Document:

exv10w8

 

Exhibit 10.8

FORM OF CREDIT AGREEMENT

 

CREDIT AGREEMENT

dated as of ___, 2006

among

                                                            ,

AS BORROWER,

and

COMPASS GROUP DIVERSIFIED HOLDINGS LLC,

as Lender

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1. DEFINITIONS; INTERPRETATION	 	 	1	 
	1.1	 	Definitions
	 	 	1	 
	1.2	 	Interpretation
	 	 	17	 
	 	 	 
	 	 	 	 
	SECTION 2. CREDIT FACILITIES	 	 	17	 
	2.1	 	Commitments
	 	 	17	 
	2.2	 	Loan Procedures
	 	 	18	 
	2.3	 	[Reserved]
	 	 	19	 
	2.4	 	Certain Conditions
	 	 	19	 
	2.5	 	Loan Accounting
	 	 	19	 
	2.6	 	Interest
	 	 	19	 
	2.7	 	Fees
	 	 	20	 
	2.8	 	Commitment Reduction
	 	 	21	 
	2.9	 	Prepayment
	 	 	21	 
	2.10	 	Repayment
	 	 	23	 
	2.11	 	Payment
	 	 	23	 
	 	 	 
	 	 	 	 
	SECTION 3. YIELD PROTECTION	 	 	26	 
	3.1	 	Taxes
	 	 	26	 
	3.2	 	Increased Cost
	 	 	27	 
	3.3	 	Inadequate or Unfair Basis
	 	 	27	 
	3.4	 	Change in Law
	 	 	28	 
	3.5	 	Funding Losses
	 	 	28	 
	3.6	 	Manner of Funding; Alternate Funding Offices
	 	 	28	 
	3.7	 	Mitigation of Circumstances; Replacement of Lender
	 	 	29	 
	3.8	 	Conclusiveness of Statements; Survival
	 	 	29	 
	 	 	 
	 	 	 	 
	SECTION 4. CONDITIONS PRECEDENT	 	 	29	 
	4.1	 	Initial Credit Extension
	 	 	29	 
	4.2	 	All Credit Extensions
	 	 	32	 
	 	 	 
	 	 	 	 
	SECTION 5. REPRESENTATIONS AND WARRANTIES	 	 	32	 
	5.1	 	Organization
	 	 	32	 
	5.2	 	Authorization; No Conflict
	 	 	32	 
	5.3	 	Validity; Binding Nature
	 	 	33	 
	5.4	 	Financial Condition
	 	 	33	 
	5.5	 	No Material Adverse Change
	 	 	33	 
	5.6	 	Litigation
	 	 	33	 
	5.7	 	Ownership of Properties; Liens
	 	 	34	 
	5.8	 	Capitalization
	 	 	34	 
	5.9	 	Pension Plans
	 	 	34	 
	5.10	 	Investment Company Act
	 	 	35	 
	5.11	 	Public Utility Holding Company Act
	 	 	35	 

i

 

	 	 	 	 	 	 	 
	5.12	 	Margin Stock
	 	 	35	 
	5.13	 	Taxes
	 	 	35	 
	5.14	 	Solvency
	 	 	35	 
	5.15	 	Environmental Matters
	 	 	35	 
	5.16	 	Insurance
	 	 	36	 
	5.17	 	Information
	 	 	36	 
	5.18	 	Intellectual Property
	 	 	36	 
	5.19	 	Restrictive Provisions
	 	 	37	 
	5.20	 	Labor Matters
	 	 	37	 
	5.21	 	No Default
	 	 	37	 
	 	 	 
	 	 	 	 
	SECTION 6. AFFIRMATIVE COVENANTS	 	 	37	 
	6.1	 	Information
	 	 	37	 
	6.2	 	Books; Records; Inspections
	 	 	39	 
	6.3	 	Maintenance of Property; Insurance
	 	 	40	 
	6.4	 	Compliance with Laws; Payment of Taxes and Liabilities
	 	 	41	 
	6.5	 	Maintenance of Existence
	 	 	41	 
	6.6	 	Employee Benefit Plans
	 	 	41	 
	6.7	 	Environmental Matters
	 	 	41	 
	6.8	 	Further Assurances
	 	 	42	 
	 	 	 
	 	 	 	 
	SECTION 7. NEGATIVE COVENANTS	 	 	42	 
	7.1	 	Debt
	 	 	42	 
	7.2	 	Liens
	 	 	43	 
	7.3	 	Operating Leases
	 	 	44	 
	7.4	 	Restricted Payments
	 	 	44	 
	7.5	 	Mergers; Consolidations; Asset Sales
	 	 	45	 
	7.6	 	Modification of Organizational Documents
	 	 	45	 
	7.7	 	Use of Proceeds
	 	 	45	 
	7.8	 	Transactions with Affiliates
	 	 	45	 
	7.9	 	Inconsistent Agreements
	 	 	45	 
	7.10	 	Business Activities
	 	 	46	 
	7.11	 	Investments
	 	 	46	 
	7.12	 	Restriction of Amendments to Certain Documents
	 	 	47	 
	7.13	 	Fiscal Year
	 	 	47	 
	7.14	 	Financial Covenants
	 	 	47	 
	7.15	 	Bank Accounts
	 	 	48	 
	7.16	 	Subsidiaries
	 	 	48	 
	 	 	 
	 	 	 	 
	SECTION 8. EVENTS OF DEFAULT; REMEDIES	 	 	48	 
	8.1	 	Events of Default
	 	 	48	 
	8.2	 	Remedies
	 	 	51	 
	 	 	 
	 	 	 	 
	SECTION 9. MISCELLANEOUS	 	 	51	 
	9.1	 	Waiver; Amendments
	 	 	51	 
	9.2	 	Notices
	 	 	51	 
	9.3	 	Computations
	 	 	52	 

ii

 

	 	 	 	 	 	 	 
	9.4	 	Costs; Expenses
	 	 	52	 
	9.5	 	Indemnification by Borrower
	 	 	52	 
	9.6	 	Marshaling; Payments Set Aside
	 	 	53	 
	9.7	 	Nonliability of Lender
	 	 	53	 
	9.8	 	Assignments; Participations
	 	 	53	 
	9.9	 	Confidentiality
	 	 	55	 
	9.10	 	Captions
	 	 	56	 
	9.11	 	Nature of Remedies
	 	 	56	 
	9.12	 	Counterparts
	 	 	56	 
	9.13	 	Severability
	 	 	56	 
	9.14	 	Entire Agreement
	 	 	56	 
	9.15	 	Successors; Assigns
	 	 	56	 
	9.16	 	Governing Law
	 	 	57	 
	9.17	 	Forum Selection; Consent to Jurisdiction
	 	 	57	 
	9.18	 	Waiver of Jury Trial
	 	 	57	 

	 	 	 
	Annexes
	 	 
	 
	 	 
	Annex I
	 	Commitments and Pro Rata Shares

	Annex II
	 	Addresses
	 
	 	 
	Exhibits
	 	 
	 
	 	 
	Exhibit A
	 	Form of Assignment Agreement
	Exhibit B
	 	Form of Compliance Certificate
	[Exhibit C
	 	Form of Availability Certificate]
	Exhibit D
	 	Form of Note
	Exhibit E
	 	Form of Borrowing Notice
	Exhibit F
	 	Conversion/Continuation Notice
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 4.1.3
	 	Debt to be Repaid
	Schedule 5.6
	 	Litigation
	Schedule 5.8
	 	Capitalization
	Schedule 5.16
	 	Insurance
	Schedule 5.20
	 	Labor Matters
	Schedule 7.1
	 	Existing Debt
	Schedule 7.2
	 	Existing Liens
	Schedule 7.11
	 	Existing Investments
	Schedule 7.15
	 	Bank Accounts

iii

 

CREDIT AGREEMENT

          This Credit Agreement dated as of [___, 2006] (as amended, restated or otherwise modified
from time to time, this “Agreement”) by and between [___], a [___]
corporation (“Borrower”), and Compass Group Diversified Holdings LLC, (together with its
successors and assigns, “Lender”), as lender.

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

Section 1. Definitions; Interpretation.

     1.1 Definitions.

          When used herein the following terms shall have the following meanings:

          Acceleration Event means the occurrence of any of the following: (i) an Event of
Default under Section 8.1.3; (ii) an Event of Default under Section 8.1.1 and
the termination of the Commitments; or (iii) any other Event of Default under Section
8.1 and the election by the Lender to declare the Obligations to be due and payable or to
terminate the Revolving Loan Commitment.

          Account has the meaning set forth in the Guarantee and Collateral Agreement.

          Account Debtor means any Person who is obligated to Borrower or any Subsidiary with
respect to any Account.

          Acquisition means any transaction or series of related transactions for the purpose
of or resulting, directly or indirectly, in (a) the acquisition of all or a substantial portion
of the assets of a Person, or of all or a substantial portion of any business or division of a
Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other
than a Person that is already a Subsidiary).

          Adjusted Working Capital means the remainder of (a) the consolidated current assets
of Borrower and the Subsidiaries minus the amount of cash and cash equivalents included in such
consolidated current assets, minus (b) the consolidated current liabilities of Borrower and the
Subsidiaries minus the amount of consolidated short-term Debt (including current maturities of
long-term Debt) of Borrower and the Subsidiaries included in such consolidated current
liabilities.

