter.

 

“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 (including such a
Lender when acting in the capacity of the L/C Issuer).  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

 

15

 

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

 

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

 

“Fund” means any Person (other than a natural
person) 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.

 

“GAAP” means generally accepted accounting
principles in the United States set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable
to the circumstances as of the date of determination, consistently applied.

 

“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).

 

“Granting Lender” has the meaning
specified in Section 10.06(g).

 

“Guarantee” means, as
to any Person, (a) any obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness
payable or performable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness of the payment or performance of such
Indebtedness, (iii) to maintain working capital, equity capital or any
other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person
securing any Indebtedness of any other Person, whether or not such Indebtedness
is assumed by such Person (or any right, contingent or otherwise, of any holder
of such Indebtedness to obtain any such Lien). 
The amount of any Guarantee shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

16

 

“Guarantors” means, collectively, Holdings,
the Material Subsidiaries of Holdings (excluding the Borrower) and each other
Person who becomes a party to the Guaranty (including by execution of a Joinder
Agreement pursuant to Section 6.14).

 

“Guaranty” means the Second Amended and
Restated Guaranty Agreement dated as of the date hereof made by the Guarantors
in favor of the Administrative Agent for the benefit of the Secured Parties,
substantially in the form of Exhibit D.

 

“Hazardous Materials” means all substances,
materials or wastes regulated as “hazardous”, “toxic”, “radioactive” or “explosive”
or a “pollutant” or “contaminant” under any Environmental Law, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, and infectious or medical wastes.

 

“Holdings” has the meaning specified in the
preamble.

 

“Honor Date” has the meaning specified in Section 2.03(c)(i).

 

“Indebtedness” means, as to any Person at a
particular time, without duplication, all of the following, whether or not
included as indebtedness or liabilities in accordance with GAAP:

 

(a)           all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;

 

(b)           all direct or contingent obligations
of such Person arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments;

 

(c)           net obligations of such Person under
any Swap Contract;

 

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business);

 

(e)           indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;

 

(f)            capital leases and Synthetic Lease
Obligations;

 

(g)           all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest (other than obligations payable in common stock of Holdings
in connection with the Convertible Notes) in such Person or any other Person,
valued, in the case of a redeemable preferred interest, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and

 

17

 

(h)           all Guarantees of such Person in
respect of any of the foregoing.

 

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.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.  The amount of
any capital lease or Synthetic Lease Obligation as of any date shall be deemed
to be the amount of Attributable Indebtedness in respect thereof as of such
date.

 

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

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

“Information” has the meaning specified in Section 10.07.

 

“Initial Revolving Loan Amount” means the
amount of Revolving Loans to be borrowed on the Closing Date, which such amount
shall be limited to the amount (if any) necessary to fund that portion of the
Transactions to be completed on the Closing Date after giving effect to the
prior application of the net proceeds of the Digimarc PIPE and the Term Loan.

 

“Interest Payment Date” means, (a) as to
any Loan other than a Base Rate Loan, the last day of each Interest Period
applicable to such Loan and the Maturity Date; provided, however, that
if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any
Base Rate Loan (including a Swing Line Loan), the last Business Day of each
March, June, September and December and the Maturity Date.

 

“Interest Period” means, as to each
Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate
Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and
ending on the date one, two, three or six months thereafter (or such other
period agreed to by each Lender participating in such Borrowing), as selected
by the Borrower in its Committed Loan Notice; provided that:

 

(a)           any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Business
Day;

 

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

 

(c)           no Interest Period shall extend
beyond the Maturity Date.

 

“Investment” means, as to any Person, any
direct or indirect acquisition or investment by such Person, whether by means
of (a) the purchase or other acquisition of capital stock or other 

 

18

 

securities of another
Person, (b) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or
equity participation or interest in, another Person, including any partnership
or joint venture interest in such other Person and any arrangement pursuant to
which the investor Guarantees Indebtedness of such other Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested (net of returns
actually received on such Investment), without adjustment for subsequent
increases or decreases in the value of such Investment.

 

“IP Rights” has the meaning specified in Section 5.19.

 

“IRS” means the United States Internal
Revenue Service.

 

“ISP” means, with respect to any Letter of
Credit, the “International Standby Practices 1998” published by the Institute
of International Banking Law & Practice (or such later version thereof
as may be in effect at the time of issuance).

 

“Issuer Documents” means with respect to any
Letter of Credit, the Letter of Credit Application and any other document,
agreement and instrument entered into by the L/C Issuer and the Borrower (or
any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of
Credit.

 

“Joinder Agreement” means a joinder
agreement, in form and substance satisfactory to the Administrative Agent.

 

“Joint Fee Letter” means that certain letter
agreement, dated as of June 28, 2008, among Bank of America, Wachovia
Bank, National Association, the Arrangers and the Borrower.

 

“Laws” means, collectively, all
international, foreign, federal, state and local statutes, treaties, rules,
guidelines, regulations, ordinances, codes and administrative or judicial
precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case whether or not having
the force of law.

 

“L/C Advance” means, with respect to each
Revolving Lender, such Revolving Lender’s funding of its participation in any
L/C Borrowing in accordance with its Applicable Percentage.

 

“L/C Borrowing” means an extension of credit
resulting from a drawing under any Letter of Credit which has not been
reimbursed on the date when made or refinanced as a Borrowing of Revolving
Loans.

 

“L/C Credit Extension” means, with respect to
any Letter of Credit, the issuance thereof or extension of the expiry date
thereof, or the increase of the amount thereof.

 

19

 

“L/C Issuer” means Bank of America in its
capacity as issuer of Letters of Credit hereunder, or any successor issuer of
Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of
determination, the aggregate amount available to be drawn under all outstanding
Letters of Credit plus the aggregate of all Unreimbursed Amounts,
including all L/C Borrowings.  For
purposes of computing the amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“Lender” has the meaning specified in the
preamble and, as the context requires, includes the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the
office or offices of such Lender described as such in such Lender’s Administrative
Questionnaire, or such other office or offices as a Lender may from time to
time notify the Borrower and the Administrative Agent.

 

“Letter of Credit”
means any standby letter of credit issued hereunder and shall include the
Existing L-1 Letters of Credit.

 

“Letter of Credit Application” means an
application and agreement for the issuance or amendment of a Letter of Credit
in the form from time to time in use by the L/C Issuer.

 

“Letter of Credit Expiration Date” means the
day that is five days prior to the Maturity Date then in effect (or, if such
day is not a Business Day, the next preceding Business Day).

 

“Letter of Credit Fee” has the meaning
specified in Section 2.03(i).

 

“Letter of Credit Sublimit” means an amount
equal to the lesser of (a) the Aggregate Revolving Commitments and (b) $40,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Aggregate Revolving Commitments.

 

“Lien” means any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge, or preference, priority or other security interest or
preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same economic effect
as any of the foregoing).

 

“Loan” means an extension of credit by a
Lender to the Borrower under Article II in the form of a Revolving
Loan, Swing Line Loan or Term Loan.

 

“Loan Documents” means this Agreement, each
Note, the Guaranty, each Security Instrument, each Joinder Agreement, each
Committed Loan Notice, each Issuer Document, the Fee Letters and all other instruments
and documents heretofore or hereafter executed or 

 

20

 

delivered to or in favor of
the Administrative Agent or any Lender in connection with the Loans made and
transactions contemplated by this Agreement.

 

“Loan Parties” means, collectively, the
Borrower, each Guarantor and each other Person providing Collateral pursuant to
any Security Instrument.

 

“Material Adverse Effect” means any event or
condition that has had or could be reasonably expected, either individually or
in the aggregate, to have (a) a material adverse change in, or a material
adverse effect on, the operations, business, assets, properties, liabilities
(actual or contingent) or condition (financial or otherwise) of Holdings and
its Subsidiaries (excluding Digimarc and its Subsidiaries until the Digimarc
Merger Date), taken as a whole, (b) a material impairment of the rights
and remedies of the Administrative Agent or any Lender under any Loan Document,
or of the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

 

“Material Subsidiaries” means those Domestic
Subsidiaries of the Borrower designated in accordance with Section 6.15
by the Borrower to the Administrative Agent that, when combined with the
Borrower (the Borrower and each such Domestic Subsidiary measured for this
purpose on a standalone basis, without giving effect to the operations and
assets of their respective Subsidiaries), in the aggregate represent not less
than 90% of the consolidated assets of the Borrower and its Subsidiaries, not
less than 90% of the consolidated revenues of the Borrower and its
Subsidiaries, and not less than 90% of Consolidated EBITDA; provided
that if at any time any of the preceding thresholds is not met by the
aggregation of the Borrower and all its Domestic Subsidiaries (each measured on
a standalone basis), then each Domestic Subsidiary of the Borrower shall be a
Material Subsidiary; provided further that the assets of Digimarc and
its Subsidiaries shall be excluded until the Digimarc Merger Date and neither
Digimarc nor any of its Subsidiaries shall be a Material Subsidiary until the
Digimarc Merger Date.

 

“Maturity Date” means August 5, 2013; provided,
however, that (a) that such date shall be accelerated to February 14,
2012 unless the Convertible Notes have been refinanced in full on or prior to January 14,
2012 (and, if such refinancing is with Indebtedness, such Indebtedness has a
stated maturity date not earlier than February 6, 2014), and (b) if
such date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.

 

“Moody’s” means Moody’s Investors Service, Inc.
and any successor thereto.

 

“Multiemployer Plan” means any employee
benefit plan of the type described in Section 4001(a)(3) of ERISA, to
which Holdings, or any of its Subsidiaries or any ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

 

“Net Cash Proceeds” means (a) in
connection with any Disposition or any Recovery Event, the proceeds thereof in
the form of cash and Cash Equivalents (including any such proceeds received by
way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or by the Disposition of any
non-cash 

 

21

 

consideration received in
connection therewith or otherwise, but only as and when received) of such
Disposition or Recovery Event, net of attorneys’ fees, accountants’ fees,
investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset that
is the subject of such Disposition or Recovery Event (other than any Lien
pursuant to the Security Agreement or Pledge Agreement), reasonable and appropriate
amounts as a reserve against liabilities associated with such Disposition and
retained by Holdings or a Subsidiary and other customary fees and expenses
actually incurred in connection therewith and net of Taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any
available Tax credits or deductions and any Tax sharing arrangements) and (b) in
connection with any incurrence of Indebtedness or any Equity Issuance, the cash
proceeds received from such issuance, contribution or incurrence, net of
attorneys’ fees, investment banking fees, accountants’ fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.

 

“Note” means (a) with respect to Revolving
Loans, a promissory note made by the Borrower in favor of a Revolving Lender
evidencing Revolving Loans made by such Revolving Lender, substantially in the
form of Exhibit C-1 and (b) with respect to Term Loans, a
promissory note made by the Borrower in favor of a Term Loan Lender evidencing
Term Loans made by such Term Loan Lender, substantially in the form of Exhibit C-2.

 

“Obligations” means all advances to, and
debts, liabilities, obligations, covenants and duties of, any Loan Party
arising under any Loan Document (or other relevant document in the case of
Related Credit Arrangements) with respect to any Loan, Letter of Credit or
Related Credit Arrangement, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.

 

“Organization Documents” means, (a) with
respect to any corporation, the certificate or articles of incorporation and
the bylaws (or equivalent or comparable constitutive documents with respect to
any non-U.S. jurisdiction); (b) with respect to any limited liability
company, the certificate or articles of formation or organization and operating
agreement or limited liability company agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“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.

 

22

 

“Outstanding Amount” means (a) with
respect to any Loans on any date, the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of
any Loans, occurring on such date; and (b) with respect to any L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any L/C Credit Extension occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrower of Unreimbursed
Amounts.

 

“Participant” has the meaning specified in Section 10.06(d).

 

“PBGC” means the Pension Benefit Guaranty
Corporation.

 

“Pension Plan” means any “employee pension
benefit plan” (as such term is defined in Section 3(2) of ERISA),
other than a Multiemployer Plan, that is subject to Title IV of ERISA and is
sponsored or maintained by Holdings or any of its Subsidiaries or any ERISA
Affiliate or to which Holdings or any of its Subsidiaries or any ERISA
Affiliate contributes or has an obligation to contribute, or in the case of a
multiple employer or other plan described in Section 4064(a) of
ERISA, has made contributions at any time during the immediately preceding five
plan years.

 

“Permitted Acquisition” has the meaning
specified in Section 7.02(g).

 

“Permitted Seller Debt” means any unsecured
Indebtedness of the Borrower or any of its Subsidiaries incurred in connection
with, and as part of the consideration payable in respect of, any Permitted
Acquisition, no part of the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption or mandatory prepayment)
prior to the date which is six months after the Maturity Date, and the payment
of principal and interest of which and other obligations of the Borrower or any
of its Subsidiaries in respect thereof are subordinated to the prior payment in
full of the Obligations on terms and conditions reasonably satisfactory to the
Administrative Agent.

 

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

 

“Plan” means any “employee benefit plan” (as
such term is defined in Section 3(3) of ERISA) sponsored by Holdings
or any of its Subsidiaries or, with respect to any such plan that is subject to
Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Platform” has the meaning specified in Section 6.02.

 

“Pledge Agreement” means the Second Amended
and Restated Securities Pledge Agreement dated as of the date hereof among the
Borrower, the Guarantors and the Administrative Agent for the benefit of the
Secured Parties, substantially in the form of Exhibit F.

 

“Pledged Interests” means (a) the Equity
Interests of each of the existing or hereafter organized or acquired direct
Domestic Subsidiaries of a Loan Party; and (b) 65% of the Voting Equity
Interests (or if the relevant Person shall own less than 65% of such Voting
Equity 

 

23

 

Interests, then 100% of the
Voting Equity Interests owned by such Person) and 100% of the nonvoting Equity
Interests of each of the existing or hereafter organized or acquired Direct
Foreign Subsidiaries.

 

 “Public
Lender” has the meaning specified in Section 6.02.

 

“Recovery Event” means any settlement of or
payment in respect of any property or casualty insurance claim or any
condemnation proceeding relating to any asset of Holdings or any of its
Subsidiaries.

 

“Reference Period” means any applicable
period of four consecutive fiscal quarters.

 

“Register” has the meaning specified in Section 10.06(c).

 

“Related Credit Arrangements” means,
collectively, Related Swap Contracts and Related Treasury Management
Arrangements.

 

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

 

“Related Swap Contract” means all Swap
Contracts to or for the benefit of any Loan Party that are entered into or
maintained with a Lender or an Affiliate of such Lender or with a counterparty
that was a Lender or its Affiliate on the Closing Date or on the date such Swap
Contract was entered into.

 

“Related Treasury Management Arrangements”
means all arrangements for the delivery of treasury management services to or
for the benefit of any Loan Party which are entered into or maintained with a
Lender or an Affiliate of such Lender, or was a Lender or an Affiliate of such
Lender on the Closing Date or on the date such arrangement was entered into.

 

“Reportable Event” means any of the events
set forth in Section 4043(c) of ERISA, other than events for which
the thirty day notice period has been waived.

 

“Request for Credit Extension” means (a) with
respect to a Borrowing, conversion or continuation of a Loan, a Committed Loan
Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit
Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

 

“Required Lenders” means, at any time,
Lenders holding in the aggregate more than 50% of (a) the unfunded
Commitments and the outstanding Loans, L/C Obligations and participations
therein or (b) if the Commitments have been terminated, the outstanding
Loans, L/C Obligations and participations therein.  The unfunded Commitments of, and the
outstanding Loans held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.

 

“Required Revolving Lenders” means as of any
date of determination, Revolving Lenders having more than 50% of the Aggregate
Revolving Commitments or if such 

 

24

 

Commitments have been
terminated, the outstanding Loans, L/C Obligations and participations
therein.  The unfunded Commitments of,
and the outstanding Loans held or deemed held by, any Defaulting Lender shall
be excluded for purposes of making a determination of Required Revolving
Lenders.

 

“Requirement of Law” means, as to any Person,
the Organization Documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer” means the chairman,
chief executive officer, president, chief financial officer, division chief
financial officer, treasurer or assistant treasurer of a Loan Party and, with
respect to the delivery requirements of Sections 4.01 and 4.02,
any secretary or assistant secretary of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any capital stock or other Equity Interest of Holdings, the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
capital stock or other Equity Interest, or on account of any return of capital
to any Loan Party’s stockholders, partners or members (or the equivalent Person
thereof); provided that Restricted Payments shall not include any
ordinary course operating expenses of Holdings that are paid by the Borrower
but allocated to Holdings so long as such expenses are included in the
determination of Consolidated Net Income of the Borrower and its Subsidiaries
without a corresponding add-back in the calculation of Consolidated EBITDA of the
Borrower and its Subsidiaries.

 

“Revolving
Commitment” means, as to each Revolving Lender, its obligation to (a) make
Revolving Loans to the Borrower pursuant to Section 2.01(a), (b) purchase
participations in L/C Obligations, and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Revolving Lender’s name on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Revolving
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.

 

“Revolving Facility”
means, at any time, the aggregate amount of the Revolving Lenders’ Revolving
Commitments at such time.

 

“Revolving
Lender” means any Lender that has a Revolving Commitment.

 

“Revolving
Loan” has the meaning specified in Section 2.01(a).

 

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

 

25

 

“SEC” means the Securities and Exchange
Commission, or any Governmental Authority succeeding to any of its principal
functions.

 

“Secured Parties” means, collectively, with
respect to each of the Security Instruments, the Administrative Agent, the
Lenders, any Person that is a party to a Related Credit Arrangement so long as
such Person was a Lender or an Affiliate of a Lender at the time of entering
into such Related Credit Arrangement  and
any other Person for whose benefit the Lien thereunder is conferred, as therein
provided.

 

“Security Agreement” means the Second Amended
and Restated Security Agreement dated as of the date hereof by the Borrower and
the Guarantors to the Administrative Agent for the benefit of the Secured
Parties, substantially in the form of Exhibit E.

 

“Security Instruments” means, collectively,
the Security Agreement, the Pledge Agreement, the Digimarc Escrow and Control
Agreement and all other agreements (including control agreements), instruments
and other documents, whether now existing or hereafter in effect, pursuant to
which Holdings, the Borrower, any Subsidiary or other Person shall grant or
convey to the Administrative Agent a Lien in, or any other Person shall
acknowledge any such Lien in, property as security for all or any portion of
the Obligations or any other obligation under any Loan Document.

 

“Securities Laws” means the Securities Act of
1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable
accounting and auditing principles, rules, standards and practices promulgated,
approved or incorporated by the SEC or the Public Company Accounting Oversight
Board, as each of the foregoing may be amended and in effect on any applicable
date hereunder.

 

“Solvent” and “Solvency”: when used
with respect to any Person, as of any date of determination, (a) the
amount of the “present fair saleable value” of the assets of such Person will,
as of such date, exceed the amount of all “liabilities of such Person,
contingent or otherwise”, as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations
of the insolvency of debtors, (b) the present fair saleable value of the
assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature.  For purposes of this definition,
(i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, or (y) right
to an equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.  In computing the
amount of contingent or unliquidated liabilities at any time, such liabilities
shall be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

26

 

“SPC” has the meaning specified in
Section 10.06(g).

 

“Specified Representations” means (a) the
representations and warranties made by or on behalf of Digimarc and its
Subsidiaries in the Digimarc Merger Agreement as are material, individually or
in the aggregate, to the interests of the Lenders, but only to the extent that
Holdings or Digimarc AcquisitionCo has the right to terminate its obligations
under the Digimarc Merger Agreement as a result of a breach of such
representations and warranties in the Digimarc Merger Agreement and (b) the
representations and warranties contained in Sections 5.01, 5.02, 5.03,
5.04, 5.14, 5.15 (with respect to Holdings and its
Subsidiaries, but excluding Digimarc and its Subsidiaries) and 5.18.

 

“Subordinated Debt” means any unsecured
Indebtedness of the Borrower or Holdings that is subordinated to the
Obligations, no part of the principal of which is required to be paid (whether
by way of mandatory sinking fund, mandatory redemption or mandatory
prepayment), prior to the date which is six months after the Maturity Date (it
being understood that any required offer to purchase such Indebtedness as a
result of a change of control or asset sale shall not violate the foregoing
restriction) and the terms and conditions of which (including the subordination
provisions) are satisfactory to the Administrative Agent; provided,
that, notwithstanding the foregoing, the Convertible Notes shall be deemed to
be Subordinated Debt under this Agreement.

 

“Subordinated Debt Document” means,
collectively, any note, indenture and each other document, agreement and
instrument governing or evidencing any Subordinated Debt.

 

“Subsidiary” of a Person means a corporation,
partnership, joint venture, limited liability company or other business entity
of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of Holdings.

 

“Swap Contract” means (a) any and all
rate swap transactions, basis swaps, credit derivative transactions, forward
rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond
index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, spot contracts, or any other similar transactions or any combination
of any of the foregoing (including any options to enter into any of the
foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, 

 

27

 

a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of
any one or more Swap Contracts, after taking into account the effect of any
legally enforceable netting agreement relating to such Swap Contracts, (a) for
any date on or after the date such Swap Contracts 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 Swap
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts
(which may include a Lender or any Affiliate of a Lender).

 

“Swing Line Borrowing” means a borrowing of a
Swing Line Loan pursuant to Section 2.04.

 

“Swing Line Lender” means Bank of America in
its capacity as provider of Swing Line Loans, or any successor swing line
lender hereunder.

 

“Swing Line Loan” has the meaning specified
in Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a
Swing Line Borrowing pursuant to Section 2.04(b), which, if in
writing, shall be substantially in the form of Exhibit B-2.

 

“Swing Line Sublimit” means an amount equal
to the lesser of (a) $15,000,000 and (b) the Aggregate Revolving
Commitments.  The Swing Line Sublimit is
part of, and not in addition to, the Aggregate Revolving Commitments.

 

“Synthetic Lease Obligation” means the
monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use
or possession of property creating obligations that do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment), other than operating leases.

 

“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” has the meaning specified in Section 2.01(b).

 

“Term Loan Commitment” means, as to each Term
Loan Lender, its obligation to make its portion of the Term Loan to the
Borrower pursuant to Section 2.01(b), in the principal amount set
forth opposite such Lender’s name on Schedule 2.01.  The aggregate principal amount of the Term
Loan Commitments of all of the Term Loan Lenders as in effect on the Closing
Date is $300,000,000.

 

28

 

“Term Loan Facility” means, at any
time, (a) on or prior to the Closing Date, the aggregate amount of the Term Loan
Commitments at such time and (b) thereafter, the aggregate principal
amount of the Term Loans of all Term Loan Lenders outstanding at such
time.

 

“Term Loan Lender” means (a) at any time
on or prior to the Closing Date, any Lender that has a Term Loan
Commitment at such time and (b) at any time after the Closing Date, any
Lender that holds Term Loans at such time.

 

“Threshold Amount” means $5,000,000.

 

“Total
Revolving Outstandings” means the aggregate Outstanding Amount of all
Revolving Loans, all Swing Line Loans and all L/C Obligations.

 

“Transactions” means, collectively, (a) the
completion of the Digimarc Merger, (b) the issuance of the Digimarc PIPE, (c) the
entering into by the Loan Parties of the Loan Documents to which they are or
are intended to be a party, (d) the refinancing of the Existing Credit
Agreement, and the termination of all commitments with respect thereto (other
than the Existing L-1 Letters of Credit) and (e) the payment of the fees
and expenses incurred in connection with the consummation of the foregoing.

 

“Type” means, with respect to a Loan, its
character as a Base Rate Loan or a Eurodollar Rate Loan.

 

“Unfunded Pension Liability” means the excess
of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of
ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding such Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

 

“United States” and “U.S.” mean the
United States of America.

 

“Unreimbursed Amount” has the meaning
specified in Section 2.03(c)(i).

 

“Voting Equity Interests” means the shares of
capital stock issued by a corporation, or equivalent interests in any other
Person, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been suspended by
the happening of such a contingency.

 

“Watermark SpinCo” means a to be formed
entity that, after giving effect to the Watermark Spin-off, shall hold certain
assets consisting of the watermark business of Digimarc and its Subsidiaries.

 

“Watermark
Spin-off” means the “Spin Off” as defined in the Digimarc Offer Documents.

 

1.02.       Other Interpretive Provisions. 
With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

 

29

 

(a)           The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.” The word “will”
shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference
to any agreement, instrument or other document (including any Organization
Document) 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 or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof’ and “hereunder,”
and words of similar import when used in any Loan Document, shall be construed
to refer to such Loan Document in its entirety and not to any particular
provision thereof, (iv) all references in a Loan Document to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, the Loan Document in which such
references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) 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.

 

(b)           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.”

 

(c)           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.

 

1.03.       Accounting Terms.

 

(a)         Generally.  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, except
as otherwise specifically prescribed herein.

 

(b)        Changes in GAAP. 
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 

 

30

 

shall provide to the
Administrative Agent and the Lenders financial statements and 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.

 

(c)         Consolidation of Variable Interest
Entities.  All references herein to consolidated
financial statements of Holdings and its Subsidiaries or the Borrower and its
Subsidiaries, as applicable, or to the determination of any amount for Holdings
and its Subsidiaries or Borrower and its Subsidiaries, as applicable, on a
consolidated basis or any similar reference shall, in each case, be deemed to
include each variable interest entity that Holdings or the Borrower, as
applicable, is required to consolidate pursuant to FASB Interpretation No. 46—Consolidation
of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003)
as if such variable interest entity were a Subsidiary as defined herein.

 

1.04.       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).

 

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

 

1.06.       Letter of Credit Amounts. 
Unless otherwise specified herein, the amount of a Letter of Credit at
any time shall be deemed to be the stated amount of such Letter of Credit in
effect at such time; provided, however, that with respect to any Letter
of Credit that, by its terms or the terms of any Issuer Document related
thereto, provides for one or more automatic increases in the stated amount
thereof, the amount of such Letter of Credit shall be deemed to be the maximum
stated amount of such Letter of Credit after giving effect to all such
increases, whether or not such maximum stated amount is in effect at such time.

 

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.       Revolving Loans and Term Loans.

 

(a)         Revolving Loans. 
Subject to the terms and conditions set forth herein, each Revolving
Lender severally agrees to make loans (each such loan, a “Revolving Loan”)
to the Borrower in Dollars from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Revolving Lender’s Revolving Commitment; provided,
however, that after giving effect to any Borrowing of Revolving Loans, (i) the
Total Revolving Outstandings shall not exceed the Aggregate Revolving
Commitments, and (ii) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus such Lender’s Applicable Percentage
of the Outstanding Amount of all L/C Obligations, plus such Revolving
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Revolving Lender’s Revolving Commitment; provided
further that, notwithstanding the foregoing, the Outstanding Amount of all
Revolving Loans (other than Revolving Loans made in connection with the 

 

31

 

Initial Revolving Loan
Amount) and Swing Line Loans made and Letters of Credit issued after the
Closing Date but prior to the Digimarc Release Date (other than Letters of
Credit issued during such period solely for the purpose of replacing or
back-stopping one or more Existing Digimarc Letters of Credit) shall not exceed
$15,000,000 in the aggregate.  Within the
limits of each Revolving Lender’s Revolving Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under this Section 2.01,
prepay under Section 2.05, and reborrow under this Section 2.01.  Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

 

(b)        Term Loan.  Subject to
the terms and conditions set forth herein, each Term Loan Lender severally
agrees to make its portion of a term loan (the “Term Loan”) to the
Borrower in Dollars on the Closing Date; provided, however, that (i) such
Term Loan Lender’s portion of the Term Loan shall not exceed such Term Loan
Lender’s Term Loan Commitment and (ii) the Term Loan must be made in a
single drawing, after which time any remaining Term Loan Commitment shall be
automatically terminated.  Amounts repaid
on the Term Loan may not be reborrowed. 
The Term Loan may consist of Base Rate Loans or Eurodollar Rate Loans,
as further provided herein.

 

2.02.       Borrowings, Conversions and
Continuations of Loans.

 

(a)         Each Borrowing, each conversion of a Loan
from one Type to the other, and each continuation of a Eurodollar Rate Loan
shall be made upon the Borrower’s irrevocable notice to the Administrative
Agent, which may be given by telephone or in writing.  Each such notice must be received by the
Administrative Agent not later than 11:00 a.m. (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of a Eurodollar Rate Loan, and (ii) on the requested date of
any Borrowing of a Base Rate Loan or of any conversion of a Eurodollar Rate
Loan to a Base Rate Loan.  Each
telephonic notice by the Borrower pursuant to this Section 2.02(a) must
be confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrower.  Each Borrowing
of, conversion to or continuation of a Eurodollar Rate Loan shall be in a
principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof.  Except as provided in Section 2.03(c),
each Borrowing of or conversion to a Base Rate Loan shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Committed Loan Notice (whether
telephonic or written) shall specify (A) whether the Borrower is
requesting a Borrowing, a conversion of Loans from one Type to the other, or a
continuation of Eurodollar Rate Loans, (B) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (C) the principal amount of Loans to be borrowed, converted
or continued, (D) the Type of Loans to be borrowed or to which existing
Loans are to be converted, (E) whether the Borrower is requesting a
Revolving Loan or a Term Loan, and (F) if applicable, the duration of the
Interest Period with respect thereto.  If
the Borrower fails to specify a Type of Loan in a Committed Loan Notice or if
the Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Loans shall be made as, or converted to, Base
Rate Loans.  Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans.  If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in 

 

32

 

any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

 

(b)        Following receipt of a Committed Loan
Notice, the Administrative Agent shall promptly notify each Lender of the
amount of its Applicable Percentage of the applicable Loans, and if no timely
notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic
conversion to Base Rate Loans described in the preceding subsection.  In the case of a Borrowing, each Lender shall
make the amount of its Loan available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than
1:00 p.m. on the Business Day specified in the applicable Committed Loan
Notice.  Upon satisfaction of the
applicable conditions set forth in Section 4.03 (or, if such
Borrowing is a Credit Extension on the Closing Date, Section 4.01
or, if such Borrowing is a Credit Extension on the Digimarc Merger Date, Section 4.02),
the Administrative Agent shall make all funds so received available to the
Borrower (other than the Digimarc Escrow Amount which shall be deposited in the
Digimarc Escrow Account) in like funds as received by the Administrative Agent
either by (i) subject to clause (iii) below, crediting the account of
the Borrower on the books of Bank of America with the amount of such funds, (ii) subject
to clause (iii) below, wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Borrower or (iii) if the conditions set forth
in Section 4.02 are not satisfied or waived as of the date of such
Borrowing, crediting the Digimarc Escrow Account with the Digimarc Escrow
Amount; provided, however, that if, on the date the Committed
Loan Notice with respect to such Borrowing is given by the Borrower of
Revolving Loans, there are L/C Borrowings outstanding, then the proceeds of
such Borrowing, first, shall be applied to the payment in full of any
such L/C Borrowings, and second, shall be made available to the Borrower
as provided above.

 

(c)         Except as otherwise provided herein, a
Eurodollar Rate Loan may be continued or converted only on the last day of an
Interest Period for such Eurodollar Rate Loan. 
During the existence of an Event of Default, no Loans may be requested
as, converted to or continued as Eurodollar Rate Loans without the consent of
the Required Lenders.

 

(d)        The Administrative Agent shall promptly
notify the Borrower and the Lenders of the interest rate applicable to any
Interest Period for a Eurodollar Rate Loan upon determination of such interest
rate.  The determination of the
Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error.  At any time that a
Base Rate Loan is outstanding, the Administrative Agent shall notify the Borrower
and the Lenders of any change in the Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

 

(e)         After giving effect to all Borrowings,
all conversions of Loans from one Type to the other, and all continuations of
Loans as the same Type, there shall not be more than ten Interest Periods in
effect with respect to Loans.

 

2.03.       Letters of Credit.

 

(a)         The Letter of Credit Commitment.

 

33

 

(i)            Subject to the
terms and conditions set forth herein, (A) the L/C Issuer agrees, in
reliance upon the agreements of the Revolving Lenders set forth in this Section 2.03
(1) from time to time on any Business Day during the period from the
Closing Date until the Letter of Credit Expiration Date (it being understood
that the Existing L-1 Letters of Credit shall be deemed to be issued on the
Closing Date as described herein), to issue Letters of Credit in Dollars for
the account of the Borrower or any of its Subsidiaries, and to amend or extend
Letters of Credit previously issued by it in accordance with subsection (b) below
(provided that the Outstanding Amount of all Letters of Credit issued
after the Closing Date but prior to the Digimarc Release Date (other than
Letters of Credit issued during such period solely for the purpose of replacing
or back-stopping one or more Existing Digimarc Letters of Credit), when
combined with the Outstanding Amount of all Revolving Loans and Swing Line
Loans made after the Closing Date but prior to the Digimarc Release Date, shall
not exceed $15,000,000 in the aggregate), and (2) to honor drawings under
the Letters of Credit; and (B) the Revolving Lenders severally agree to
participate in Letters of Credit issued for the account of the Borrower or its
Subsidiaries and any drawings thereunder; provided that after giving
effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the
Total Revolving Outstandings shall not exceed the Aggregate Revolving Commitments,
(y) the aggregate Outstanding Amount of the Revolving Loans of any
Revolving Lender, plus such Revolving Lender’s Applicable Percentage of
the Outstanding Amount of all L/C Obligations, plus such Revolving
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Revolving Lender’s Revolving Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit.  Each request by the Borrower
for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding
sentence.  Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to
obtain Letters of Credit shall be fully revolving, and accordingly the Borrower
may, during the foregoing period, obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed.  All Existing L-1 Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Closing Date
shall be subject to and governed by the terms and conditions hereof.

 

(ii)           The L/C Issuer
shall not issue any Letter of Credit, if:

 

(A)          subject to Section 2.03(b)(iii),
the expiry date of such requested Letter of Credit would occur more than twelve
months after the date of issuance or last extension, unless the Required
Revolving Lenders have approved such expiry date; or

 

(B)           the expiry date
of such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless any such Letter of Credit is Cash Collateralized in
accordance with Section 2.03(g).