          Affiliate of any Person means (a) any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person, (b) any officer or
director of such Person and (c) with respect to Lender, any entity administered or managed by
Lender or an Affiliate or investment advisor thereof which is engaged in

1

 

making, purchasing, holding or otherwise investing in commercial loans. A Person shall be
deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly,
power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting
power for the election of directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise. Unless expressly
stated otherwise herein, Lender shall not be deemed an Affiliate of Borrower or of any
Subsidiary.

          Agreement has the meaning set forth in the Preamble.

          Applicable Margin1 means the applicable rate per annum as set forth in
the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Revolving Loans	 	Term A Loans	 	Term B Loans	 	Commitment
	 	 	 	 	 	 	Base Rate	 	LIBOR	 	Base Rate	 	LIBOR	 	Base Rate	 	LIBOR	 	Fee
	1
	 	[ratio]	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%
	2
	 	[ratio]	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%
	3
	 	[ratio]	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%	 	 	—	%

Initially, each Applicable Margin shall be that percentage set forth above for Level [_] in
the table above. On and after July 1, 2006, each Applicable Margin shall be equal to the
applicable rate per annum set forth in the table above opposite the applicable Total Debt to EBITDA
Ratio.

          Assignment Agreement means an agreement substantially in the form of Exhibit
A.

          [Availability Certificate means a certificate substantially in the form of
Exhibit C.]

          Balance Sheet Date has the meaning set forth in Section 5.4.

          Base Rate means, for any day, the greater of (a) the rate of interest which is
identified as the “Prime Rate” and normally published in the Money Rates Section of The Wall
Street Journal (or, if such rate ceases to be so published, as quoted from such other
generally available and recognizable source as Lender may select) and (b) the sum of the Federal
Funds Rate plus 0.5%. Any change in the Base Rate due to a change in such Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in such Prime Rate or
the Federal Funds Rate.

          Base Rate Loan means any Loan which bears interest at or by reference to the Base
Rate.

          Borrower has the meaning set forth in the Preamble.

 

			
	1	 	Note: Pricing will be based on Debt to EBITDA
ratios for each of CBS Personnel, Crosman and Silvue. Advanced Circuits’
pricing will not be subject to a grid (i.e., the rates will not vary based on
any financial ratio).

2

 

          [Borrowing Availability means, at the time of determination, an amount equal to the
lesser of (a) the Revolving Loan Commitment and (b) the sum of (i) 85% of the unpaid amount of
all Eligible Accounts plus (ii) 50% of the value of all Eligible Inventory valued at the lower
of cost or market, in each case less such reserves and allowances as Lender deems necessary in
its reasonable discretion; provided, however, that any increase in such reserves and allowances
shall not be effective until 10 days after Lender notifies Borrower of such
increase.]2

          Borrowing Notice means a notice in substantially the form of Exhibit E.

          Business Day means any day other than any Saturday and Sunday on which commercial
banks are open for commercial banking business in New York, New York, and, in the case of a
Business Day which relates to a LIBOR Loan, any day on which dealings are carried out in the
London interbank Eurodollar market.

          Capital Expenditures means all expenditures which, in accordance with GAAP, would
be required to be capitalized and shown on the consolidated balance sheet of Borrower, but
excluding expenditures made in connection with the replacement, substitution or restoration of
assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on
account of the loss of or damage to the assets being replaced or restored, (b) with cash awards
of compensation arising from the taking by eminent domain or condemnation of the assets being
replaced or (c) with cash proceeds of Dispositions that are reinvested in accordance with
Section 2.9.2(a)(i).

          Capital Lease means, with respect to any Person, any lease of (or other agreement
conveying the right to use) any real or personal property by such Person that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of such Person.

          Cash Equivalent Investment means, at any time, (a) any evidence of Debt, maturing
not more than one year after such time, issued or guaranteed by the United States Government or
any agency thereof, (b) commercial paper, or corporate demand notes, in each case (unless issued
by a Lender or its holding company) rated at least A-l by Standard & Poor’s Ratings Group or P-l
by Moody’s Investors Service, Inc., (c) any certificate of deposit (or time deposit represented
by a certificate of deposit) or banker’s acceptance maturing not more than one year after such
time, or any overnight Federal Funds transaction that is issued or sold by Lender (or by a
commercial banking institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase
agreement entered into with Lender (or commercial banking institution of the nature referred to
in clause (c) above) which (i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c) above and (ii) has a market
value at the time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of Lender (or other commercial banking institution) thereunder, (e) money
market accounts or mutual funds

 

			
	2	 	Note: “Borrowing Availability”
and related terms and provisions (e.g., Availability Certificate, Eligible
Account and Eligible Inventory) will be included only in the Credit Agreements
for CBS Personnel and Crosman.

3

 

which invest exclusively in assets satisfying the foregoing requirements and (f) other
short term liquid investments approved in writing by Lender.

          Closing Date means the date on which all conditions precedent set forth in
Section 4.1 have been satisfied or waived in writing by Lender.

          Collateral has the meaning set forth in the Guarantee and Collateral Agreement.

          Collateral Access Agreement means an agreement in form and substance reasonably
satisfactory to Lender pursuant to which a mortgagee or lessor of real property on which
Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of
Inventory or other property owned by Borrower or any Subsidiary, acknowledges the Liens of
Lender and waives (or, if approved by Lender, subordinates) any Liens held by such Person on
such property, and, in the case of any such agreement with a mortgagee or lessor, permits Lender
reasonable access to and use of such real property during the continuance of an Event of Default
to assemble, complete and sell any Collateral stored or otherwise located thereon.

          Collateral Documents means, collectively, the Guarantee and Collateral Agreement,
each Mortgage, each Collateral Access Agreement, and each other agreement or instrument pursuant
to or in connection with which Borrower, any Subsidiary or any other Person grants a security
interest in any Collateral to Lender, each as amended, restated or otherwise modified from time
to time.

          Commitment means the Revolving Loan Commitment, the Term A Loan Commitment and the
Term B Loan Commitment.

          Commitment Fee means the fee payable by Borrower to Lender pursuant to Section
2.7.1.

          Compliance Certificate means a certificate substantially in the form of Exhibit
B.

          Computation Period means each period of four consecutive Fiscal Quarters ending on
the last day of a Fiscal Quarter.

          Consolidated Net Income means, with respect to Borrower and the Subsidiaries for
any period, the consolidated net income (or loss) of Borrower and the Subsidiaries for such
period, excluding any gains or losses from Dispositions, any extraordinary or
non-recurring gains or extraordinary or non-recurring losses and any gains or losses from
discontinued operations.

          Contingent Obligation means any agreement, undertaking or arrangement by which any
Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or
otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability of any other Person (other than by

4

 

endorsements of instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person. The amount of any
Person’s obligation in respect of any Contingent Obligation shall (subject to any limitation set
forth therein) be deemed to be the principal amount of the debt, obligation or other liability
supported thereby.

          Controlled Group means all members of a controlled group of corporations and all
members of a controlled group of trades or businesses (whether or not incorporated) under common
control which, together with Borrower, are treated as a single employer under Section 414 of the
IRC or Section 4001 of ERISA.

          Conversion/Continuation Notice means a notice in substantially the form of
Exhibit F.

          Debt of any Person means, without duplication, (a) all indebtedness of such Person
for borrowed money, whether or not evidenced by bonds, debentures, notes or similar instruments,
(b) all obligations of such Person as lessee under Capital Leases which have been or should be
recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (c) all
obligations of such Person to pay the deferred purchase price of property or services (excluding
trade accounts payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have been assumed by
such Person (with the amount thereof being measured as the fair market value of such property),
(e) all obligations, contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker’s acceptances issued for the account of such Person,
(f) all Hedging Obligations of such Person, (g) all Contingent Obligations of such Person, (h)
all indebtedness of any partnership of which such Person is a general partner and (i) all
obligations of such Person under any synthetic lease transaction, where such obligations are
considered borrowed money indebtedness for tax purposes but the transaction is classified as an
operating lease in accordance with GAAP.

          Debt to be Repaid means the Debt listed on Schedule 4.1.3.

          Default means any event that, if it continues uncured, will, with the lapse of time
or the giving of notice or both, constitute an Event of Default.

          Disposition means, as to any asset or right of Borrower or any Subsidiary, (a) any
sale, lease, assignment or other transfer (other than to Borrower or any Subsidiary), (b) any
loss, destruction or damage thereof or (c) any actual or threatened condemnation, confiscation,
requisition, seizure or taking thereof, in each case excluding (i) assets subject to a
Disposition which are replaced within 180 days with assets performing the same or a similar
function, (ii) Dispositions in any Fiscal Year, the Net Cash Proceeds of which do not in the
aggregate exceed $150,000 and (iii) the sale or other transfer of Inventory in the ordinary
course of business.

          Dollar and $ mean lawful money of the United States of America.

5

 

          Domestic Subsidiary means any Subsidiary that is incorporated or organized under
the laws of a State within the United States of America or the District of Columbia. Unless the
context otherwise requires, each reference to Domestic Subsidiary or Domestic Subsidiaries
herein shall be a reference to Subsidiary or Subsidiaries of Borrower.

          EBITDA means, for any period, Consolidated Net Income for such period plus, to the
extent deducted in determining such Consolidated Net Income, (i) Interest Expense, income tax
expense, depreciation and amortization for such period, and (ii) management fees paid to or
accrued for the benefit of Manager in such period to the extent permitted pursuant to
Section 7.4; provided, that, notwithstanding anything to the contrary contained
herein, for each of the calendar quarters listed below, EBITDA shall be deemed to be the amount
set forth below opposite such quarter:

	 	 	 
	Calendar Quarter	 	EBITDA
	September 30, 2005

	 	$___
	December 31, 2005

	 	$___
	March 31, 2006

	 	$___

Provided, further, that notwithstanding anything to the contrary contained herein, for the
calendar quarter ending June 30, 2006, EBITDA shall be determined to be EBITDA, as calculated
above, for the month of June, 2006 plus the amounts set forth below for April, 2006 plus the
amount set forth below for May, 2006:

	 	 	 
	April, 2006

	 	$___
	May, 2006

	 	$___

               ECF Percentage means, for any fiscal year, 90%.

               [Eligible Account means an Account owing to Borrower or any Domestic Subsidiary
which meets each of the following requirements:

               (a) it arises from the sale of goods (which goods comply in all material respects with
such Account Debtor’s specifications (if any) and have been delivered to such Account Debtor
and not returned by such Account Debtor) or the rendering of services by Borrower or the
applicable Subsidiary;

               (b) it (i) is subject to a perfected Lien in favor of Lender and (ii) is not subject to
any other assignment, claim or Lien;

               (c) it is a valid, legally enforceable and unconditional obligation of the Account
Debtor with respect thereto and is not subject to any counterclaim, credit, allowance,
discount, rebate or adjustment by the Account Debtor or to any claim by such Account Debtor
denying liability thereunder in whole or in part; provided, that in the

6

 

event any counterclaim, credit, allowance, rebate or adjustment is asserted, or
discount is granted, the Account shall only be ineligible pursuant to this clause (c) to the
extent thereof;

               (d) there is no bankruptcy, insolvency or liquidation proceeding pending by or against
the Account Debtor with respect thereto;

               (e) the Account Debtor with respect thereto is a resident or citizen of, and is located
within, the United States or Canada, unless the sale of goods or services giving rise to
such Account is on letter of credit, banker’s acceptance or other credit support terms
reasonably satisfactory to Lender;

               (f) it is not an Account arising from a “sale on approval,” “sale or return,”
“consignment” or “bill and hold” or subject to any other repurchase or return agreement;

               (g) it is not an Account with respect to which possession and/or control of the goods
sold giving rise thereto is held, maintained or retained by Borrower or any Subsidiary (or
by any agent or custodian of Borrower or any Subsidiary) for the account of or subject to
further and/or future direction from the Account Debtor with respect thereto;

               (h) it arises in the ordinary course of business of Borrower or the applicable
Subsidiary;

               (i) if the Account Debtor is the United States or any department, agency or
instrumentality thereof, it does not, when aggregated with other such Accounts, exceed
$50,000 or, if the aggregate of such Accounts exceeds $50,000, to the extent of such excess,
Borrower or the applicable Subsidiary has assigned its right to payment of such Account to
Lender pursuant to the Assignment of Claims Act of 1940, as amended;

               (j) if Borrower or applicable Subsidiary maintains a credit limit for an Account
Debtor, the aggregate dollar amount of Accounts due from such Account Debtor, including such
Account, does not exceed such credit limit; provided, that, in the event that such Account
exceeds such credit limit, the Account shall only be ineligible pursuant to this clause (j)
to the extent of such excess;

               (k) if the Account is evidenced by chattel paper or an instrument, the original copy of
such chattel paper or instrument shall have been endorsed and/or assigned and delivered to
Lender in a manner reasonably satisfactory to Lender;

               (l) such Account is not more than (i) 60 days past the due date thereof or (ii) 90 days
past the original invoice date thereof, in each case according to the original terms of
sale;

               (m) the Account Debtor with respect thereto is not Borrower or an Affiliate of
Borrower;

7

 

               (n) it is not owed by an Account Debtor with respect to which 25% or more of the
aggregate amount of outstanding Accounts owed at such time by such Account Debtor and its
Affiliates is classified as ineligible under clause (l) above;

               (o) if the aggregate amount of the Accounts owed by the Account Debtor and its
Affiliates thereon exceeds [25%] of the aggregate amount of all Accounts at such time, then
all Accounts owed by such Account Debtor in excess of such amount shall be deemed
ineligible; and

               (p) it is an Account denominated in Dollars.

               An Account which is at any time an Eligible Account, but which subsequently fails to meet any
of the foregoing requirements, shall forthwith cease to be an Eligible Account. Further, with
respect to any Account, if Lender at any time hereafter determines in its reasonable discretion
that the prospect of payment or performance by the Account Debtor with respect thereto is
materially impaired for any reason whatsoever, such Account shall cease to be an Eligible Account
after notice of such determination is given to Borrower.]

               Eligible Institution means (a) any Person that (i) is organized for the purpose of
making equity or debt investments in one or more other Persons and (ii) is an Affiliate of Lender
or Manager, (b) any Person that invests in, or extends credit pursuant to, commercial loans in the
ordinary course of business and is approved by Lender, and (c) any finance company, insurance
company or other financial institution which temporarily warehouses Loans for Lender or any Person
described in clauses (a) or (b) above.

               [Eligible Inventory means Inventory of Borrower or any Domestic Subsidiary which meets
each of the following requirements:

          (a) it (i) is subject to a perfected Lien in favor of Lender and (ii) is not subject to
any other assignment, claim or Lien;

          (b) it is salable;

          (c) it is in the possession and control of Borrower or any Domestic Subsidiary and it
is stored and held in facilities in the United States owned by Borrower or any Domestic
Subsidiary or, if such facilities are not so owned, Lender is in possession of a Collateral
Access Agreement with respect thereto;

          (d) it is not Inventory produced in violation of the Fair Labor Standards Act and
subject to the “hot goods” provisions contained in Title 29 U.S.C. §215;

          (e) it is not subject to any agreement which would restrict Lender’s ability to sell or
otherwise dispose of such Inventory;

          (f) it is located in the United States or in any territory or possession of the United
States that has adopted Article 9 of the Uniform Commercial Code;

8

 

          (g) it is not “in transit” to Borrower or any Domestic Subsidiary or held or delivered
by Borrower or any Domestic Subsidiary on consignment;

          (h) it is not “work-in progress” Inventory; and

          (i) Lender shall not have determined in its discretion that it is unacceptable due to
age, type, category, quality, quantity and/or any other reason whatsoever.

          Inventory which is at any time Eligible Inventory but which subsequently fails to meet any of
the foregoing requirements shall forthwith cease to be Eligible Inventory.]

          Environmental Claims means all claims, however asserted, by any governmental,
regulatory or judicial authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law, or for release or injury to the environment or any Person or
property.

          Environmental Laws means all present or future federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all administrative
orders, directed duties, requests, licenses, authorizations and permits of, and agreements with,
any governmental authority, in each case relating to any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace, including any of the
foregoing relating to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, discharge, release, control or cleanup of any Hazardous Substance.

          ERISA means the Employee Retirement Income Security Act of 1974, as amended.

          Event of Default means any of the events described in Section 8.1.

          Excess Cash means, with respect to Holdings, Borrower and their Subsidiaries, the
excess of (i) the combined cash and Cash Equivalent Instruments of Holdings, Borrower and the
Subsidiaries over (ii) $[___].

          Excess Cash Flow means, with respect to each Fiscal Year, for any period, the
remainder of EBITDA for such Fiscal Year, minus the sum, without duplication, of (i) scheduled
repayments of principal of Term Loans and other Debt of Borrower and the Subsidiaries (in respect
of Debt permitted in accordance with Section 7.1) made during such Fiscal Year, plus (ii)
voluntary prepayments of the Term Loans pursuant to Section 2.9.1 during such Fiscal Year,
plus (iii) cash payments (not financed with the proceeds of Debt other than Revolving Loans) made
in such Fiscal Year with respect to Capital Expenditures permitted under Section 7.14.4
plus (iv) all federal, state, local and foreign income taxes paid in cash by Borrower and the
Subsidiaries, or paid in cash by Holdings with the proceeds of the tax distributions by Borrower
permitted under Section 7.4, during such Fiscal Year or payable with respect to such Fiscal
Year by any of them within 75 days after the last day of such Fiscal Year, plus (v) all Interest
Expense in respect of Debt permitted in accordance with Section 7.1 paid in cash by
Borrower and the Subsidiaries during such Fiscal Year or payable with respect to such Fiscal Year
by any of them

9

 

 within 30 days after the last day of such Fiscal Year, plus (vi) to the extent permitted under
Section 7.4, management fees paid in cash to Manager during such Fiscal Year or payable to
Manager with respect to such Fiscal Year within 30 days of the last day of such Fiscal Year.

          Federal Funds Rate means, for any day, a rate per annum (rounded upward to the nearest
1/100th of 1%) equal to the rate published by the Federal Reserve Bank of New York on the preceding
Business Day or, if no such rate is so published, the average rate per annum, as determined by
Lender, quoted for overnight Federal Funds transactions last arranged prior to such day.

          Fiscal Quarter means a fiscal quarter of a Fiscal Year.

          Fiscal Year means the fiscal year of Borrower and the Subsidiaries, which period shall
be the [12-month period ending on December 31][___] of each year.

          Fixed Charge Coverage Ratio means, for any Computation Period, the ratio of (a) the
total for such period of EBITDA minus the sum for such period of (i) all income taxes and tax
distributions described in Section 7.4 paid by Borrower and the Subsidiaries within 75 days
of the end of such period, (ii) all Capital Expenditures and (iii) management fees paid in cash to
Manager during such period or payable to Manager within 30 days of the end of such period (other
than management fees paid concurrent with the Closing Date or within 15 days after the Closing
Date) to (b) the sum for such period of (i) Interest Expense paid in cash by Borrower and
the Subsidiaries, plus (ii) required payments of principal of Debt (including the Term Loans but
excluding the Revolving Loans).