 

(iii)          The L/C Issuer
shall not be under any obligation to issue any Letter of Credit if:

 

34

 

(A)          any order,
judgment or decree of any Governmental Authority or arbitrator shall by its
terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of
Credit, or any Law applicable to the L/C Issuer or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the L/C Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which the L/C Issuer
in good faith deems material to it;

 

(B)           the issuance of
such Letter of Credit would violate one or more policies of the L/C Issuer;

 

(C)           except as
otherwise agreed by the Administrative Agent and the L/C Issuer, such Letter of
Credit is in an initial stated amount less than $250,000;

 

(D)          such Letter of
Credit is to be denominated in a currency other than Dollars;

 

(E)           such Letter of
Credit contains any provisions for automatic reinstatement of the stated amount
after any drawing thereunder; or

 

(F)           a default of
any Lender’s obligations to fund under Section 2.03(c) exists
or any Lender is at such time a Defaulting Lender hereunder, unless the L/C
Issuer has entered into satisfactory arrangements with the Borrower or such
Lender to eliminate the L/C Issuer’s risk with respect to such Lender.

 

(iv)          The L/C Issuer
shall not amend any Letter of Credit if the L/C Issuer would not be permitted
at such time to issue such Letter of Credit in its amended form under the terms
hereof.

 

(v)           The L/C Issuer
shall be under no obligation to amend any Letter of Credit if (A) the L/C
Issuer would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms hereof, or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(vi)          The L/C Issuer
shall act on behalf of the Revolving Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the L/C Issuer
shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken
or omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included the L/C Issuer with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.

 

35

 

(b)        Procedures for Issuance and Amendment of
Letters of Credit; Auto-Extension Letters of Credit.

 

(i)            Each Letter of
Credit shall be issued or amended, as the case may be, upon the request of the
Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent)
in the form of a Letter of Credit Application, appropriately completed and
signed by a Responsible Officer of the Borrower.  Such Letter of Credit Application must be
received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m.,
at least two Business Days (or such later date and time as the L/C Issuer and
the Administrative Agent may agree in a particular instance in their sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be.  In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a Business
Day); (B) the amount thereof; (C) the expiry date thereof; (D) the
name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) the purpose and nature of the requested Letter of
Credit; and (H) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such Letter of Credit Application shall
specify in form and detail satisfactory to the L/C Issuer (I) the Letter
of Credit to be amended; (II) the proposed date of amendment thereof
(which shall be a Business Day); (III) the nature of the proposed amendment;
and (IV) such other matters as the L/C Issuer may reasonably require.  Additionally, the Borrower shall furnish to
the L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or the
Administrative Agent may reasonably require.

 

(ii)           Promptly after
receipt of any Letter of Credit Application, the L/C Issuer will confirm with
the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the
Borrower and, if not, the L/C Issuer will provide the Administrative Agent with
a copy thereof.  Unless the L/C Issuer
has received written notice from any Lender, the Administrative Agent or any
Loan Party, at least one Business Day prior to the requested date of issuance
or amendment of the applicable Letter of Credit, that one or more applicable
conditions contained in Section 4.03 shall not then be satisfied,
then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower (or
the applicable Subsidiary) or enter into the applicable amendment, as the case
may be, in each case in accordance with the L/C Issuer’s usual and customary
business practices.  Immediately upon the
issuance of each Letter of Credit, each Revolving Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the L/C
Issuer a risk participation in such Letter of Credit in an amount equal to the
product of such Revolving Lender’s Applicable Percentage times the
amount of such Letter of Credit.

 

(iii)          If the Borrower
so requests in any applicable Letter of Credit Application, the L/C Issuer may,
in its sole and absolute discretion, agree to issue a Letter of Credit 

 

36

 

that
has automatic extension provisions (each, an “Auto-Extension Letter of
Credit”); provided that any such Auto-Extension Letter of Credit
must permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
in each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued.  Unless otherwise
directed by the L/C Issuer, the Borrower shall not be required to make a
specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the L/C Issuer shall, subject to the terms and conditions set
forth herein, permit the extension of such Letter of Credit to an expiry date
not later than the Letter of Credit Expiration Date; provided, however,
that the L/C Issuer shall have no obligation to permit the renewal of any
Auto-Extension Letter of Credit at any time if it has determined that it would
have no obligation at such time to issue such Letter of Credit in its extended
form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii) or
otherwise).

 

(iv)          Promptly after
its delivery of any Letter of Credit or any amendment to a Letter of Credit to
an advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Borrower and the Administrative Agent a true
and complete copy of such Letter of Credit or amendment.

 

(c)         Drawings and Reimbursements; Funding of
Participations.

 

(i)            Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under
such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof.  Not later
than 11:00 a.m. on the next Business Day following the date of any payment
by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”),
the Borrower shall reimburse the L/C Issuer through the Administrative Agent in
an amount equal to the amount of such drawing. 
If the Borrower fails to so reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Revolving Lender of the Honor
Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”),
and the amount of such Revolving Lender’s Applicable Percentage thereof.  In such event, the Borrower shall be deemed
to have requested a Borrowing of Revolving Loans that are Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Revolving Commitments and the conditions
set forth in Section 4.03 (other than the delivery of a Committed
Loan Notice).  Any notice given by the
L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may
be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.

 

(ii)           Each Revolving
Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer
at the Administrative Agent’s Office in an amount equal to its Applicable
Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the
Business Day specified in such notice by the Administrative Agent, whereupon,
subject to the 

 

37

 

provisions
of Section 2.03(c)(iii), each Revolving Lender that so makes funds
available shall be deemed to have made a Base Rate Loan that is a Revolving
Loan to the Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the L/C Issuer.

 

(iii)          With respect to
any Unreimbursed Amount that is not fully refinanced by a Borrowing of Base
Rate Loans because the conditions set forth in Section 4.03 cannot
be satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall, upon the request of the Required
Revolving Lenders, bear interest at the Default Rate.  In such event, each Revolving Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(ii) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C Advance
from such Revolving Lender in satisfaction of its participation obligation
under this Section 2.03.

 

(iv)          Until each
Revolving Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Revolving Lender’s Applicable Percentage of such
amount shall be solely for the account of the L/C Issuer.

 

(v)           Each Revolving
Lender’s obligation to make Revolving Loans or L/C Advances to reimburse the
L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense
or other right which such Revolving Lender may have against the L/C Issuer, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence
or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.03(c) is subject to the conditions set forth in
Section 4.03 (other than delivery by the Borrower of a Committed
Loan Notice).  No such making of an L/C
Advance shall relieve or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit, together with interest as provided herein.

 

(vi)          If any
Revolving Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Revolving
Lender pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(ii), the L/C Issuer shall be
entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C Issuer in
accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by the L/C
Issuer in 

 

38

 

connection
with the foregoing.  If such Revolving
Lender pays such amount (with interest and fees as aforesaid), the amount so
paid shall constitute such Revolving Lender Revolving Loan included in the
relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as
the case may be.  A certificate of the
L/C Issuer submitted to any Revolving Lender (through the Administrative Agent)
with respect to any amounts owing under this clause (vi) shall be
conclusive absent manifest error.

 

(d)        Repayment of Participations.

 

(i)            At any time
after the L/C Issuer has made a payment under any Letter of Credit and has
received from any Revolving Lender such Lender’s L/C Advance in respect of such
payment in accordance with Section 2.03(c), if the Administrative
Agent receives for the account of the L/C Issuer any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the
Borrower or otherwise, including proceeds of cash collateral applied thereto by
the Administrative Agent), the Administrative Agent will distribute to such
Revolving Lender its Applicable Percentage thereof in the same funds as those
received by the Administrative Agent.

 

(ii)           If any payment
received by the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(i) is required to be returned under any of
the circumstances described in Section 10.05 (including pursuant to
any settlement entered into by the L/C Issuer in its discretion), each
Revolving Lender shall pay to the Administrative Agent for the account of the
L/C Issuer its Applicable Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date
such amount is returned by such Revolving Lender, at a rate per annum equal to
the Federal Funds Rate from time to time in effect.  The obligations of the Revolving Lenders
under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

(e)         Obligations Absolute. 
The obligation of the Borrower to reimburse the L/C Issuer for each
drawing under each Letter of Credit and to repay each L/C Borrowing shall be
absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:

 

(i)            any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other Loan Document;

 

(ii)           the existence
of any claim, counterclaim, setoff, defense or other right that any Loan Party
or any Subsidiary may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

 

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

 

39

 

transmission
or otherwise of any document required in order to make a drawing under such
Letter of Credit;

 

(iv)          any payment by
the L/C Issuer under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

 

(v)           any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any Subsidiary.

 

The Borrower shall promptly examine a copy of each
Letter of Credit and each amendment thereto that is delivered to it and, in the
event of any claim of noncompliance with the Borrower’s instructions or other
irregularity, the Borrower will immediately notify the L/C Issuer.  The Borrower shall be conclusively deemed to
have waived any such claim against the L/C Issuer and its correspondents unless
such notice is given as aforesaid.

 

(f)         Role of L/C Issuer. 
Each Revolving Lender and the Borrower agrees that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by such Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Revolving Lenders or the Required Revolving Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. 
The Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable or responsible for
any of the matters described in clauses (i) through (v) of Section 2.03(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the L/C Issuer, and the
L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. 
In furtherance and not in limitation of the foregoing, the L/C Issuer
may accept documents that appear on their face to be 

 

40

 

in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

 

(g)        Cash Collateral. 
Upon the request of the Administrative Agent, (i) if the L/C Issuer
has honored any full or partial drawing request under any Letter of Credit and
such drawing has resulted in an L/C Borrowing that remains outstanding as of the
date of such request, or (ii) if, as of the Letter of Credit Expiration
Date, any L/C Obligation for any reason remains outstanding, the Borrower
shall, in each case, immediately Cash Collateralize the then Outstanding Amount
of all L/C Obligations.  Sections 2.05
and 8.02(c) set forth certain additional requirements to deliver
cash collateral hereunder.  For purposes
of this Section 2.03, Section 2.05 and Section 8.02(c),
“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Revolving
Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby consented
to by the Lenders).  Derivatives of such
term have corresponding meanings.  The
Borrower hereby grants to the Administrative Agent, for the benefit of the L/C
Issuer and the Revolving Lenders a security interest in all such cash, deposit
accounts and all balances therein and all proceeds of the foregoing.  Cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts at Bank of America.

 

(h)        Applicability of ISP. 
Unless otherwise expressly agreed by the Administrative Agent and the
Borrower when a Letter of Credit is issued, the rules of the ISP shall
apply to each Letter of Credit.

 

(i)          Letter of Credit Fees. 
The Borrower shall pay to the Administrative Agent for the account of
each Revolving Lender in accordance with its Applicable Percentage a Letter of
Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal
to the Applicable Rate times the daily maximum amount available to be drawn
under such Letter of Credit.  For
purposes of computing the daily amount available to be drawn under any Letter
of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. 
Letter of Credit Fees shall be (i) computed on a quarterly basis in
arrears and (ii) due and payable on the first Business Day after the last
day of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily amount available to be drawn under each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, while any Event of Default exists, all Letter of Credit Fees
shall accrue at the Default Rate.

 

(j)          Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer.  The Borrower
shall pay directly to the L/C Issuer for its own account a fronting fee with
respect to each Letter of Credit, at the rate per annum specified in the
Administrative Agency Fee Letter, computed on the daily amount available to be
drawn under such Letter of Credit and on 

 

41

 

a quarterly basis in
arrears.  Such fronting fee shall be due
and payable on the tenth Business Day after the end of each March, June, September and
December in respect of the most recently-ended quarterly period (or
portion thereof, in the case of the first payment), commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  In addition, the Borrower shall pay directly
to the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in
effect.  Such customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

(k)         Conflict with Issuer Documents. 
In the event of any conflict between the terms hereof and the terms of
any Issuer Document, the terms hereof shall control.

 

(l)          Letters of Credit Issued for Subsidiaries. 
Notwithstanding that a Letter of Credit issued or outstanding hereunder
is in support of any obligations of, or is for the account of, a Subsidiary,
the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any
and all drawings under such Letter of Credit. 
The Borrower hereby acknowledges that the issuance of Letters of Credit
for the account of Subsidiaries inures to the benefit of the Borrower, and that
the Borrower’s business derives substantial benefits from the businesses of
such Subsidiaries.

 

2.04.       Swing Line Loans.

 

(a)         The Swing Line. 
Subject to the terms and conditions set forth herein, the Swing Line
Lender agrees, in reliance upon the agreements of the other Lenders set forth
in this Section 2.04, to make loans (each such loan, a “Swing
Line Loan”) to the Borrower in Dollars from time to time on any Business
Day during the period from the Closing Date until the Maturity Date in an
aggregate amount not to exceed at any time outstanding the amount of the Swing
Line Sublimit, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Applicable Percentage of the Outstanding Amount of
Revolving Loans and L/C Obligations of the Lender acting as Swing Line Lender,
may exceed the amount of such Lender’s Revolving Commitment; provided, however,
that after giving effect to any Swing Line Loan, (i) the Total Revolving
Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the
aggregate Outstanding Amount of the Revolving Loans of any Revolving Lender, plus
such Revolving Lender’s Applicable Percentage of the Outstanding Amount of all
L/C Obligations, plus, such Revolving Lender’s Applicable Percentage of
the Outstanding Amount of all Swing Line Loans shall not exceed such Revolving
Lender’s Revolving Commitment, and provided, further, that (x) the
Borrower shall not use the proceeds of any Swing Line Loan to refinance any
outstanding Swing Line Loan and (y) the Outstanding Amount of all Swing
Line Loans and Revolving Loans made and Letters of Credit issued after the
Closing Date but prior to the Digimarc Release Date (other than Letters of
Credit issued during such period solely for the purpose of replacing or
back-stopping one or more Existing Digimarc Letters of Credit) shall not exceed
$15,000,000 in the aggregate.  Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.04, prepay under Section 2.05,
and reborrow under this Section 

 

42

 

2.04. 
Each Swing Line Loan shall bear interest only at a rate based on the
Base Rate plus the Applicable Rate for Base Rate Loans that are
Revolving Loans.  Immediately upon the
making of a Swing Line Loan, each Revolving Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Swing Line
Lender a risk participation in such Swing Line Loan in an amount equal to the
product of such Lender’s Applicable Percentage times the amount of such
Swing Line Loan.

 

(b)        Borrowing Procedures. 
Each Borrowing of Swing Line Loans shall be made upon the Borrower’s
irrevocable notice to the Swing Line Lender and the Administrative Agent, which
may be given by telephone.  Each such
notice must be received by the Swing Line Lender and the Administrative Agent
not later than 1:00 p.m. on the requested borrowing date, and shall
specify (i) the amount to be borrowed, which shall be a minimum principal
amount of $100,000, and (ii) the requested borrowing date, which shall be
a Business Day.  Each such telephonic
notice must be confirmed promptly by delivery to the Swing Line Lender and the
Administrative Agent of a written Swing Line Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower.  Promptly after receipt by the Swing Line
Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has also received such Swing Line Loan Notice and, if not,
the Swing Line Lender will notify the Administrative Agent (by telephone or in
writing) of the contents thereof.  Unless
the Swing Line Lender has received notice (by telephone or in writing) from the
Administrative Agent (including at the request of any Revolving Lender) prior
to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing
the Swing Line Lender not to make such Swing Line Loan as a result of the
limitations set forth in the first proviso to the first sentence of Section 2.04(a),
or (B) that one or more of the applicable conditions specified in Section 4.03
is not then satisfied, then, subject to the terms and conditions hereof, the
Swing Line Lender will, not later than 3:00 p.m. on the borrowing date
specified in such Swing Line Loan Notice, make the amount of its Swing Line
Loan available to the Borrower at its office by crediting the account of the
Borrower on the books of the Swing Line Lender in immediately available funds,
or such other location as the Borrower may reasonably direct.  In order to facilitate the borrowing of Swing
Line Loans, the Borrower and the Swing Line Lender may mutually agree, and are
hereby authorized, to enter into an Autoborrow Agreement providing for the
automatic advance by the Swing Line Lender of Swing Line Loans under the
conditions set forth in such agreement and without the necessity for any notice
by the Borrower otherwise required by this subsection (b).

 

(c)         Refinancing of Swing Line Loans.

 

(i)            The Swing Line
Lender at any time in its sole and absolute discretion may request, on behalf
of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to
so request on its behalf), that each Revolving Lender make a Base Rate Loan in
an amount equal to such Lender’s Applicable Percentage of the amount of Swing
Line Loans then outstanding.  Such
request shall be made in writing  (which
written request shall be deemed to be a Committed Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the conditions set forth in Section 4.03
(other than the delivery of a Committed Loan Notice) 

 

43

 

and
provided that, after giving effect to such Borrowing, the Total Revolving
Outstandings shall not exceed the Aggregate Revolving Commitments.  The Swing Line Lender shall furnish the
Borrower with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent.  Each Revolving Lender shall make an amount
equal to its Applicable Percentage of the amount specified in such Committed
Loan Notice available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the Administrative Agent’s
Office not later than 1:00 p.m. on the day specified in such Committed
Loan Notice, whereupon, subject to Section 2.04(c)(ii), each
Revolving Lender that so makes funds available shall be deemed to have made a
Base Rate Loan to the Borrower in such amount. 
The Administrative Agent shall remit the funds so received to the Swing
Line Lender.  The Borrower may request
weekly settlement procedures regarding the Swing Line Loans.

 

(ii)           If for any
reason any Swing Line Loan cannot be refinanced by such a Borrowing of
Revolving Loans in accordance with Section 2.04(c)(i), the request
for Base Rate Loans submitted by the Swing Line Lender as set forth herein
shall be deemed to be a request by the Swing Line Lender that each of the
Revolving Lenders fund its risk participation in the relevant Swing Line Loan
and each Revolving Lender’s payment to the Administrative Agent for the account
of the Swing Line Lender pursuant to Section 2.04(c)(i) shall
be deemed payment in respect of such participation.

 

(iii)          If any
Revolving Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such
Revolving Lender pursuant to the foregoing provisions of this Section 2.04(c) by
the time specified in Section 2.04(c)(i), the Swing Line Lender
shall be entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the greater of the Federal Funds Rate and a rate determined by the Swing Line
Lender in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees
customarily charged by the Swing Line Lender in connection with the
foregoing.  If such Revolving Lender pays
such amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Revolving Lender’s Revolving Loan included in the relevant
Borrowing or funded participation in the relevant Swing Line Loan, as the case
may be.  A certificate of the Swing Line
Lender submitted to any Revolving Lender (through the Administrative Agent)
with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.

 

(iv)          Each Revolving
Lender’s obligation to make Revolving Loans or to purchase and fund risk
participations in Swing Line Loans pursuant to this Section 2.04(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
that such Revolving Lender may have against the Swing Line Lender, the Borrower
or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; 

 

44

 

provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.04(c) is subject to the conditions set forth in
Section 4.03.  No such
funding of risk participations shall relieve or otherwise impair the obligation
of the Borrower to repay Swing Line Loans, together with interest as provided
herein.

 

(d)        Repayment of Participations.

 

(i)            At any time
after any Revolving Lender has purchased and funded a risk participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to such Revolving
Lender its Applicable Percentage thereof in the same funds as those received by
the Swing Line Lender.

 

(ii)           If any payment
received by the Swing Line Lender in respect of principal or interest on any
Swing Line Loan is required to be returned by the Swing Line Lender under any
of the circumstances described in Section 10.05 (including pursuant
to any settlement entered into by the Swing Line Lender in its discretion),
each Revolving Lender shall pay to the Swing Line Lender its Applicable
Percentage thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned, at a
rate per annum equal to the Federal Funds Rate. 
The Administrative Agent will make such demand upon the request of the
Swing Line Lender.  The obligations of
the Revolving Lenders under this clause shall survive the payment in full of
the Obligations and the termination of this Agreement.

 

(e)         Interest for Account of Swing Line Lender. 
The Swing Line Lender shall be responsible for invoicing the Borrower
for interest on the Swing Line Loans. 
Until each Revolving Lender funds its Revolving Loans that are Base Rate
Loans or risk participation pursuant to this Section 2.04 to
refinance such Revolving Lender’s Applicable Percentage of any Swing Line Loan,
interest in respect of such Applicable Percentage shall be solely for the
account of the Swing Line Lender.

 

(f)         Payments Directly to Swing Line Lender. 
The Borrower shall make all payments of principal and interest in
respect of the Swing Line Loans directly to the Swing Line Lender.

 

2.05.       Prepayments.

 

(a)         Voluntary Prepayments of Loans.

 

(i)            Revolving Loans
and Term Loans.  The
Borrower may, upon notice from the Borrower to the Administrative Agent, at any
time or from time to time voluntarily prepay Revolving Loans or the Term Loan
in whole or in part without premium or penalty; provided that (A) such
notice must be received by the Administrative Agent not later than 1:00 p.m.
(1) three Business Days prior to any date of prepayment of Eurodollar Rate
Loans and (2) on the date of prepayment of Base Rate Loans; (B) any
such prepayment of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof (or, if less, the
entire principal amount thereof then outstanding); (C) any prepayment of
Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple
of $100,000 in excess thereof (or, if less, the 

 

45

 

entire
principal amount thereof then outstanding) and (D) any prepayment of the
Term Loan shall be applied to the principal repayment installments thereof on a
pro rata basis;  provided that
any such payments made prior to the Digimarc Release Date shall be applied only
to the portion of the Term Loans received by the Borrower on the Closing Date
and shall not be applied to the amounts in the Digimarc Escrow Account.  Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Loans to be prepaid and, if
Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify
each applicable Lender of its receipt of each such notice, and of the amount of
such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Loans of the Lenders in accordance with their respective Applicable
Percentages.

 

(ii)           Swing Line
Loans.  The Borrower may, upon notice
to the Swing Line Lender (with a copy to the Administrative Agent), at any time
or from time to time, voluntarily prepay Swing Line Loans in whole or in part
without premium or penalty; provided that (i) such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the date of the prepayment, and (ii) any such prepayment
shall be in a minimum principal amount of $100,000 (or, if less, the entire
principal thereof then outstanding). 
Each such notice shall specify the date and amount of such
prepayment.  If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.

 

(b)        Mandatory Prepayments of Loans.

 

(i)            Revolving Commitments.  If for any reason the Total Revolving
Outstandings at any time exceed the Aggregate Revolving Commitments then in
effect, the Borrower shall immediately prepay Revolving Loans and/or the Swing
Line Loans and/or Cash Collateralize the L/C Obligations in accordance with Section 2.05(b)(vii)(A) in
an aggregate amount equal to such excess; provided, however, that
the Borrower shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.05(b)(i) unless after the prepayment
in full of the Revolving Loans and Swing Line Loans the Total Revolving
Outstandings exceed the Aggregate Revolving Commitments then in effect.

 

(ii)           Dispositions.  If on any date Holdings or any of its
Subsidiaries shall receive Net Cash Proceeds from any Disposition (other than
Dispositions permitted under any of subsections (a) through (m) of Section 7.05)
or Recovery Event, the Borrower shall, on the next Business Day following such
date, prepay the Loans and/or Cash Collateralize the L/C Obligations in
accordance with Section 2.05(b)(vii)(B) in an aggregate amount
equal to 100% of such Net Cash Proceeds provided, however, that
if Holdings and its Subsidiaries apply the Net Cash Proceeds from such event
(or a portion 

 

46

 

thereof)
within 360 days after receipt of such Net Cash Proceeds and at a time when no
Default or Event of Default has occurred and is continuing, to acquire assets
(excluding goodwill) to be used in the business of Holdings and its Subsidiaries
(provided that the Borrower has delivered to the Administrative Agent on
the next Business Day following the date such Net Cash Proceeds are received a
certificate of a financial officer stating its intention to do so and
certifying that no Default or Event of Default has occurred and is continuing
at the time of such receipt), then no prepayment shall be required pursuant to
this paragraph in respect of the Net Cash Proceeds in respect of such event (or
the portion of such Net Cash Proceeds specified in such certificate, if
applicable) except to the extent of any such Net Cash Proceeds therefrom that
have not been so applied by the end of such 360-day period, at which time a
prepayment shall be required in an amount equal to such Net Cash Proceeds that
have not been so applied.

 

(iii)          Debt Issuances.  If any Indebtedness shall be incurred by
Holdings and its Subsidiaries that is not permitted under Section 7.03,
the Borrower shall, on the next Business Day following the date of such
incurrence, prepay the Loans and/or Cash Collateralize the L/C Obligations in
accordance with Section 2.05(b)(vii)(B) in an aggregate amount
equal to 100% of the Net Cash Proceeds of such issuance, incurrence or
contribution.

 

(iv)          Equity
Issuances.  In the case
of any Equity Issuance (other than (x) an Equity Issuance to a Loan Party
(and the Net Cash Proceeds thereof) and (y) any issuance by Holdings of
its Equity Interests (and the Net Cash Proceeds thereof) as
consideration for a Permitted Acquisition (including the Digimarc PIPE)), if the pro forma Consolidated Leverage Ratio of the Borrower and
its Subsidiaries (including the pro forma
effect of such Equity Issuance and any Indebtedness incurred in connection
therewith) is greater than or equal to 1.50 to 1.00, the Borrower shall, on the
next Business Day following the date of such Equity Issuance, prepay the Loans
and/or Cash Collateralize the L/C Obligations in accordance with Section 2.05(b)(vii)(B) in
an aggregate amount equal to the lesser of (A) 50% of all Net Cash
Proceeds from such Equity Issuance or (B) such Net Cash Proceeds as are
necessary to reduce the pro forma Consolidated
Leverage Ratio of the Borrower and its Subsidiaries (including the pro forma effect of such Equity Issuance and any
Indebtedness incurred in connection therewith) below 1.50 to 1.00.

 

(v)           Extraordinary
Receipts.  On the next
Business Day following the receipt by Holdings or any of its Subsidiaries of
any Extraordinary Receipts, the Borrower shall prepay the Loans and/or Cash
Collateralize the L/C Obligations in accordance with Section 2.05(b)(vii)(B) in
an aggregate amount equal to 100% of such Extraordinary Receipts; provided,
however, that with respect to any proceeds of insurance, condemnation
awards (or payments in lieu thereof) or indemnity payments, if Holdings and its
Subsidiaries apply the Net Cash Proceeds from such event (or a portion thereof)
within 360 days after receipt of such Net Cash Proceeds and at a time when no
Default or Event of Default has occurred and is continuing, to acquire assets
(excluding goodwill) to be used in the business of Holdings and its
Subsidiaries (provided that the Borrower has delivered to the
Administrative Agent on the next Business Day following the date such
Extraordinary Receipts are received a certificate of a financial officer
stating its intention to do so and certifying that no Default or Event of
Default has occurred and is continuing 

 

47

 

at
the time of such receipt), then no prepayment shall be required pursuant to
this paragraph in respect of such Extraordinary Receipts (or the portion of
such Extraordinary Receipts specified in such certificate, if applicable)
except to the extent of any such Extraordinary Receipts that have not been so applied
by the end of such 360-day period, at which time a prepayment shall be required
in an amount equal to such Extraordinary Receipts that have not been so
applied.

 

(vi)          Consolidated Excess Cash Flow.  On the next Business Day
following the date on which financial statements are delivered or required to
be delivered pursuant to Section 6.01(a), commencing with the
fiscal year ending December 31, 2009, the Borrower shall prepay the Loans and/or Cash Collateralize the L/C Obligations in
accordance with Section 2.05(b)(vii)(B) in an aggregate amount
equal to (x) 50%  of
Consolidated Excess Cash Flow for such fiscal year minus (y) the
amount of any voluntary prepayments made on the Term Loan during such fiscal
year.

 

(vii)         Application of
Mandatory Prepayments.  All
amounts required to be paid pursuant to this Section 2.05(b) shall
be applied as follows:

 

(A)          with respect to
all amounts prepaid pursuant to Section 2.05(b)(i), first,
ratably to the L/C Borrowings and the Swing Line Loans, second, to the
outstanding Revolving Loans, and, third, to Cash Collateralize the
remaining L/C Obligations; and

 

(B)           with respect to
all amounts prepaid pursuant to Sections 2.05(b)(ii), (iii), (iv),
(v) and (vi), first to the Term Loans to the
principal repayment installments thereof on a pro rata basis (provided that any such payments
made prior to the Digimarc Release Date shall be applied only to the portion of
the Term Loans received by the Borrower on the Closing Date and shall not be
applied to the amounts in the Digimarc Escrow Account), second, ratably
to the L/C Borrowings and the Swing Line Loans, third, to the
outstanding Revolving Loans, and, fourth, to Cash Collateralize the
remaining L/C Obligations (in each of the cases described in clauses second
through fourth above, without a corresponding reduction in the Aggregate
Revolving Commitments).

 

Within
the parameters of the applications set forth above, prepayments shall be
applied first to Base Rate Loans and then to Eurodollar Rate Loans in direct
order of Interest Period maturities.  All
prepayments under this Section 2.05(b) shall be subject to Section 3.05,
but otherwise without premium or penalty, and shall be accompanied by interest
on the principal amount prepaid through the date of prepayment.

 

2.06.       Termination or Reduction of
Aggregate Revolving Commitments.  The Borrower
may, upon notice to the Administrative Agent, terminate the Aggregate Revolving
Commitments, or from time to time permanently reduce the Aggregate Revolving
Commitments to an amount not less than the Outstanding Amount of Revolving
Loans, Swing Line Loans and L/C Obligations; provided that (a) any
such notice shall be received by the Administrative Agent 

 

48

 

not later than 11:00 a.m.,
three Business Days prior to the date of termination or reduction, (b) any
such partial reduction shall be in an aggregate amount of $1,000,000 or any
whole multiple of $500,000  in excess
thereof, (c) the Borrower shall not terminate or reduce the Aggregate Revolving
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Revolving Outstandings would exceed the Aggregate
Revolving Commitments and (d) if, after giving effect to any reduction of
the Aggregate Revolving Commitments, the Letter of Credit Sublimit or the Swing
Line Sublimit exceeds the amount of the Aggregate Revolving Commitments, such
sublimit shall be automatically reduced by the amount of such excess.  The Administrative Agent will promptly notify
the Revolving Lenders of any such notice of termination or reduction of the
Aggregate Revolving Commitments.  Any
reduction of the Aggregate Revolving Commitments shall be applied to the
Revolving Commitment of each Revolving Lender according to its Applicable Percentage.  All fees accrued with respect thereto until
the effective date of any termination of the Aggregate Revolving Commitments
shall be paid on the effective date of such termination.

 

2.07.       Repayment of Loans.

 

(a)         Revolving Loans. 
The Borrower shall repay to the Revolving Lenders on the Maturity Date
the aggregate principal amount of all Revolving Loans outstanding on such date.

 

(b)        Swing Line Loans. 
The Borrower shall repay each Swing Line Loan on the earlier to occur of
(i) the date ten Business Days after such Swing Line Loan is made and (ii) the
Maturity Date.

 

(c)         Term Loan.  The Borrower
shall repay the outstanding principal amount of the Term Loan in installments
on the dates and in the amounts set forth in the table below (as such
installments may hereafter be adjusted as a result of prepayments made pursuant
to Section 2.05), unless accelerated sooner pursuant to Section 8.02
or, if the Maturity Date occurs earlier (provided that any amortization
payments made prior to the Digimarc Release Date shall be applied only to the
portion of the Term Loans received by the Borrower on the Closing Date and
shall not be applied to the amounts in the Digimarc Escrow Account):

 

	
  Payment Dates

  	
   

  	
  Principal

  Amortization Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  September 30,
  2009

  	
   

  	
  $

  	
  3,750,000

  	
   

  
	
  December 31,
  2009

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  March 31,
  2010

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  June 30,
  2010

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  September 30,
  2010

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  December 31,
  2010

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  March 31,
  2011

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  June 30,
  2011

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  September 30,
  2011

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  December 31,
  2011

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  March 31,
  2012

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  June 30,
  2012

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  September 30,
  2012

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  December 31,
  2012

  	
   

  	
  $

  	
  33,750,000

  	
   

  
	
  March 31,
  2013

  	
   

  	
  $

  	
  33,750,000

  	
   

  
	
  June 30,
  2013

  	
   

  	
  $

  	
  33,750,000

  	
   

  
	
  Maturity Date

  	
   

  	
  $

  	
  33,750,000

  	
   

  

 

49

 

2.08.       Interest.

 

(a)         Subject to the provisions of subsection (b) below,
(i) each Eurodollar Rate Loan shall bear interest on the outstanding
principal amount thereof for each Interest Period at a rate per annum equal to
the sum of the Eurodollar Rate for such Interest Period plus the
Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Base Rate plus the Applicable Rate; and (iii) each
Swing Line Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate.

 

(b)        (i)            If any amount of
principal of any Loan is not paid when due (after giving effect
to any applicable grace period), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws.

 

                (ii)           If
any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (after giving effect to any applicable grace
period), whether at stated maturity, by acceleration or otherwise, then upon
the request of the Required Lenders, such amount shall thereafter bear interest
at a fluctuating interest rate per annum at all times equal to the Default Rate
to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required
Lenders, while any Event of Default exists, the Borrower shall pay interest on
the principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws, without duplication of clauses (i) and
(ii) above.

 

(iv)          Accrued and unpaid interest on past
due amounts (including interest on past due interest) shall be due and payable
upon demand.

 

50

 

(c)         Interest on each Loan shall be due and
payable in arrears on each Interest Payment Date applicable thereto and at such
other times as may be specified herein. 
Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

2.09.       Fees. 
In addition to certain fees described in subsections (i) and (j) of
Section 2.03:

 

(a)         Commitment Fee. 
The Borrower shall pay to the Administrative Agent for the account of
each Revolving Lender in accordance with its Applicable Percentage, a
commitment fee equal to the product of (i) the Applicable Rate times
(ii) the actual daily amount by which the Aggregate Revolving Commitments
exceed the sum of (A) the Outstanding Amount of Revolving Loans and (B) the
Outstanding Amount of L/C Obligations (the “Commitment Fee”).  The Commitment Fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Section 4.03 is not met, and shall be due and
payable quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the last day of the Availability Period. 
The Commitment Fee shall be calculated quarterly in arrears, and if
there is any change in the Applicable Rate during any quarter, the actual daily
amount shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.  For purposes of clarification, Swing Line
Loans shall not be considered outstanding for purposes of determining the
unused portion of the Aggregate Revolving Commitments.

 

(b)        Other Fees.  The Borrower
shall pay to the Lenders such fees as shall have been separately agreed upon in
writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

 

2.10.       Computation of Interest and Fees;
Retroactive Adjustments of Applicable Rate.

 

(a)         All computations of interest for Base
Rate Loans when the Base Rate is determined by Bank of America’s “prime rate”
shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed.  All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.12(a), bear interest for one day.  Each determination by the Administrative
Agent of an interest rate or fee hereunder shall be conclusive and binding for
all purposes, absent manifest error.

 

(b)        If, as a result of any restatement of or
other adjustment to the financial statements of the Borrower or for any other
reason, the Borrower or the Lenders determine that (i) the Consolidated
Leverage Ratio of the Borrower and its Subsidiaries as calculated by the
Borrower 

 

51

 

as of any applicable date
was inaccurate and (ii) a proper calculation of the Consolidated Leverage
Ratio of the Borrower and its Subsidiaries would have resulted in higher
pricing for such period, the Borrower shall immediately and retroactively be
obligated to pay to the Administrative Agent for the account of the Revolving
Lenders or the L/C Issuer, as the case may be, promptly on demand by the
Administrative Agent (or, after the occurrence of an actual or deemed entry of
an order for relief with respect to the Borrower under the Bankruptcy Code of
the United States, automatically and without further action by the
Administrative Agent, any Revolving Lender or the L/C Issuer), an amount equal
to the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such
period.  This paragraph shall not limit
the rights of the Administrative Agent, any Lender or the L/C Issuer, as the
case may be, under Section 2.03(c)(iii), 2.03(i) or 2.09(b) or
under Article VIII.  The
Borrower’s obligations under this paragraph shall survive the termination of
the Aggregate Revolving Commitments and the repayment of all other Obligations
hereunder.

 

2.11.       Evidence of Debt.

 

(a)         The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the 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 Credit Extensions 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 Note, which shall evidence such Lender’s Loans in addition to such
accounts or records.  Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect
thereto.

 

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

 

2.12.       Payments Generally;
Administrative Agent’s Clawback.

 

(a)         General.  All payments
to be made by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. 
Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is 

 

52

 

owed, at the
Administrative Agent’s Office in Dollars and in immediately available funds not
later than 3:00 p.m. on the date specified herein.  The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage (or other applicable share
as provided herein) of such payment in like funds as received by wire transfer
to such Lender’s Lending Office.  All
payments received by the Administrative Agent after 3:00 p.m. shall be
deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue.  If any
payment to be made by the Borrower shall come due on a day other than a
Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

 

(b)                         (i)            Funding
by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of Eurodollar
Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00
noon on the date of such Borrowing) that such Lender will not make available to
the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with Section 2.02 (or, in the case of a
Borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by Section 2.02) and may,
in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the Borrower
to but excluding the date of payment to the Administrative Agent, at (A) in
the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case
of a payment to be made by the Borrower, the interest rate applicable to Base
Rate Loans.  If the Borrower and such
Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent.

 

(ii)           Payments by Borrower; Presumptions
by Administrative Agent.  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuer hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the case may be,
the amount due.  In such event, if the 

 

53

 

Borrower
has not in fact made such payment, then each of the Lenders or the L/C Issuer,
as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or the L/C Issuer,
in immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.

 

A
notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this subsection (b) shall be conclusive, absent
manifest error.

 

(c)         Failure to Satisfy Conditions Precedent. 
If any Lender makes available to the Administrative Agent funds for any
Loan to be made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the Borrower by the Administrative
Agent because the conditions to the applicable Credit Extension set forth in Article IV
are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

(d)        Obligations of Lenders Several. 
The obligations of the Lenders hereunder to make Loans, to fund
participations in Letters of Credit and Swing Line Loans and to make payments
pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Loan,
to fund any such participation or to make any payment under Section 10.04(c) on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, to
purchase its participation or to make its payment under Section 10.04(c).

 

(e)         Funding Source. 
Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

 

(f)         Insufficient Funds. 
If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i) first,
toward payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, toward payment of
principal and L/C Borrowings then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and L/C Borrowings
then due to such parties.

 

2.13.       Sharing of Payments by Lenders. 
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 the Loans made by it, or the participations in L/C Obligations or in Swing
Line Loans held by it resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Loans or participations and accrued
interest thereon greater than its pro  rata share thereof 

 

54

 

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 subparticipations in L/C Obligations and
Swing Line Loans 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 or
subparticipations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such recovery;
without interest; and

 

(b)        the provisions of this Section 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 subparticipations in L/C Obligations or
Swing Line Loans to any assignee or participant, other than to any Loan Party
or any Subsidiary thereof (as to which the provisions of this Section shall
apply).

 

Each Loan 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 such Loan Party rights of setoff
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of such Loan Party in the amount of such participation.

 

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01.       Taxes.

 

(a)         Payments Free of Taxes; Obligation to
Withhold; Payments on Account of Taxes.

 

(i) Any and all
payments by or on account of any obligation of the Loan Parties hereunder or
under any other Loan Document shall to the extent permitted by applicable Laws
be made free and clear of and without reduction or withholding for any
Taxes.  If, however, applicable Laws
require any Loan Party or the Administrative Agent to withhold or deduct any
Tax, such Tax shall be withheld or deducted in accordance with such Laws as
determined by such Loan Party or the Administrative Agent, as the case may be,
upon the basis of the information and documentation to be delivered pursuant to
subsection (e) below.

 

(ii)           If the Loan Parties or the Administrative Agent shall be
required by the Code to withhold or  deduct any
Taxes, including both United States federal backup withholding and withholding
taxes, from any payment, then (A) the Administrative Agent shall withhold
or make such deductions as are determined by the Administrative Agent to be
required based upon the information and documentation it has received pursuant
to subsection (e) below, (B) the Administrative Agent shall timely
pay the full amount withheld or deducted to the relevant Governmental Authority
in accordance with 

 

55

 

the
Code, and (C) to the extent that the withholding or deduction is made on
account of Indemnified Taxes or Other Taxes, the sum payable by the Loan
Parties shall be increased as necessary so that after any required withholding
or the making of all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, any
Lender or the L/C Issuer, as the case may be, receives an amount equal to the
sum it would have received had no such withholding or deduction been made.

 

(b)           Payment of Other Taxes by the Loan Parties. 
Without limiting the provisions of subsection (a) above, the Loan
Parties shall timely pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable Laws.

 

(c)           Tax Indemnification.

 

(i)            Without limiting the
provisions of subsection (a) or (b) above, the Loan Parties shall,
and do hereby, indemnify the Administrative Agent, each Lender and the L/C
Issuer, and shall make payment in respect thereof within ten 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) withheld or deducted by the
Loan Parties or the Administrative Agent or paid by the Administrative Agent,
such Lender or the L/C Issuer, 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.  The Loan Parties shall also, and do hereby,
indemnify the Administrative Agent, and shall make payment in respect thereof
within ten days after demand therefor, for any amount which a Lender or the L/C
Issuer for any reason fails to pay indefeasibly to the Administrative Agent as
required by clause (ii) of this subsection.  A certificate as to the amount of any such
payment or liability delivered to the Borrower by a Lender or the L/C Issuer
(with a copy to the Administrative Agent), or by the Administrative Agent on
its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive
absent manifest error.

 

(ii)           Without
limiting the provisions of subsection (a) or (b) above, each Lender
and the L/C Issuer shall, and does hereby, indemnify the Loan Parties and the
Administrative Agent, and shall make payment in respect thereof within ten days
after demand therefor, against any and all Taxes and any and all related
losses, claims, liabilities, penalties, interest and expenses (including the
fees, charges and disbursements of any counsel for the Borrower or  the Administrative Agent) incurred by or
asserted against the Borrower or the Administrative Agent by any Governmental
Authority as a result of the failure by such Lender or the L/C Issuer, as the
case may be, to deliver, or as a result of the inaccuracy, inadequacy or
deficiency of, any documentation required to be delivered by such Lender or the
L/C Issuer, as the case may be, to the Borrower or the Administrative Agent
pursuant to subsection (e).  Each Lender
and the L/C Issuer hereby authorizes the Administrative Agent to set off and
apply any and all amounts at any time owing to such Lender or the L/C Issuer,
as the case may be, under this Agreement or any other Loan Document against any
amount due to the Administrative Agent under this 

 

56

 

clause
(ii).  The agreements in this clause (ii) shall
survive the resignation and/or replacement of the Administrative Agent, any
assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the
termination of the Aggregate Revolving Commitments and the repayment,
satisfaction or discharge of all other Obligations.

 

(d)        Evidence of Payments. 
Upon request by any Loan Party or the Administrative Agent, as the case
may be, after any payment of Taxes by such Loan Party or by the Administrative
Agent to a Governmental Authority as provided in this Section 3.01,
such Loan Party shall deliver to the Administrative Agent or the Administrative
Agent shall deliver to such Loan Party, as the case may be, the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of any return required by Laws to report such payment or
other evidence of such payment reasonably satisfactory to such Loan Party or
the Administrative Agent, as the case may be.

 

(e)         Status of Lenders; Tax Documentation.

 

(i)            Each Lender
shall deliver to the Borrower and to the Administrative Agent, at the time or
times prescribed by applicable Laws or when reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable Laws or by the taxing authorities of any
jurisdiction and such other reasonably requested information as will permit the
Borrower or the Administrative Agent, as the case may be, to determine (A) whether
or not payments made hereunder or under any other Loan Document are subject to
Taxes, (B) if applicable, the required rate of withholding or deduction,
and (C) such Lender’s entitlement to any available exemption from, or
reduction of, applicable Taxes in respect of all payments to be made to such
Lender by the Borrower pursuant to this Agreement or otherwise to establish
such Lender’s status for withholding tax purposes in the applicable
jurisdiction.

 

(ii)           Without limiting the generality of
the foregoing, if the Borrower is resident for tax purposes in the United
States,

 

(A)          any Lender that
is a “United States person” within the meaning of Section 7701(a)(30) of
the Code shall deliver to the Borrower and the Administrative Agent executed
originals of IRS Form W-9 or such other documentation or information
prescribed by applicable Laws or reasonably requested by the Borrower or the Administrative
Agent as will enable the Borrower or the Administrative Agent, as the case may
be, to comply with all United States backup withholding or information
reporting requirements; and

 

(B)           each Foreign
Lender that is entitled under the Code or any applicable treaty to an exemption
from or reduction of withholding tax with respect to payments hereunder or
under any other Loan Document 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 

 

57

 

Lender
is legally entitled to do so), whichever of the following is applicable:

 

(I)            executed
originals of IRS Form W-8BEN claiming eligibility for benefits of an
income tax treaty to which the United States is a party,

 

(II)           executed
originals of IRS Form W-8ECI,

 

(III)         executed
originals of IRS Form W-8IMY and all required supporting documentation,

 

(IV)         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) executed originals of  IRS Form W-8BEN, or

 

(V)           executed
originals of any other form prescribed by applicable Laws as a basis for
claiming exemption from or a reduction in United States federal withholding tax
together with such supplementary documentation as may be prescribed by
applicable Laws to permit the Borrower or the Administrative Agent to determine
the withholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify
the Borrower and the Administrative Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction, and (B) take
such steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws of any jurisdiction that the Borrower or the Administrative Agent make any
withholding or deduction for taxes from amounts payable to such Lender.

 

(f)         Treatment of Certain Refunds. 
Unless required by applicable Laws, at no time shall the Administrative
Agent have any obligation to file for or otherwise pursue on behalf of a Lender
or the L/C Issuer, or have any obligation to pay to any Lender or the L/C
Issuer, any refund of Taxes withheld or deducted from funds paid for the
account of such Lender or the L/C Issuer, as the case may be.  If the Administrative Agent, any Lender or
the L/C Issuer 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 any
Loan Party or with respect to which any Loan Party has paid additional amounts
pursuant to this Section, it shall pay to such Loan Party an amount equal to
such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by such Loan Party under this Section with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses incurred by the Administrative Agent, such 

 

58

 

Lender or the L/C Issuer,
as the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided
that each Loan Party, upon the request of the Administrative Agent, such Lender
or the L/C Issuer, agrees to repay the amount paid over to such Loan Party (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer in the
event the Administrative Agent, such Lender or the L/C Issuer is required to
repay such refund to such Governmental Authority.  This subsection shall not be construed to
require the Administrative Agent, any Lender or the L/C Issuer to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Borrower or any other Person.

 

3.02.       Illegality. 
If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrower
through the Administrative Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate
Loans shall be suspended until such Lender notifies the Administrative Agent
and the Borrower that the circumstances giving rise to such determination no
longer exist.  Upon receipt of such
notice, the Borrower shall, upon demand from such Lender (with a copy to the
Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate
Loans of such Lender to Base Rate Loans, either on the last day of the Interest
Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

3.03.       Inability to Determine Eurodollar
Rate.  If the Required Lenders determine that for
any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not
being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, the Administrative Agent will promptly so notify
the Borrower and each Lender. 
Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, if no response is received from the Borrower in
connection with such notice, will be deemed to have converted such request into
a request for a Borrowing of Base Rate Loans in the amount specified therein.

 

3.04.       Increased Costs; Reserves on
Eurodollar Rate Loans.

 

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

 

59

 

(i)            impose, modify
or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the
account of, or credit extended or participated in by, any Lender (except any
reserve requirement contemplated by Section 3.04(e));

 

(ii)           subject any
Lender or the L/C Issuer 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
Eurodollar Rate Loan made by it, or change the basis of taxation of payments to
such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes
or Other Taxes covered by Section 3.01 and the imposition of, or
any change in the rate of, any Excluded Tax payable by such Lender or the L/C
Issuer); or

 

(iii)          impose on any
Lender or the L/C Issuer or the London interbank market any other condition,
cost or expense affecting this Agreement or Eurodollar 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 or maintaining
any Eurodollar Rate Loan (or of maintaining its obligation to make any such
Loan), or to increase the cost to such Lender or the L/C Issuer 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
L/C Issuer hereunder (whether of principal, interest or any other amount) then,
upon request of such Lender or the L/C Issuer, the Borrower will pay to such
Lender or the L/C Issuer, as the case may be, such additional amount or amounts
as will compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)        Capital Requirements. 
If any Lender or the L/C Issuer determines that any Change in Law
affecting such Lender or the L/C Issuer or any Lending Office of such Lender or
such Lender’s or the L/C Issuer’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 L/C Issuer’s capital or on the capital of such Lender’s or
the L/C Issuer’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
L/C Issuer, to a level below that which such Lender or the L/C Issuer or such
Lender’s or the L/C Issuer’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or the L/C Issuer’s
policies and the policies of such Lender’s or the L/C Issuer’s holding company
with respect to capital adequacy), then from time to time the Borrower will pay
to such Lender or the L/C Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or the L/C Issuer or such Lender’s or
the L/C Issuer’s holding company for any such reduction suffered.

 

(c)         Certificates for Reimbursement. 
A certificate of a Lender or the L/C Issuer setting forth the amount or
amounts necessary to compensate such Lender or the L/C Issuer or its holding
company, as the case may be, as specified in subsection (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 L/C Issuer, as the case may be, the amount shown as due on
any such certificate within ten days after receipt thereof.

 

60

 

(d)        Delay in Requests. 
Failure or delay on the part of any Lender or the L/C Issuer to demand
compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand
such compensation, provided that the Borrower shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more
than six months prior to the date that such Lender or the L/C Issuer, 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 L/C Issuer’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 six-month
period referred to above shall be extended to include the period of retroactive
effect thereof).

 

(e)         Reserves on Eurodollar Rate Loans. 
The Borrower shall pay to each Lender, as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive), which shall be due and payable on each date
on which interest is payable on such Loan, provided the Borrower shall have
received at least ten days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from such Lender.  If a Lender fails to give notice ten days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable ten days from receipt of such notice.

 

3.05.       Compensation for Losses. 
Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrower shall promptly compensate such Lender for and hold
such Lender harmless from any loss, cost or expense incurred by it as a result
of:

 

(a)         any continuation, conversion, payment or
prepayment of any Loan other than a Base Rate Loan on a day other than the last
day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise);

 

(b)        any failure by the Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by the Borrower; or

 

(c)         any assignment of a Eurodollar Rate Loan
on a day other than the last day of the Interest Period therefor as a result of
a request by the Borrower pursuant to Section 10.13; including any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained (but excluding any loss of the Applicable Rate
on the relevant Loan).  The Borrower
shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing.

 

For purposes of calculating
amounts payable by the Borrower to the Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it
at the Eurodollar Rate for such Loan by a matching deposit or other borrowing
in the London interbank 

 

61

 

eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan was in fact so funded.

 

3.06.       Mitigation Obligations;
Replacement of Lenders.

 

(a)         Designation of a Different Lending Office. 
If any Lender requests compensation under Section 3.04, or
the Borrower is required to pay any additional amount to any Lender, the L/C
Issuer, or any Governmental Authority for the account of any Lender or the L/C
Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant
to Section 3.02, then such Lender or the L/C Issuer shall, as
applicable, 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 or the L/C Issuer, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each
case, would not subject such Lender or the L/C issuer, as the case may be, to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender or the L/C Issuer, as the case may be.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender or the L/C Issuer in
connection with any such designation or assignment.

 

(b)        Replacement of Lenders. 
If any Lender requests compensation under Section 3.04, 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 3.01,
the Borrower may replace such Lender in accordance with Section 10.13.

 

3.07.       Survival. 
All of the Loan Parties’ obligations under this Article III
shall survive termination of the Aggregate Revolving Commitments, repayment of
all other Obligations hereunder and resignation of the Administrative Agent.

 

ARTICLE
IV

CONDITIONS PRECEDENT TO CLOSING AND CREDIT EXTENSIONS

 

4.01.       Conditions of Closing and Initial
Credit Extensions.  The obligation of each Lender to close and to
make its initial Credit Extension hereunder in connection with the Digimarc
Tender Offer is subject to satisfaction of the following conditions precedent:

 

(a)         Loan Documents. 
Receipt by the Administrative Agent of executed counterparts of this
Agreement and the other Loan Documents, each properly executed by a Responsible
Officer of the signing Loan Party party thereto and, in the case of this
Agreement, by each Lender.

 

(b)        Opinions of Counsel. 
Receipt by the Administrative Agent of favorable opinions of legal
counsel to the Loan Parties with respect to the Transactions, addressed to the
Administrative Agent and each Lender, dated as of the Closing Date, and in form
and substance satisfactory to the Administrative Agent (which such opinions
shall expressly permit reliance by the successors and assigns of the
Administrative Agent and each Lender).

 

62

 

(c)         Organization Documents,
Resolutions, Etc.  Receipt by the Administrative Agent of
the following, in form and substance satisfactory to the Administrative Agent:

 

(i)            copies of the Organization
Documents of each Loan Party certified to be true and complete as of a recent
date by the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation or organization, where applicable, and
certified by a secretary or assistant secretary of such Loan Party to be true
and correct as of the Closing Date;

 

(ii)           such resolutions or other
action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may require evidencing
the identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this Agreement
and the other Loan Documents to which such Loan Party is a party; and

 

(iii)          such documents and
certifications as the Administrative Agent may reasonably require to evidence
that each Loan Party is duly organized or formed, and is validly existing, in
good standing and qualified to engage in business in its state of organization
or formation, the state of its principal place of business and each other
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

(d)        Personal Property Collateral. 
Receipt by the Administrative Agent of the following:

 

(i)            searches of Uniform
Commercial Code filings in the jurisdiction of formation of each Loan Party and
each other jurisdiction deemed appropriate by the Administrative Agent;

 

(ii)           UCC financing statements for
each appropriate jurisdiction as is necessary, in the Administrative Agent’s
sole discretion, to perfect the Administrative Agent’s security interest in the
Collateral;

 

(iii)          all certificates evidencing
any certificated Equity Interests pledged to the Administrative Agent pursuant
to the Security Agreement or the Pledge Agreement, together with duly executed
in blank, undated stock powers attached thereto (unless, with respect to the
pledged Equity Interests of any Foreign Subsidiary, such stock powers are
deemed unnecessary by the Administrative Agent in its reasonable discretion
under the law of the jurisdiction of organization of such Person);

 

(iv)          searches of ownership of,
and Liens on, United States registered intellectual property of each Loan Party
in the appropriate governmental offices;

 

(v)           duly executed notices of
grant of security interest in the form required by the Security Agreement as
are necessary, in the Administrative Agent’s sole discretion, to perfect the
Administrative Agent’s security interest in the United States registered
intellectual property of the Loan Parties; and

 

63

 

(vi)          evidence of the completion
of all other actions, recordings and filings of or with respect to the Security
Agreement that the Administrative Agent may deem necessary or desirable in
order to perfect the Liens created thereby.

 

(e)         Evidence of Insurance. 
Receipt by the Administrative Agent of copies of insurance policies or
certificates of insurance of the Loan Parties evidencing liability and casualty
insurance meeting the requirements set forth in the Loan Documents, including,
but not limited to, naming the Administrative Agent as additional insured (in the
case of liability insurance) or loss payee (in the case of hazard insurance) on
behalf of the Lenders.

 

(f)         Limitation on Amount of Loans. 
Unless the conditions specified in Section 4.02 are
satisfied on the Closing Date, the aggregate amount of Loans received by the
Borrower on the Closing Date (and not deposited into the Digimarc Escrow
Account) shall not exceed the minimum amount necessary, after applying the net
proceeds of the Digimarc PIPE, to consummate the Digimarc Tender Offer, the
refinancing of the Existing Credit Agreement and to pay fees and expenses in
connection with the Digimarc Tender Offer, the refinancing of the Existing
Credit Agreement and the Credit Extensions to be made on the Closing Date.

 

(g)        Digimarc Merger.

 

(i)            Digimarc Merger Agreement.  The Digimarc Merger Agreement (including the
schedules and exhibits thereto) shall not have been altered, amended or
otherwise changed or supplemented, except in each case to the extent that any
such alteration, amendment, change or supplement, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect
on the interests of the Lenders or on the ability of the Arrangers to syndicate
the Loans, without the prior written consent of the Arrangers and the Digimarc
Merger Agreement shall provide that the Digimarc Expiration Date may be
extended for up to ten business days at the option of Holdings or Digimarc
AcquisitionCo regardless of whether the Digimarc Minimum Condition has been
satisfied.

 

(ii)           Digimarc Tender Offer.  The Digimarc Offer Documents shall be in form
and substance as is usual and customary for transactions of this type and
consistent with the terms of the Digimarc Merger Agreement and this Agreement
and shall not have been altered, amended or otherwise changed or supplemented,
except in each case to the extent that any such alteration, amendment, change
or supplement, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the interests of the Lenders or
on the ability of the Arrangers to syndicate the Loans and, in no event shall
the aggregate “Offer Price” (as defined in the Digimarc Offer Documents) that
is payable to all of the holders of Digimarc Common Stock exceed $310,000,000,
in each case without the prior written consent of the Arrangers.

 

(iii)          Digimarc Common Stock.  All conditions to the Digimarc Tender Offer
shall be satisfied or waived (with the prior written consent of the Arrangers)
and Digimarc AcquisitionCo shall have accepted for payment the shares tendered
pursuant to the Digimarc Tender Offer.  
After acquiring the shares to be validly tendered and not withdrawn by
Digimarc stockholders in the Digimarc Tender Offer, Digimarc 

 

64

 

AcquisitionCo
shall be the record and beneficial owner of not less than a majority
(calculated on a fully-diluted basis)  of
the issued and outstanding shares of Digimarc and not less than a majority
(calculated on a fully-diluted basis) of the voting power of the issued and
outstanding shares of Digimarc entitled to vote in the election of directors or
in shareholder votes generally.

 

(iv)          Digimarc PIPE.  The Digimarc PIPE shall have been consummated
on terms and conditions reasonably satisfactory to the Arrangers, yielding net
proceeds of not less than $120,000,000, and the Administrative Agent shall have
received a receipt, in form and substance satisfactory to the Administrative
Agent, from Computershare, Inc., as depositary for the Digimarc Tender
Offer, and acknowledged by the Borrower, evidencing that such net proceeds have
been used to pay the consideration for the Digimarc Tender Offer and indicating
the amount of any deficiency in the consideration for the Digimarc Tender Offer
that is to be funded from the proceeds of the Loans.

 

(v)           Pro Forma Capital Structure.  The Administrative Agent shall be satisfied
that the proposed tax and accounting treatment of the Transactions and the
proposed corporate and capital structure (including the shareholding arrangements)
of Holdings and its Subsidiaries (including Digimarc and its Subsidiaries, if
any) after giving effect to the Transactions, (A) does not differ
materially from the treatment and structure previously disclosed in writing by
the Borrower to the Arrangers and (B) is otherwise satisfactory to the
Arrangers (including receipt by the Administrative Agent of evidence in form
and substance satisfactory to the Administrative Agent that the Watermark
Spin-Off has occurred prior to the Closing Date pursuant to documentation and
on terms and conditions satisfactory to the Arrangers (including, without
limitation, a requirement that the Watermark SpinCo shall pay any portion of
the consideration for the Digimarc Merger that is in excess of $310,000,000)).

 

(vi)          No Litigation.  No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to impose materially adverse conditions on, or have a
material adverse effect upon, the Transactions.

 

(h)        Financial Statements. 
Receipt by the Administrative Agent of (i) pro forma
consolidated financial statements as to Holdings and its Subsidiaries
(including Digimarc and its Subsidiaries) after giving effect to all elements
of the Transactions (including, without limitation, the Digimarc Merger) and (ii) forecasts prepared by
management of Holdings giving effect to all elements of the Transactions
(including, without limitation, the Digimarc Merger), each in form satisfactory to the
Lenders, and each such forecast including balance sheets, income statements and
cash flow statements on an annual basis for each year during the term of this
Agreement.

 

(i)          Officer’s Certificate. 
Receipt by the Administrative Agent of a certificate signed by a chief
financial officer of each of the Borrower and Holdings:

 

(i)            certifying that:

 

65

 

(A)          no Default nor any default with
respect to any other material Indebtedness of Holdings and its Subsidiaries
shall exist, or would result from the proposed Credit Extension or from the
application of the proceeds thereof on the Closing Date or from any other
Transaction;

 

(B)           (1)           since
June 28, 2008, no event or change has occurred that, individually or in
the aggregate, has had or could reasonably be expected to have a Digimarc
Material Adverse Effect; and

 

(2)           since December 31, 2007, no
event or change has occurred that, individually or in the aggregate, has had or
could be reasonably expected to have a Material Adverse Effect; and

 

(C)           all representations and warranties
contained in this Agreement and the other Loan Documents are true and correct
in all material respects; provided that (1) any representation or
warranty that is qualified by materiality or by reference to Material Adverse
Effect shall be true and correct in all respects and (2) the only
representations and warranties the accuracy of which shall be a condition to
the availability of the Credit Extensions on the Closing Date shall be the
Specified Representations;

 

(ii)           certifying and attaching
calculations, in form and substance satisfactory to the Administrative Agent,
demonstrating that:

 

(A)          the pro forma Consolidated Leverage Ratio of
the Borrower and its Consolidated Subsidiaries as of the Closing Date (after
giving effect to the Transactions and all related incurrences and repayments of
Indebtedness of the Borrower and its Consolidated Subsidiaries) is less than
3.00 to 1.00; and

 

(B)           the Consolidated EBITDA of
Digimarc and its Subsidiaries for the Reference Period of Digimarc and its
Subsidiaries most recently ended for which financial statements are available
is not less than $25,000,000, in each case after giving effect to all elements
of the Transactions; and

 

(iii)          attesting to the Solvency of
Holdings and its Subsidiaries, taken as a whole, after giving effect to the
Transactions.

 

(j)          Existing Credit Agreement. 
Receipt by the Administrative Agent of evidence that the Existing Credit
Agreement has been or concurrently with the Closing Date is being amended and
restated by this Agreement.

 

(k)         Ratings.  The Borrower
shall have used commercially reasonable efforts to procure current Corporate
Ratings and Facility Ratings from Moody’s and S&P.

 

(l)          Federal Reserve Form. 
Receipt by the Administrative Agent of a Statement of Purpose for an
Extension of Credit Secured by Margin Stock on Federal Reserve Form U-1
from the Borrower confirming the representation in Section 5.14(a) and
such other 

 

66

 

documentation,
information or certifications as the Administrative Agent reasonably deems
necessary or appropriate to comply with Regulation U of the FRB.

 

(m)        Fees.

 

(i)            All fees required to be paid to the
Administrative Agent and the Arrangers on or before the Closing Date shall have
been paid.

 

(ii)           All fees required to be paid to the
Lenders on or before the Closing Date shall have been paid.

 

(n)        Attorney Costs. 
The Borrower shall have paid all fees, charges and disbursements of
counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent) to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of such fees, charges and
disbursements as shall constitute its reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Administrative Agent).

 

Without limiting the generality of the provisions of
the last paragraph of Section 9.03, for purposes of determining
compliance with the conditions specified in this Section 4.01, each
Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

4.02.       Conditions of Release of Funds on
Digimarc Release Date.  The obligation of the
Administrative Agent to release of funds from the Digimarc Escrow Account in
connection with the Digimarc Merger is subject to satisfaction of each of the
following conditions precedent:

 

(a)         Joinder Agreement. 
Receipt by the Administrative Agent of a fully executed counterpart of a
Joinder Agreement for Digimarc and each of its Material Subsidiaries along with
each of the items set forth in Section 6.14.

 

(b)        Closing of Facility. 
The conditions set forth in Section 4.01 shall have been
satisfied or waived on or prior to the Digimarc Release Date.

 

(c)         Officer’s Certificate. 
Receipt by the Administrative Agent of a certificate signed by a chief
financial officer of each of the Borrower and Holdings certifying and attaching
calculations, in form and substance satisfactory to the Administrative Agent,
demonstrating that the undrawn amount under the Revolving Commitment plus cash
on hand of the Borrower and its Subsidiaries, in each case as of the date of
consummation of the Digimarc Merger, shall be no less than $25,000,000, in each
case after giving effect to all elements of the Transactions and the incurrence
of Indebtedness of the Borrower and its Subsidiaries (including the release of
funds from the Digimarc Escrow Account) related thereto.

 

67

 

(d)        Existing Digimarc Indebtedness. 
Receipt by the Administrative Agent of evidence that all existing
Indebtedness of Digimarc and its Subsidiaries (other than any such Indebtedness
permitted under Section 7.03) has been or concurrently with the
Digimarc Release Date is being terminated and all Liens securing obligations in
connection with such Indebtedness have been or concurrently with the Digimarc
Release Date are being released.

 

(e)         Digimarc Merger.

 

(i)            Digimarc Merger Terms.

 

(A)          Neither the Digimarc Merger Agreement
(including the schedules and exhibits thereto) nor any of the documentation
entered into in connection with the Watermark Spin-Off shall have been altered,
amended or otherwise changed or supplemented, except in each case to the extent
that any such alteration, amendment, change or supplement, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the interests of the Lenders or on the ability of the Arrangers to
syndicate the Loans, without the prior written consent of the Arrangers.

 

(B)           The receipt by the Arrangers of
evidence reasonably satisfactory to them that (1) the Borrower or Digimarc
has received from Watermark SpinCo any portion of the consideration for the
Digimarc Merger that is in excess of $310,000,000 and (2) after giving
effect to the Digimarc Merger, Digimarc shall be a wholly-owned Subsidiary of
the Borrower.

 

(ii)           Legal Impediments.  No Law, injunction, judgment or ruling
enacted, promulgated, issued, entered, amended or enforced by any Governmental
Authority shall be in effect, enjoining, restraining, preventing or prohibiting
the consummation of the Transactions or making the consummation of the
Transactions illegal.

 

(iii)          Completion of Digimarc
Merger.  All conditions to the Digimarc
Merger shall be satisfied or waived (any such waiver to be with the prior
written consent of the Arrangers) on or before the Digimarc Release Date such
that the Digimarc Merger shall be consummated, pursuant to and in accordance
with the Digimarc Merger Agreement and the laws of the State of Delaware prior
to or concurrently the release of the Digimarc Escrow Amount to occur on the
Digimarc Release Date.

 

(f)         Fees.

 

(i)            All fees required to be paid to the
Administrative Agent and the Arranger on or before the Digimarc Release Date
shall have been paid.

 

(ii)           All fees required to be paid to the
Lenders on or before the Digimarc Release Date shall have been paid.

 

(g)        Attorney Costs. 
The Borrower shall have paid all fees, charges and disbursements of
counsel to the Administrative Agent (directly to such counsel if requested by
the Administrative Agent) to the extent invoiced prior to or on the Closing
Date, plus such 

 

68

 

additional amounts of
such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by
it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).

 

Without limiting
the generality of the provisions of the last paragraph of Section 9.03,
for purposes of determining compliance with the conditions specified in this Section 4.02,
each Lender that has signed this Agreement or an Assignment and Assumption
prior to the Digimarc Release Date shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Digimarc Release Date specifying
its objection thereto.

 

4.03.       Conditions to all Credit
Extensions.  The obligation of each Lender to honor any
Request for Credit Extension is subject to the following conditions precedent:

 

(a)         With respect to any Credit Extension made
on the Closing Date, the Specified Representations shall be true and correct in
all material respects and with respect to any other Credit Extension, the
representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document shall be true and
correct in all material respects (in each case, except to the extent any such
representation and warranty is itself qualified by materiality or Material
Adverse Effect, in which case it shall be true and correct in all respects) on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects (except to the
extent any such representation and warranty is itself qualified by materiality
or Material Adverse Effect, in which case it shall be true and correct in all
respects) as of such earlier date, and except that for purposes of this Section 4.03,
the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

 

(b)        No Default shall exist, or would result
from such proposed Credit Extension or from the application of the proceeds
thereof; provided that, with respect to the Credit Extensions made or
applied on the Closing Date, notwithstanding anything herein to the contrary,
the existence or non-existence of any Default or Event of Default with respect
to a breach of representations and warranties as of the Closing Date shall
relate only to the Specified Representations.

 

(c)         The
Administrative Agent and, if applicable, the L/C Issuer or the Swing Line
Lender shall have received a Request for Credit Extension in accordance with
the requirements hereof.

 

(d)        In
the case of any Request for Credit Extension under the Revolving Facility made
after the Closing Date but prior to the Digimarc Release Date, the
Administrative Agent shall have received such documents and information as it
may reasonably request to be satisfied that the proposed Credit Extension will
be made in compliance with Regulation U of the FRB.

 

69

 

Each Request for Credit Extension submitted by the
Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.03(a) and (b) have
been satisfied on and as of the date of the applicable Credit Extension.