          Foreign Subsidiary means any Subsidiary that is not incorporated or organized under
the laws of a State within the United States of America or the District of Columbia.

          FRB means the Board of Governors of the Federal Reserve System or any successor
thereto.

          Funded Debt means, as to any Person, all Debt of such Person that matures more than
one year from the date of its creation (or is renewable or extendible, at the option of such
Person, to a date more than one year from such date).

          GAAP means generally accepted accounting principles in effect in the United States of
America set forth from time to time 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 agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination.

          Guarantee and Collateral Agreement means the Guarantee and Collateral Agreement, dated
as of the Closing Date, by each Loan Party (other than Borrower) in favor of Lender, as amended,
restated or otherwise modified from time to time.

10

 

          Hazardous Substances means hazardous waste, hazardous substance, pollutant,
contaminant, toxic substance, oil, hazardous material, chemical or other substance regulated by any
Environmental Law.

          Hedging Obligation means, with respect to any Person, any liability of such Person
under any interest rate, currency or commodity swap agreement, cap agreement or collar agreement,
and any other agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices. The amount of any Person’s obligation
in respect of any Hedging Obligation shall be deemed to be the incremental obligation that would be
reflected in the financial statements of such Person in accordance with GAAP.

          Holdings means [___], a Delaware corporation.

          Interest Expense means for any period the consolidated interest expense of Borrower
and the Subsidiaries for such period (including all imputed interest on Capital Leases).

          Interest Period means, as to any LIBOR Loan, the period commencing on the date such
Loan is borrowed or continued as, or converted into, a LIBOR Loan and ending on the date one, two
or three months thereafter, as selected by Borrower pursuant to Section 2.2.2 or
2.2.3, as the case may be; provided, that: (a) if any Interest Period would otherwise end
on a day that is not a Business Day, such Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the preceding Business
Day; (b) any Interest Period that begins 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; (c) Borrower may not select any Interest
Period for a Revolving Loan which would extend beyond the scheduled Termination Date; and (d)
Borrower may not select any Interest Period for a Term Loan if, after giving effect to such
selection, the aggregate principal amount of all Term Loans having Interest Periods ending after
any date on which an installment of the Term Loans is scheduled to be repaid would exceed the
aggregate principal amount of the Term Loans scheduled to be outstanding after giving effect to
such repayment.

          Inventory has the meaning set forth in the Guarantee and Collateral Agreement.

          Investment means, with respect to any Person, (a) the purchase of any debt or equity
security of any other Person, (b) the making of any loan or advance to any other Person, (c)
becoming obligated with respect to a Contingent Obligation in respect of obligations of any other
Person (other than travel and similar advances to employees in the ordinary course of business) or
(d) the making of an Acquisition.

          Investment Affiliate means, with respect to Manager, any fund or investment vehicle
that (a) is organized by Manager for the purpose of making equity or debt investments in one or
more companies and (b) is controlled by Manager. For purposes of this definition “control” means
the power to direct or cause the direction of management and policies of a Person, whether by
contract or otherwise.

11

 

          IRC means the Internal Revenue Code of 1986, as amended.

          Legal Costs means, with respect to any Person, (a) all reasonable fees and charges of
any counsel, accountants, auditors, appraisers, consultants and other professionals to such Person,
(b) the reasonable allocable cost of internal legal services of such Person and all reasonable
disbursements of such internal counsel and (c) all court costs and similar legal expenses.

          Lender has the meaning set forth in the Preamble.

          LIBOR Loan means any Loan which bears interest at a rate determined by reference to
the LIBOR Rate.

          LIBOR Rate means, with respect to any LIBOR Loan for any Interest Period, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (i) the offered rate for
deposits in Dollars for the applicable Interest Period and for the amount of the applicable LIBOR
Loan that appears on Telerate Page 3750 at 11:00 a.m. London time (or, if not so appearing, as
published in the “Money Rates” section of The Wall Street Journal or another national
publication selected by Lender) two Business Days prior to the first day of such Interest Period,
divided by (ii) the sum of one minus the daily average during such Interest Period of the aggregate
maximum reserve requirement (expressed as a decimal) then imposed under Regulation D of the FRB for
“Eurocurrency Liabilities” (as defined therein).

          Lien means, with respect to any Person, any interest granted by such Person in any
real or personal property, asset or other right owned or being purchased or acquired by such Person
which secures payment or performance of any obligation and shall include any mortgage, lien,
encumbrance, charge or other security interest of any kind, whether arising by contract, as a
matter of law, by judicial process or otherwise.

          Loan Documents means this Agreement, the Notes, the Collateral Documents and all
documents, instruments and agreements delivered in connection with the foregoing, all as amended,
restated or otherwise modified from time to time.

          Loan Party means Holdings, Borrower and each Subsidiary.

          Loans means Revolving Loans and Term Loans.

          Manager means Compass Group Management LLC, a Delaware limited liability company.

          Margin Stock means any “margin stock” as defined in Regulation T, U or X of the FRB.

          Material Adverse Effect means (a) a material adverse change in, or a material adverse
effect upon, the financial condition, operations, assets, business, properties or prospects of Loan
Parties taken as a whole, (b) a material impairment of the ability of any Loan Party to perform any
of its Obligations under any Loan Document or (c) a material adverse effect upon

12

 

any substantial portion of the Collateral under the Collateral Documents or upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan Document.

          Mortgage means a mortgage, deed of trust, leasehold mortgage or similar instrument
granting Lender a Lien on a real property interest of any Loan Party, each as amended, restated or
otherwise modified from time to time.

          Multiemployer Pension Plan means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which Borrower or any member of the Controlled Group may have any
liability.

          Net Cash Proceeds means:

          (a) with respect to any Disposition, the aggregate cash proceeds (including cash
proceeds received pursuant to policies of insurance and by way of deferred payment of
principal pursuant to a note, installment receivable or otherwise, but only as and when
received) received by any Loan Party pursuant to such Disposition net of (i) the reasonable
direct costs relating to such Disposition (including sales commissions and legal, accounting
and investment banking fees, commissions and expenses and, in the case of a Disposition of
any asset, costs of preparing such asset for sale), (ii) any portion of such proceeds
deposited in an escrow account pursuant to the documentation relating to such Disposition
(provided that such amounts shall be treated as Net Cash Proceeds upon their release from
such escrow account to the applicable Loan Party), (iii) taxes paid or reasonably estimated
by Borrower to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), (iv) amounts required to be applied
to the repayment of any Debt secured by a Lien prior to the Lien of Lender on the asset
subject to such Disposition and (v) with respect to any Disposition described in clause (b)
or (c) of the definition thereof, all money actually applied within 180 days to repair,
replace or reconstruct damaged property or property affected by loss, destruction, damage,
condemnation, confiscation, requisition, seizure or taking, all of the costs and expenses
reasonably incurred in connection with the collection of such proceeds, award or other
payments, and any amounts retained by or paid to parties having superior rights to such
proceeds, awards or other payments; and

          (b) with respect to any issuance of equity securities, the aggregate cash proceeds
received by Holdings, Borrower or any Subsidiary pursuant to such issuance, net of the
reasonable direct costs relating to such issuance (including reasonable sales and
underwriter’s commission).

          Non-Senior Debt means the Term B Loans plus all any unsecured Debt of Holdings,
Borrower or a Subsidiary which has subordination terms, covenants, pricing and other terms which
have been approved in writing by Lender.

          Note means a promissory note substantially in the form of Exhibit D, as the
same may be amended, restated or otherwise modified from time to time.

13

 

          Obligations means all liabilities, indebtedness and obligations (monetary (including
post-petition interest, allowed or not) or otherwise) of any Loan Party under this Agreement, any
other Loan Document, any Collateral Document or any other document or instrument executed in
connection herewith or therewith and all Hedging Obligations permitted hereunder which are owed to
Lender or its Affiliates, in each case howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to become due.

          Operating Lease means any lease of (or other agreement conveying the right to use) any
real or personal property by Borrower or any Subsidiary, as lessee, other than any Capital Lease.

          Paid in Full means, with respect to any Obligations, (a) the payment in full in cash
and performance of all such Obligations, and (b) the termination of all Commitments relating to
such Obligations.

          PBGC means the Pension Benefit Guaranty Corporation and any entity succeeding to any
or all of its functions under ERISA.

          Pension Plan means a “pension plan”, as such term is defined in Section 3(2) of ERISA,
which is subject to Title IV of ERISA (other than a Multiemployer Pension Plan), and to which
Borrower or any member of the Controlled Group may have any liability, including any liability by
reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any
time during the preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.

          Person means any natural person, corporation, partnership, trust, limited liability
company, association, governmental authority or unit, or any other entity, whether acting in an
individual, fiduciary or other capacity.

          Pro Rata Revolving Share means, with respect to Lender or any Assignee, the applicable
percentage (as adjusted from time to time in accordance with the terms hereof) specified opposite
such Person’s name on Annex I which corresponds to the Revolving Loan Commitment, which
percentage shall be with respect to Revolving Loans outstanding if the Revolving Loan Commitment
has terminated.

          Pro Rata Share means, with respect to Lender or any Assignee, the applicable
percentage (as adjusted from time to time in accordance with the terms hereof) obtained by dividing
(a) the sum of (i) such Person’s Pro Rata Revolving Share of the Revolving Loan Commitment (or if
the Revolving Loan Commitment has terminated, such Person’s Pro Rata Revolving Share of the
Revolving Loans outstanding), (ii) such Person’s Pro Rata Term A Loan Share of the Term A Loans)
and (iii) such Person’s Pro Rata Term B Loan Share of the Term B Loans, by (b) the Total Loan
Commitment.