 

4.04.       Conditions of Release of Funds
for Additional Tender Offer.  In the event
that after the Closing Date and the consummation of the Digimarc Tender Offer,
but prior to the occurrence of the Digimarc Release Date and the Digimarc
Merger Date, Digimarc AcquisitionCo elects to make an additional tender offer
for additional issued and outstanding Digimarc Common Stock pursuant to and in
accordance with the Digimarc Offer Documents and the Digimarc Merger Agreement
with an expiration date no later than August 8, 2008 unless extended in
accordance with applicable Law and in no event later than August 29, 2008
(such offer, the “Follow-On Offer”), then the
Administrative Agent may make up to two releases of funds from the Digimarc
Escrow Account solely for the purpose of paying the consideration necessary to
pay for Digimarc Common Stock tendered and accepted in such Follow-On Offer, subject
in each case to satisfaction of each of the following conditions precedent:

 

(a)         Notice.  The Borrower
shall have provided the Administrative Agent, not later than 1:00 p.m. the
Business Day prior to the date of the requested release (which release date
shall be a Business Day), with a written notice requesting a release from the
Digimarc Escrow Account for the purpose of funding the purchase of accepted
Digimarc Common Stock in connection with the Follow-On Offer, identifying the
requested date of such release and providing calculations demonstrating the
aggregate purchase price of the Digimarc Common Stock accepted and to be
purchased pursuant to such release; provided that (i) no such
release shall be made after August 11, 2008 unless the Follow-On Offer is
extended in accordance with applicable Law, but in no event later than September 2,
2008, and (ii) no more than two such releases may be made after the
Closing Date and prior to the Digimarc Release Date.

 

(b)        Closing of Facility. 
The conditions set forth in Section 4.01 shall have been
satisfied or waived on or prior to the date of any request for such a release.

 

(c)         Digimarc Tender Offer. 
The Digimarc Offer Documents and any other documents necessary to
effectuate the Follow-On Offer shall be in form and substance as is usual and
customary for transactions of this type and consistent with the terms of the
Digimarc Merger Agreement and this Agreement and shall not have been altered,
amended or otherwise changed or supplemented, except in each case to the extent
that any such alteration, amendment, change or supplement, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the interests of the Lenders or on the ability of the Arrangers to
syndicate the Loans and, in no event shall the aggregate “Offer Price” (as
defined in the Digimarc Offer Documents) that is payable to all of the holders
of Digimarc Common Stock exceed $310,000,000, in each case without the prior
written consent of the Arrangers.

 

(d)        Digimarc Common Stock. 
All conditions to the acceptance and purchase of the Digimarc Common
Stock to be purchased with such release shall be satisfied or waived (with the
prior written consent of the Arrangers) and Digimarc AcquisitionCo shall have
accepted for payment the shares tendered pursuant to such Follow-On Offer to be
purchased with the proceeds of such release.

 

70

 

(e)         Digimarc Merger Terms. Neither the Digimarc Merger Agreement
(including the schedules and exhibits thereto) nor any of the documentation
entered into in connection with the Watermark Spin-Off shall have been altered,
amended or otherwise changed or supplemented, except in each case to the extent
that any such alteration, amendment, change or supplement, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the interests of the Lenders or on the ability of the Arrangers to
syndicate the Loans, without the prior written consent of the Arrangers.

 

(f)         Legal Impediments. 
No Law, injunction, judgment or ruling enacted, promulgated, issued,
entered, amended or enforced by any Governmental Authority shall be in effect,
enjoining, restraining, preventing or prohibiting the consummation of the
Transactions or making the consummation of the Transactions illegal.

 

(g)        Pledge of Tendered Shares. 
The Borrower and Digimarc AcquisitionCo shall have taken all actions
reasonably requested by the Administrative Agent to ensure that a first priority,
perfected security interest on the Digimarc Common Stock to be purchased with
such release shall have been, or shall be, granted to the Administrative Agent,
for the benefit of the Secured Parties, including confirming that such Digimarc
Common Stock is pledged pursuant to the Pledge Agreement and is subject to a
control agreement over such Digimarc Common Stock.

 

Without limiting
the generality of the provisions of the last paragraph of Section 9.03,
for purposes of determining compliance with the conditions specified in this Section 4.04,
each Lender that has signed this Agreement or an Assignment and Assumption
prior to the date of any release provided for in this Section 4.04
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Administrative
Agent shall have received notice from such Lender prior to the proposed release
date specifying its objection thereto.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

Each of Holdings and the Borrower represents and
warrants to the Administrative Agent and the Lenders that:

 

5.01.       Existence, Qualification and
Power.  Each Loan Party and each Subsidiary thereof (a) is
duly organized or formed, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own or lease its assets and
carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it is a party, and (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license; except in each
case referred to in clause (b)(i) or (c), to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect.

 

71

 

5.02.       Authorization; No Contravention. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict
with or result in any breach or contravention of, or the creation of any Lien
under, or require any payment to be made under (i) any material
Contractual Obligation to which such Person is a party or affecting such Person
or the properties of such Person or any of its Subsidiaries or (ii) any
material order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which such Person or its property is subject; or (c) violate
any Law.

 

5.03.       Governmental Authorization; Other
Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document or the
completion of the Transactions other than (i) filings required to perfect
the Liens granted by the Loan Documents and (ii) those that have been or
will be obtained prior to the Closing Date.

 

5.04.       Binding Effect. 
This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is party thereto.  This Agreement
constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against
each Loan Party that is party thereto in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

5.05.       Financial Statements; No Material
Adverse Effect.

 

(a)         The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; and (ii) fairly
present the financial condition of Holdings and its Consolidated Subsidiaries
or Digimarc and its Consolidated Subsidiaries, as applicable, as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein.

 

(b)        The unaudited Consolidated balance sheets
of Holdings and its Consolidated Subsidiaries dated as of June 30, 2008,
and the related Consolidated statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present the financial condition of Holdings and its Consolidated Subsidiaries
as of the date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the absence of
footnotes and to normal year-end audit adjustments.

 

72

 

(c)         Since the date of the Audited Financial
Statements, there has been no event or circumstance, either individually or in
the aggregate, that has had or could reasonably be expected to have a Material
Adverse Effect.

 

(d)        The pro forma financial statements of
Holdings and its Subsidiaries and the forecasted balance sheet and statements
of income and cash flows of Holdings and its Subsidiaries delivered pursuant to
Section 4.01(h) and Section 6.01(c) were
prepared in good faith on the basis of the assumptions stated therein, which
management believes are reasonable in the circumstances in light of the
conditions existing at the date of their preparation and known to the Borrower
or Holdings.  The forecasted financial
information reflects management’s judgment of the expected conditions and its
expected course of action as of the date of its preparation.  The assumptions are those that management
believes are significant to the forecast. 
There will usually be differences between forecasted and actual results,
because events and circumstances frequently do not occur as expected, and those
differences may be material.  The
forecasts were prepared for management’s internal use and are not intended to
comply with standard for the presentation of forecasted financial information
in accordance with standards established by the American Institute of Certified
Public Accountants as they relate to prospective financial information.

 

(e)         As of the Closing Date, Holdings and its
Subsidiaries have no material indebtedness or other material liabilities,
direct or contingent, including liabilities for taxes, material commitments and
Indebtedness, other than (i) those booked or disclosed in the unaudited
consolidated financial statements of Holdings and its Subsidiaries for the
fiscal quarter ended June 30, 2008 and (ii) as disclosed on Schedule
7.03.

 

5.06.       Litigation. 
There are no actions, suits, proceedings, claims or disputes pending or,
to the best knowledge of the Borrower or Holdings, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against Holdings, the Borrower or any of its Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the Transactions or the other
transactions contemplated by this Agreement or any other Loan Document, or (b) either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

5.07.       No Default. 
Neither Holdings, the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation that could, either individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.  No Default has occurred and is
continuing or would result from the consummation of the Transactions or the
other transactions contemplated by this Agreement or any other Loan Document.

 

5.08.       Ownership of Property; Liens. 
Each of Holdings, the Borrower and each Subsidiary has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  The property of Holdings, the Borrower and
its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

 

73

 

5.09.       Environmental Compliance. 
Based on the respective businesses, operations and properties of the
Borrower, the Borrower has reasonably concluded that there are no claims with
respect to Environmental Laws that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

5.10.       Insurance.  The properties of Holdings, 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 localities where
Holdings, the Borrower or the applicable Subsidiary operates.

 

5.11.       Taxes. 
Holdings, the Borrower and its Subsidiaries have (a) filed all
United States federal and state income tax returns required to be filed, and
have paid all United States federal and state taxes imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
either (i) being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP or (ii) where the failure to file or pay could not
reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect, and (b) filed all other tax returns and reports required to be
filed, and have paid all other taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which either (i) are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP or (ii) the
failure to file or pay could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. 
There is no proposed tax assessment against Holdings, the Borrower or
any Subsidiary that could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect. 
Neither Holdings, the Borrower nor any of its Subsidiaries is party to
any tax sharing agreement with any Person other than the Borrower or one or
more of its Subsidiaries.

 

5.12.       ERISA Compliance.

 

(a)         Each Plan is in compliance with the
applicable provisions of ERISA, the Code and other United States federal or
state Laws, except for such non-compliance that, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.  Each Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of the Borrower, nothing has occurred
which would prevent, or cause the loss of, such qualification, except for such
non-qualification that, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.  The Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

(b)        There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that, either individually
or in the aggregate, could reasonably be expected to have a Material 

 

74

 

Adverse Effect.  There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan
that has, within the past six years, resulted or, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(c)         No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither the Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA, except in such instances described in (i) through
(v) above that, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

 

5.13.       Subsidiaries; Equity Interests. 
As of the Closing Date, Holdings has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, and all
of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by Holdings, the
Borrower or one of their respective Subsidiaries in the amounts specified on Part (a) of
Schedule 5.13 free and clear of all Liens other than non-consensual
Liens permitted by Section 7.01 that could not reasonably be
expected to materially impair the value of any such Equity Interest as
Collateral.  As of the Closing Date,
Holdings and the Borrower have no equity investments in any other corporation
or entity other than those specifically disclosed in Part (b) of Schedule
5.13.  All of the outstanding Equity
Interests in the Borrower have been validly issued, and are fully paid and
nonassessable.  Except as disclosed in
financial statements delivered under this Agreement and Part (c) of Schedule
5.13, there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors’ qualifying shares) of any nature relating
to any capital stock of the Borrower, Holdings or any Subsidiary, except in
each case as created by the Loan Documents.

 

5.14.       Margin Regulations; Investment
Company Act.

 

(a)         Holdings, the Borrower and each
Subsidiary is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.  No part of the proceeds of any of the Loans
or Letters of Credit will be used for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of such
Board of Governors.

 

(b)        None of Holdings, the Borrower, any of
their respective Subsidiaries or any Person Controlling Holdings, the Borrower,
or any Subsidiary is or is required to be registered as an “investment company”
under the Investment Company Act of 1940.

 

75

 

5.15.       Disclosure. 
The Borrower has disclosed to the Administrative Agent and all Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is 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 report,
financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the transactions contemplated hereby and
the negotiation of this Agreement or delivered hereunder or under any other
Loan Document (in each case, as modified or supplemented by other information
so furnished), taken as a whole, contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.

 

5.16.       Compliance with Laws. 
Each of Holdings, the Borrower and each Subsidiary is in compliance in
all respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such Requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

5.17.       Labor Matters. 
There is (a) no unfair labor practice complaint pending against
Holdings, the Borrower or any of its Subsidiaries or, to the best knowledge of
Borrower, threatened against Holdings, the Borrower or any of its Subsidiaries,
before the National Labor Relations Board or any other Governmental Authority,
and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against Holdings, the Borrower or
any of its Subsidiaries or, to the best knowledge of Borrower after due
inquiry, threatened against Holdings, the Borrower or any of its Subsidiaries, (b) no
strike, labor dispute, slowdown or stoppage pending against Holdings, the
Borrower or any of its Subsidiaries or, to the best knowledge of Borrower,
after due inquiry, threatened against Holdings, the Borrower or any of its
Subsidiaries and (iii) to the best knowledge of Borrower after due
inquiry, no union representation question existing with respect to the
employees of Holdings, the Borrower or any of its Subsidiaries and, to the best
knowledge of Borrower, no union organizing activities are taking place, except
such as could not, with respect to any matter specified in clause (i), (ii) or
(iii) above, individually or in the aggregate, reasonably be expected have
a Material Adverse Effect.

 

5.18.       Solvency. 
Upon giving effect to the issuance of the Notes, the execution of the
Loan Documents by the Loan Parties and the consummation of the Transactions and
the other  transactions contemplated
hereby, Holdings and its Subsidiaries, taken as a whole, will be Solvent.

 

5.19.       Intellectual Property; Licenses,
Etc.  Holdings, the Borrower and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective 

 

76

 

businesses, without
material conflict with the rights of any other Person.  (i) To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by Holdings or any Subsidiary infringes upon any rights held by any
other Person, and (ii) no claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower, threatened,
which, in either case, either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

5.20.       No Burdensome Restrictions. 
No Requirement of Law or Contractual Obligation of Holdings, the
Borrower or any of its Subsidiaries has had or could be expected to have a
Material Adverse Effect.

 

5.21.       Security Interests.

 

The
Pledge Agreement is effective to create in favor of the Administrative Agent
for the benefit of the Lenders valid and enforceable security interests in the
Pledged Interests, subject to no other Liens, except Liens permitted by the
Loan Documents.  The Security Instruments
(other than the Pledge Agreement) are effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, valid and enforceable
security interest in the collateral subject thereto, subject to no other Liens,
except Liens permitted by the Loan Documents.

 

5.22.       Compliance with Anti-Terrorism
Laws.

 

(a)         No Loan Party is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law, in each
case in any respect that could reasonably be expected to have a Material
Adverse Effect.

 

(b)        Except as could not reasonably be expected
to have a Material Adverse Effect, none of the Loan Parties or their agents
acting or benefiting in any capacity in connection with the Loans, Letters of
Credit or other transactions hereunder, is any of the following (each a “Blocked
Person”):

 

(i)            a person that is listed in
the annex to, or is otherwise subject to the provisions of Executive Order No. 13224;

 

(ii)           a person owned or controlled
by, or acting for or on behalf of, any person that is listed in the annex to,
or is otherwise subject to the provisions of, Executive Order No. 13224;

 

(iii)          a person with which any
Lender is prohibited from dealing or otherwise engaging in any transaction by
any Anti-Terrorism Law;

 

(iv)          a person that commits,
threatens or conspires to commit or supports “terrorism” as defined in
Executive Order No. 13224;

 

(v)           a person that is named as a “specially
designated national” on the most current list published by the United States
Treasury Department’s Office of Foreign Asset Control at its official website
or any replacement website or other replacement official publication of such
list; or

 

77

 

(vi)          a person who is affiliated
or associated with a person listed above.

 

No Loan Party, or to the
knowledge of any Loan Party, any of its agents acting in any capacity in
connection with the Loans, Letters of Credit or other transactions hereunder (A) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person or (B) deals in,
or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to Executive Order No. 13224, in each case in
any respect that could reasonably be expected to have a Material Adverse
Effect.

 

5.23.       Subordination. 
The Obligations constitute “Senior Debt” or “Designated Senior Debt”
under any Subordinated Debt Documents (or any similar term used therein); provided,
that this requirement shall not apply to any documentation related to the
Convertible Notes.

 

ARTICLE VI

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Holdings and the
Borrower shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02 and 6.03) cause each Subsidiary to:

 

6.01.       Financial Statements. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent:

 

(a)         as soon as available, but in any event
within one hundred twenty (120) days after the end of each fiscal year of
Holdings (or, if earlier, the date that is five (5) days after the
reporting date for such information required by the SEC) (commencing with the
fiscal year ending December 31, 2008), a consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year, and the
related consolidated statements of income or operations, shareholders’ equity and
cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all in reasonable detail and prepared
in accordance with GAAP, such statements to be audited and accompanied by a
report and opinion of an independent certified public accountant of nationally
recognized standing as to whether such financial statements are free of
material misstatement, which report and opinion shall be prepared in accordance
with audit standards of the Public Company Accounting Oversight Board and
applicable Securities Laws and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit or with respect to the absence of material misstatement;
and

 

(b)        as soon as available, but in any event
within sixty (60) days after the end of each of the first three fiscal quarters
of each fiscal year of Holdings (or, if earlier, the date that is five (5) days
after the reporting date for such information required by the SEC) (commencing
with the fiscal quarter ending September 30, 2008), a consolidated balance
sheet of Holdings and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal quarter and for the portion of Holdings’
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding 

 

78

 

portion of the previous
fiscal year, all in reasonable detail, such statements to be certified by a
Responsible Officer of Holdings as fairly presenting the financial condition,
results of operations, shareholders’ equity and cash flows of Holdings and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.

 

(c)         as soon as available, but in any event at
least fifteen days before the end of each fiscal year of Holdings, forecasts
prepared by management of Holdings, in form satisfactory to the Administrative
Agent, of consolidated balance sheets and statements of income or operations
and cash flows of Holdings and its Subsidiaries on a quarterly basis for the
immediately following fiscal year (including the fiscal year in which the
Maturity Date occurs).

 

As to any information contained in materials
furnished pursuant to Section 6.02(d), Holdings shall not be
separately required to furnish such information under clause (a) or (b) above,
but the foregoing shall not be in derogation of the obligation of Holdings to
furnish the information and materials described in clauses (a) and (b) above
at the times specified therein.

 

6.02.       Certificates; Other Information. 
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent:

 

(a)         concurrently with the delivery of the
financial statements referred to in Section 6.01(a), a certificate
of its independent certified public accountants certifying such financial
statements and stating that in making the examination necessary therefor no
knowledge was obtained of any Default under the financial covenants set forth
herein or, if any such Default shall exist, stating the nature and status of
such event;

 

(b)        concurrently with the delivery of the
financial statements referred to in Sections 6.01(a) and (b) (commencing
with the delivery of the financial statements for the fiscal quarter ending September 30,
2008), a duly completed Compliance Certificate signed by a Responsible Officer
of the Borrower;

 

(c)         promptly after any request by the
Administrative Agent or any Lender, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of a Loan Party by independent
accountants in connection with the accounts or books of a Loan Party or any
Subsidiary, or any audit of any of them;

 

(d)        promptly after the same are available,
copies of each annual report, proxy or financial statement or other report or
communication sent to the stockholders of Holdings or the Borrower (not
otherwise publicly available), and copies of all annual, regular, periodic and
special reports and registration statements which Holdings or the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of
the Securities Exchange Act of 1934, and not otherwise required to be delivered
to the Administrative Agent pursuant hereto;

 

(e)         promptly, and in any event within five
Business Days after receipt thereof by any Loan Party or any Subsidiary
thereof, copies of each written notice or other correspondence received from
the SEC (or comparable agency in any applicable non-U.S. jurisdiction)
concerning any material investigation or possible material investigation by
such agency regarding financial or other operational results of any Loan Party
or any Subsidiary thereof,

 

79

 

(f)         no later than five Business Days (or such
shorter period as agreed to by the Administrative Agent) prior to the
effectiveness thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification of any Subordinated Debt
Document; and

 

(g)        promptly, such additional information
regarding the business, financial or corporate affairs of Holdings, the
Borrower or any Subsidiary, or compliance with the terms of the Loan Documents,
as the Administrative Agent or any Lender may from time to time reasonably
request.

 

Documents required to be delivered pursuant to Section 6.01
or Section 6.02 may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
the Borrower or Holdings posts such documents or provides a link thereto on the
Borrower’s or Holdings’ website on the Internet at the website address listed
on Schedule 10.02 or (ii) on which such documents are posted on the
Borrower’s or Holdings’ behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (A) if the Administrative
Agent or a Lender so requests, the Borrower and Holdings shall deliver paper
copies of such documents to the Administrative Agent or such Lender until a
written request to cease delivering paper copies is given by the Administrative
Agent or such Lender and (ii) the Borrower or Holdings shall notify (which
may be by facsimile or electronic mail) the Administrative Agent and each
Lender of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions of such documents.  Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(b) to the
Administrative Agent.  Except for such
Compliance Certificates, the Administrative Agent shall have no obligation to
request the delivery or to maintain copies of the documents referred to above,
and in any event shall have no responsibility to monitor compliance by the
Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

 

The Borrower and Holdings hereby acknowledge that (a) the
Administrative Agent and/or the Arrangers will make available to the Lenders
and the L/C Issuer materials and/or information provided by or on behalf of the
Borrower or Holdings hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”) and (b) certain of the Lenders (each a “Public
Lender”) may have personnel who do not wish to receive material non-public
information with respect to Holdings, the Borrower or their respective
Affiliates, or the respective securities of any of the foregoing, and who may
be engaged in investment and other market-related activities with respect to
such Persons’ securities.  The Borrower
hereby agrees that (w) all Borrower Materials that are to be made
available to Public Lenders shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,”
the Borrower and Holdings shall be deemed to have authorized the Administrative
Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower
Materials as not containing any material non-public information with respect to
the Borrower, Holdings or their respective securities for purposes of United
States federal and state securities laws (provided, however, that
to the extent 

 

80

 

such Borrower Materials
constitute Information, they shall be treated as set forth in Section 10.07);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made
available through a portion of the Platform designated as “Public Side
Information”; and (z) the Administrative Agent and the Arrangers shall be
entitled to treat any Borrower Materials that are not designated “PUBLIC” as
being suitable only for posting on a portion of the Platform that is not marked
as “Public Side Information.” 
Notwithstanding the foregoing, the Borrower and Holdings shall be under
no obligation to mark any Borrower Materials “PUBLIC.”

 

6.03.       Notices. 
Promptly notify the Administrative Agent and each Lender:

 

(a)         of the occurrence of any Default;

 

(b)        of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect, including (i) breach
or non-performance of, or any material  default under,
a Contractual Obligation of Holdings, the Borrower or any Subsidiary; (ii) any
material dispute, litigation, investigation, proceeding or suspension between
Holdings, the Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;

 

(c)         of the occurrence of any ERISA Event;

 

(d)        of any material change in accounting
policies or financial reporting practices by Holdings, the Borrower or any
Subsidiary; and

 

(e)         of the (i) occurrence of any
Disposition of property or assets for which the Borrower is required to make a
mandatory prepayment pursuant to Section 2.05(b)(ii), (ii) incurrence
or issuance of any Indebtedness of Holdings or its Subsidiaries for which the
Borrower is required to make a mandatory prepayment pursuant to Section 2.05(b)(iii),
(iii) occurrence of any sale of capital stock or other Equity Interests
for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.05(b)(iv) and
(iv) receipt of any Extraordinary Receipt for which the Borrower is
required to make a mandatory prepayment pursuant to Section 2.05(b)(v);
and

 

(f)         of the issuance of a notice of proposed
debarment or notice of proposed suspension by a Governmental Authority or
Governmental Authorities.

 

Each notice pursuant to this Section shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04.       Payment of Obligations. 
Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless either (i) the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate 

 

81

 

reserves in accordance
with GAAP are being maintained by Holdings, the Borrower or such Subsidiary or (ii) the
failure to do so would not have a Material Adverse Effect; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property that is
not a Lien permitted by Section 7.01; and (c) all its
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.

 

6.05.       Preservation of Existence, Etc.  (a) Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.04 or 7.05; (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect; and (d) deliver
certificates of good standing and/or qualifications to engage in business not
delivered to the Administrative Agent on or before the Closing Date as set
forth in Section 4.01(c)(iii) within ten Business Days after
the Closing Date or as otherwise agreed to by the Administrative Agent.

 

6.06.       Maintenance of Properties.  (a) Maintain,
preserve and protect all of its properties and equipment necessary in the
operation of its business in good working order and condition, ordinary wear
and tear excepted; (b) make all necessary repairs thereto and renewals and
replacements thereof; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities, in each case
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

6.07.       Maintenance of Insurance.  (a) Maintain
with financially sound and reputable insurance companies not Affiliates of any
Loan Party or Subsidiary, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons  and (b) name the Administrative Agent as
additional insured party in respect of hazard and liability insurance and loss
payee in respect of property insurance.

 

6.08.       Compliance with Laws and Material
Contractual Provisions.  Comply in all respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, and all contractual
provisions, except in such instances in which (a) such Requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.09.       Compliance with Environmental
Laws.

 

(a)         (i) Comply with all Environmental
Laws applicable to it, and obtain, comply with and maintain any and all
environmental permits necessary for its operations as conducted and as planned;
and (ii) use commercially reasonable efforts to cause all of its tenants,
subtenants, 

 

82

 

contractors,
subcontractors and invitees to comply with all Environmental Laws, and obtain,
comply with and maintain any and all environmental permits, applicable to any
of them insofar as any failure to so comply, obtain or maintain as set forth in
(i) and (ii) above, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(b)        Comply in a timely manner with all orders
and lawful directives regarding Environmental Laws issued to Holdings, the
Borrower or any of their respective Subsidiaries by any Governmental Authority,
other than such orders and lawful directives (x) as to which an appeal or
other challenge has been timely and properly taken in good faith or (y) which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

6.10.       Books and Records.  (a) Maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Holdings, the
Borrower or their respective Subsidiaries, as the case may be; and (b) maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction or
contracting authority over Holdings, the Borrower or their respective
Subsidiaries, as the case may be.

 

6.11.       Inspection Rights. 
Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
the Borrower and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided, however, that such visits shall be limited to
no more than four (4) visits per fiscal year unless an Event of Default
exists, at which time the Administrative Agent or any Lender (or any of their
respective representatives or independent contractors) may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice. 
Notwithstanding the foregoing, neither the Administrative Agent nor any
Lender shall conduct any invasive soil or groundwater investigation, study or
sampling at any property of Holdings or any of its Subsidiaries that would
unreasonably interfere with the occupancy and/or operations at such properties.

 

6.12.       Use of Proceeds. 
The proceeds of (a) the Term Loans shall be used (i) after the
prior application of the net proceeds of the Digimarc PIPE, to pay a portion of the share consideration
payable for the Digimarc Tender Offer and a portion of the merger consideration
payable for the Digimarc Merger, together with any payments in connection with
dissenters’ rights, (ii) to refinance the Existing Credit Agreement and (iii) to
pay fees and expenses incurred in connection with the Transactions and (b) the Revolving Loans shall be used (i) after
the prior application of the net proceeds of the Digimarc PIPE and the proceeds
of the Term Loan, to pay a portion of the consideration payable for the
Digimarc Tender Offer and the Digimarc Merger and (ii) to provide ongoing
working capital and for other general corporate purposes of the Borrower and
its Subsidiaries.

 

83

 

6.13.       Security Interests; Further
Assurances.

 

(a)         Promptly, but in no event later than
thirty days after the request of the Administrative Agent or any Lender, at
Borrower’s expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Instruments or otherwise deemed by the Administrative Agent reasonably
necessary or desirable for the continued validity, perfection and priority of
the Liens on the Collateral covered thereby superior to and prior to the rights
of all third Persons other than the holders of Liens permitted hereunder and
subject to other Liens except as permitted by the Security Instruments, or
obtain any consents, including, without limitation, landlord or similar lien
waivers and consents, as may be necessary or appropriate in connection
therewith.  Deliver or cause to be
delivered to the Administrative Agent from time to time such other
documentation, consents, authorizations, approvals and orders in form and
substance reasonably satisfactory to the Administrative Agent as the
Administrative Agent shall reasonably deem necessary to perfect or maintain the
Liens on the Collateral pursuant to the Security Instruments.  Upon the exercise by the Administrative Agent
or the Lenders of any power, right, privilege or remedy pursuant to any Loan
Document which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority execute and deliver all
applications, certifications, instruments and other documents and papers that
the Administrative Agent or the Lenders may be so required to obtain.

 

(b)        In the case of the acquisition or
creation of any new Subsidiary or the designation of a Subsidiary as a Material
Subsidiary, subject to the time limitations in Section 6.14, cause:

 

(i)            100% of the issued and outstanding
Equity Interests of each direct Domestic Subsidiary of a Loan Party; and

 

(ii)           65% (or such greater percentage that,
due to a change in an applicable Law after the date hereof, (A) could not
reasonably be expected to cause the undistributed earnings of such Foreign
Subsidiary as determined for United States federal income tax purposes to be treated
as a deemed dividend to such Foreign Subsidiary’s United States parent and (B) could
not reasonably be expected to cause any adverse tax consequences) of the issued
and outstanding Equity Interests entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by a
Loan Party;  and

 

(iii)          100% of the issued and outstanding
Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
in each Foreign Subsidiary directly owned by any Loan Party;

 

in each case, to be
subject at all times to a first priority, perfected Lien in favor of the
Administrative Agent pursuant to the terms and conditions of the Security
Instruments, together with opinions of counsel and any filings and deliveries
reasonably necessary in connection 

 

84

 

therewith to perfect the security interests therein,
all in form and substance reasonably satisfactory to the Administrative Agent.

 

6.14.       New Subsidiaries; Collateral.

 

(a)         Except as provided in Section 4.02,
as soon as practicable but in any event within thirty days (as such date may be
extended by the Administrative Agent in its sole discretion) following either (x) the
acquisition or creation of any Subsidiary that constitutes a Material
Subsidiary or (y) any existing Subsidiary being determined to be a
Material Subsidiary pursuant to Section 6.15, cause to be delivered
to the Administrative Agent each of the following:

 

(i)            a Joinder Agreement duly
executed by such Material Subsidiary;

 

(ii)           if the Pledged Interests
issued or owned by such Material Subsidiary constitute securities under Article 8
of the Uniform Commercial Code (i) the certificates representing 100% of
such Pledged Interests and (ii) duly executed, undated stock powers or
other appropriate powers of assignment in blank affixed thereto;

 

(iii)          Uniform Commercial Code
financing statements naming such Material Subsidiary as “debtor” and naming the
Administrative Agent for the benefit of the Secured Parties as “secured party,”
in form, substance and number sufficient in the reasonable opinion of the
Administrative Agent and its counsel to be filed in all Uniform Commercial Code
filing offices and in all jurisdictions in which filing is necessary to perfect
in favor of the Administrative Agent, for the benefit of the Secured Parties,
the Lien on the Collateral conferred under such Security Instrument to the
extent such Lien may be perfected by Uniform Commercial Code filing;

 

(iv)          unless otherwise agreed by
the Administrative Agent in its reasonable discretion, an opinion of counsel to
each Person executing a Joinder Agreement pursuant to this Section 6.14,
dated as of the date of delivery of such applicable Loan Document provided for
in this Section 6.14 and addressed to the Administrative Agent, in
form and substance reasonably acceptable to the Administrative Agent, each of
which opinions may be in form and substance, including assumptions and
qualifications contained therein, substantially similar to those opinions of
counsel delivered pursuant to Section 4.01(a) (which such
opinions shall expressly permit reliance by the successors and assigns of the
Administrative Agent and each Lender); and

 

(v)           as to each Person executing
a Joinder Agreement pursuant to this Section 6.14, current copies
of the Organization Documents of each such Person, resolutions (or duly
effected consent actions) of the Board of Directors, partners, or appropriate
committees thereof (and, if required by such Organization Documents or
applicable law, of the shareholders, members or partners) of such Person
authorizing the actions and the execution and delivery of documents described
in this Section 6.14, all certified by the applicable Governmental
Authority or appropriate officer as the Administrative Agent may elect.

 

85

 

(b)        If any assets in excess of $500,000
individually or $1,000,000 in the aggregate (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary after the Closing Date (other than assets constituting
Collateral under the Security Agreement or Pledge Agreement that have become
subject to the Liens granted under such Security Instruments upon acquisition
thereof), the Borrower will notify the Administrative Agent thereof, and, if
requested by the Administrative Agent, the Borrower will cause such assets to
be subjected to a Lien securing the Obligations and will take, and cause its
Subsidiaries to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such Liens,
including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties.

 

(c)         As soon as practicable but in any event
within ten Business Days after such event, the Borrower will furnish to the
Administrative Agent prompt written notice of any casualty or other insured
damage to any material portion of any Collateral or the commencement of any action
or proceeding for the taking of any material portion of the Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding, and will ensure that the net proceeds of
any such event (whether in the form of insurance proceeds, condemnation awards
or otherwise) are collected and applied in accordance with this Agreement the
applicable provisions of the Security Instruments.

 

6.15.       Designation of Material
Subsidiaries.  As of the Closing Date, the Material
Subsidiaries, after giving effect to the Transactions, are listed on Schedule
6.15.  If, at any time (including on
a pro forma basis after the consummation
of any acquisition transaction), the Subsidiaries identified on Schedule
6.15 as Material Subsidiaries and any Subsidiary joined to the Loan
Documents under Section 6.14 are insufficient to satisfy each of
the thresholds set forth in the definition of Material Subsidiaries, the
Borrower shall promptly (but no later than fifteen days after either (i) the
acquisition of such Subsidiary or (ii) the date upon which the Borrower
obtains knowledge that such threshold is no longer satisfied) designate in
writing to the Administrative Agent such additional Subsidiaries as “Material
Subsidiaries” as are necessary to comply with such definition, and each such
additional Subsidiary shall comply with the provisions of Section 6.14
within the time provided therein.

 

6.16.       Interest Rate Protection
Agreements.  Within sixty days of the Closing Date, the
Borrower shall enter into interest rate protection agreements (protecting
against fluctuations in interest rates) reasonably acceptable to the
Administrative Agent, so that after giving effect to such agreements an amount
that is not less than 50% of the sum of (a) the aggregate principal
amount of the Term Loans made on the Closing Date (including amounts deposited
in the Digimarc Escrow Account) plus (b) the aggregate principal
amount of the Convertible Notes on the Closing Date, shall bear interest at a
fixed rate for a duration of at least three years.

 

6.17.       Designation as Senior
Indebtedness.  Designate all Obligations as “Designated
Senior Indebtedness” (or the equivalent) under, and defined in, the
Subordinated Debt Documents;  provided, that this requirement shall
not apply to any documentation related to the Convertible Notes.

 

6.18.       Post Closing Requirements. 
Unless otherwise waived by the Administrative Agent in its sole
discretion, within sixty days of the Closing Date (which such date may be 

 

86

 

extended up to an
additional sixty days by the Administrative Agent in its sole discretion), the
Borrower shall deliver to the Administrative Agent each of the items, and
complete each of the actions, referred to on Schedule 6.18.

 

ARTICLE VII

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Holdings and the
Borrower shall not, nor shall they permit any of their respective Subsidiaries
to, directly or indirectly:

 

7.01.       Liens. 
Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired (including
the Equity Interests of Digimarc tendered in the Digimarc Tender Offer), other
than the following:

 

(a)         Liens pursuant to any Loan Document;

 

(b)        Liens existing on the date hereof and
listed on Schedule 7.01 and any renewals or extensions thereof; provided
that (i) the property covered thereby is not changed, (ii) the amount
secured or benefited thereby is not increased, (iii) the direct or any
contingent obligor with respect thereto is not changed, and (iv) any
renewal or extension of the obligations secured or benefited thereby is
permitted by Section 7.03(b);

 

(c)         Liens for taxes (i) not yet due, (ii) which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP, or (iii) that are
not, either individually or in the aggregate, material;

 

(d)        carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than sixty days or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person;

 

(e)         pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed by
ERISA;

 

(f)         deposits to secure the performance of bids,
trade contracts and leases (other than (i) Indebtedness and (ii) operating
leases of Holdings), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business of the Borrower and its Subsidiaries;

 

(g)        easements, rights-of-way, restrictions
and other similar encumbrances affecting real property of the Borrower and its
Subsidiaries which, in the aggregate, are not substantial in 

 

87

 

amount, and which do not
in any case materially detract from the value the property subject thereto or
materially interfere with the ordinary conduct of the business of the
applicable Person;

 

(h)        Liens securing judgments for the payment
of money not constituting an Event of Default under Section 8.01(h);

 

(i)          Liens securing the property of the
Borrower or any of its Subsidiaries for Indebtedness permitted under Section 7.03(e) and
(f); provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;

 

(j)          Liens on the property of the Borrower or
any of its Subsidiaries in favor of landlords securing licenses, subleases or
leases entered into in the ordinary course of business;

 

(k)         Liens arising from precautionary Uniform
Commercial Code financing statement filings with respect to operating leases or
consignment arrangements entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business;

 

(l)          Liens and rights of setoff of banks and
securities intermediaries in respect of deposit accounts and securities
accounts maintained in the ordinary course of business;

 

(m)        Liens on the property of the Borrower or
any of its Subsidiaries securing obligations in respect of trade letters of
credit covering the goods (or the documents of title in respect of such goods)
financed by such trade letters of credit and the proceeds and products thereof;

 

(n)        Liens on the property of the Borrower or
any of its Subsidiaries in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;

 

(o)        Liens that are contractual rights of
set-off relating to purchase orders and other agreements entered into with
customers of any Loan Party in the ordinary course of business;

 

(p)        Liens on property of a Person existing at
the time such Person is merged with or into or consolidated with the Borrower
or any Subsidiary in connection with a Permitted Acquisition; provided,
that (i) such Liens were in existence prior to the contemplation of such
merger or consolidation (and not incurred in contemplation thereof), (ii) do
not extend to any assets other than those of the Person merged into or
consolidated with the Borrower or the applicable Subsidiary and (iii) any
Indebtedness secured by such Liens is permitted by Section 7.03;

 

(q)        Liens (i)(A) on advances of cash or
Cash Equivalents in favor of the seller of any property to be acquired in an
Investment pursuant to Section 7.02(g) to be applied against
the purchase price for such Investment and (B) consisting of Dispositions
permitted under Section 7.05, in each case under this clause (i),
solely to the extent such Investment or Disposition, as the case may be, would
have been permitted on the date of the creation of such Lien and (ii) on 

 

88

 

earnest money deposits of
cash or Cash Equivalents made by any Loan Party in connection with any letter
of intent or purchase agreement permitted hereunder; and

 

(r)         Liens not otherwise permitted by this Section 7.01
so long as the aggregate outstanding principal amount of the Indebtedness
secured thereby does not exceed $5,000,000 at any one time.

 

7.02.       Investments. 
Make any Investments, except:

 

(a)         Investments in the form of Cash
Equivalents held by the Borrower, such Subsidiary or Holdings; provided,
that the aggregate amount of all such Investments by Holdings in Cash
Equivalents that are not from (i) proceeds of Subordinated Debt, (ii) proceeds
of the issuance of Equity Interests by Holdings or (iii) the proceeds of
distributions by the Borrower to Holdings permitted by Section 7.06(d)(ii) and
clause (b) below, shall not exceed $1,000,000 in any fiscal year;

 

(b)        advances to officers, directors and
employees for travel, entertainment, relocation and analogous ordinary business
purposes of (i) the Borrower and its Subsidiaries, in an aggregate amount
not to exceed $500,000 at any time outstanding and (ii) Holdings, in an
aggregate amount taken together with the amounts incurred under clause (a) above
not to exceed $1,000,000 in any fiscal year;

 

(c)         (i) Investments (A) of the
Borrower in any Guarantor (other than Holdings), (B) of any Guarantor
(other than Holdings) in the Borrower or in another Guarantor (other than
Holdings) and (C) of the Borrower or any Guarantor (other than Holdings)
in any Subsidiary of the Borrower that is not a Guarantor in an aggregate
amount for all such Investments not to exceed $10,000,000 at any time
outstanding and (ii) Investments of Holdings in the Borrower or another
Guarantor;

 

(d)        Investments of the Borrower and any
Subsidiary consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

(e)         Guarantees permitted by Section 7.03;

 

(f)         Investments existing on the date hereof
and listed on Schedule 7.02;

 

(g)        the acquisition of all or substantially
all of the assets or line of business of, or not less than 100% of the capital
stock of, a Person (referred to herein as the “Acquired Entity”); provided
that:

 

(i)            such acquisition was
approved by the board of directors of such Acquired Entity;

 

89

 

(ii)           the Acquired Entity shall be
in a similar line of business or any business related or incidental thereto as
that of the Borrower and the Subsidiaries as conducted during the current and
most recent calendar year;

 

(iii)          the Acquired Entity shall be
organized under the laws of the United States, United Kingdom, Canada or
Germany or any state or political subdivision thereof;

 

(iv)          no such acquisition shall be
permitted prior to the Digimarc Merger Date; and

 

(v)           at the time of such
transaction:

 

(A)          both before and after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing,

 

(B)           the Borrower would be in
compliance with the Consolidated Leverage Ratio set forth in Section 7.11(b) as
of the most recently completed Reference Period ended prior to such transaction
for which the financial statements and certificates required by Section 6.01(a) or
6.01(b) have been delivered, after giving pro forma effect to such transaction and
to any other event occurring after such period as to which pro forma recalculation is appropriate
(including any other transaction described in this Section 7.02(g) occurring
after such period) as if such transaction had occurred as of the first day of
such period (assuming, for purposes of pro
forma compliance with Section 7.11(b), that the maximum
Consolidated Leverage Ratio permitted at the time by such Section was in
fact 0.25 to 1.00 more restrictive than the Consolidated Leverage Ratio
actually provided for in such Section at such time);

 

(C)           the available Aggregate
Revolving Commitments shall be at least $25,000,000 after giving effect to such
transaction; and

 

(D)          the Borrower shall have
delivered a certificate of a Responsible Officer, certifying as to the
foregoing and containing reasonably detailed calculations in support thereof,
in form and substance reasonably satisfactory to the Administrative Agent (any
acquisition of an Acquired Entity meeting all the criteria of this Section 7.02(g) being
referred to herein as a “Permitted Acquisition”);

 

(h)        the Digimarc Merger; and

 

(i)          other Investments by the Borrower and its
Subsidiaries not exceeding $5,000,000 in the aggregate in any fiscal year of
the Borrower.

 

7.03.       Indebtedness. 
Create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)         Indebtedness under the Loan Documents;

 

90

 

(b)        Indebtedness outstanding on the date
hereof and listed on Schedule 7.03 and any refinancings, refundings,
renewals or extensions thereof; provided that (i) the 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 and by an amount equal to any existing commitments
unutilized thereunder and (ii) the terms relating to principal amount,
amortization, maturity, collateral (if any) and subordination (if any), and
other material terms (other than interest rate and fees) taken as a whole, of
any such refinancing, refunding, renewing or extending Indebtedness, and of any
agreement entered into and of any instrument issued in connection therewith,
are no less favorable in any material respect to the Loan Parties or the
Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate and fees applicable to any such refinancing, refunding, renewing or
extending Indebtedness are on market terms;

 

(c)         Guarantees of (i) the Borrower or
any Guarantor in respect of Indebtedness otherwise permitted hereunder of the
Borrower or any other Guarantor (other than Holdings), (ii) any
non-Guarantor Subsidiary of Indebtedness of the Borrower or any Subsidiary of
the Borrower, or (iii) any non-Guarantor Subsidiary of Investments
permitted by Section 7.02(c);

 

(d)        obligations (contingent or otherwise) of
Holdings, the Borrower or any Subsidiary existing or arising under any Swap Contract;
provided, that (i) such obligations are (or were) entered into by
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments, investments, assets,
or property held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person, and not for purposes of speculation
or taking a “market view”; and (ii) such Swap Contract does not contain
any provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party;

 

(e)         Indebtedness of the Borrower or any
Subsidiary in respect of capital leases and Synthetic Lease Obligations for
fixed or capital assets, and renewals and extensions thereof in connection with
a refinancing thereof, within the limitations set forth in Section 7.01(i);
provided, however, that the aggregate amount of all such
Indebtedness at any one time outstanding shall not exceed (i) $20,000,000
taken together with amounts outstanding under clause (f) below or (ii) $40,000,000
taken together with amounts outstanding under clauses (f), (g) and (h) of
this Section;

 

(f)         Indebtedness of the Borrower or any
Subsidiary in respect of purchase money obligations for fixed or capital
assets, and renewals and extensions thereof in connection, with a refinancing
thereof, within the limitations set forth in Section 7.01(i); provided,
however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed (i) $20,000,000 taken together with
amounts outstanding under clause (e) above or (ii) $40,000,000 taken
together with amounts outstanding under clauses (e), (g) and (h) of
this Section;

 

(g)        Indebtedness of an Acquired Entity that
is assumed by the Borrower or any Subsidiary in connection with a Permitted
Acquisition consummated pursuant to Section 7.02(g); provided,
however, that the aggregate amount of all such Indebtedness at any one
time 

 

91

 

outstanding shall not
exceed (i) $20,000,000 or (ii) $40,000,000 taken together with
amounts outstanding under clauses (e), (f) and (h) of this Section;

 

(h)        Permitted Seller Debt; provided, however,
that the aggregate amount of all such Permitted Seller Debt at any one time
outstanding shall not exceed (i) $20,000,000 or (ii) $40,000,000
taken together with amounts outstanding under clauses (e), (f) and (g) of
this Section; provided, further, that before and after giving
effect to the incurrence of such Permitted Seller Debt, no Default or Event of
Default shall have occurred;

 

(i)          unsecured Subordinated Debt

 

(i)            of the Borrower not to
exceed $200,000,000 at any time outstanding; provided that (A) no
Default or Event of Default shall have occurred or would occur as a result of
the incurrence of such Subordinated Debt and (B) the Borrower and its
Subsidiaries are in pro forma compliance,
after giving effect to the incurrence of such Subordinated Debt, with each of
the covenants in this Agreement (including, without limitation, Section 7.11);
and

 

(ii)           of Holdings; provided,
that (A) no Default or Event of Default shall have occurred or would occur
as a result of the incurrence of such Subordinated Debt and (B) the pro forma Consolidated Leverage Ratio of Holdings and its
Subsidiaries after giving effect to the incurrence of such Subordinated Debt
shall be less than 4.75 to 1.00;

 

(j)          unsecured Indebtedness of the Borrower or
any Subsidiary representing deferred compensation to employees of any Loan
Party incurred in the ordinary course of business;

 

(k)         Indebtedness of the Borrower or any
Subsidiary incurred in a Permitted Acquisition or Disposition consisting of
obligations for indemnification, the adjustment of the purchase price or
similar adjustments;

 

(l)          Indebtedness consisting of obligations of
the Borrower or any Subsidiary under deferred compensation or other similar
arrangements incurred by such Person in connection with Permitted Acquisitions;

 

(m)        Indebtedness of the Borrower or any
Subsidiary consisting of the financing of insurance premiums or take-or-pay
obligations contained in supply arrangements, in each case, in the ordinary
course of business;

 

(n)        Indebtedness incurred by the Borrower or
any Subsidiary constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including in respect of
health, disability or other employee benefits or property, casualty or
liability insurance or self-insurance; provided, that, upon the drawing
of such letters of credit, such obligations are reimbursed within thirty days
following such drawing; and

 

(o)        (i) Indebtedness that would
constitute an Investment under Section 7.02(c) or (ii) other
Indebtedness of the Borrower or any Subsidiary at any time outstanding not to
exceed $5,000,000 in the aggregate.

 

92

 

7.04.       Fundamental Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

 

(a)         any Subsidiary may merge with (i) the
Borrower, provided that the Borrower shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries, provided
that when any Guarantor is merging with another Subsidiary, the Guarantor shall
be the continuing or surviving Person;

 

(b)        any Subsidiary may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or to another Subsidiary; provided that if the transferor
in such a transaction is a Guarantor, then the transferee must either be the
Borrower or a Guarantor;

 

(c)         Digimarc AcquisitionCo may consummate the
Digimarc Merger;

 

(d)        the Borrower may dissolve any Subsidiary
that is not a Material Subsidiary; and

 

(e)         any Permitted Acquisition expressly
permitted by Section 7.02 may be structured as a merger, consolidation
or amalgamation.

 

7.05.       Dispositions. 
Make any Disposition or enter into any agreement to make any
Disposition, except:

 

(a)         Dispositions of obsolete or worn out
property, whether now owned or hereafter acquired, in the ordinary course of business;

 

(b)        Dispositions of inventory in the ordinary
course of business;

 

(c)         Dispositions of equipment or real
property to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the proceeds
of such Disposition are reasonably promptly applied to the purchase price of
such replacement property;

 

(d)        Dispositions of property by any
Subsidiary to the Borrower or to a wholly-owned Subsidiary; provided
that if the transferor of such property is a Guarantor, the transferee thereof
must either be the Borrower, a Guarantor or a non-Guarantor Subsidiary to the
extent such Disposition constitutes an Investment permitted by Section 7.02(c)(ii);

 

(e)         Dispositions permitted by Section 7.04;

 

(f)         non-exclusive licenses of, or covenants
not to assert with respect to, IP Rights in the ordinary course of business;

 

(g)        intercompany sales or transfers of assets
made in the ordinary course of  business;

 

93

 

(h)        licenses, leases or subleases of tangible
property in the ordinary course of business;

 

(i)          licensing, cross-licensing and covenant
not to assert arrangements involving technology or other intellectual property
of the Borrower or a Subsidiary in the ordinary course of business;

 

(j)          any consignment arrangements or similar
arrangements for the sale of assets in the ordinary course of business;

 

(k)         the sale or discount of overdue accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof;

 

(l)          Dispositions of Cash Equivalents;

 

(m)        Dispositions in the ordinary course of
business consisting of the abandonment of IP Rights which, in the reasonable
good faith determination of the Borrower are uneconomical, negligible, obsolete
or otherwise not material in the conduct of its business; and

 

(n)        other Dispositions by the Borrower and
its Subsidiaries in addition to those permitted by any other clause of this Section 7.05,
provided, that (i) the aggregate value of all such Dispositions
pursuant to this Section 7.05(n) shall not exceed $15,000,000
in any fiscal year, (ii) the Borrower complies with Section 2.05(b)(ii) with
respect to the Net Cash Proceeds thereof and (iii) Dispositions related to
any arrangement with any Person providing for leasing by Borrower or any
Subsidiary of real or personal property that has been or is to be sold or
transferred by Borrower or such Subsidiary to such Person or to any other
Person or to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of Borrower or such Subsidiary
shall not exceed $7,500,000 in any fiscal year;

 

provided, however,
that any Disposition pursuant to clauses (b), (c), (1) and (n) above
shall be for fair market value.

 

7.06.       Restricted Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that, so long
as no Default shall have occurred and be continuing at the time of any action
described below or would result therefrom:

 

(a)         each Subsidiary may make Restricted
Payments to the Borrower, the Guarantors (other than Holdings) and any other
Person (other than Holdings) that owns an Equity Interest in such Subsidiary,
ratably according to their respective holdings of the type of Equity Interest
in respect of which such Restricted Payment is being made;

 

(b)        Holdings, the Borrower and each
Subsidiary may declare and make dividend payments or other distributions
payable solely in the common stock or other common Equity Interests of such
Person;

 

(c)         Holdings, the Borrower and each
Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by
it with the proceeds received from the substantially 

 

94

 

concurrent issue of (x) new
shares of its common stock or other common Equity Interests or (y) so long
as no Default or Event of Default shall have occurred or be continuing,
Subordinated Debt of Holdings permitted hereunder;

 

(d)        the Borrower may declare and make cash
dividend payments to Holdings, and Holdings may make payments,

 

(i)            solely to pay regularly scheduled
interest as and when due with respect to the Subordinated Debt, in an amount
not to exceed the lesser of (A) the actual aggregate amount of interest
payments paid in such fiscal year on such Subordinated Debt or (B) $10,000,000
in the aggregate in any fiscal year;

 

(ii)           so long as no Default or Event of
Default shall have occurred and is continuing or would result therefrom and
subject to the prior application of proceeds pursuant to Section 2.05(b)(iv),
in an amount not to exceed the aggregate amount contributed or loaned from
Holdings to the Borrower, within the twelve months immediately preceding the
date of any such payment, from the proceeds of issuances of Equity Interests by
Holdings (other than the Convertible Notes); and

 

(iii)          to pay tax liabilities actually due
and payable which are attributable to (or as a result of) the operations of the
Borrower or any of its Subsidiaries and are not otherwise paid by the Borrower
or any of its Subsidiaries;

 

(e)         To the extent required in connection with
the conversion of the Convertible Notes, Holdings may (i) issue common
stock of Holdings and (ii) make payments in cash in lieu of the issuance
of fractional shares; and

 

(f)         Subject to the prior application of
proceeds pursuant to Section 2.05(b)(iv), Holdings may repay,
repurchase or redeem the Convertible Notes, or settle conversion thereof with
cash payments, and make other Restricted Payments, in each case in an amount
not to exceed the aggregate proceeds of issuances of Equity Interests by
Holdings (other than the Convertible Notes) remaining after any required
payment made pursuant to Section 2.05(b)(iv).

 

7.07.       Change in Nature of Business.  Engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and its Subsidiaries on the date hereof or any business substantially related or
incidental thereto.

 

7.08.       Transactions with Affiliates. 
Except as set forth on Schedule 7.08, enter into any transaction
of any kind with any Affiliate of Holdings, whether or not in the ordinary
course of business, other than on fair and reasonable terms substantially as
favorable to Holdings or such Subsidiary as would be obtainable by Holdings or
such Subsidiary at the time in a comparable arm’s length transaction with a
Person other than an Affiliate, provided that the foregoing restriction
shall not apply to transactions between or among the Loan Parties and their
Subsidiaries.

 

7.09.       Burdensome Agreements. 
Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document or an agreement that has been entered into in connection
with the disposition of all or substantially all of the capital stock or assets
of such 

 

95

 

Subsidiary) that limits
the ability (i) of Holdings, the Borrower or any Subsidiary to (A) make
dividend payments in respect of any capital stock of such Subsidiary held by,
or pay any Indebtedness owed to, Borrower or any other Subsidiary, (B) make
loans or advances to, or other Investments in, the Borrower or any other
Subsidiary or (C) transfer any of its assets to the Borrower or any other
Subsidiary, (ii) of any Subsidiary to Guarantee the Indebtedness of the
Borrower or (iii) of the Borrower or any Subsidiary to create, incur,
assume or suffer to exist Liens on property or assets (whether now owned or
hereafter acquired) of such Person; provided, however, that the
foregoing shall not prohibit (x) any negative pledge incurred or provided
pursuant to (A) any agreement with a holder of Indebtedness permitted
under Section 7.03 (e), (f) or (g) solely
to the extent that such negative pledge does not restrict in any manner
(directly or indirectly) Liens created pursuant to the Loan Documents and does
not require the direct or indirect granting of any Lien securing any
Indebtedness or other obligation by virtue of the granting of Liens on or
pledge of property to secure the Loans, (B) any industrial revenue or
development bonds, acquisition agreement or operating leases of real property
and equipment entered into in the ordinary course of business or (C) any
such restrictions or conditions imposed by any Subordinated Debt Document.

 

7.10.       Use of Proceeds. 
Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose in a manner that
violates Regulation U of the FRB.

 

7.11.       Financial Covenants.

 

(a)         Consolidated Debt Service Coverage Ratio. 
Permit the Consolidated Debt Service Coverage Ratio as of the end of
each fiscal quarter of the Borrower to be less than 2.25 to 1.00.

 

(b)        Consolidated Borrower Leverage Ratio. 
Permit the Consolidated Leverage Ratio of the Borrower and its
Consolidated Subsidiaries as of the end of each fiscal quarter of the Borrower
to exceed the corresponding ratio set forth below:

 

	
  Applicable Period

  	
   

  	
  Maximum Consolidated

  Leverage Ratio

  	
   

  
	
  Closing Date to and including

  March 30, 2010

  	
   

  	
  3.25 to 1.00

  	
   

  
	
  March 31, 2010 to and including

  March 30, 2011

  	
   

  	
  3.00 to 1.00

  	
   

  
	
  March 31, 2011 and thereafter

  	
   

  	
  2.75 to 1.00

  	
   

  

 

7.12.       Capital Expenditures. 
Make or become legally obligated to make any expenditure in respect of
the purchase or other acquisition of any fixed or capital asset 

 

96

 

(excluding normal
replacements and maintenance which are properly charged to current operations),
except for capital expenditures in the ordinary course of business not
exceeding, $40,000,000 in the aggregate in any fiscal year of the Borrower and
its Subsidiaries; provided that the Borrower and its Subsidiaries may
make capital expenditures in excess of the applicable annual amount in connection
with new contracts or extensions of existing contracts to the extent approved
by the Administrative Agent, the Administrative Agent further agreeing to
provide a response promptly after a request therefor by the Borrower
accompanied by reasonable information with respect thereto, which request may
occur in advance of a bid for any such new contract or contract extension.

 

7.13.       Change in Fiscal Year. 
Permit the fiscal year of the Borrower to end on a day other than December 31
or change the Borrower’s method of determining fiscal quarters.

 

7.14.       Modifications of Material
Agreements.  Amend, modify, waive, terminate or release (a) its
Organization Documents, (b) any certificate of designations or similar
document governing any preferred stock or any preferred Equity Interests, (c) the
Digimarc Merger Agreement, any of the Digimarc Offer Documents or any other
documents in connection with the Transactions or (d) any document
governing Subordinated Debt, in each case unless the Borrower determines in
good faith that the effect of such amendment, modification, waiver, termination
or release is not materially adverse to the Borrower, any Subsidiary or the
Lenders (including any amendment or modification that would shorten the final
maturity or average life to maturity prior to the date which is six months
after the Maturity Date or require any payment to be made sooner than
originally scheduled or increase the interest rate applicable thereto).

 

7.15.       Payments of Certain Debt. 
Make (or give any notice with respect thereto) any optional or other
non-scheduled payment on, or prepayment, redemption, acquisition for value
(including without limitation, by way of depositing money or securities with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange any Subordinated Debt (it being understood that any
required offer to purchase such Indebtedness as a result of a change of control
or asset sale shall not violate the foregoing restriction); or make any
principal or interest payments in respect of any Subordinated Debt in violation
of any subordination provisions contained in the Subordinated Debt Documents; provided,
that the foregoing shall not restrict Holdings from making any Restricted
Payment, in each case, as permitted under Section 7.06; or make any
principal or interest payments to Holdings in respect of any Indebtedness
permitted under Section 7.03(o)(i).

 

7.16.       Holding Company.  In the case of Holdings, engage in any business or
activity other than (a) the ownership of all outstanding Equity Interests
in the Borrower and the Investment set forth on part (b) of Schedule
5.13, (b) incurrence of the Convertible Notes and other unsecured
Subordinated Debt pursuant to and in accordance with Section 7.03(i)(ii),
(c) maintaining its corporate existence, (d) participating in tax,
accounting and other administrative activities as the parent of the
consolidated group of companies, including the Loan Parties, (e) the
execution and delivery of the Loan Documents to which it is a party and the
performance of its obligations thereunder, and (f) activities incidental
to the businesses or activities described in clauses (a) through (e) of
this Section.

 

97

 

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

 

8.01.       Events of Default.  Any of the following shall constitute an Event of
Default:

 

(a)         Non-Payment.  The Borrower
or any other Loan Party fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within
three Business Days after the same becomes due, any interest on any Loan or on
any L/C Obligation, or any fee due hereunder, or (iii) within five days
after the same becomes due, any other amount payable hereunder or under any other
Loan Document; or

 

(b)        Specific Covenants. 
The Borrower or Holdings fails to perform or observe any term, covenant
or agreement contained in any of Section 6.01, 6.02, 6.03,
6.05(a) (but only as to Loan Parties) or (d), 6.10, 6.11,  6.12, 6.13(b), 6.14, 6.15,
6.18, or Article VII; or

 

(c)         Other Defaults. 
Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in
any Loan Document on its part to be performed or observed and such failure
continues for thirty days after the earlier of (i) notice thereof to the
Borrower from the Lender or (ii) a Responsible Officer of the Borrower
having knowledge or notice thereof; or

 

(d)        Representations and Warranties. 
Any representation, warranty, certification or statement of fact made or
deemed made by or on behalf of the Borrower or any other Loan Party herein, in
any other Loan Document, or in any document delivered in connection herewith or
therewith shall be incorrect or misleading in any material respect (or, if such
representation and warranty is itself qualified by materiality or Material
Adverse Effect, it shall be incorrect or misleading in any respect) when made
or deemed made; or

 

(e)         Cross-Default.  (i) Holdings,
the Borrower or any Subsidiary (A) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness
hereunder and Indebtedness under Swap Contracts) having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than the Threshold Amount, or (B) fails to observe or perform any
other agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to become
payable or cash collateral in respect thereof to be demanded; or (ii) there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so
defined) under 

 

98

 

such Swap Contract as to
which the Borrower or any Subsidiary is an Affected Party (as so defined) and,
in either event, the Swap Termination Value owed by the Borrower or such
Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(f)         Insolvency Proceedings, Etc. 
Any Loan Party or any of its Subsidiaries institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for it or for all or any material part of its property; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of such Person
and the appointment continues undischarged or unstayed for sixty calendar days;
or any proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent of
such Person and continues undismissed or unstayed for sixty calendar days, or
an order for relief is entered in any such proceeding; or

 

(g)        Inability to Pay Debts; Attachment.  (i) Holdings,
the Borrower or any other Loan Party becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within thirty days after its issue or
levy; or

 

(h)        Judgments.  There is
entered against Holdings, the Borrower or any Subsidiary (i) a final
judgment or order for the payment of money in an aggregate amount exceeding the
Threshold Amount (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), or (ii) any
one or more non-monetary final judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any
creditor upon such judgment or order, or (B) there is a period of thirty
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or

 

(i)          ERISA.  (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of the
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of the Threshold Amount; or

 

(j)          Invalidity of Loan Documents. 
Any Loan Document, at any time after its execution and delivery and for
any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any Subsidiary or Affiliate of any Loan Party
contests in any manner the validity or enforceability of any Loan Document; or
any Loan Party denies that it has any or further liability or obligation under
any Loan Document, or purports to revoke, terminate or rescind any Loan
Document;

 

99

 

(k)         Liens.  Any Lien
purported to be created under any Security Instrument shall cease to be, or
shall be asserted by any Loan Party not to be, a valid and perfected Lien on
any Collateral with an aggregate fair market value in excess of $800,000, with
the priority required by the applicable Security Instrument, except as a result
of the sale or other disposition of the applicable Collateral in a transaction
permitted under the Loan Documents; or

 

(l)          Change of Control. 
There occurs any Change of Control; or

 

(m)        Subordinated Debt. 
There shall occur an “Event of Default” (or any comparable term) under,
and as defined in, any Subordinated Debt Document; or any of the Obligations
for any reason shall fail to be “Senior Debt” (or any comparable term) under,
and as defined in, any Subordinated Debt Document; or any Indebtedness other
than the Obligations shall constitute “Designated Senior Debt” (or any
comparable term) under, and as defined in, any Subordinated Debt Document; or
the subordination provisions of any Subordinated Debt Document shall, in whole
or in part, terminate, cease to be effective or cease to be legally valid,
binding and enforceable against any holder of such Subordinated Debt; or

 

(n)        Digimarc Merger. 
The failure to complete the Digimarc Merger on or prior to December 31,
2008; or

 

(o)        Government Contracts. If:

 

(i)            any of Holdings, its Subsidiaries or
its Affiliates:

 

(A)          has been debarred or suspended by any
Governmental Authority or Governmental Authorities, or

 

(B)           has any Contractual Obligation  with any Governmental Authority terminated
due to Holdings’, any of its Subsidiaries’ or any of its Affiliates’ alleged
fraud or willful misconduct; and

 

(ii)           the
revenues of all Contractual Obligations of Holdings, its Subsidiaries and its
Affiliates with such Governmental Authority or Governmental Authorities that
are subject to or affected by all debarments, suspensions or terminations
referred to in clause (i) above exceed $50,000,000 in the aggregate in any
fiscal year for all such Contractual Obligations.

 

8.02.       Remedies Upon Event of Default. 
If any Event of Default occurs and is continuing, the Administrative
Agent shall, at the request of, or may, with the consent of, the Required
Lenders, take any or all of the following actions:

 

(a)         declare the commitment of each Lender to
make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions
to be terminated, whereupon such commitments and obligation shall be
terminated;

 

(b)        declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan 

 

100

 

Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;

 

(c)         require that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)        exercise on behalf of itself, the Lenders
and the L/C Issuer all rights and remedies available to it, the Lenders and the
L/C Issuer under the Loan Documents or applicable law;

 

provided, however,
that upon the occurrence of an actual or deemed entry of an order for relief
with respect to the Borrower under the Bankruptcy Code of the United States,
the obligation of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of the
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the
Administrative Agent or any Lender.

 

8.03.       Application of Funds. 
After the exercise of remedies provided for in Section 8.02
(or after the Loans have automatically become immediately due and payable and
the L/C Obligations have automatically been required to be Cash Collateralized
as set forth in the proviso to Section 8.02), any amounts received
on account of the Obligations shall be applied by the Administrative Agent in
the following order:

 

First, to payment of that portion
of the Obligations constituting fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agent and amounts payable under Article III) payable to the
Administrative Agent in its capacity as such;

 

Second, to payment of that portion
of the Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and the
L/C Issuer (including fees, charges and disbursements of counsel to the respective
Lenders and the L/C Issuer and amounts payable under Article III),
ratably among them in proportion to the respective amounts described in this
clause Second payable to them;

 

Third, to payment of
(a) that portion of the Obligations constituting accrued and unpaid Letter
of Credit Fees and interest on the Loans and L/C Borrowings, (b) interest
on Related Treasury Management Arrangements and
(c) fees, premiums and scheduled periodic payments, and any interest
accrued thereon, due under any Related Swap Contract, to the extent such
Related Swap Contract is permitted by Section 7.03(d), ratably
among the Lenders (and, in the case of such Related Swap Contracts and Related
Treasury Management Arrangements, Affiliates of Lenders) and the L/C Issuer in
proportion to the respective amounts described in this clause Third held
by them;

 

Fourth, to (a) payment
of that portion of the Obligations constituting unpaid principal of the Loans
and L/C Borrowings, (b) payment of breakage,
termination or other payments, and any interest accrued thereon, due under any
Related Swap Contract, to the extent such Related Swap 

 

101

 

Contract is permitted by Section 7.03(d), (c) payments
of other amounts due under any Related
Treasury Management Arrangement and (d) Cash Collateralize that
portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit, ratably among the Lenders (and, in the case of such Related Swap
Contracts and Related Treasury Management Arrangements, Affiliates of Lenders)
and the L/C Issuer 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 paid indefeasibly in full, to the Borrower or as
otherwise required by Law.

 

Subject to Section 2.03(c),
amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause Fourth above shall be applied to satisfy
drawings under such Letters of Credit as they occur.  If any amount remains on deposit as cash
collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the
order set forth above.

 

ARTICLE IX

ADMINISTRATIVE AGENT

 

9.01.       Appointment and Authority. 
Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank
of America 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, including, without limitation,
maintaining the Digimarc Escrow Account and entering into the Digimarc Escrow
and Control Agreement.  The provisions of
this Article are solely for the benefit of the Administrative Agent, the
Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party
shall have rights as a third party beneficiary of any of such provisions.

 

9.02.       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.

 

9.03.       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:

 

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

 

102

 

(b)        The Administrative Agent shall not have
any duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated 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 Laws.

 

(c)         The Administrative Agent 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 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.

 

(d)        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 Sections
10.01 and 8.02) or (ii) in the absence of its own gross
negligence or willful misconduct.  The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until notice describing such Default is given to the Administrative
Agent by the Borrower, a Lender or the L/C Issuer.

 

(e)         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 the creation, perfection or
priority of any Lien purported to be created by the Security Instruments, (v) the
value or the sufficiency of any Collateral, or (vi) the satisfaction of
any condition set forth in Section 4.03 or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

9.04.       Reliance by 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 L/C Issuer, the Administrative
Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received notice to the
contrary from 

 

103

 

such Lender or the L/C
Issuer 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.

 

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

 

9.06.       Resignation of Administrative
Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuer 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 thirty days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the L/C Issuer, 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 L/C Issuer 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 L/C Issuer directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section.  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 Section).  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 10.04
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.

 

104

 

Any resignation by Bank of America as Administrative
Agent pursuant to this Section shall also constitute its resignation as
L/C Issuer and Swing Line 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 L/C Issuer and Swing Line Lender, (b) the
retiring L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

9.07.       Non-Reliance on Administrative
Agent and Other Lenders.  Each Lender and the L/C Issuer
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 L/C Issuer 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.

 

9.08.       No Other Duties, Etc. 
Anything herein to the contrary notwithstanding, none of book managers,
arrangers, syndication agents, documentation agents or co-agents 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, an Arranger, a Lender or the L/C Issuer hereunder.

 

9.09.       Administrative Agent May File
Proofs of Claim.  In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any
Loan Party, 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, the L/C Issuer and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders, the L/C Issuer and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer and the Administrative Agent under Sections 2.03(i) and (j),
2.09 and 10.04) 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;

 

105

 

and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Lender and the L/C Issuer
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 and the L/C Issuer, 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 2.09 and 10.04.