          Pro Rata Term A Loan Share means, with respect to Lender or any Assignee, the
applicable percentage (as adjusted from time to time in accordance with the terms hereof) specified
opposite such Person’s name on Annex I which corresponds to the Term A Loans.

14

 

          Pro Rata Term B Loan Share means, with respect to Lender or any Assignee, the
applicable percentage (as adjusted from time to time in accordance with the terms hereof) specified
opposite such Person’s name on Annex I which corresponds to the Term B Loans.

          Related Transactions means the transactions contemplated by the Stock Purchase
Agreement, dated as of even date herewith, by and among Compass Group Diversified Holdings, Inc.,
Compass Group Investments, Inc., Compass CS Partners, L.P., Compass CS II Partners, L.P., Compass
Crosman Partners, L.P., Compass Advanced Partners, L.P. and Compass Silvue Partners, L.P.,
including the Ancillary Purchase and Redemption Transactions as defined therein.

          Revolving Loan Commitment means [$___] (as reduced from time to time pursuant to
the terms hereof), plus such additional amounts, if any, that Lender may, in its sole discretion,
from time to time commit to advance as Revolving Loans in connection with one or more Acquisitions;
provided, however, that no advance in respect of any such additional Revolving Loan Commitment
shall exceed that amount that would result in Borrower’s: (i) Senior Debt to EBITDA Ratio exceeding
3.0 to 1.0; or (ii) Total Debt to EBITDA Ratio exceeding 4.0 to 1.0, with both such ratios
calculated as of the last day of the Fiscal Quarter immediately proceeding the Fiscal Quarter in
which such additional amount is to be advanced and on a pro forma basis based on EBITDA for the
Computation Period as if the applicable Acquisition had been consummated on the calculation date,
with such adjustments thereto as may be determined necessary or appropriate by Lender.

          Revolving Loans has the meaning set forth in Section 2.1.1.

          Senior Debt means, as of any day, the Revolving Loans, to the extent outstanding at
the end of such day, plus the aggregate principal amount of the Term A Loans outstanding at the end
of such day, plus all obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker’s acceptances, if any, issued for the account
of Borrower and outstanding at the end of such day.

          Senior Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio
of (i) Senior Debt as of such day to (ii) EBITDA for the Computation Period ending on such day.

          Subsidiary means, with respect to any Person, a corporation, partnership, limited
liability company or other entity of which such Person owns, directly or indirectly, such number of
outstanding shares or other equity interests as to have more than 50% of the ordinary voting power
for the election of directors or other managers of such corporation, partnership, limited liability
company or other entity. Unless the context otherwise requires, each reference to Subsidiary or
Subsidiaries herein shall be a reference to Subsidiary or Subsidiaries of Borrower.

          Term A Loan Commitment means [$___] plus, after the Closing Date, such additional
amounts, if any, that Lender may, in its sole discretion, from time to time advance as Term A Loans
in connection with one or more Acquisitions; provided, however, that no such additional Term A Loan
Commitment shall exceed that amount which would result in Borrower’s: (i) Senior Debt to EBITDA
Ratio exceeding 3.0 to 1.0; or (ii) Total Debt to EBITDA Ratio exceeding 4.0 to 1.0, with both such
ratios calculated as of the last day of the

15

 

Fiscal Quarter immediately proceeding the Fiscal Quarter in which such additional amount is to
be advanced and on a pro forma basis based on EBITDA for the Computation Period as if the
applicable Acquisition had been consummated on the calculation date, with such adjustments thereto
as may be determined necessary or appropriate by Lender.

          Term A Loan Maturity Date means [___, 2012] or such earlier date on which the
Commitments terminate pursuant to Section 8.

          Term A Loans means a loan from Lender to Borrower in the principal amount of the Term
A Loan Commitment on the Closing Date, together with such other loans, if any, pursuant to the Term
A Loan Commitment.

          Term B Loan Commitment means [$___] plus, after the Closing Date, such additional
amounts, if any, that Lender may, in its sole discretion, from time to time advance as Term B Loans
in connection with one or more Acquisitions; provided, however, that no such additional Term B Loan
Commitment shall exceed that amount which would result in Borrower’s Total Debt to EBITDA Ratio
exceeding 4.0 to 1.0, with such ratio to be calculated as of the last day of the Fiscal Quarter
immediately proceeding the Fiscal Quarter in which such additional amount is to be advanced and on
a pro forma basis based on EBITDA for the Computation Period as if the applicable Acquisition had
been consummated on the calculation date, with such adjustments thereto as may be determined
necessary or appropriate by Lender.

          Term B Loan Maturity Date means [___, 2013] or such earlier date on which the
Commitments terminate pursuant to Section 8.

          Term B Loans means a loan from Lender to Borrower in the principal amount of the Term
B Loan Commitment on the Closing Date, together with such other loans, if any, pursuant to the Term
B Loan Commitment.

          Term Loans means the Term A Loans and the Term B Loans, collectively.

          Termination Date means [___, 2012] or such earlier date on which the Revolving
Loan Commitment terminates pursuant to Section 2.9 or Section 8.

          Total Debt means, as of any day, all Debt (other than Debt described in clause (g) of
the definition thereof and Debt of any Loan Party to another Loan Party) of Borrower and the
Subsidiaries at the end of such day, determined on a consolidated basis.

          Total Debt to EBITDA Ratio means, as of the last day of any Fiscal Quarter, the ratio
of (a) Total Debt as of such day to (b) EBITDA for the Computation Period ending on such day.

          Total Loan Commitment means at any date of determination, the sum of (i) the Revolving
Loan Commitment (or if the Revolving Loan Commitment has terminated, the Revolving Loans then
outstanding) at the end of such date plus (ii) the outstanding principal balance of the Term Loans
at the end of such date.

16

 

               [U. S. Bank Letter of Credit Obligations means all obligations of Borrower to
U.S. Bank National Association under that certain [Loan Facility], dated as of ___; provided,
however, such obligations shall not exceed $25,000,000 and shall be secured by a first priority
lien on the Accounts of Borrower.]

               Wholly-Owned Subsidiary means, as to any Person, another Person all of the equity
interests of which (except directors’ qualifying shares) are at the time directly or indirectly
owned by such Person and/or another Wholly-Owned Subsidiary of such Person. Unless the context
otherwise requires, each reference to Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries herein
shall be a reference to Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries of Borrower.

     1.2 Interpretation.

               In the case of this Agreement and each other Loan Document, (a) the meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms; (b) Annex, Exhibit,
Schedule and Section references are to such Loan Document unless otherwise specified; (c) the term
“including” is not limiting and means “including but not limited to”; (d) 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”; (e) unless otherwise expressly provided in such Loan Document, (i) references
to agreements and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation shall be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute or regulation; (f) this Agreement
and the other Loan Documents may use several different limitations, tests or measurements to
regulate the same or similar matters, all of which are cumulative and each shall be performed in
accordance with its terms; and (g) this Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to Lender, Borrower and the other parties
thereto and are the products of all parties; accordingly, they shall not be construed against
Lender merely because of Lender’s involvement in their preparation.

Section 2. Credit Facilities.

     2.1 Commitments.

               On and subject to the terms and conditions of this Agreement, Lender agrees as follows:

          2.1.1 Revolving Loan Commitments.

               Lender will make loans to Borrower on a revolving basis (“Revolving Loans”) from time
to time and Borrower may repay such loans from time to time until the Termination Date in such
amounts as Borrower may request from Lender; provided, that after giving effect to
such Revolving Loans, the Revolving Loans outstanding will not at any time exceed the
Revolving Loan Commitment [or, if less, the Borrowing Availability].

17

 

          2.1.2 Term Loan Commitments.

               Lender agrees to make (a) a Term A Loan to Borrower on the Closing Date in an amount equal to
the Term A Loan Commitment as of the Closing Date, and (b) a Term B Loan to Borrower on the Closing
Date in an amount equal to the Term B Loan Commitment as of the Closing Date. The Lender shall
have no obligation to make Term Loans after the Closing Date. Term Loans which are repaid or
prepaid by Borrower, in whole or in part, may not be re-borrowed.

     2.2 Loan Procedures.

          2.2.1 Loan Types.

               Each Loan shall be either a Base Rate Loan or a LIBOR Loan, as Borrower shall specify in the
related notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3. Base
Rate Loans and LIBOR Loans may be outstanding at the same time, provided that not more than three
different Interest Periods shall exist among outstanding LIBOR Loans at any one time. All
borrowings, conversions and repayments of Revolving Loans shall be effected so that Lender and each
Assignee will have a ratable share (according to its Pro Rata Revolving Share) of all Revolving
Loans and all Interest Periods of LIBOR Loans. Notwithstanding the foregoing or any other
provision of this Agreement, Borrower may not make more than one Revolving Loan borrowing during
any single calendar week.

          2.2.2 Borrowing.

               Borrower shall give written notice or telephonic notice (followed immediately by written
confirmation thereof) to Lender of each proposed borrowing of a Revolving Loan not later than (a)
in the case of a Base Rate borrowing, 11:00 a.m. New York City time at least two (2) Business Days
prior to the proposed date of such borrowing, and (b) in the case of a LIBOR borrowing, 11:00 a.m.
New York City time at least four (4) Business Days prior to the proposed date of such borrowing;
provided, however, that Lender shall have no obligation to advance such borrowings more than one
time each week. Each such notice shall be effective upon receipt by Lender, shall be irrevocable,
and shall specify, in the form of a Borrowing Notice, the date, amount and type of borrowing and,
in the case of LIBOR borrowing, the initial Interest Period therefor. So long as Borrower’s
request is timely made and the conditions precedent set forth in Section 4 with respect to
such borrowing have been satisfied, Lender shall pay over the proceeds of such borrowing request to
Borrower on the requested borrowing date. Each borrowing shall be on a Business Day. Each Base
Rate borrowing shall be in an aggregate amount of $250,000 or of any integral multiple of $50,000
in excess thereof, and each LIBOR borrowing shall be in an aggregate amount of $250,000 or of any
integral multiple of $50,000 in excess thereof.

          2.2.3 Conversion; Continuation.

               (a) Subject to Section 2.2.1, Borrower may, upon irrevocable written notice to Lender
in accordance with clause (b) below, elect (i) as of any Business Day, to convert any
Loans (or any part thereof in an aggregate amount of not less than $250,000 or a higher
integral multiple of $50,000) into Loans of the other type or (ii) as of the last day of the
applicable Interest Period, to continue any LIBOR Loans having Interest Periods expiring on such
day (or

18

 

any part thereof in an aggregate amount not less than $250,000 or a higher integral
multiple of $50,000) for a new Interest Period; provided, that any conversion of a LIBOR Loan on a
day other than the last day of an Interest Period therefor shall be subject to Section 3.5.

               (b) Borrower shall give written or telephonic notice (followed immediately by written
confirmation thereof) to Lender of each proposed conversion or continuation not later than (i) in
the case of conversion into Base Rate Loans, 11:00 a.m. New York City time at least one Business
Day prior to the proposed date of such conversion and (ii) in the case of conversion into or
continuation of LIBOR Loans, 11:00 a.m. New York City time at least four Business Days prior to the
proposed date of such conversion or continuation, specifying in each case in the form of a
Conversion/Continuation Notice: (i) the proposed date of conversion or continuation; (ii) the
aggregate amount of Loans to be converted or continued; (iii) the type of Loans resulting from the
proposed conversion or continuation; and (iv) in the case of conversion into, or continuation of,
LIBOR Loans, the duration of the requested Interest Period therefor.

               (c) If upon the expiration of any Interest Period applicable to LIBOR Loans, Borrower has
failed to select timely a new Interest Period to be applicable to such LIBOR Loans, Borrower shall
be deemed to have elected to convert such LIBOR Loans into Base Rate Loans effective on the last
day of such Interest Period.

     2.3 [Reserved]

     2.4 Certain Conditions.

               Notwithstanding any other provision of this Agreement, Lender shall not have an obligation to
make any Loan, or to permit the continuation of any expiring LIBOR Loan as a LIBOR Loan, or to
permit any conversion into any LIBOR Loans, if an Event of Default or Default exists.

     2.5 Loan Accounting.

          2.5.1 Recordkeeping.

               Lender shall record in its records the date and amount of each Loan made and each repayment or
conversion thereof and, in the case of each LIBOR Loan, the dates on which each Interest Period for
such Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttably presumptive evidence of the principal amount of the Loans owing and unpaid. The failure
to so record any such amount or any error in so recording any such amount shall not, however, limit
or otherwise affect the Obligations of Borrower hereunder or under any Note to repay the principal
amount of the Loans hereunder, together with all interest accruing thereon.

     2.6 Interest.

          2.6.1 Interest Rates.

               Borrower promises to pay interest on the unpaid principal amount of each Loan for the period
commencing on the date of such Loan until such Loan is paid in full as follows:

19

 

(a) at all times
which such Loan is a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from
time to time in effect plus the Applicable Margin; and (b) at all times while such Loan is a LIBOR
Loan, at a rate per annum equal to the LIBOR Rate applicable to each Interest Period for such Loan
plus the Applicable Margin; provided, that (i) at any time an Event of Default exists, if requested
by Lender, the Applicable Margin corresponding to each Loan shall be increased by two percentage
points per annum (and, in the case of Obligations not subject to an Applicable Margin, such
Obligations shall bear interest at the Base Rate applicable to Revolving Loans plus the Applicable
Margin plus two percentage points per annum), (ii) any such increase may thereafter be rescinded by
Lender, and (iii) upon the occurrence of an Event of Default under Section 8.1.1 or
8.1.3, any such increase described in the foregoing clause (i) shall occur automatically.
In no event shall interest payable by Borrower to Lender hereunder exceed the maximum rate
permitted under applicable law, and if any such provision of this Agreement is in contravention of
any such law, such provision shall be deemed modified to limit such interest to the maximum rate
permitted under such law.

          2.6.2 Interest Payment Dates.

               Accrued interest on each Base Rate Loan shall be payable in arrears on the last day of each
calendar month and at maturity in cash. Accrued interest on each LIBOR Loan shall be payable (a)
on the last day of each Interest Period relating to such Loan, (b) upon a prepayment of such Loan
in accordance with Section 2.9 and (c) at maturity in cash. After maturity and at any time
an Event of Default exists, all accrued interest on all Loans shall be payable in cash on demand at
the rates specified in Section 2.7.1.

          2.6.3 Setting and Notice of LIBOR Rates.

               The applicable LIBOR Rate for each Interest Period shall be determined by Lender, and notice
thereof shall be given by Lender promptly to Borrower. Each determination of the applicable LIBOR
Rate by Lender shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. Lender shall, upon written request of Borrower, deliver to Borrower a
statement showing the computations used by Lender in determining any applicable LIBOR Rate
hereunder.

          2.6.4 Computation of Interest.

               Interest shall be computed for the actual number of days elapsed on the basis of a year of (a)
365/366 days for interest calculated at the Base Rate and (b) 360 days for interest calculated at
the LIBOR Rate. The applicable interest rate for each Base Rate Loan shall change simultaneously
with each change in the Base Rate.

     2.7 Fees.

          2.7.1 Commitment Fee.

               For the period from the Closing Date to the Termination Date, Borrower agrees to pay to Lender
a Commitment Fee equal to the Applicable Margin multiplied by the amount by which the Revolving
Loan Commitment exceeds the average daily Revolving Loans outstanding. The Commitment Fee shall be
payable in arrears on the last day of each calendar month and on

20

 

the Termination Date for any
period then ending for which the Commitment Fee shall not have previously been paid. The
Commitment Fee shall be computed for the actual number of days elapsed on the basis of a year of
360 days.

          2.7.2 Additional Commitment Fees.

               Borrower agrees to pay to Lender on each date, if any, on which (i)Term A Loans or Revolving
Loans are advanced or Revolving Loan Commitments made after the Closing Date an amount equal to
1.0% multiplied by the amount of each such post-Closing Date advance or commitment, and (ii) Term B
Loans are advanced after the Closing Date an amount equal to 2.0% multiplied by the amount of each
such post-Closing Date advance.

          2.7.3
[Origination Fee].3

     2.8 Commitment Reduction.

          2.8.1 Voluntary Reduction or Termination of Revolving Loan Commitment.

               Borrower may from time to time on at least five Business Days’ prior written notice received
by Lender permanently reduce the Revolving Loan Commitment to an amount not less than the Revolving
Loans. Any such reduction shall be in an amount not less than $500,000 or a higher integral
multiple of $100,000. Concurrently with any reduction of the Revolving Loan Commitment to zero,
Borrower shall pay all interest on the Revolving Loans and all commitment fees.

          2.8.2 Mandatory Reduction of Revolving Loan Commitment.

               On the date of any mandatory prepayment pursuant to Section 2.9.2(a)(i) or
(ii), the Revolving Loan Commitment shall be permanently reduced by the amount of such
mandatory prepayment applied to prepay the Revolving Loans pursuant to Section 2.9.2(a)(i)
or (ii).

     2.9 Prepayment.

          2.9.1 Voluntary Prepayment.

               Borrower may from time to time, on at least one Business Day’s written notice or telephonic
notice (if a telephonic notice, followed immediately by written confirmation thereof) to Lender not
later than 11:00 a.m. New York City time on such day, prepay the Term Loans in whole or in part;
provided that Borrower may not prepay all or any portion of the Term B Loans if, either immediately
prior to or after giving effect to any such prepayment, any portion of the Revolving Loans or Term
A Loans are outstanding. Such notice to Lender shall specify the Loans to be prepaid and the date
and amount of prepayment. Any such partial prepayment shall

 

			
	3	 	Applicable only to the CBS Credit Agreement.

21

 

be in an amount equal to $500,000 or a
higher integral multiple of $100,000. All prepayments of Term Loans pursuant to this Section
2.9.1 shall be applied pursuant to Section 2.9.3.

          2.9.2 Mandatory Prepayment.

               (a) Subject to Section 2.9.2(c), Borrower shall prepay, first, the Term A Loans until
Paid in Full and, then, the Term B Loans until Paid in Full (in each case in the inverse order of
maturity to the remaining installments thereof), at the following times and in the following
amounts:

               (i) concurrently with the receipt by Holdings, Borrower or any Subsidiary of any Net
Cash Proceeds from any Disposition, in an amount equal to such Net Cash Proceeds;

               (ii) concurrently with the receipt by Holdings, Borrower or any Subsidiary of any Net
Cash Proceeds from any issuance of its equity securities (other than equity securities that
are issued pursuant to Section 7.11(a)), in an amount equal to such Net Cash
Proceeds; and

               (iii) within 90 days after the end of each Fiscal Year (commencing with Fiscal Year
2006), in an amount equal to the ECF Percentage of Excess Cash Flow for such Fiscal Year.