 

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 or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or the L/C Issuer to authorize the Administrative Agent to vote
in respect of the claim of any Lender or the L/C Issuer in any such proceeding.

 

9.10.       Collateral and Guaranty Matters.

 

The Lenders and the L/C
Issuer irrevocably authorize the Administrative Agent, at its option and in its
discretion,

 

(a)         to release any Lien on any property
granted to or held by the Administrative Agent under any Loan Document (i) upon
termination of the Aggregate Revolving Commitments and payment in full of all
Obligations (other than contingent indemnification obligations) and the
expiration or termination of all Letters of Credit, (ii) that is sold or
to be sold as part of or in connection with any sale permitted hereunder or
under any other Loan Document, or (iii) subject to Section 10.01,
if approved, authorized or ratified in writing by the Required Lenders;

 

(b)        to subordinate any Lien on any property
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 7.01(i);
and

 

(c)         to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted hereunder.

 

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 Guarantor from its obligations under the
Guaranty pursuant to this Section 9.10.

 

No Lender or Affiliate of a Lender that obtains the
benefits of Section 8.03, any Guaranty or any Collateral by virtue
of the provisions hereof or of any Guaranty or any Security Instrument shall
have any right to notice of any action or to consent to, direct or object to
any action hereunder or under any other Loan Document or otherwise in respect
of the Collateral (including the release or impairment of any Collateral) other
than in its capacity as a Lender and, in such case, only to the extent
expressly provided in the Loan Documents. 
Notwithstanding any other provision of this Article IX to
the contrary, the Administrative Agent shall not be required to verify the
payment of, or that other satisfactory arrangements have been made with respect
to, Obligations arising under any Related Credit Arrangement unless the
Administrative Agent has 

 

106

 

received written notice of
such Obligations, together with such supporting documentation as the
Administrative Agent may request, from the applicable Lender or Affiliate of a
Lender, as the case may be.

 

ARTICLE X

MISCELLANEOUS

 

10.01.     Amendments; Etc.  No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, further,
that no such amendment, waiver or consent shall:

 

(a)         waive any condition set forth in Sections
4.01 or 4.02 (other than Section 4.01(m)(i) and (n) and
Section 4.02(f)(i) and (g)) without the written consent
of each Lender;

 

(b)        without the prior written consent of the
Required Revolving Lenders, amend, modify or waive (i) Section 4.03
or any other provision of this Agreement if the effect of such amendment,
modification or waiver is to require the Revolving Lenders (pursuant to, in the
case of any such amendment to a provision hereof other than Section 4.03,
any substantially concurrent request by the Borrower for a Borrowing of
Revolving Loans) to make Revolving Loans when such Revolving Lenders would not
otherwise be required to do so, (ii) the amount of the Letter of Credit
Sublimit or (iii) the amount of the Swing Line Sublimit;

 

(c)         extend or increase the Commitment of any
Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

 

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

 

(e)         reduce the principal of, or the rate of
interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of
the second proviso to this Section 10.01) any fees or other amounts
payable hereunder or under any other Loan Document without the written consent
of each Lender directly affected thereby; provided, however, that
only the consent of the Required Lenders shall be necessary (i) to amend
the definition of “Default Rate” or to waive any obligation of the Borrower to
pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) even if the
effect of such amendment would be to reduce the rate of interest on any Loan or
L/C Borrowing or to reduce any fee payable hereunder;

 

107

 

(f)         change Section 2.13 or Section 8.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender adversely affected thereby;

 

(g)        change Section 10.06 in a
manner that would restrict assignments thereunder without the written consent
of each Lender affected thereby;

 

(h)        change (i) any provision of this Section or
the definition of “Required 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 (other than the definitions specified in clause (ii) of this Section 10.01(h)),
without the written consent of each Lender or (ii) the definition of “Required
Revolving Lenders,” without the written consent of each Revolving Lender;

 

(i)          release all or substantially all of the
value of the Guaranty or all or substantially all of the Collateral without the
written consent of each Lender, except to the extent the release of any
Guaranty or the release of Collateral is permitted pursuant to Section 9.10
(in which case such release may be made by the Administrative Agent acting
alone); or

 

(j)          amend, modify or waive any provision of
any Security Instrument or Section 8.03 hereof so as to alter the
ratable treatment of Related Credit Arranger maintained by a Loan Party and
covered thereby without the consent of the applicable Related Swap Contract
counterparty or Related Treasury Management Arrangement bank;

 

and, provided  further,
that (i) no amendment, waiver or consent shall, unless in writing and
signed by the L/C Issuer in addition to the Lenders required above, affect the
rights or duties of the L/C Issuer under this Agreement or any Issuer Document
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 Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) 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; (iv) the
Fee Letters may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto; and  (v) Section 10.06(g) may
not be amended, waived or otherwise modified without the consent of each
Granting Lender all or any part of whose Loans are being funded by an SPC at
the time of such amendment, waiver or other modification.  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.

 

108

 

10.02.     Notices; Effectiveness;
Electronic Communication.

 

(a)         Notices Generally.  Except in the
case of notices and other communications expressly permitted to be given by
telephone (and except as provided in subsection (b) below), all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i)            if to the Borrower, the
Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address,
facsimile number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and

 

(ii)           if to any other Lender, to
the address, facsimile number, electronic mail address or telephone number
specified in its Administrative Questionnaire.

 

Notices and other
communications sent by hand or overnight courier service, or mailed by certified
or registered mail, shall be deemed to have been given when received; notices
and other communications sent by facsimile shall be deemed to have been given
when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the
next business day for the recipient). 
Notices and other communications delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).

 

(b)        Electronic Communications. 
Notices and other communications to the Lenders and the L/C Issuer
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
the Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender or the L/C Issuer pursuant to Article II if
such Lender or the L/C Issuer, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by
electronic communication.  The
Administrative Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.

 

Unless the
Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening
of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address therefor.

 

109

 

(c)         The Platform. 
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS
FROM THE BORROWER MATERIALS.  NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY
AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent,
the Arrangers or any of their Related Parties (collectively, the “Agent
Parties”) have any liability to the Borrower, any Lender, the L/C Issuer or
any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities
or expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender, the
L/C Issuer or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).

 

(d)        Change of Address, Etc. 
Each of the Borrower, the Administrative Agent, the L/C Issuer and the
Swing Line Lender may change its address, facsimile or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change its
address, facsimile or telephone number for notices and other communications
hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuer
and the Swing Line Lender.  In addition,
each Lender agrees to notify the Administrative Agent from time to time to
ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, facsimile number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender. 
Furthermore, each Public Lender agrees to cause at least one individual
at or on behalf of such Public Lender to at all times have selected the “Private
Side Information” or similar designation on the content declaration screen of
the Platform in order to enable such Public Lender or its delegate, in
accordance with such Public Lender’s compliance procedures and applicable Law,
including United States federal and state securities Laws, to make reference to
Borrower Materials that are not made available through the “Public Side
Information” portion of the Platform and that may contain material non-public
information with respect to the Borrower or its securities for purposes of
United States Federal or state securities laws.

 

(e)         Reliance by Administrative Agent, L/C
Issuer and Lenders.  The Administrative Agent, the L/C Issuer and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly
given by or on behalf of the Borrower even if (i) such notices were not
made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation
thereof.  The Borrower shall indemnify
the Administrative Agent, the L/C Issuer, each Lender and the Related Parties
of each of them from all losses, costs, expenses and 

 

110

 

liabilities resulting
from the reliance by such Person on each notice purportedly given by or on
behalf of the Borrower.  All telephonic
notices to and other telephonic communications with the Administrative Agent
may be recorded by the Administrative Agent, and each of the parties hereto
hereby consents to such recording.

 

10.03.     No Waiver; Cumulative Remedies;
Enforcement.

 

No failure by any Lender,
the L/C Issuer or the Administrative Agent to exercise, and no delay by any
such Person in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. 
The rights, remedies, powers and privileges herein provided, and
provided under each other Loan Document are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan
Documents against the Loan Parties or any of them shall be vested exclusively
in, and all actions and proceedings at law in connection with such enforcement
shall be instituted and maintained exclusively by, the Administrative Agent in
accordance with Section 8.02 for the benefit of all the Lenders and
the L/C Issuer; provided, however, that the foregoing shall not
prohibit (a) the Administrative Agent from exercising on its own behalf
the rights and remedies that inure to its benefit (solely in its capacity as
Administrative Agent) hereunder and under the other Loan Documents, (b) the
L/C Issuer or the Swing Line Lender from exercising the rights and remedies
that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line
Lender, as the case may be) hereunder and under the other Loan Documents, (c) any
Lender from exercising setoff rights in accordance with Section 10.08
(subject to the terms of Section 2.13), or (d) any Lender from
filing proofs of claim or appearing and filing pleadings on its own behalf
during the pendency of a proceeding relative to any Loan Party under any Debtor
Relief Law; and provided, further, that if at any time there is
no Person acting as Administrative Agent hereunder and under the other Loan
Documents, then (i) the Required Lenders shall have the rights otherwise
ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in
addition to the matters set forth in clauses (b), (c) and (d) of the
preceding proviso and subject to Section 2.13, any Lender may, with
the consent of the Required Lenders, enforce any rights and remedies available
to it and as authorized by the Required Lenders.

 

10.04.     Expenses; Indemnity; Damage
Waiver.

 

(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
L/C Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder, (iii) all 

 

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reasonable out of pocket
expenses incurred by the Administrative Agent, any Lender or the L/C Issuer
(including the reasonable fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the L/C Issuer) 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 and (iv) all reasonable out of pocket expenses of the Arrangers
incurred in connection with the syndication of this facility.

 

(b)        Indemnification by the Borrower. 
The Borrower shall indemnify the Administrative Agent (and any sub-agent
thereof), each Lender and the L/C Issuer, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities, penalties and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee), and shall
indemnify and hold harmless each Indemnitee from all fees and time charges and
disbursements for attorneys who may be employees of any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party 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, or, in the case of the Administrative Agent (and any sub-agent
thereof) and its Related Parties only, the administration of this Agreement and
the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer
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 Holdings,
the Borrower or any of its Subsidiaries, or any Environmental Liability related
in any way to Holdings, the Borrower or any of its Subsidiaries, or (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 Holdings, the Borrower or any other Loan
Party, and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities, penalties 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
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if
Holdings, the Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.  This Section 10.04(b) shall
not apply to Taxes, which shall be governed exclusively by Section 3.01.

 

(c)         Reimbursement by Lenders. 
To the extent that the Borrower for any reason fails to indefeasibly pay
any amount required under subsection (a) or (b) of this Section to
be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C
Issuer or any Related Party of 

 

112

 

any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or the L/C Issuer 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 L/C Issuer in connection with
such capacity.  The obligations of the
Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

 

(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 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 subsection (b) above
shall be liable for any damages arising from the use by unintended recipients
of any information or other materials distributed to such unintended recipients
by such Indemnitee 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 other than for
direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable
judgment of a court of competent jurisdiction.

 

(e)         Payments.  All amounts
due under this Section shall be payable not later than ten Business Days
after demand therefor.

 

(f)         Survival.  The
agreements in this Section shall survive the resignation of the
Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement
of any Lender, the termination of the Commitments and the repayment,
satisfaction or discharge of all the other Obligations.

 

10.05.     Payments Set Aside. 
To the extent that any payment by or on behalf of the Borrower is made
to the Administrative Agent, the L/C Issuer or any Lender, or the
Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then, (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each
Lender and the L/C Issuer severally agrees to pay to the Administrative Agent
upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest
thereon from the date of such demand to the date such payment is made at a rate
per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of 

 

113

 

the Lenders and the L/C
Issuer under clause (b) of the preceding sentence shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

10.06.     Successors and Assigns.

 

(a)         Successors and Assigns Generally. 
The provisions of this Agreement and the other Loan Documents shall be
binding upon and inure to the benefit of the parties hereto and thereto 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 or thereunder without the prior written consent of the Administrative
Agent, the L/C Issuer and each Lender, and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, (iii) by way of pledge or assignment
of a security interest subject to the restrictions of subsection (f) of
this Section or (iv) to an
SPC in accordance with the provisions of subsection (g) 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 subsection (d) of this Section and,
to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuer 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 assignees all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents (including all or a portion of its Commitment, and the Loans
(including for purposes of this subsection (b), participations in L/C
Obligations and in Swing Line Loans at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          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, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned;
and

 

(B)           in any case not described in
subsection (b)(i)(A) of this Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or,
if the 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
$5,000,000, in the case of any assignment in respect of the Revolving Facility,
or $1,000,000, in the case of any assignment in respect of the Term Loan
Facility, unless each of the Administrative Agent and, so long as no 

114

Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met.

 

(ii)           Proportionate Amounts.  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 Loans or the Commitment
assigned, except that this clause (ii) shall not (A) apply to the
Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit
any Lender from assigning all or a portion of its rights and obligations in
respect of its Revolving Commitment (and the related Revolving Loans
thereunder) and its outstanding Term Loans on a non-pro rata basis;

 

(iii)          Required Consents.  No consent shall be required for any
assignment except to the extent required by subsection (b)(i)(B) of this Section and,
in addition:

 

(A)          the consent of the Borrower
(such consent not to be unreasonably withheld or delayed) shall be required
unless (1) an Event of Default has occurred and is continuing at the time
of such assignment or (2) such assignment is to a Lender, an Affiliate of
a Lender or an Approved Fund;

 

(B)           the consent of the
Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of any Revolving Commitment if
such assignment is to a Person that is not a Lender with a Commitment in
respect of the Commitment subject to such assignment, an Affiliate of such
Lender or an Approved Fund with respect to such Lender; and

 

(C)           the consent of the L/C
Issuer (such consent not be unreasonably withheld or delayed) shall be required
for any assignment that increases the obligation of the assignee to participate
in exposure under one or more Letters of Credit (whether or not then
outstanding); and

 

(D)          the consent of the Swing
Line Lender (such consent not to be unreasonably withheld or delayed) shall be
required for any assignment in respect of Revolving Loans and Revolving
Commitments.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee in the amount of $3,500; provided,
however, that the Administrative Agent may, in its sole discretion,
elect to waive such processing and recordation fee in the case of any
assignment.  The assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)           No Assignment to Holdings.  No such assignment shall be made to Holdings
or any of Holdings’ Affiliates or Subsidiaries.

 

115

 

(vi)          No Assignment to Natural
Persons.  No such assignment shall be made
to a natural person.

 

Subject to acceptance and
recording thereof by the Administrative Agent pursuant to subsection (c) of
this Section, from and after the effective date specified in each Assignment
and Assumption, the 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 3.01, 3.04, 3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender.  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section.

 

(c)         Register.  The
Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office 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 and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive absent manifest error, and the 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 Holdings or any of Holdings’ 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 (including such Lender’s participations in L/C
Obligations and/or Swing Line 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, the other Lenders and the L/C Issuer shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

 

Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the 

 

116

 

Participant,
agree to any amendment, waiver or other modification described in the first
proviso of Section 10.01 that affects such Participant.  Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were
a Lender.

 

(e)         Limitation on Participant Rights. 
A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04  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 3.01
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 3.01(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 (including under its Note, if
any) to secure obligations of such Lender, including 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.

 

(g)        Special Purpose
Funding Vehicles. 
Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may
grant to a special purpose funding vehicle identified as such in writing from
time to time by the Granting Lender to the Administrative Agent and the
Borrower (an “SPC”) the
option to provide all or any part of any Loan that such Granting Lender would
otherwise be obligated to make pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to fund any
Loan, and (ii) if an SPC elects not to exercise such option or otherwise
fails to make all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof or, if it fails to do
so, to make such payment to the Administrative Agent as is required under Section 2.12(b)(ii).  Each party hereto hereby agrees that (i) neither
the grant to any SPC nor the exercise by any SPC of such option shall increase
the costs or expenses or otherwise increase or change the obligations of the
Borrower under this Agreement (including its obligations under Section 3.04),
(ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii) the
Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. 
The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior debt of any SPC, it will not institute against, or join any other Person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under the laws of the United 

 

117

 

States
or any State thereof.  Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to,
but without prior consent of the Borrower and the Administrative Agent and with
the payment of a processing fee in the amount of $3,500 (which processing fee
may be waived by the Administrative Agent in its sole discretion), assign all
or any portion of its right to receive payment with respect to any Loan to the
Granting Lender and (ii) disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency, commercial
paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.

 

(h)        Resignation as L/C Issuer or Swing Line
Lender after Assignment.  Notwithstanding anything to
the contrary contained herein, if at any time Bank of America assigns all of
its Revolving Commitment and Revolving Loans pursuant to subsection (b) above,
Bank of America may, (i) upon thirty days’ notice to the Borrower and the
Lenders, resign as L/C Issuer and/or (ii) upon thirty days’ notice to the
Borrower, resign as Swing Line Lender. 
In the event of any such resignation as L/C Issuer or Swing Line Lender,
the Borrower shall be entitled to appoint from among the Lenders a successor
L/C Issuer or Swing Line Lender hereunder; provided, however,
that no failure by the Borrower to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case
may be.  If Bank of America resigns as
L/C Issuer, it shall retain all the rights, powers, privileges and duties of
the L/C Issuer hereunder with respect to all Letters of Credit outstanding as
of the effective date of its resignation as L/C Issuer and all L/C Obligations
with respect thereto (including the right to require the Lenders to make Base
Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Base Rate Loans or fund risk participations in outstanding Swing Line
Loans pursuant to Section 2.04(c). 
Upon the appointment of a successor L/C Issuer and/or Swing Line Lender,
(1) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line
Lender, as the case may be, and (2) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit.

 

10.07.     Confidentiality.  Each of the Administrative Agent, the Lenders and the
L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, trustees, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (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 hereunder
or under any other Loan Document or any action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or

 

118

 

Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower, (h) 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, any Lender, the L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower, or
(i) to the extent requested by ratings agencies (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).

 

For purposes of this Section, “Information”
means all information received from Holdings or any of its Subsidiaries
relating to Holdings or any of its Subsidiaries or any of their respective
businesses, other than any such information that is available to the
Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis
prior to disclosure by Holdings or any of its Subsidiaries, provided
that, in the case of information received from Holdings or any of its
Subsidiaries after the date hereof, such information is clearly identified at
the time of delivery as confidential. 
Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

 

Each of the Administrative Agent, the Lenders and
the L/C Issuer acknowledges that (a) the Information may include material
non-public information concerning Holdings or its Subsidiaries, as the case may
be, (b) it has developed compliance procedures regarding the use of
material non-public information and (c) it will handle such material
non-public information in accordance with applicable Law, including United
States federal and state securities Laws.

 

10.08.     Right of Setoff. 
If an Event of Default shall have occurred and be continuing, each
Lender, the L/C Issuer 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 setoff 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 L/C Issuer or any such Affiliate to or for the credit or the
account of the Borrower or any other Loan Party against any and all of the
obligations of the Borrower or such Loan Party now or hereafter existing under
this Agreement or any other Loan Document to such Lender or the L/C Issuer,
irrespective of whether or not such Lender or the L/C Issuer shall have made
any demand under this Agreement or any other Loan Document and although such
obligations of the Borrower or such Loan Party may be contingent or unmatured
or are owed to a branch or office of such Lender or the L/C Issuer different
from the branch or office holding such deposit or obligated on such
indebtedness.  The rights of each Lender,
the L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer 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.

 

119

 

10.09.     Interest Rate Limitation. 
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 maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate,
and spread in equal or unequal parts the total amount of interest throughout
the contemplated term of the Obligations hereunder.

 

10.10.     Counterparts; Integration;
Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken
together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic imaging
means shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

10.11.     Survival of Representations and
Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

 

10.12.     Severability. 
If any provision of this Agreement or the other Loan Documents is held
to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions.  The invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

120

 

10.13.     Replacement of Lenders. 
If any Lender requests compensation under Section 3.04, 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 3.01,
a Lender (a “Non-Consenting Lender”) does not consent to a proposed
change, waiver, discharge or termination with respect to any Loan Document that
has been approved by the Required Lenders as provided in Section 10.01
but requires unanimous consent of all Lenders or all Lenders directly affected
thereby (as applicable), or any Lender is a Defaulting Lender, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.06), 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:

 

(a)           the Borrower shall have paid to the Administrative
Agent the assignment fee specified in Section 10.06(b);

 

(b)           such Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
and under the other Loan Documents (including any amounts under Section 3.05)
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);

 

(c)           in the case of any such assignment resulting from a
claim for compensation under Section 3.04 or payments required to
be made pursuant to Section 3.01, such assignment will result in a
reduction in such compensation or payments thereafter;

 

(d)           such assignment does not conflict with applicable
Laws; and

 

(e)           in the case of any such assignment resulting from a
Non-Consenting Lender’s failure to consent to a proposed change, waiver,
discharge or termination with respect to any Loan Document, the applicable
replacement bank, financial institution or Fund consents to the proposed change,
waiver, discharge or termination; provided that the failure by such
Non-Consenting Lender to execute and deliver an Assignment and Assumption shall
not impair the validity of the removal of such Non-Consenting Lender and the
mandatory assignment of such Non-Consenting Lender’s Commitments and
outstanding Loans and participations in L/C Obligations and Swing Line Loans
pursuant to this Section 11.13 shall nevertheless be effective
without the execution by such Non-Consenting Lender of an Assignment and
Assumption.

 

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.

 

10.14.     Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK; 

 

121

 

PROVIDED THAT THE ADMINISTRATIVE AGENT SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           SUBMISSION TO JURISDICTION. 
EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDIING ARISING OUT OF OR RELATING TO 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 NEW YORK 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
LAW.  NOTHING IN THIS AGREEMENT OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY
LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY
LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE.  EACH LOAN
PARTY 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
NOTICE IN SECTION 10.02. 
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15.     Waiver of Jury Trial. 
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).  

 

122

 

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.

 

10.16.     USA Patriot Act Notice. 
Each Lender that is subject to
the Act (as hereinafter defined) and the Administrative Agent (for itself and
not on behalf of any 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 each Loan Party, which information includes the name and
address of each Loan Party and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify each Loan Party in
accordance with the Act.  The Borrower
shall, promptly following a request by the Administrative Agent or any Lender,
provide all documentation and other information that the Administrative Agent
or such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and
regulations, including the Act.

 

10.17.     No Advisory or Fiduciary
Responsibility.  In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), each of the
Loan Parties acknowledges and agrees,
and acknowledges its Affiliates’ understanding, that: (i) (A) the
arranging and other services regarding this Agreement provided by the
Administrative Agent and the Arrangers, are arm’s-length commercial transactions between the Loan Parties and their respective Affiliates, on the
one hand, and the Administrative Agent and
the Arrangers, on the other hand, (B) each of the Loan Parties has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and (C) each
of the Loan Parties is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) the Administrative Agent and each Arranger is and has been
acting solely as a principal and, except as expressly agreed in writing by the
relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary for the Loan Parties or any of their respective Affiliates, or any other Person and (B) neither
the Administrative Agent nor any
Arranger has any obligation to the Loan Parties or any of their respective Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; and (iii) the
Administrative Agent and the
Arrangers and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Loan Parties
and their respective Affiliates,
and neither the Administrative Agent nor
any Arranger has any obligation to disclose any of such interests to the Loan
Parties and their respective
Affiliates.  To the fullest extent
permitted by law, each of the
Loan Parties hereby waives and releases any claims that it may have against the
Administrative Agent and the
Arrangers with respect to any breach or alleged breach of agency or fiduciary
duty in connection with any aspect of any transaction contemplated hereby.

 

123

 

10.18.     Amendment and Restatement;
Binding Effect.

 

(a)           This Agreement shall become effective when it shall
have been executed by the Borrower and the Administrative Agent and thereafter
shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agent and each Lender and the L/C Issuer and, in each case,
their respective successors and assigns.

 

(b)           On the Closing Date, the Existing Credit Agreement
shall be amended and restated in its entirety by this Agreement, and the
Existing Credit Agreement shall thereafter be of no further force and effect,
except to evidence (i) the incurrence by the Borrower of the “Obligations”
under and as defined in the Existing Credit Agreement (whether or not such “Obligations”
are contingent as of the Closing Date) and (ii) any action or omission
performed or required to be performed pursuant to such Existing Credit
Agreement prior to the Closing Date. 
This Agreement is not in any way intended to constitute a novation of
the obligations and liabilities existing under the Existing Credit Agreement or
evidence payment of all or any portion of such obligations and liabilities.

 

(c)           The terms and conditions of this Agreement and the
Administrative Agent’s, the Lenders’ and the LC Issuers’ rights and remedies
under this Agreement and the other Loan Documents shall apply to all of the
Obligations incurred under the Existing Credit Agreement and the Indebtedness
issued thereunder.

 

(d)           On and after the Closing Date, (i) all references
to the Existing Credit Agreement (or to any amendment or any amendment and
restatement thereof) in the Loan Documents (other than this Agreement) shall be
deemed to refer to the Existing Credit Agreement, as amended and restated
hereby, (ii) all references to any Article, Section or sub-clause of
the Existing Credit Agreement or in any Loan Document (but not herein) shall be
amended to become, mutatis mutandis,
references to the corresponding provisions of this Agreement and (iii) except
as the context otherwise provides, on or after the Closing Date, all references
to this Agreement herein (including for purposes of indemnification and
reimbursement of fees) shall be deemed to be reference to the Existing Credit
Agreement, as amended and restated hereby.

 

(e)           This amendment and restatement is limited as written
and is not a consent to any other amendment, restatement or waiver, whether or
not similar and, except as expressly provided herein or in any other Loan
Document, all terms and conditions of the Loan Documents remain in full force
and effect unless otherwise specifically amended hereby or any other Loan
Document.

 

10.19.     Electronic Execution of
Assignments and Certain Other Documents.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and
Assumption or in any amendment or other modification hereof (including waivers
and consents) shall be deemed to include electronic signatures or the keeping
of records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

 

124

 

[Signature pages follow]

 

125

 

IN WITNESS WHEREOF, the undersigned has caused this
Second Amended and Restated Credit Agreement to be duly executed and delivered
as of the date first above written.

 

	
   

  	
  L-1 IDENTITY SOLUTIONS
  OPERATING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ JAMES A. DEPALMA

  
	
   

  	
  Name: James A. DePalma

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  L-1 IDENTITY SOLUTIONS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ JAMES A. DEPALMA

  
	
   

  	
  Name: James A. DePalma

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial Officer and Treasurer

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ KRISTINE THENNES

  
	
   

  	
  Name: Kristine Thennes

  
	
   

  	
  Title: Vice President

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  as Lender, L/C Issuer and
  Swing Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ BARBARA P. LEVY

  
	
   

  	
  Name: Barbara P. Levy

  
	
   

  	
  Title: Senior Vice
  President

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL
  ASSOCIATION,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ R. LANGDON HOLZMAN

  
	
   

  	
  Name: R. Langdon Holzman

  
	
   

  	
  Title: Vice President

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  ROYAL BANK OF CANADA, as
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ GORDON C. MACARTHUR

  
	
   

  	
  Name: Gordon C. MacArthur

  
	
   

  	
  Title: Authorized
  Signatory

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  SOCIÉTÉ GÉNÉRALE, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ R. D. BOYD HARMAN

  
	
   

  	
  Name: R. D. Boyd Harman

  
	
   

  	
  Title: Vice President

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  TD BANK, N.A.,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ JAMES R. RILEY

  
	
   

  	
  Name: James R. Riley

  
	
   

  	
  Title: Managing Director

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

  
	
   

  	
  as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ RIANKA MOHAN

  
	
   

  	
  Name: Rianka Mohan

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ CHRISTOPHER REO DAY

  
	
   

  	
  Name: Christopher Reo Day

  
	
   

  	
  Title: Associate

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  CIT BANK, as Lender

  
	
   

  	
   

  
	
   

  	
  By: The CIT Group/Equipment Financing, Inc., as
  attorney-in-fact

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   illegible

  
	
   

  	
  Name: illegible

  
	
   

  	
  Title: Managing Director

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  RBS CITIZENS, N.A., as
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ KAREN YAP

  
	
   

  	
  Name: Karen Yap

  
	
   

  	
  Title: Assistant Vice
  President

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit Agreement

 

 

 

	
   

  	
  THE  BANK
  OF NOVA SCOTIA, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ TODD MELLER

  
	
   

  	
  Name: Todd Meller

  
	
   

  	
  Title: Managing Director

  

 

Signature Pages

L-1 Identity Solutions
Operating Company

Credit AgreementExhibit
10.1

 

Confidential treatment
has been requested for portions of this document. This copy of the document
filed as an Exhibit omits the confidential information subject to the
confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this
document has been filed separately with the Securities and Exchange Commission.

 

MASTER LOAN AGREEMENT

 

THIS MASTER LOAN AGREEMENT (“Agreement”)
is made effective as of
                ,
2008, between ALLEGIANT AIR, LLC, a
Nevada limited-liability company, with its principal executive office located
at 3301 North Buffalo Drive, Suite B-9, Las Vegas, Nevada 89129 (“Borrower”) and BANK OF NEVADA, a bank chartered under the laws of Nevada,
with its principal executive office located at 777 N. Rainbow Blvd., Las Vegas,
Nevada, 89107 (“Lender”).

 

Background

 

A.                      Borrower intends to obtain from Lender certain
loans in the aggregate principal amount of EIGHTEEN MILLION AND NO/100 DOLLARS
($18,000,000.00), collectively the “Loans”,
and individually a “Loan”).  The respective Loans shall be in the
following amounts: $2,895,000.00, $2,394,000.00, $2,052,000.00, $1,881,000.00,
$2,166,000.00, $2,166,000.00, $2,508,000.00, and $1,938,000.00. For each Loan,
the Borrower’s obligation to repay the Loan shall be set forth in and evidenced
by a Note (defined below). The Borrower’s obligation to repay each Loan shall
be secured by a security interest in property consisting of one (1) aircraft
corresponding to each Loan, for a total of eight (8) aircraft, each
including two Pratt & Whitney aircraft engines (the “Aircraft”, “Engines” and “Collateral” as more specifically defined
in the Security Agreement, defined below, to be executed by Borrower and
corresponding to each Note).

 

B.                        Lender has agreed to make the Loan to Borrower
in separate installment promissory notes (the “Notes”
collectively, or “Note,”
individually) on or about the “Funding Date” set
forth in each Security Agreement, executed by Borrower (“Security Agreements” collectively, or “Security Agreement,” individually) and
corresponding with each Note upon Borrower’s fulfillment of the terms and
conditions stated herein.

 

C.                        The amounts of the respective Loans/Notes, and
the Collateral (including Aircraft and Engines) to which each Loan/Note
corresponds, are as follows:

 

	
  Aircraft

  	
   

  	
  Loan:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  i.

  	
   

  	
  N860GA

  	
   

  	
  $

  	
  2,895,000

  	
   

  
	
  ii.

  	
   

  	
  N861GA

  	
   

  	
  $

  	
  2,394,000

  	
   

  
	
  iii.

  	
   

  	
  N862GA

  	
   

  	
  $

  	
  2,052,000

  	
   

  
	
  iv.

  	
   

  	
  N891GA

  	
   

  	
  $

  	
  1,881,000

  	
   

  
	
  v.

  	
   

  	
  N880GA

  	
   

  	
  $

  	
  2,166,000

  	
   

  
	
  vi.

  	
   

  	
  N881GA

  	
   

  	
  $

  	
  2,166,000

  	
   

  
	
  vii.

  	
   

  	
  N883GA

  	
   

  	
  $

  	
  2,508,000

  	
   

  
	
  viii.

  	
   

  	
  N884GA

  	
   

  	
  $

  	
  1,938,000

  	
   

  

 

 

Agreement

 

1.                          General Conditions Precedent to the Loan. Before the Lender makes a Loan, Borrower
shall execute and deliver to Lender the respective Note corresponding to the
Loan, in the form attached hereto as Exhibit “A”, and the Security
Agreement for the Collateral corresponding to the Loan, in the form attached
hereto as Exhibit “B”, and provide all financial information, corporate
documents, certifications, authorizations and invoices requested by Lender and
to Lender’s satisfaction. In addition, Lender’s obligations shall be
conditioned upon Lender’s receipt of and determination that the following are
satisfactory to Lender: (a) lien searches in the jurisdiction in which
Borrower’s principal executive office is located; (b) lien searches with
the Federal Aviation Administration (“FAA”);
(c) lien searches with the International Registry of Mobile Assets created
by the Cape Town Treaty (“IRMA”)
and (d) Borrower’s parent company, Allegiant Travel Company, a Nevada corporation,
shall have executed a guaranty in the form attached hereto as Exhibit “C”.

 

2.                          Note Term and Payments. Each Note shall provide for the amortization
of principal and interest in equal monthly installments over a period of forty
eight (48) months and for a balloon payment of the remaining principal balance
on the date that is forty-eight (48) months after the date of the Note, all as
set forth in each Note and commencing on the date stated in each Note.

 

3.                          Interest
Rate. The interest rate for each Note shall be reflected in the respective
Note and shall be equal to 3-Month LIBOR rate (the “3-Month LIBOR rate”),  plus
two hundred fifty basis points (2.50%), fixed. For these purposes, the “3-Month
LIBOR rate” shall mean the 3-Month LIBOR rate as published in The Wall Street
Journal on the date of the advance. This definition of Bank’s 3-Month LIBOR
rate is to be strictly interpreted and is not intended to serve any purpose
other than providing an index to determine the interest rate used herein. Bank’s
3-Month LIBOR rate may not necessarily be the same as the quoted offered side
in the Eurodollar time deposit market by any particular institution or service
applicable to any interest period. It is not the lowest rate at which Bank may
make loans to any of its customers, either now or in the future. At no time
shall the interest rate applicable to the Notes be less than 6.00% per annum.

 

4.                          Origination Fee. Borrower shall pay, as a condition precedent
to the Loans, a “loan origination fee” equal to one-quarter of one percent
(0.25%) of the amount of each of the Loans. The origination fee shall be
payable at the time of each advance of the Loan evidenced by a respective Note
by reducing the amount to be disbursed by Lender to Borrower upon the execution
of each Note by the amount of the loan origination fee with respect to such
Loan.

 

5.                          Consideration for the Note. In consideration of each Note and as a
condition of its Loan to Borrower, Lender requires Borrower to grant a security
interest in the Collateral described in each Security Agreement to secure
Borrower’s payment and performance of all its obligations under the
corresponding Note.

 

2

 

6.                          Method of Payment. Borrower shall make each payment under each Note
on the date when due thereunder in lawful money of the United States to Lender’s
address set forth above (or the address of Lender’s assignee which shall be
provided to Borrower) in immediately available funds. Borrower may make
payments by wire transfer per wire instructions set forth on Exhibit “D”
attached hereto as such wire instructions may be changed by Lender by prior
written notice to Borrower.

 

7.                          Fees and Costs. Borrower shall reimburse Lender for all out
of pocket appraisal fees, attorneys’ fees and additional costs, charges, and
expenses incurred (i) for all searches, filings, registrations,
recordings, waivers and appraisals; (ii) in review, preparation, execution
and delivery of the Loan Agreement, the Security Agreements and the Notes (“Debt Documents”), (iii) in defending
or protecting Lender’s security interest in the Collateral after a default by
Borrower or in the event another lien is filed against the Collateral or Lender
has reasonable basis to believe its priority secured position in the Collateral
is impaired; (iv) in the enforcement of the Loan or the collection of any
payments due under the Debt Documents after an Event of Default (defined below)
by Borrower, or the preparation of any settlement agreements prepared in
connection with the Loan as a result of any such event of default; (v) in
any amendment of the Loan other than an amendment requested by Lender; and (vi) in
any lawsuit or other legal or arbitration/mediation proceeding to which the
Loan gives rise, including without limitation, actions in tort if Lender is the
prevailing party. The documentation, appraisal fees and legal fees to be paid
by Borrower and described in clauses (i) and (ii) above shall not
exceed $20,000.00.

 

8.                          Corporate Existence and Evidence; Citizenship;
International Registry.
Borrower represents and warrants, on a continuing basis, that it (i) is a
limited liability company, (ii) is duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization, (iii) is
duly qualified to do business in each jurisdiction where its operations
require, and (iv) has full power and authority, under the operating or
other organizational or governing agreement of the company, to obtain the Loans
using the Collateral as security, and to enter into and perform its obligations
under the Debt Documents. Borrower’s execution, delivery and performance of the
Debt Documents have been duly authorized by all necessary company action on the
part of Borrower and are not inconsistent with its operating agreement or other
organizational or governing instruments. Borrower is, and shall at all times
throughout the term of this Agreement (including any extensions or renewals
hereof) be and remain, a citizen of the United States within the meaning of 49
U.S. Code Section 20102(a)(15) of Title 49 of the United States Code. In
addition, Borrower shall, throughout the term of the Loan, (i) be
registered as a Transaction User Entity, (ii) have designated a
Professional User Entity (acceptable to Lender) and (iii) have paid all
required fees and taken all actions necessary to enable Lender to register any
International Interest with the International Registry. The terms “Transaction
User Entity” and “Professional User Entity” shall have the respective meanings
assigned thereto in the International Registry Regulations issued pursuant to Article 17(2) of
the Cape Town Convention and Article XVIII of the Protocol to the
Convention on International Interests in Mobile Equipment on Matters specific
to Aircraft Equipment.

 

3

 

9.                          Legally Binding Obligations. The execution, delivery and performance by
Borrower of the Debt Documents do not violate any law or governmental rule,
regulation or order applicable to Borrower and do not and will not contravene
any provision, or constitute a default under any instrument to which it is
bound, and will constitute a legal, valid and binding agreement of Borrower,
enforceable in accordance with its terms. No action, including any permits or
consents, in respect of or by any state, federal or other governmental
authority or agency is required with respect to the execution, delivery and
performance of the Debt Documents by Borrower.

 

10.                    Financial Statements and Covenants.

 

(a)                      Borrower shall provide to Lender a copy of its
parent company’s annual audited financial statements within one hundred twenty
(120) days after its fiscal year end, and a copy of its parent company’s
quarterly un-audited financial statements within sixty (60) days after the end
of each fiscal quarter.

 

(b)                     [Intentionally omitted.]

 

(c)                      [...***...]

 

4

 

(d)                     [...***...]

 

(e)                      Until Borrower’s obligations are paid in full
as required under the Debt Documents, Borrower agrees that it will: (i) preserve
its organizational existence and not, in one transaction or a series of related
transactions, merge into or consolidate with any other entity, or sell all or
substantially all of its assets; and (ii) not change its name, address of
principal executive offices, address or jurisdiction of organization without
first providing Lender with at least thirty (30) days’ prior written notice.
The parties acknowledge that Borrower expects to move its principal offices to
8360 South Durango Drive, Las Vegas, Nevada 89113 in 2008;

 

(f)                        At all times prior to the repayment of all of
Borrower’s obligations under this Loan Agreement and the Notes executed
hereunder, neither Borrower nor any of its officers, directors or members and
any other direct or indirect holder of any equity interest in Borrower: (i) shall
be a Prohibited Person as defined under U.S. Presidential Executive Order
#13224 and the Patriot Act; and (ii) shall fail to be in full compliance
with all applicable orders, rules, regulations and recommendations promulgated
under or in connection with Executive Order #13224 and the Patriot Act except
that Borrower makes no representation with respect to the shareholders of its
publicly held parent company; and

 

(g)                     Borrower shall, in all material respects,
remain in compliance with all applicable laws, regulations, requirements, rules and
orders applicable to its business, all manufacturers’ instructions and warranty
requirements, all FAA directives (as applicable) and with the conditions and
requirements of all policies of insurance with respect to the Collateral.

 

11.                    Notices required. Borrower shall give Lender written notice of
each of the following events within the specified period of time set forth
below:

 

(a)                      any loss, damage or destruction to an item of
Collateral within 10 days thereof;

 

(b)                     any condition or event that constitutes a
default under the Debt Documents, specifying the nature thereof and the action
which Borrower is taking or proposes to take with respect thereto, within 10
days thereof;

 

(c)                      the cancellation, revocation, suspension,
restriction or expiration of any FAA registration, maintenance certificate,
airworthiness certificate, or insurance on any item of Collateral upon Borrower’s
receipt thereof;

 

5

 

(d)                     any litigation involving Borrower within 10
days of Borrower’s commencing or receiving notice of such litigation, as
applicable, if such litigation, if adversely determined, would have a material
adverse effect on Borrower, its Financial condition, or the Collateral;

 

(e)                      a change in ownership of Borrower such that it
is no longer a wholly-owned subsidiary of Allegiant Travel Company within 20
days thereof; or

 

(f)                        any other event or change in the type of
business conducted by Borrower or the location or jurisdiction of organization
of Borrower or its parent corporation within 20 days thereof.

 

12.                    Indemnification. Borrower shall indemnify and hold Lender
harmless from and against any and all third party claims (including without
limitation, negligence, tort and strict liability), damages, adjustments,
suits, administrative and legal proceedings, and any and all costs and expenses
in connection therewith (including attorneys’ fees incurred by Lender) arising
out of or in any manner connected with or resulting from this Agreement or the
Collateral, including, without limitation the manufacture, purchase, financing,
ownership, rejection, non-delivery, transportation, importation, delivery,
possession, use, operation, maintenance, inspection, condition, lease, return,
storage or disposition thereof, and including further, without limitation (a) claims
for injury to or death of persons and for damage to property, (b) claims
relating to patent, copyright, or trademark infringement, (c) claims
relating to latent or other defects in the Collateral whether or not
discoverable by Borrower, and (d) claims for wrongful, negligent or
improper act or misuse by Borrower. Borrower agrees to give Lender prompt
notice of any such claim or liability. The term “Lender,” for purposes of this
paragraph, includes Lender, its successors and assigns, shareholders, members,
owners, partners, directors, officers, representatives and agents. The
provisions of this paragraph shall survive the expiration or other termination
of this Agreement and the Debt Documents with respect to events occurring prior
to such expiration or termination.

 

13.                    Default. An Event of Default shall occur under this Agreement if:

 

(a)                      Nonpayment of any Note. Borrower fails to pay Lender or its assigns
when due any principal or interest payment under any Note and such failure
shall continue uncured for five (5) business days.

 

(b)                     Other Nonpayment. Borrower fails to pay Lender or its assigns
when due any other obligation under any Note, this Agreement, any Security
Agreement or any other instrument executed as a part of this Agreement, and
such failure shall continue uncured for five business (5) days after
Borrower’s receipt of written notice of the failure from Lender;

 

(c)                      Insurance. Borrower fails to maintain any required insurance in compliance with
the terms of the Debt Documents;

 

6

 

(d)                     Unauthorized Use of Collateral or Proceeds. Borrower attempts to or does, remove, sell,
assign, transfer, encumber, sublet or part with possession of any one or more
items of the Collateral or proceeds, except as expressly permitted herein or in
any Security Agreement, allows any of the Collateral or proceeds to become
subject to any levy, seizure, attachment, assignment or execution, or Borrower
abandons any item of Collateral without substituting therefor additional
Collateral in accordance with the terms of the Security Agreement;

 

(e)                      Failure to Provide Notice. Borrower fails to notify Lender of any
material loss, damage, or destruction to any of the Collateral within ten (10) days
thereof;

 

(f)                        Breach of Debt Documents. Borrower fails to observe or perform any of
its covenants and obligations required to be observed or performed under any of
the Debt Documents and such failure continues uncured for twenty (20) days
after the earlier of receipt of written notice from Lender or Borrower’s
knowledge thereof, except that: (i) the twenty (20) day cure period shall
not apply and an Event of Default shall occur immediately upon Borrower’s
failure to maintain insurance in compliance with the terms of the Debt
Documents, and (ii) the twenty (20) day cure period shall not apply when a
shorter cure period has been specified in this Section;

 

(g)                     Representations and Warranties. That Prove False. Borrower breaches any of
its representations or warranties made under any of the Debt Documents in any
material respect, or if any such representations or warranties are false or
misleading in any material respect;

 

(h)                     Bankruptcy and Insolvency. Borrower or its parent company shall (i) be
adjudicated insolvent or a bankrupt, or cease, be unable, or admit its
inability to pay its debts as they mature, or make a general assignment for the
benefit of creditors or enter into any composition or arrangement with
creditors; (ii) apply for or consent to the appointment of a receiver,
trustee or liquidator of it or of a substantial part of the Collateral, or
authorize such application or consent, or proceedings seeking such appointment
shall be instituted against it without such authorization, consent or
application and shall continue undismissed for a period of sixty (60) days; (iii)
authorize or file a voluntary petition in bankruptcy or apply for or consent to
the application of any bankruptcy, reorganization in bankruptcy, arrangement,
readjustment of debt, insolvency, dissolution, moratorium or other similar law
of any jurisdiction, or authorize such application or consent; or proceedings
to such end shall be instituted against it without such authorization,
application or consent and such proceeding instituted against it shall continue
undismissed for a period of sixty (60) days;

 

(i)                         Control of Borrower. Borrower shall become a less than
wholly-owned subsidiary of Allegiant Travel Company or Allegiant Travel Company
shall no longer control the managing board of Borrower;

 

(j)                         Breach of Security Agreement. Debtor fails to comply with the terms of any
Security Agreement executed by Borrower and Lender, which failure is not cured
by Borrower within the applicable cure period under such Security Agreement;

 

7

 

(k)                      Change in Corporate Existence. Borrower shall have terminated or changed
its organizational or limited liability company existence, consolidated with,
merged into, or conveyed or leased substantially all of its assets to any
person or entity, unless: (i) such person or entity executes and delivers to
Lender an agreement reasonably satisfactory in form and substance to Lender,
containing such person’s or entity’s effective assumption, and its agreement to
pay, perform, comply with and otherwise be liable for, in a due and punctual
manner, all of Borrower’s obligations having previously arisen, or then or
thereafter arising, under the Debt Documents, together with any and all
documents, agreements, instruments, certificates, guarantees, opinions and
filings reasonably requested by Lender; (ii) Lender is reasonably
satisfied as to the creditworthiness of such person’s or entity’s conformance
to other standard criteria then used by Lender for such purposes; and (iii) Borrower
has provided no less than twenty (20) days prior written notice of such
occurrence to Lender or its assigns; or

 

(1)                      Location of Collateral. Borrower or its lessee operates or locates
the Collateral in any country or jurisdiction that does not maintain full
diplomatic relations with the United States, any area of hostilities, or any
country or jurisdiction for which exports or transactions are subject to
specific restrictions under any United States export or other law or United
Nations Security Counsel Directive, or otherwise violates, or suffers or
permits the violation of, such laws or directives.

 

14.                    Remedies. Upon the occurrence of any Event of Default and at any time thereafter
during the continuance of such default, Lender may, with or without giving
notice to Borrower, do any one or more of the following:

 

(a)                      Enforcement. Accelerate amounts owing under any or all of the Notes, and enforce
this Agreement, any or all of the Security Agreements and any or all of the
Notes according to their respective terms;

 

(b)                     Cure. Advance funds on Borrower’s behalf to cure the Event of Default,
whereupon Borrower shall immediately reimburse Lender therefor, together with
interest charges accrued thereon;

 

(c)                      Cancel Funding Obligations. Refuse to make additional advances provided
for under this Agreement;

 

(d)                     Acceleration. Accelerate all obligations due and payable under any or all of the
Notes, and declare any or all of the Notes immediately due and payable;

 

(e)                      Additional Collateral. Request additional collateral to secure the
Note or Notes;

 

(f)                        File Suit and Obtain Judgment. File suit and obtain monetary judgment and,
in conjunction with any action, seek any ancillary remedies provided by law,
including levy of attachment or garnishment;

 

8

 

(g)                     Exercise Rights under Security Agreements. Exercise any remedies available to Lender
under any or all of the Security Agreements.

 

The rights and remedies afforded Lender hereunder shall not be deemed to
be exclusive, but shall be in addition to any rights or remedies provided by
law. Lender’s failure promptly to enforce any right or remedy hereunder shall
not operate as a waiver of such right or remedy, and Lender’s waiver of any
default shall not constitute a waiver of any subsequent or other default.
Lender may accept late payments or partial payments of amounts due under the
Note or Notes and may delay enforcing any of Lender’s rights or remedies
hereunder without losing or waiving any of Lender’s rights or remedies. Except
as expressly provided in this Agreement, Borrower waives any notice of Lender’s
notice of nonpayment, presentment, notice of dishonor, or any other notice.

 

Lender shall also have and enjoy all rights and remedies provided at law
or in equity, including without limitation those provided to secured parties
under the Uniform Commercial Code (“UCC”),
to collect, enforce or satisfy any obligations of Borrower then owing, whether
by acceleration or otherwise.

 

Notwithstanding the foregoing, in the event Lender is fully compensated
for all amounts due under the Debt Documents, including all fees of collection,
through the exercise of any or all of the foregoing remedies, any excess
amounts obtained by Lender through such collection efforts shall inure to the
benefit of and shall be paid to Borrower or as directed by Borrower.

 

15.                    Bankruptcy Code. The parties acknowledge that Lender and its
assignees shall not be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the security for the Loan.

 

16.                    Governing Law; Waiver of Trial by Jury. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE PARTIES
AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF NEVADA; ANY SUIT OR OTHER
PROCEEDING BROUGHT BY EITHER PARTY TO ENFORCE OR CONSTRUE THIS AGREEMENT, OR TO
DETERMINE MATTERS RELATING TO THE COLLATERAL OR THE RELATIONSHIP BETWEEN THE
PARTIES HERETO, SHALL BE BROUGHT ONLY IN THE STATE OR FEDERAL COURTS IN NEVADA.
THIS AGREEMENT WAS EXECUTED IN NEVADA AND IS TO BE PERFORMED IN NEVADA (BY
REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE MADE TO LENDER IN NEVADA). THE
PARTIES HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF
THIS AGREEMENT, THE COLLATERAL OR THE CONDUCT OF THE RELATIONSHIP BETWEEN
BORROWER AND LENDER.

 

9

 

17.                    Headings.
Section headings used in this Agreement are for convenience only and are
not a part of this Agreement and shall not be used in construing it.

 

18.                    Severability.
In the event that any provision of this Agreement is found to be unenforceable
in any legal proceeding, the remaining provisions shall remain in full force
and effect.

 

19.                    Integration
and Modification. This Agreement is the entire agreement of Borrower and
Lender concerning its subject matter until the parties’ execution of one or
more Security Agreements and one or more Notes. This Agreement may not be
amended or modified except by a written amendment signed by a duly authorized
representative of each party, but no such amendment or modification needs
further consideration to be binding.

 

[THE REMAINDER OF THIS PAGE INTENTIALLY LEFT
BLANK]

 

10

 

The parties have signed this Agreement as of the day and year written
below.

 

Dated:              ,
2008

 

	
  BORROWER:

  	
  LENDER:

  
	
   

  	
   

  
	
  ALLEGIANT
  AIR, LLC

  	
  BANK
  OF NEVADA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  
	
  NAME:

  	
  Andrew
  C. Levy

  	
   

  	
  NAME:

  	
   

  
	
  TITLE:

  	
  Authorized
  Agent

  	
   

  	
  TITLE:

  	
   

  
							

 

11

 

EXHIBIT “A”

 

Form of Note

 

(to be attached)

 

12

 

Loan
No.           

 

PROMISSORY NOTE 

AIRCRAFT # N860GA

 

	
  $2,895,000.00

  	
  Date:          ,
  2008

  

 

 

FOR VALUE RECEIVED,
ALLEGIANT AIR, LLC, a Nevada
limited-liability company, with its principal executive office located at 3301
North Buffalo Drive, Suite B-9 Las Vegas, Nevada 89129 (“Debtor”), hereby promises to pay, without
offset, defense or counterclaim, to the order of BANK OF NEVADA (“Secured Party”) with its principal executive
office located at 777 N. Rainbow Blvd., Las Vegas, Nevada, 89107, or at such
other place as may be designated in writing by the holder of this Note, the
principal sum of TWO MILLION EIGHT HUNDRED NINETY FIVE THOUSAND AND NO/100
DOLLARS ($2,895,000.00), with interest under this Note will accrue at the rate
of six percent (6%) per annum. Payments under the Note will be paid as follows:

 

A.       Principal and interest under this Note
shall be payable in forty-eight (48) installments of SIXTY EIGHT THOUSAND ONE
HUNDRED NINETY FIVE AND 72/100 DOLLARS ($68,195.72) each, reflecting a 48-month
amortization period, commencing on the
           day of          2008,
and on the same day of each month thereafter through and
including          , 2012.

 

B.        A final installment equal to the unpaid
balance of the Note (if any) shall be due and payable
on          , 2012.

 

Debtor shall have
the right to prepay the Note in whole or in part, at any time or times, without
premium or penalty.

 

In the event of a
default under this Note, any other Note signed by Debtor in favor of Secured
Party, the Loan Agreement or the Security Agreement (as hereinafter defined)
and/or after maturity (whether by acceleration or otherwise), interest on any
amounts not paid when due under this Note and any amounts accelerated pursuant
to the Security Agreement, shall accrue at a per annum rate equal to the
aforesaid rate plus three percent (3%), which default interest rate shall apply
both before and after any judgment obtained by Secured Party or its assigns.
Interest on any amounts not paid when due under this Note and any amounts
accelerated pursuant to the Security Agreement shall be computed on the basis
of a year equal to 360 days and charged for the actual number of days within
the period for which interest is being charged.

 

This Note is
entered into pursuant to a Master Loan Agreement dated as
of        , 2008, between Debtor and
Secured Party and is secured by collateral described in a Security Agreement
between Debtor and Secured Party, to which reference is made for a description
of the rights of Secured Party and any holder of this Note. If there is an
Event of Default under the Loan Agreement which is not cured within the cure period
provided for therein, Secured Party may declare the entire amount of the Note
to be

 

13

 

immediately due and
payable and exercise all of its rights and remedies under the Security
Agreement. If suit is brought to collect this Note, Debtor shall be liable to
Secured Party for its costs of enforcement of its rights and remedies,
including, without limitation, its reasonable attorneys’ fees.

 

Presentment,
demand for payment, notice of dishonor and protest are hereby waived.

 

Secured Party may
renew or extend this Note, release any guarantor hereof or waive or modify any
provision hereof, without affecting the obligations of Debtor, except as may be
specifically set forth in such renewal, extension, release, waiver or
modification.

 

All payments
received by Secured Party in respect hereof shall be applied, first, to any
charges then owing hereon, next, to accrued interest and then, to principal.
Secured Party may assess Debtor a charge for any remittance that is dishonored.

 

This Note shall in
all respects be governed by and construed in accordance with the laws of
Nevada, including all matters of construction, validity and performance. The
parties agree to submit to the exclusive jurisdiction of the state or federal
courts located in the State of Nevada; any suit or other proceeding brought by
either party to enforce or construe this Agreement, or to determine matters
relating to the Collateral or the relationship between the parties hereto shall
be brought only in the state or federal courts in Nevada. This Note was
executed in Nevada and is to be performed in Nevada. The parties hereby waive
the right to trial by jury of any matters arising out of this Note, or the
conduct of the relationship between Debtor and Secured Party.

 

This Note and the
Security Agreement may not be otherwise modified or changed, in whole or in
part, and no right or remedy of Secured Party under this Note or the Security
Agreement or under any other agreement may be waived, except in a writing
signed by Secured Party. All rights, remedies and benefits of Secured Party
hereunder shall inure to the benefit of the holder of this Note. Secured Party
may assign this Note and Security Agreement without notice to Debtor; provided,
however, that Debtor shall not be in default hereunder as a result of
compliance with the terms of the Note and Security Agreement until Debtor has
been notified of such assignment in writing.

 

DEBTOR:

 

	
  ALLEGIANT
  AIR, LLC, a Nevada limited-liability company

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Andrew C. Levy

  	
   

  
	
  Title:

  	
  Authorized Agent

  	
   

  

 

14

 

EXHIBIT “B”

 

Form of Security Agreement

 

(to be attached)

 

15

 

AIRCRAFT SECURITY AGREEMENT 

AIRCRAFT #N860GA

 

THIS AIRCRAFT
SECURITY AGREEMENT (“Agreement”) is
made between ALLEGIANT AIR, LLC, a
Nevada limited liability company, with its principal executive office located
at 3301 North Buffalo Drive, Suite B-9 Las Vegas, Nevada 89129 (‘Debtor”), and BANK OF NEVADA, a bank chartered under the laws of Nevada,
with its principal executive office located at 777 N. Rainbow Blvd., Las Vegas,
Nevada, 89107 (“Secured Party”), effective
as of          , 2008, as the
Funding Date for the amount of TWO MILLION EIGHT HUNDRED NINETY FIVE THOUSAND
AND NO/100 DOLLARS ($2,895,000.00), as set forth in the corresponding
Promissory Note.

 

1.         Background. Secured Party and
Debtor will have simultaneously herewith entered into a Promissory Note (“860 Note”),  evidencing the loan made by Secured Party with respect to the
Collateral hereunder. As a condition to and in consideration of its loan to
Debtor under the Note, Secured Party requires Debtor to grant a security
interest in the “Collateral” described herein to secure Debtor’s payment and
performance of all its obligations under the Note. This Security Agreement has
been entered into pursuant to that certain Master Loan Agreement dated as of
                ,
2008, between Secured Party and Debtor (“Loan
Agreement”). All of the Promissory Notes issued by Debtor under the
Loan Agreement are hereinafter referred to as the “Loan Notes”.

 

2.         Grant of Security Interest. For
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby grants to Secured Party a security interest in the “Collateral”
described in Section 3 to secure all of Debtor’s obligations (including
without limitation all payment obligations) under the Loan Notes and all other
obligations and liabilities of Debtor to Secured Party arising in connection
with the Loan Notes and/or the Loan Agreement, hereinafter together with this
Security Agreement collectively referred to as the “Debt Documents,” for which
Debtor is now or may hereafter become liable in any manner, whether such
obligations arise under the Loan Notes or otherwise, and whether primary or
secondary, direct or indirect, contingent or absolute, and howsoever arising,
including without limitation, all costs and expenses incurred in connection
with the Loan Notes or in the protection or maintenance of the Collateral or in
the enforcement of this Security Agreement, including without limitation, court
costs and attorneys’ fees and expenses.

 

3.         Collateral. The Collateral
serving as “Collateral” and subject to the above security interest shall
consist of one aircraft (“Aircraft”) along
with the aircraft engines (“Engines”), Parts,
appurtenances and other personal property as more fully described in Exhibit “A”
attached hereto, together with all attachments, replacements, parts, substitutions,
additions, repairs, accessions and accessories incorporated therein or affixed
thereto, and all rights and services related thereto, all records, logs,
manuals, data, inspection, modification and overhaul records and all
maintenance and inspection programs required to be maintained with respect to
the personal property under applicable rules and regulations of the FAA,
and all other documents at any time maintained with

 

16

 

respect to such personal
property and to the extent not listed above as original collateral, rebates,
refunds, remittances, proceeds (including insurance proceeds), and income of
the foregoing (“Collateral”).

 

At any time during the
term of this Agreement, the Debtor shall have the right to substitute an
equivalent Engine with a value and utility of at least the value and utility of
the Engine sought to be replaced (assuming the Engine to be replaced is in a
condition at least as favorable as required by this Agreement). The term “Engine”
shall refer to any Replacement Engine substituted for an Engine in accordance
with this Section 3, but shall not include any Engine that has been
substituted with a Replacement Engine. In order to effect a substitution of an
Engine, the Debtor shall comply with the following:

 

(a)       Casualty Occurrence with Respect to an
Engine. Upon a Casualty Occurrence with respect to an Engine, Debtor shall
give Secured Party prompt written notice thereof and shall, within forty-five
(45) days after such occurrence, grant to Secured Party, as replacement for the
Engine suffering a Casualty Occurrence, a first- priority perfected security
interest in a Replacement Engine.

 

Upon full
compliance by Debtor with the terms of this subsection and subsection (d),
Secured Party will release the lien of this Security Agreement with respect to
the Engine (and related Collateral) which suffered the Casualty Occurrence.

 

(b)       Engine Replacement. The Debtor
shall have the option, at any time, on at least ten (10) Business Days’
prior written notice to the Secured Party, to substitute a Replacement Engine
for an Engine, subject to (i) advance notice to the Secured Party; (ii) compliance
with the terms and conditions set forth at subsection (d); and (iii) the
additional requirement that such Replacement Engine shall be of the same or
better value utility of the Engine being replaced. Upon full compliance by
Debtor with the terms of this paragraph, Secured Party will release the lien of
this Security Agreement with respect to the Engine (and related Collateral)
being replaced.

 

(c)       CRAF Program Requisitioned Engine. If the
Engine is requisitioned for use pursuant to the CRAF Program and/or CRAF
Program activation, the Engine being requisitioned shall be substituted by a
Replacement Engine as Collateral, and Secured Party shall release its lien on
the Engine pursuant to the terms and conditions set forth at subsection (d) below.
In addition, the Replacement Engine shall be of the same or better value
utility of the Engine being replaced.

 

(d)       Lien Release on Engine. Secured Party
shall release its lien on the Engine (and related Collateral) after a Casualty
Occurrence or upon replacement of an Engine, provided each Replacement Engine
is: (i) free of all liens other than Permitted Liens; (ii) in as good
an operating condition as the Engine being replaced, assuming the Engine being
replaced was in the condition and repair required by the terms hereof
immediately prior to the Casualty Occurrence or replacement and (iii) Secured
Party receives a Security Agreement Supplement (a “Supplement”‘) in the form
attached as Exhibit “B” hereto certifying that the Replacement Engine
satisfies all of the requirements set forth in

 

17

 

the Supplement. In addition,
prior to such release, Debtor, at its own expense, will promptly (x) take
any and all actions necessary to cause such Replacement Engine to become
subject to the lien of this Security Agreement; (y) furnish Secured Party
with such evidence of title to such Replacement Engine and of compliance with
the insurance provisions of Section 4h hereof with respect to such
Replacement Engine as Secured Party may reasonably request; and (z) furnish
Secured Party such other documents as the Secured Party may reasonably request
in connection with the consummation of the transactions contemplated by this Section 3,
in each case in form and substance reasonably satisfactory to Secured Party. If
Debtor is in breach of any provision in the Debt Documents, Secured Party shall
have no obligation to release its lien on an Engine until the breach has been
cured.

 

Secured Party
shall have the right to inspect the Replacement Engine records to determine
whether the Replacement Engine complies with the conditions for release of its
lien as stated above. No inspection shall interfere with the operation of the
Engine in the Debtor’s business unless Debtor or its lessee fails to cooperate
with Secured Party to access the Engine records.

 

(d)       Additional Definitions. For purposes of
this Agreement, the following terms will have the meanings indicated:

 

“Airframe”
means the airframe described on Exhibit “A” but not including any Engine
installed thereon, but including any and all Parts incorporated on or installed
on or attached to the Airframe.

 

“Parts”
means any and all appliances, parts, systems, components, assemblies, rotables,
life limited parts, instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature used in connection with the Engine.

 

A “Casualty
Occurrence” or “Casualty Loss” shall mean any of the following
events with respect to an Aircraft or an Engine constituting part of the
Collateral:

 

(a)       loss of such property or its use due to
theft or disappearance for a period in excess of sixty (60) consecutive days or
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Debtor for any reason whatsoever;

 

(b)       any damage to such property which results
in an insurance settlement with respect to such property on the basis of a
total loss or on the basis of an actual, arranged or constructive total loss;
or

 

(c)       the confiscation, appropriation or
seizure of, or requisition of title to such property, or the use of such
property by or on the authority of any governmental entity (other than a
requisition or activation under CRAF) which in any such case shall have
resulted in the loss of possession thereof by Debtor for a period in excess of
sixty (60) consecutive days (or for such shorter period ending on the date
which is seven (7) days

 

18

 

from the date of receipt
of an insurance settlement with respect to such property on the basis of a
total loss).

 

“Permitted Liens”
shall mean (i) the lien created by this Security Agreement; (ii) liens
for taxes either not yet due or being contested in good faith and so long as
adequate reserves are maintained with respect to such liens and the Collateral
is not in material danger of being lost, sold, confiscated, forfeited or seized
as a result of such lien; (iii) inchoate material person’s, mechanics’,
worker’s, repairer’s, employees’ or other like liens arising in the ordinary
course of business and not delinquent or such liens being contested in good
faith by Debtor so long as the Aircraft is not in material danger of being
lost, sold, confiscated, forfeited or seized as a result of such lien; (iv) liens
arising out of any judgment or award unless the judgment secured shall not,
within sixty (60) days of the entry thereof, have been discharged or vacated or
execution thereof stayed pending appeal or shall not have been discharged,
vacated or released within sixty (60) days after execution of such stay; (v) rights
of others under any arrangements to the extent expressly permitted under this
Security Agreement, and (vi) any other lien with respect to which Debtor
shall have provided security in form and amount adequate in the reasonable
opinion of the Secured Party.

 

A “Replacement
Engine” shall mean an engine of the same manufacturer and model, or an
improved model, as an Engine replaced and that such Replacement Engine shall
have equal or greater expected life remaining to the next scheduled overhaul as
the Engine being replaced.

 

“CRAF Program”
means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C. §
9511-13 or any similar substitute program.

 

No reference to “proceeds”
in this Security Agreement authorizes any sale, transfer, or other disposition
of the Collateral by Debtor.

 

4.         Representations, Warranties and
Covenants. Debtor represents, warrants and covenants with Secured Party, on
a continuing basis, as follows:

 

(a)       Title. Debtor is the absolute owner with
full right and interest in the Collateral, which is free and clear of any and
all liens, claims and encumbrances, except for Permitted Liens or any lease of
the Collateral entered into in accordance with the terms of this Agreement.
Debtor has full power and authority to grant a security interest in the
Collateral and agrees to defend its title and ownership of the Collateral
against all other persons who may claim an interest in it;

 

(b)       No Other Security Interests Outstanding
or other FAA, IRMA or UCC Filings. There are no security interests (including
filed financing statements or liens or other interests filed with the Federal
Aviation Administration (“FAA”) or
the International Registry of Mobile Assets (“IRMA”),
liens, claims or other encumbrances against the Collateral other than created
hereby or any lease of the Collateral entered into in accordance with the terms
of this Agreement. During the course of this Security

 

19

 

Agreement
and as long as any Debtor obligations under the 860 Note remains outstanding, (i) Debtor
will not grant or permit a security interest in the Collateral other than the
security interest created hereunder or permitted hereby, (ii) Debtor will
keep the Collateral free from any and all liens, claims and encumbrances, other
than any lease of the Collateral entered into in accordance with the terms of
this Agreement and other than Permitted Liens and (iii) Debtor will not
file any corrective or termination statement with respect to any FAA or IRMA
filings or UCC financing statements recorded by Secured Party or its assigns;

 

(c)       No Sale or Disposition of
Collateral. Other than a lease permitted under Section 11 hereof, Debtor
will not assign, transfer, discount, sell, license, offer for sale, or
otherwise dispose of the Collateral or any interest therein without the prior
written consent of Secured Party or without providing substitute Collateral in
accordance with Section 3 hereof;

 

(d)       Uses of Collateral.
Debtor shall at all times keep the Collateral in its sole possession and
control, except as permitted by Secured Party or except for any lease entered
into in accordance with the terms of this Agreement, and in connection with
inspections, repairs or modifications by authorized, competent and duly
qualified third parties, and shall cause the Collateral to be installed, used
and operated only on airframes that are duly registered with the FAA (if in the
United States) or other governing authority with jurisdiction over the
Collateral. Debtor shall cause the Collateral to be installed, used, operated
and removed (i) in accordance with applicable manufacturer’s manuals or
instructions; (ii) by competent and duly qualified personnel only; (iii) in
accordance with applicable governmental regulations; and (iv) in
accordance with the provisions of Exhibit “C” attached hereto and made a
part hereof by reference. Debtor may only make and remove alterations,
attachments or improvements to the Collateral in accordance with the provisions
of Exhibit “C”;

 

At
all times when in use, the Collateral, if it includes or consists of engines,
propellers or blades, will be placed on aircraft that are operated only by
duly-qualified, currently certificated pilots having at least the minimum total
pilot hours required by Debtor’s insurance carriers (if applicable), and with
such certification by the FAA (if operated in the United States), and shall not
be used for the carriage or the transport of contraband. At all times when in
use, the Collateral, if it includes or consists of aircraft, will only be
operated by duly-qualified, currently certificated pilots having at least the
minimum total pilot hours required by Debtor’s insurance carriers (if
applicable), with such certification by the FAA, and shall not be used for the
carriage or the transport of contraband.