               (b) If on any day the Revolving Loans then outstanding exceed Borrowing Availability, whether
pursuant to a reduction of the Revolving Loan Commitment pursuant to Section 2.8.1 or
otherwise, Borrower shall immediately prepay Revolving Loans in an amount sufficient to eliminate
such excess.

               (c) Notwithstanding Section 2.9.2(a), on each Monday during the term of the Revolving
Loan Commitment and for so long as there are Revolving Loans outstanding, Borrower shall prepay the
Revolving Loans until Paid in Full in an amount equal to the Excess Cash at the time of such
payment. Payments pursuant to this Section 2.9.2(c) shall not result in a reduction in the
Revolving Loan Commitment.

          2.9.3 All Prepayments.

               (a) Any prepayment of a LIBOR Loan on a day other than the last day of an Interest Period
therefor shall include interest on the principal amount being repaid and shall be subject to
Section 3. All prepayments of a Loan shall be applied first to that portion of such Loan
comprised of Base Rate Loans and then to that portion of such Loan comprised of LIBOR Loans, in
direct order of Interest Period maturities. All prepayments of Term Loans shall be applied first
to Term A Loans until Paid in Full and then to Term B Loans and, in each case, in the inverse order
of maturity to the remaining installments thereof.

               (b) Borrower shall give written notice or telephonic notice (followed immediately by written
confirmation thereof) to Lender not later than 11:00 a.m. New York City time at least one Business
Day prior to each mandatory prepayment pursuant to clause (a) of Section 2.9.2.

22

 

     2.10 Repayment.

          2.10.1 Revolving Loans.

               The Revolving Loans shall be paid, for the account of Lender and any Assignee according to its
respective Pro Rata Revolving Share, in full on the Termination Date.

          2.10.2 Term A Loans.

               The Term A Loans shall amortize as provided in the following table, with each annualized
amount being due and payable in equal quarterly installments on the last day of each Fiscal
Quarter, commencing June 30, 2006 and continuing to the Term Loan A Maturity Date, on which date
the then outstanding Term A Loans shall be paid in full:

	 	 	 	 	 
	Year	 	Annual Amortization
	1
	 	$	—	 
	2
	 	$	—	 
	3
	 	$	—	 
	4
	 	$	—	 
	5
	 	$	—	 
	6
	 	$	—	 

          2.10.3 Term B Loans.

          The Term B Loans shall be paid in full on the Term B Loan Maturity Date.

     2.11 Payment.

          2.11.1
Making Payments.

               All payments of principal of or interest on the Notes, and of all fees, shall be made by
Borrower to Lender without setoff, recoupment or counterclaim and in immediately available funds at
the office specified by Lender not later than 12:00 noon New York City time on the date due, and
funds received after that hour shall be deemed to have been received by Lender on the following
Business Day.

          2.11.2 Application of Payments and Proceeds.

               (a) Except as set forth in Section 2.9.2 and Section 2.9.3, and subject to the
provisions of Sections 2.11.2(b) and 2.11.2(c) below, each payment of principal
shall be applied to such Loans as Borrower shall direct by notice to be received by Lender on or
before the date of such payment or, in the absence of such notice, as Lender shall determine in its
discretion.

23

 

               (b) If an Acceleration Event shall have occurred and be continuing, notwithstanding anything
herein or in any other Loan Document to the contrary, Lender shall apply all or any part of
payments in respect of the Obligations and proceeds of Collateral, in each case as received by
Lender, to the payment of the Obligations in the following order:

               (i) FIRST, to the payment of all fees, costs, expenses and indemnities due and owing to
Lender under this Agreement or any other Loan Document, and any other Obligations owing to
Lender in respect of sums advanced by Lender to preserve or protect the Collateral or to
preserve or protect its security interest in the Collateral (whether or not such Obligations
are then due and owing to Lender), until Paid in Full;

               (ii) SECOND, to the payment of all fees, costs, expenses and indemnities due and owing
to Lender, other than in respect of Term B Loans, until Paid in Full;

               (iii) THIRD, to the payment of all accrued and unpaid interest due and owing to Lender,
other than in respect of Term B Loans, until Paid in Full;

               (iv) FOURTH, to the payment of all principal of the Loans, other than Term B Loans, due
and owing until Paid in Full;

               (v) FIFTH, to the payment of all Hedging Obligations due and owing to Lender or its
Affiliates;

               (vi) SIXTH, to the payment of all other Obligations owing to Lender, other than
Obligations owing in respect of Term B Loans, until Paid in Full;

               (vii) SEVENTH, to the payment of all fees, costs, expenses and indemnities due and
owing to Lender in respect of Term B Loans until Paid in Full;

               (viii) EIGHTH, to the payment of all accrued and unpaid interest due and owing to
Lender in respect of Term B Loans until Paid in Full;

               (ix) NINTH, to the payment of all principal of Term B Loans due and owing until Paid in
Full; and

               (x) TENTH, to the payment of all other Obligations owing to Lender in respect of Term B
Loans until Paid in Full.

               (c) If an Event of Default shall have occurred and be continuing but an Acceleration Event
shall not exist, notwithstanding anything herein or in any other Loan Document to the contrary,
Lender shall apply all or any part of payments in respect of the obligations and proceeds of
Collateral, in each case as received by Lender, to the payment of the Obligations in such order as
Lender may elect. In the absence of a specific determination by Lender, payments in respect of the
Obligations and proceeds of Collateral received by Lender shall be applied in the following order:

               (i) FIRST, to the payment of all fees, costs, expenses and indemnities due and owing to
Lender under this Agreement or any other Loan Document, and any other

24

 

Obligations owing to
Lender in respect of sums advanced by Lender to preserve or protect the Collateral or to
preserve or protect its security interest in the Collateral (whether or not such Obligations
are then due and owing to Lender), until Paid in Full;

               (ii) SECOND, to the payment of all fees, costs, expenses and indemnities due and owing
to Lender, other than in respect of Term B Loans, until Paid in Full;

               (iii) THIRD, to the payment of all accrued and unpaid interest due and owing to Lender,
other than in respect of Term B Loans, until Paid in Full;

               (iv) FOURTH, to the payment of all principal of the Loans, other than Term B Loans,
then due and owing until Paid in Full;

               (v) FIFTH, to the payment of Revolving Loans not then due and owing until Paid in Full;

               (vi) SIXTH, to the payment of all Hedging Obligations owing to Lender or its
Affiliates, pro rata in accordance with Lender’s or one of its Affiliate’s share thereof,
until Paid in Full;

               (vii) SEVENTH, to the payment of all other Obligations owing to Lender, other than
Obligations owing in respect of Term B Loans, until Paid in Full;

               (viii) EIGHTH, to the payment of all fees, costs, expenses and indemnities due and
owing to Lender in respect of Term Loans until Paid in Full;

               (ix) NINTH, to the payment of all accrued and unpaid interest due and owing to Lender
in respect of Term B Loans until Paid in Full;

               (x) TENTH, to cash collateralize Obligations consisting of Term B Loans not yet due and
owing until Paid in Full; and

               (xi) ELEVENTH, to the payment of all other Obligations owing to Lender in respect of
Term B Loans until Paid in Full.

          2.11.3 Payment Dates.

               If any payment of principal or interest with respect to any of the Loans, or of any fees,
falls due on a day which is not a Business Day, then such due date shall be extended to the
immediately following Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such due date shall be
the immediately preceding Business Day) and, in the case of principal, additional interest shall
accrue and be payable for the period of any such extension.

          2.11.4 Set-off.

               Borrower agrees that Lender and its Affiliates have all rights of set-off and bankers’ lien
provided by applicable law, and in addition thereto, Borrower agrees that at any

25

 

time an Event of
Default has occurred and is continuing, Lender may apply to the payment of any Obligations of
Borrower hereunder, whether or not then due, any and all balances, credits, deposits, accounts or
moneys of Borrower then or thereafter with Lender.

Section 3. Yield Protection.

     3.1 Taxes.

               (a) All payments of principal and interest on the Loans and all other amounts payable
hereunder shall be made free and clear of and without deduction for any present or future income,
excise, stamp, documentary, property or franchise taxes and other taxes, fees, duties, levies,
withholdings or other charges of any nature whatsoever imposed by any taxing authority, excluding
taxes imposed on or measured by Lender’s net income by the jurisdiction under which Lender is
organized or conducts business (all non-excluded items being called “Taxes”). If any
withholding or deduction from any payment to be made by Borrower hereunder is required in respect
of any Taxes pursuant to any applicable law, rule or regulation, then Borrower will: (i) pay
directly to the relevant authority the full amount required to be so withheld or deducted; (ii)
promptly forward to Lender an official receipt or other documentation satisfactory to Lender
evidencing such payment to such authority; and (iii) pay to Lender such additional amount or
amounts as is necessary to ensure that the net amount actually received by Lender will equal the
full amount Lender would have received had no such withholding or deduction been required. If any
Taxes are directly asserted against Lender with respect to any payment received by Lender
hereunder, Lender may pay such Taxes and Borrower will promptly pay such additional amounts
(including any penalty, interest or expense) as is necessary in order that the net amount received
by such Person after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had such Taxes not been asserted so long as
such amounts have accrued on or after the day which is 180 days prior to the date on which Lender
first made demand therefor; provided, that if the event giving rise to such costs or reductions has
retroactive effect, such 180 day period shall be extended to include the period of retroactive
effect.