 

(e)       Adherence to Legal and
Other Requirements. Debtor shall at all times comply with all statutes, laws,
rules, ordinances, regulations, orders and directives and mandatory standards
issued by any governmental agency applicable to the Collateral and in
compliance with any airworthiness certificate, Airworthiness Directive, license
or registration relating to the Collateral issued by any applicable agency, as
well as with all manufacturers’ instructions and warranty requirements, and
with the conditions and requirements of all policies of insurance with respect
to the Collateral and the Debt

 

20

 

Documents.
Debtor shall continue to be the entity duly registered with the FAA under the
Transportation Code and with the IRMA for each item of Collateral;

 

(f)        Maintenance of
Collateral. Debtor shall, at its own expense, or require its lessee under Section 11
to, comply in all respects with the maintenance and repair provisions set forth
in Exhibit “C” hereto;

 

(g)       Taxes and Fees. Debtor
shall pay promptly when due all taxes, fees and assessments on or with respect
to the Collateral (such as registration and license fees and assessments, sales
and use taxes, and personal property taxes). In addition, Debtor shall pay all
penalties and interest resulting from its failure to pay any taxes or fees when
due. Should Debtor fail to make all payments when due, Secured Party may at its
option (although it is not required to do so) pay or discharge the same. Any
such payment shall become an obligation of Debtor secured by the Collateral;

 

(h)       Insurance. Debtor shall,
or require its lessee under Section 11 to, obtain and maintain for the
entire time this Security Agreement is in effect, at its own expense (as
primary insurance for Debtor and Secured Party), with insurers of recognized
reputation and responsibility and in form customary in the airline industry and
reasonably acceptable to Secured Party, comprehensive airline and general
liability (including, without limitation, contractual, bodily injury,
passenger, third-party liability and property damage liability) insurance
(exclusive of manufacturer’s product liability insurance) covering operation of
the Collateral, in an amount not less than $500,000,000 per occurrence. In
addition, Debtor shall, or require its lessee under Section 11 to, at all
times maintain war risk (aviation liability) insurance of the scope at least as
comprehensive as covered by AVN 52D (or its equivalent) as in effect on the
date of the Loan Agreement, in an amount (taking into consideration any
insurance or indemnification provided by the United States government or any
agency or instrumentality thereof the obligations of which are supported by the
full faith and credit of the United States government) not less than
$500,000,000 per occurrence.’ In addition, such insurance shall be at least of
a scope and coverage (except as to dollar requirements) (i) as Debtor
carries on the operation of its other property similar to the Collateral and (ii) as
is customarily carried by United States based air carriers engaged in the same
or similar business, similarly situated with Debtor and operating property that
is similar to the Collateral.

 

Debtor shall also, or require its lessee under Section 11 to,
obtain and maintain for the entire time the Security Agreement is in effect, at
its own expense (as primary insurance for Secured Party and Debtor), with
insurers of recognized reputation and

 

(1) For
the avoidance of doubt, AVN 52D provides insurance against the following risks:
(1) war, invasion, acts of foreign enemies (whether war be declared or
not), civil war, rebellion, revolution, insurrection, martial law, military or
usurped power, or attempts at usurpation of power, (2) strikes, riots,
civil commotions or labor disturbances, (3) any act of one or more
persons, whether or not agents of a sovereign power, for political or terrorist
purposes and whether or not the loss or damage resulting therefrom is
accidental or intentional, (4) any malicious act or act of sabotage, (5) confiscation,
nationalization, seizure, restraint, detention, appropriation, requisition for
title or use by or under the order of any government (whether civil, military
or de facto) or public or local authority, and (6) hi-jacking or any
unlawful seizure or wrongful exercise of control of the Collateral or crew in
flight (including any attempt at such seizure or control) made by any person or
persons on board the Collateral or, if the Collateral consists of or includes
engines and/or propellers, the airframe to which the Collateral is attached,
acting without the consent of the insured.

 

21

 

responsibility
and in form customary in the airline industry and reasonably acceptable to
Secured Party, all-risk ground, taxiing and flight aircraft hull insurance
covering the Collateral and, if the Collateral consists of or includes engines
and/or propellers (including blades), shall also cover the Collateral while on
an airframe or removed therefrom, whether temporarily or otherwise, and fire
and explosion coverage, ingestion and lightning and electrical damage, and
extended coverage and all-risk property damage insurance, including fire and
transit, covering the Collateral; provided, however, that the amount of such
insurance against loss or damage to the Collateral shall be equal to or greater
than the fair market value of the Collateral. In addition, such insurance shall
be at least of a scope and coverage (except as to dollar requirements) (i) as
Debtor carries on the majority of its other property similar to the Collateral
and (ii) as is customarily carried by United States based air carriers
engaged in the same or similar business, similarly situated with Debtor and
operating property that is similar to the Collateral. Further, Debtor shall, or
require its lessee under Section 11 to, at all times maintain or cause to
be maintained war risk hull and governmental confiscation insurance providing
insurance against the following risks: (1) strikes, riots, civil
commotions or labor disturbances, (2) any malicious act or act of sabotage
and (3) hi-jacking or any unlawful seizure or wrongful exercise of control
of the Collateral or crew in flight (including any attempt at such seizure or
control) made by any person or persons on board the Collateral or, if the
Collateral consists of or includes engines and/or propellers, the airframe to
which the Collateral is attached, without the consent of the insured. Such
insurance described in the immediately preceding sentence shall be in an amount
(taking into consideration any insurance or indemnification provided by the
United States government or any agency or instrumentality thereof the
obligations of which are supported by the full faith and credit of the United
States government) not less than the amount set forth in Exhibit “D” to
this Security Agreement.

 

Each of the foregoing insurance policies shall name Debtor as insured
and Secured Party and its assignees as additional insureds and loss payees
thereof, shall contain cross-liability endorsements, shall contain a clause
requiring the insurer to give Secured Party and its assignees at least thirty (30)
days prior written notice of any material alteration in the terms of such
policy or of the cancellation thereof, and shall be in full force and effect
throughout any geographical areas at any time traversed by the Collateral.
Debtor shall furnish to Secured Party certificates of insurance and letters
from a reputable and recognized aviation insurance broker to the effect that
Debtor’s or lessee’s insurance coverage comply with the terms of this Security
Agreement; provided, however, that Secured Party shall be under no duty either
to ascertain the existence of or to examine such insurance policies or to
advise Debtor in the event such insurance coverage shall not comply with the
requirements hereof. All insurance covering loss or damage to the Collateral
shall (i) contain a breach of warranty clause reasonably satisfactory to
Secured Party; (ii) provide that the additional insureds shall have no
liability for premiums, commissions, calls, assessments or advances or other
charge with respect to such policies; (iii) provide that it is primary
without right of contribution; (iv) provide that in respect of the
respective interest of each additional insured in such policies, the insurance
shall not be invalidated by any action or inaction of Debtor, any lessee, or
any other person or entity; (v) provide that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured;

 

22

 

(vi)
be payable in United States dollars; and (vii) provide that (1) in
the event of a Casualty Loss and on the condition that no Event of Default
shall have occurred and be continuing, the proceeds shall be paid first to
Secured Party, to be applied against all of the Debtor’s obligations due and
owing under the 860 Note given with respect to the Collateral suffering the
Casualty Loss, with the excess being payable to the Debtor, unless the Casualty
Loss relates to an Engine and Debtor elects to substitute a Replacement Engine
as provided in Section 3, whereupon the proceeds shall be paid to Debtor; (2) in
the event of an insured loss that does not constitute a Casualty Loss, there is
no existing Event of Default then outstanding and if Debtor provides to Secured
Party evidence reasonably satisfactory to the Secured Party that the damage
giving rise to such payment has been repaired or that such insurance proceeds
shall be used to pay for repairs then being made or to be made, then the
proceeds shall be paid to Debtor or at Debtor’s direction, otherwise the
proceeds shall be paid to Secured Party to be applied against all of the Debtor’s
obligations due and owing under the 860 Note given with respect to the
Collateral suffering the Casualty Loss with any excess insurance proceeds
payable to the Debtor; and (3) in the event of a Casualty Loss or an
insured loss while an Event of Default shall have occurred and be continuing,
the proceeds shall be payable to Secured Party to be applied against all of the
Debtor’s obligations under the 860 Note with respect to such Collateral with
any excess being payable to Debtor. Debtor may maintain reasonable deductibles
with respect to the insurance required hereunder.

 

(i)        Loan Notes. So long as
this Security Agreement remains in effect, Debtor shall be liable under this
Security Agreement for all of its obligations under the Loan Notes. Breach of
any of Debtor’s obligations under any of the Loan Notes shall constitute a
breach of this Security Agreement;

 

(j)        Possession and Location
of Collateral. Debtor or its lessee under any lease entered into in accordance
with this Agreement shall, at all times, retain sole possession and control of
the Collateral, headquartered at the location shown on Exhibit “E” (or
amendment thereto in connection with the lease of the Collateral or otherwise),
and all records, logs, manuals, data, inspection, modification and overhaul
records shall be kept at Debtor’s or such lessee’s chief executive offices.
Notwithstanding the foregoing, Debtor or lessee may operate the Collateral in
connection with its business and may also temporarily move the Collateral to
other locations for repair or maintenance provided Debtor furnishes Secured
Party with a reasonably-detailed list of such repair locations within ten (10) days
of Secured Party’s reasonable request therefor;

 

(k)       Personal Property. Any
and all Collateral which is personal property shall remain personal property at
all times. Debtor shall not affix any of the personal property to any real
property in any manner which would change its nature to a fixture; and

 

(1)       Location, State of
Incorporation and Name of Debtor. Debtor’s full and exact legal name, state of
organization and correct and current chief executive office are as listed in
the heading or introductory paragraph of this Security Agreement.

 

23

 

5.         Financing Statement
and Other Documents. Debtor authorizes Secured Party to file one or more
financing statements, IRMA registrations and FAA filings describing the
Collateral, and to take any and all actions which Secured Party deems necessary
or advisable in order to perfect Secured Party’s interest in the Collateral.
Debtor agrees to execute any additional documents, and to take any further
actions, reasonably requested by Secured Party to evidence or perfect the first
priority of the security interest granted to Secured Party by this Security
Agreement.

 

6.         Inspection and
Appraisal of the Collateral. Secured Party, its assigns and agents shall have
free access to the Collateral at all reasonable times during normal business
hours for the purpose of inspecting the Collateral and for any other purpose
contemplated in this Security Agreement; provided, however, that no inspection
shall interfere with the operation of the Collateral in the Debtor’s or its
lessee’s business unless Debtor or a lessee fails to cooperate with Secured
Party for access to the records for the Collateral.

 

7.         Default. The
occurrence of an Event of Default under the Loan Agreement shall constitute an
Event of Default under this Agreement.

 

8.         Remedies. Upon
the occurrence of any Event of Default and at any time thereafter during the
continuance of the default, Secured Party may, with or without giving notice to
Debtor and with or without canceling this Security Agreement and the Loan
Notes, do any one or more of the following:

 

(a)       Enforcement. Enforce this
Security Agreement, the Loan Agreement and the Loan Notes according to their
respective terms;

 

(b)       Cure. Advance funds on Debtor’s
behalf to cure the Event of Default, whereupon Debtor shall immediately
reimburse Secured Party therefor, together with interest accrued thereon;

 

(c)       Additional Collateral.
Request additional collateral to secure the Loan Notes;

 

(d)       Acceleration. Accelerate
all obligations due and payable under the Loan Notes, and declare the Loan
Notes immediately due and payable;

 

(e)       File Suit and Obtain
Judgment. File suit and obtain monetary judgment and, in conjunction with any
action, seek any ancillary remedies provided by law, including levy of
attachment or garnishment;

 

(f)        Take Possession. Without
notice to Debtor, repossess the Collateral wherever found, with or without
legal process, and for this purpose Debtor grants to Secured Party and/or its
agents or assigns the right to enter upon any premises of or under the control
or jurisdiction of Debtor or any agent of Debtor, without liability for suit,
action or other proceeding by Debtor (any damages occasioned by such
repossession

 

24

 

being
hereby expressly waived by Debtor) and remove the Collateral therefrom; Debtor
further agrees, on demand, to assemble any or all of the Collateral and make it
available to Secured Party at a place to be designated by Secured Party, all at
Debtor’s expense;

 

(g)       Sell, Lease or other
Disposition. In its sole discretion, sell, lease or otherwise dispose of any or
all of the Collateral, whether or not in Secured Party’s possession and free
and clear of any right or interest Debtor has, in a commercially reasonable
manner at public or private sale with notice to Debtor (the parties agreeing
that ten (10) days’ prior written notice shall constitute adequate notice
of such sale), and apply the net proceeds of any such disposition, after
deducting all costs (including attorneys’ fees and expenses) incurred by
Secured Parry in connection with such default to the obligations of Debtor
hereunder and under the Loan Notes, or propose to retain any or all of the
Collateral in full or partial satisfaction, as the case may be, with Debtor
remaining liable for any deficiency. The sale, lease or other disposition may,
at Secured Party’s sole option, be conducted at Debtor’s premises.

 

With respect to any exercise by Secured Party of its right to recover
and/or dispose of any Collateral securing Debtor’s obligations, Debtor
acknowledges and agrees as follows: (i) Secured Party shall have no
obligation, subject to the requirements of commercial reasonableness, to
clean-up, repair or otherwise prepare the Collateral for disposition; (ii) Secured
Party may comply with any applicable State or Federal law requirements in
connection with any disposition of the Collateral, and any actions taken in
connection therewith shall not be deemed to have adversely affected the
commercial reasonableness of any disposition of such Collateral; (iii) Secured
Party may specifically disclaim any warranties of title or the like with
respect to the disposition of the Collateral; (iv) if Secured Party
purchases any of the Collateral, Secured Party may pay for the same by
crediting some or all of Debtor’s obligations under this Security Agreement and
the Loan Notes; and (v) no right or remedy referred to in this Section is
intended to be exclusive, but each shall be cumulative and shall be in addition
to any other remedy referred to above or otherwise available at law or in
equity, and may be exercised concurrently or separately from time to time.

 

The rights and remedies afforded Secured Party hereunder shall not be
deemed to be exclusive, but shall be in addition to any rights or remedies
provided by law. Secured Party’s failure promptly to enforce any right or
remedy hereunder shall not operate as a waiver of such right or remedy, and
Secured Party’s waiver of any default shall not constitute a waiver of any
subsequent or other default. Secured Party may accept late payments or partial
payments of amounts due under the Loan Notes and may delay enforcing any of
Secured Party’s rights or remedies hereunder without losing or waiving any of
Secured Party’s rights or remedies. Except as expressly provided in this
Security Agreement, Debtor waives any notice of Secured Party’s notice of
nonpayment, presentment, notice of dishonor, or any other notice.

 

Secured Party shall also have and enjoy all rights and remedies provided
at law or in equity, including without limitation those provided to secured
parties under the Uniform

 

25

 

Commercial
Code (“UCC”), to collect, enforce
or satisfy any obligations of Debtor then owing, whether by acceleration or
otherwise.

 

Notwithstanding the foregoing, in the event Secured Party is fully
compensated for all amounts due under the Debt Documents, including all fees of
collection, through the exercise of any or all of the foregoing remedies, any
excess amounts obtained by Secured Party through such collection efforts shall
inure to the benefit of and shall be paid to Debtor or as directed by Debtor.

 

9.         Costs and Attorneys’
Fees. Debtor shall be liable for and shall pay to Secured Party all of
Secured Party’s costs and expenses incurred in enforcing its rights and
remedies under this Security Agreement after an Event of Default with regard to
the Collateral, including without limitation its court costs and reasonable
attorney’s fees and expenses. Secured Party shall be entitled to recover from
Debtor all reasonable costs and expenses incurred by Secured Party after an
Event of Default in: (i) the repossession, recovery, storage, repair,
sale, insuring, lease or other disposition of the Collateral, (ii) other
pre-judgment and post-judgment enforcement related actions taken by Secured
Party, and (iii) any actions taken by Secured Party in a bankruptcy
proceeding involving Debtor or the Collateral. Costs and expenses include,
without limitation, reasonable attorneys’ fees and costs incurred in connection
therewith or otherwise resulting or arising from Debtor’s or any guarantor’s
default, plus interest on all of the above until paid (before and after judgment)
at the lesser of the default interest rate under the 860 Note or the highest
rate permitted by law.

 

10.       Assignment.
Secured Party may assign or transfer its rights and interests in the Debt
Documents or the Collateral to its assignee either outright or as security for
a loan or loans. Upon notice of any such assignment and instructions from
Secured Party, Debtor shall make its payments and perform its other obligations
under the Debt Documents to Secured Party’s assignee (or to another party
designated by Secured Party’s assignee). Secured Party’s assignee shall have
all of the rights but none of the obligations of Secured Party under this
Security Agreement and the Loan Notes assigned, and after such assignment
Secured Party shall continue to be responsible for all of its obligations.
Debtor shall provide Secured Party with a copy of any notices sent by Debtor to
any assignee of Secured Party under this Security Agreement.

 

Upon any such assignment, Debtor agrees to promptly execute or otherwise
authenticate and deliver to Secured Party all documents requested by Secured
Party which acknowledge the assignment and which may be required to effect the
underwriting. Debtor authorizes Secured Party’s assigns to file UCC-1 financing
statements, and other filings and registrations with the IRMA, the FAA and
otherwise to protect its interest. Secured Party’s assigns are authorized to
take any measures necessary to protect their interest in the Collateral in
accordance with the terms of the Debt Documents.

 

11.       Lease of Collateral.
Debtor is prohibited from entering into a lease for any of the Collateral
unless: (i) Debtor has provided documentation reasonably satisfactory to
the Secured Party that the lessee will operate the Collateral in compliance
with the terms

 

26

 

of
this Security Agreement; (ii) Debtor has provided documentation reasonably
satisfactory to the Secured Party that the lessee acknowledges the Secured
Party’s priority security interest in the Collateral; and (iii) the lessee
has received written notice from Debtor that the lease shall be assigned to
Secured Party. With respect to any such lease, Debtor shall grant and assign to
Secured Party, and no other person, a security interest in the lease between
Debtor and lessee. Any interest Debtor may have in the lease is hereby assigned
to Secured Party as part of the Collateral. Secured Party reserves the right,
upon an Event of Default by Debtor under the Debt Documents, to obtain lease
payments directly from the lessee. If there is a conflict between a provision
in the Debt Documents and a provision in a lease, the provision in the Debt
Documents control.

 

12.       Term. This
Security Agreement is a continuing agreement, and to the extent allowed by
applicable law all rights, remedies and powers of Secured Party hereunder shall
apply to all past, present and future obligations of Debtor under the Loan
Notes, notwithstanding the bankruptcy, dissolution or insolvency of Debtor,
and, subject to the following paragraph, shall continue in full force and
effect until all obligations of Debtor under the Loan Notes have been paid,
performed and satisfied in full, notwithstanding any termination of the Loan
Notes. The power of sale and other rights and remedies granted to Secured Party
hereunder may be exercised even though any remedies of Secured Party under the
Loan Notes may be barred for whatever reason.

 

Notwithstanding anything to the contrary, so long as Debtor is not in
default under this Security Agreement or other Debt Documents, the Secured
Party shall release its security interest in the Collateral under this Security
Agreement upon Debtor’s satisfaction in full of all amounts owing under the 860
Note issued with respect to such Collateral. In such event, this Security
Agreement shall terminate, and the Collateral hereunder shall no longer serve
as security for the unpaid Loan Notes.

 

13.       Notices. Any
notices or demands required to be given herein shall be in writing and
addressed to the other party at the address herein or such other address
provided by written notice and shall be effective (i) upon the next
business day if sent by guaranteed overnight express service (such as Federal
Express); (ii) on the same day if personally delivered; or (iii) three
days after mailing if sent by certified or registered U.S. mail, postage
prepaid.

 

14.       Governing Law; Waiver
of Trial by Jury. This Security Agreement shall in all respects be governed
by and construed in accordance with the laws of Nevada, including all matters of
construction, validity and performance. The parties agree to submit to the
exclusive jurisdiction of Nevada; any suit or other proceeding brought by
either party to enforce or construe this Security Agreement, or to determine
matters relating to the Collateral or the relationship between the parties
hereto shall be brought only in the state or federal courts in Nevada. This
Security Agreement was executed in Nevada and is to be performed in Nevada. THE
PARTIES HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF
THIS SECURITY AGREEMENT, ANY OTHER DEBT DOCUMENT, THE COLLATERAL

 

27

 

OR
THE CONDUCT OF OR RELATIONSHIP BETWEEN DEBTOR AND SECURED PARTY.

 

15.       Risk of Loss.
Debtor assumes and shall bear all risk of loss for theft, damage, non-delivery
or destruction to the Collateral (hereafter, such loss, damage, non-delivery or
destruction to the Property shall be referred to as a “Casualty”), howsoever
caused.

 

In the event of a Casualty to the Collateral (or any part thereof) and
irrespective of payment from any insurance coverage maintained by Debtor, but
applying full credit therefor, Debtor shall at its option, (a) place the
Collateral in good repair, condition and working order; or (b) if the Collateral
suffering a Casualty is an Engine, replace the Collateral as provided in Section 3;
or (c) pay to Secured Party the total due under the 860 Note and this
Security Agreement for such Collateral, less the insurance proceeds relating
thereto, if any.

 

Debtor shall notify Secured Party within ten (10) days of the
actual date of the Casualty that a Casualty has occurred; Debtor will notify
Secured Party of its election of either option (a), (b) or (c), as set
forth above, within thirty (30) days following the actual date of the Casualty.
Debtor will then fully perform the repair, replacement or payment within sixty
(60) days of the date of the Casualty.

 

16.       CRAF PROGRAM

 

(a)       Notwithstanding any of
the provisions of this Agreement or any other Debt Document, Debtor may
transfer possession of the Collateral to the United States of America or any
instrumentality or agency thereof as part of the CRAF Program. Debtor will
promptly notify Secured Party in writing in the event of the requisition for
use of the Collateral under a CRAF Program activation by the U.S. Government.
All of Debtor’s obligations under the Debt Documents will continue to the same
extent as if such requisition had not occurred. Any provisions of the Debt
Documents to the contrary notwithstanding, if there is a requisition for use of
the Engine pursuant to the CRAF Program and/or CRAF Program activation, Secured
Party agrees that the insurance the Debtor is required to maintain pursuant to
terms hereof, so long as the requisitioned Collateral remains Collateral, may
be supplemented or replaced by insurances provided under Title XIII of the
Federal Aviation Act of 1958, and /or U.S. government indemnification (which
Title XIII insurances and indemnification will be, as to the Collateral, in an
amount not less than 110% of the balance of the promissory note signed in
connection with such Collateral and, as to all other insurances, in amounts not
less than those required by the terms of the Loan Agreement); provided,
however, that Debtor will remain responsible for full compliance with all the
provisions of the Debt Documents, to the extent Title XIII and/or the U.S.
Government indemnification do not satisfy Debtor’s obligations under the Loan
Documents.

 

(b)       If there is a requisition
for use of the Collateral pursuant to the CRAF Program and/or CRAF Program
activation, there will be no limitation on the

 

28

 

geographic
area in which the Collateral may be operated so long as taken as a whole,
Debtor’s insurance, the Title XIII insurance and/or the indemnification
provided by the U.S. Government shall fully cover (without any geographic
exclusions) the insurance requirements set forth herein.

 

(c)       If an Event of Default
occurs and Secured Party elects to pursue its remedies in accordance with the
provisions of this Agreement to repossess the Collateral, Secured Party will so
notify the U.S. Government by sending a written communication with a copy to
Debtor as follows:

 

Headquarters Air Mobility
command

AMC Contracting Office –
XOKA

Scott Air Force Base,
Illinois 62225-5007

 

(d)       So long as no Event of
Default has occurred and is continuing, all payments received by Secured Party
or Debtor from any governmental entity in connection with the requisition of
the Collateral under the CRAF Program (except payments on account of an Event
of Loss relating to the Collateral) will be paid over to or retained by Debtor.
If an Event of Default has occurred and is continuing, Secured Party may direct
the governmental entity to make all payments to Secured Party and all payments
received by Secured Party or Debtor from such governmental entity in connection
with the requisition of the Collateral under the CRAF Program may be used by
Secured Party and applied to the Debtor’s obligations in accordance with the
terms of the Loan Documents.

 

17.       Indemnification.
Debtor shall indemnify and hold Secured Party harmless from and against any and
all third party claims (including without limitation, negligence, tort and
strict liability), damages, adjustments, suits, administrative and legal
proceedings, and any and all costs and expenses in connection therewith
(including attorneys’ fees and expenses incurred by Secured Party) arising out
of or in any manner connected with or resulting from this Security Agreement or
the Collateral, except such claims relating to Debtor’s enforcement of this
Security Agreement against Secured Party. Debtor agrees to give Secured Party
prompt notice of any such claim or liability. Secured Party for purposes of
this paragraph includes Secured Party, its successors and assigns,
shareholders, members, owners, partners, directors, officers, representatives
and agents, and the provisions of this paragraph shall survive expiration of
this Security Agreement with respect to events occurring prior hereto.

 

18.       Headings. Section headings
used in this Security Agreement are for convenience only and are not a part of
this Security Agreement and shall not be used in construing it.

 

19.       Severability. In
the event that any provision of this Security Agreement is found to be
unenforceable in any legal proceeding, the remaining provisions shall remain in
full force and effect.

 

29

 

20.       Integration and
Modification. This Security Agreement together with the Loan Agreement and
the Loan Notes referred to herein constitute the entire agreement of Debtor and
Secured Party concerning its subject matter. This Security Agreement may not be
amended or modified except by a written amendment signed by a duly authorized
representative of each party, but no such amendment or modification needs
further consideration to be binding. The parties have signed this Security
Agreement as of the day and year written below.

 

Dated:
                  ,
2008

 

	
  DEBTOR:

  	
  SECURED PARTY:

  
	
   

  	
   

  
	
  ALLEGIANT
  AIR, LLC

  	
  BANK
  OF NEVADA

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
  Andrew C. Levy

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
  Authorized Agent

  	
   

  	
  Title:

  	
   

  

 

30

 

EXHIBIT “C”

 

Form of Guaranty

 

(to be attached)

 

31

 

GUARANTY AGREEMENT

 

THIS GUARANTY is made, as of
                ,
2008, by ALLEGIANT TRAVEL COMPANY, a
Nevada corporation, of 3301 North Buffalo Drive, Suite B-9, Las Vegas, NV
89129 (“Guarantor”) to BANK OF NEVADA of 777 N. Rainbow Blvd., Las
Vegas, Nevada, 89107 (“Secured Party”) and
its assigns on behalf of ALLEGIANT AIR, LLC, a
Nevada limited-liability company, of 3301 North Buffalo Drive, Suite B-9,
Las Vegas, NV 89129 (“Debtor”).

 

R E C I T A L S:

 

A.       Secured Party and Debtor
have entered or intend to enter into a Master Loan Agreement (“Loan Agreement”), which includes all
riders, amendments, supplements or other attachments now or hereafter executed
in connection therewith. (Terms used herein as defined terms shall have the
meaning given to such terms in the Loan Agreement.) In connection with the Loan
Agreement, Secured Party and Debtor have or intend to enter into one or more
Security Agreements along with corresponding Notes for the purpose of financing
the property listed in each Security Agreement. Each Security Agreement shall
incorporate the terms and conditions of the Loan Agreement and, along with the
corresponding Note, shall constitute a separate and independent Loan for the
property listed in each Security Agreement. Each Security Agreement and its
corresponding Note shall be referred to herein as “Loan.”

 

B.        As a condition to Secured
Party’s execution of one or more Loans with Debtor, Secured Party requires
Guarantor to guarantee Debtor’s obligations under each Loan.

 

C.        Guarantor is financially
interested in Debtor, and by Secured Party’s execution of each Loan, Guarantor
will receive reasonably equivalent value for this Guaranty.

 

D.        Guarantor is willing to
guarantee Debtor’s obligations under each Loan and the corresponding Notes in
accordance with the provisions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and as an inducement to
Secured Party to enter into each Loan with Debtor, Guarantor represents,
warrants and agrees as follows:

 

1.         Guaranty.
Guarantor hereby unconditionally guarantees the full, complete and prompt
payment, performance and observance of all of Debtor’s obligations under each
and every Loan and Note, including without limitation the payment of principal
and interest and the payment of all amounts required or provided for under the
Loan resulting from Debtor’s breach or non-performance thereof. Guarantor
agrees that this is an irrevocable, continuing guaranty and that Guarantor
shall perform its obligations hereunder notwithstanding any renewal, extension,
modification or discharge of any of Debtor’s obligations under the Loans, the
Notes, and the other Debt Documents. This Guaranty

 

32

 

shall
apply to each Note, Security Agreement, and Debt Document that Debtor executes,
and Secured Party shall not be required to notify Guarantor of Debtor’s
execution of each such Note, Security Agreement, or Debt Document before, at
the time of, or after it is executed and delivered.

 

2.         Default by Debtor.
Guarantor’s obligations hereunder are separate and independent of Debtor’s
obligations under any Loan. If an Event of Default shall occur and be
continuing under any Loan, Secured Party may pursue its remedies against Debtor
and/or proceed directly against Guarantor for the payment, performance or
observance of any and all of Debtor’s obligations under any of the Loans, and
Guarantor hereby waives any right to require Secured Party: (a) to proceed
first or otherwise against Debtor; (b) to proceed against or exhaust any
security it may hold; or (c) to pursue any other remedy available to it.

 

3.         Waiver. Guarantor
hereby waives notice of acceptance of this Guaranty by Secured Party and waives
presentment, demand for performance, notice of default, protest, notice of
protest, notice of dishonor and any other notice otherwise required with
respect to Debtor’s failure to perform under any Loan, the Loan Agreement, or
any Debt Document. Guarantor also waives any defense or disability available to
Debtor which might save or release it from liability including, without
limitation, defect in or unenforceability of the Loan Agreement, any Note, any
Security Agreement, any Debt Document, or a Loan. No delay on the part of
Secured Party in exercising any rights under this Guaranty or failure to
exercise the same shall operate as a waiver of such rights. No modification or
waiver of the provisions of this Guaranty shall be effective unless in writing
signed by Secured Party, and no such waiver shall be applicable and effective
except in the specific instance for which it is given.

 

4.         Authority to Modify
Obligations. In accordance with the provisions of the Loan Agreement, each
Loan, Note, Security Agreement, and Debt Document, and without causing a
release of Guarantor from its obligations hereunder, Secured Party shall be
authorized to renew, extend, accelerate or otherwise change the payment
schedule or other terms of any Loan; accept partial payments from the Debtor;
take and apply any security (if applicable) and exercise any remedy against the
Debtor; amend, substitute, waive, subordinate or release any property or
additional security or any obligations covered under any Loan; settle, release,
compound, compromise, collect or otherwise liquidate the obligations covered
under any Loan; and release Debtor from any obligations under any Loan. Secured
Party shall not be required to notify Guarantor of any of the foregoing
modifications made.

 

5.         Familiarity with
Debtor. Guarantor shall be solely responsible to keep itself informed as to
the financial and other condition of Debtor and of all circumstances bearing
upon the risk of Debtor’s breach or non-performance of any Loan. Secured Party
shall have no duty to advise Guarantor of information known to it regarding
Debtor’s condition, financial or otherwise.

 

33

 

6.         Discharge.
Nothing shall discharge or satisfy Guarantor’s obligations hereunder except the
full payment, performance and observance of all of Debtor’s obligations under
each Loan. If any claim is made upon Secured Party at any time for repayment or
recovery of any amount(s) or other value received by Secured Party from
any sources, in payment of or on account of any of the liabilities of Debtor
guaranteed hereunder and Secured Party repays or otherwise becomes liable for
all or any part of such claims, for whatever reason, the undersigned shall
remain liable to Secured Party hereunder as if such amount(s) had never
been received by Secured Party, notwithstanding any termination hereof or the
termination of the agreements evidencing any of the liabilities of Secured
Party. The terms of this paragraph shall survive the termination of this
Guaranty.

 

7.         Representations and
Warranties. Guarantor hereby represents and warrants that this Guaranty is
a binding obligation of the Guarantor and is enforceable against Guarantor in
accordance with its terms, and that the execution, delivery and performance of
this Guaranty has been approved by all necessary corporate action and does not
violate or conflict with Guarantor’s articles of organization, bylaws,
resolutions or other governing instruments and will not result in a breach of
any agreement to which Guarantor is a party.

 

8.         Financial Statements.
Guarantor shall provide to Secured Party a copy of its annual audited financial
statements within one hundred twenty (120) days after its fiscal year end, and
a copy of its quarterly un-audited financial statements within sixty (60) days
after the end of each fiscal quarter.

 

9.         Applicable Law; Costs
of Enforcement. Guarantor agrees that this Guaranty shall be governed by
and construed in accordance with the substantive law of the State of Nevada and
that jurisdiction of any dispute shall be exclusively in the Nevada state or
federal courts. Guarantor submits itself to such jurisdiction. Guarantor agrees
that it shall reimburse Secured Party for all costs and expenses incurred by
Secured Party in connection with the enforcement of this Guaranty, including
without limitation court costs and reasonable attorneys fees.

 

10.       Assignment.
Secured Party may assign this Guaranty to one or more entities without notice
to Guarantor, and upon such assignment, the assignee shall be entitled to all
of the benefits, rights and remedies of Secured Party, as if no assignment had
been made.

 

11.       Benefit. This
Guaranty shall be binding upon the Guarantor, its successors and assigns and
shall inure to the benefit of Secured Party, its successors and assigns,
including any successor assignees.

 

12.       Entire Agreement:
Modification: Partial Invalidity. This Guaranty represents the entire
obligation of Guarantor in favor of Secured Party, and there are no prior or
contemporaneous verbal or written modifications to it. This Guaranty shall not
be modified or limited except in a writing signed by Secured Party and all
parties to be bound. In the event that any provision of this Guaranty shall be
held to be invalid or unenforceable, the remaining provisions shall continue in
full force and effect.

 

34

 

Dated:        ,
2008

 

	
  GUARANTOR:

  	
   

  
	
   

  	
   

  
	
  ALLEGIANT TRAVEL COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  
	
   

  	
  Andrew
  C. Levy, Chief Financial Officer

  	
   

  

 

35

 

EXHIBIT “D”

 

Wire
Instructions

 

[to be added]

 

36

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