               (b) If Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails
to remit to Lender the required receipts or other required documentary evidence, Borrower shall
indemnify Lender for any incremental Taxes, interest or penalties that may become payable by Lender
as a result of any such failure.

               (c) Each Assignee that (i) is organized under the laws of a jurisdiction other than the United
States of America and (ii) becomes an assignee of an interest under this Agreement under
Section 9.8.1 after the Closing Date (unless such Person was already a Lender hereunder
immediately prior to such assignment) shall execute and deliver to Borrower and Lender one or more
(as Borrower or Lender may reasonably request) Forms W-8ECI, W-8BEN, W-8IMY (as applicable) or
other applicable form, certificate or document prescribed by the United States Internal Revenue
Service certifying as to such Person’s entitlement to exemption from withholding or deduction of
Taxes. Borrower shall not be required to pay additional amounts to any Person pursuant to this
Section 3.1 to the extent that the obligation to pay such additional amounts would not have
arisen but for the failure of such Person or Lender to comply with this paragraph.

26

 

     3.2 Increased Cost.

               (a) If, after the Closing Date, the adoption of, or any change in, any applicable law, rule or
regulation, or any change in the interpretation or administration of any applicable law, rule or
regulation by any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank or comparable agency
shall impose on Lender any other condition affecting its LIBOR Loans, its Note or its obligation to
make LIBOR Loans; and the result of anything described above is to increase the cost to (or to
impose a cost on) Lender of making or maintaining any LIBOR Loan, or to reduce the amount of any
sum received or receivable by Lender under this Agreement or under its Note with respect thereto,
then upon demand by Lender (which demand shall be accompanied by a statement setting forth the
basis for such demand and a calculation of the amount thereof in reasonable detail), Borrower shall
pay directly to Lender such additional amount as will compensate Lender for such increased cost or
such reduction, so long as such amounts have accrued on or after the day which is 180 days prior to
the date on which Lender first made demand therefor; provided, that if the event giving rise to
such costs or reductions has retroactive effect, such 180 day period shall be extended to include
the period of retroactive effect.

               (b) If Lender shall reasonably determine that any change in, or the adoption or phase-in of,
any applicable law, rule or regulation regarding capital adequacy, or any change in the
interpretation or administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the compliance by Lender or
any Person controlling Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Lender’s or such controlling Person’s capital as
a consequence of Lender’s obligations hereunder to a level below that which Lender or such
controlling Person could have achieved but for such change, adoption, phase-in or compliance
(taking into consideration Lender’s or such controlling Person’s
policies with respect to capital adequacy) by an amount deemed by Lender or such controlling
Person to be material, then from time to time, upon demand by Lender (which demand shall be
accompanied by a statement setting forth the basis for such demand and a calculation of the amount
thereof in reasonable detail), Borrower shall pay to Lender such additional amount as will
compensate Lender or such controlling Person for such reduction, so long as such amounts have
accrued on or after the day which is 180 days prior to the date on which Lender first made demand
therefor; provided, that if the event giving rise to such costs or reductions has retroactive
effect, such 180 day period shall be extended to include the period of retroactive effect.

     3.3 Inadequate or Unfair Basis.

               If Lender reasonably determines (which determination shall be binding and conclusive on
Borrower) that, by reason of circumstances affecting the interbank Eurodollar market, adequate and
reasonable means do not exist for ascertaining the applicable LIBOR Rate, then Lender shall
promptly notify the Borrower thereof and, so long as such circumstances shall continue, (a) Lender
shall be under no obligation to make or convert any Base Rate Loans into

27

 

LIBOR Loans and (b) on the
last day of the current Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.

     3.4 Change in Law.

               If any change in, or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or other regulatory body
charged with the administration thereof, would make it (or in the good faith judgment of Lender
cause a substantial question as to whether it is) unlawful for Lender to make, maintain or fund
LIBOR Loans, then Lender shall promptly notify each of the other parties hereto and, so long as
such circumstances shall continue, (a) Lender shall have no obligation to make or convert any Base
Rate Loan into a LIBOR Loan (but shall make Base Rate Loans in each case in an amount equal to the
amount of LIBOR Loans which would be made or converted into by Lender at such time in the absence
of such circumstances) and (b) on the last day of the current Interest Period for each LIBOR Loan
of Lender (or, in any event, on such earlier date as may be required by the relevant law,
regulation or interpretation), such LIBOR Loan shall, unless then repaid in full, automatically
convert to a Base Rate Loan. Each Base Rate Loan made by Lender which, but for the circumstances
described in the foregoing sentence, would be a LIBOR Loan shall remain outstanding for the period
corresponding to the Interest Period originally applicable to such LIBOR Loan absent such
circumstances.

     3.5 Funding Losses.

               Borrower hereby agrees that upon demand by Lender (which demand shall be accompanied by a
statement setting forth the basis for the amount being claimed), Borrower will indemnify Lender
against any net loss or expense which Lender may sustain or incur (including any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired
by Lender to fund or maintain any LIBOR Loan), as reasonably determined by Lender, as a result of
(a) any payment, prepayment or conversion of any LIBOR Loan of Lender on a date other than the last
day of an Interest Period for such Loan (including any conversion pursuant to Section 3.3
or 3.4) or (b) any failure of Borrower to borrow, convert or
continue any Loan on a date specified therefor in a notice of borrowing, conversion or
continuation pursuant to this Agreement. For the purposes of this Section 3.5, all
determinations shall be made as if Lender had actually funded and maintained each LIBOR Loan during
each Interest Period for such Loan through the purchase of deposits having a maturity corresponding
to such Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest
Period.

     3.6 Manner of Funding; Alternate Funding Offices.

               Notwithstanding any provision of this Agreement to the contrary, Lender shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it may determine at its
sole discretion. Lender may, if it so elects, fulfill its commitment to make any LIBOR Loan by
causing any branch or Affiliate of Lender to make such Loan; provided that in such event for the
purpose of this Agreement, such Loan shall be deemed to have been made by Lender, the obligation of
Borrower to repay such Loan shall nevertheless be to Lender and shall

28

 

be deemed held by Lender, to
the extent of such Loan, for the account of such branch or Affiliate.

     3.7 Mitigation of Circumstances; Replacement of Lender.

               (a) Lender shall promptly notify Borrower of any event of which it has knowledge which will
result in, and will use reasonable commercial efforts available to it (and not, in Lender’s sole
judgment, otherwise disadvantageous to Lender) to mitigate or avoid any obligation by Borrower to
pay any amount pursuant to Sections 3.1 or 3.2 or the occurrence of any
circumstances described in Sections 3.3 or 3.4 (and, if Lender has given notice of
any such event and thereafter such event ceases to exist, Lender shall promptly so notify
Borrower).

               (b) If (i) Borrower becomes obligated to pay additional amounts to Lender pursuant to
Sections 3.1 or 3.2 or the occurrence of any circumstances described in
Sections 3.3 or 3.4, or (ii) Lender defaults in its obligation to make Revolving
Loans under Section 2.1.1, then Borrower may within 90 days thereafter designate another
bank which is acceptable to Lender in Lender’s reasonable discretion (such other bank being called
a “Replacement Lender”) to purchase the Loans of Lender and Lender’s rights hereunder,
without recourse to or warranty by, or expense to, Lender, for a purchase price equal to the
outstanding principal amount of the Loans payable to Lender plus any accrued but unpaid interest on
such Loans and all accrued but unpaid fees owed to Lender and any other amounts payable to Lender
under this Agreement, and to assume all the obligations of Lender hereunder, and, upon such
purchase and assumption (pursuant to an Assignment Agreement), Lender shall no longer be a party
hereto or have any rights hereunder (other than rights with respect to indemnities and similar
rights applicable to Lender prior to the date of such purchase and assumption) and shall be
relieved from all obligations to Borrower hereunder, and the Replacement Lender shall succeed to
the rights and obligations of Lender hereunder.

          3.8 Conclusiveness of Statements; Survival.

               Determinations and statements of Lender pursuant to Sections 3.1, 3.2,
3.3, 3.4 or 3.5 shall be conclusive absent demonstrable error. Lender may
use reasonable averaging and
attribution methods in determining compensation under Sections 3.1, 3.2 and
3.5 and the provisions of such Sections shall survive repayment of the Loans, cancellation
of the Notes and termination of this Agreement.

Section 4. Conditions Precedent.

               The obligation of Lender to make its Loans is subject to the following conditions precedent:

     4.1 Initial Credit Extension.

               The obligation of Lender to make the initial Loans hereunder is, in addition to the conditions
precedent specified in Section 4.2, subject to the following conditions precedent, each of
which shall be satisfactory in all respects to Lender:

29

 

     4.1.1 EBITDA.

               EBITDA, as adjusted by adjustments satisfactory to Lender, for the 12 month period ending
[                    , 200___] shall not be less than [$                    ].

     4.1.2 Initial Loans; Availability.

               Not more than [$                    ] in Revolving Loans shall be advanced or issued (as applicable) on
the Closing Date, and after giving effect to the consummation of the Related Transactions and
funding of the initial Loans on the Closing Date, Borrowing Availability shall exceed the Revolving
Loans outstanding by at least [$                    ].

     4.1.3 Debt to be Repaid.

               The Debt to be Repaid has been (or concurrently with the initial borrowing will be) paid in
full.

     4.1.4 Fees.

               Borrower shall have paid all fees, costs and expenses due and payable under this Agreement and
the other Loan Documents on the Closing Date.

     4.1.5 Delivery of Loan Documents.

               Borrower shall have delivered the following documents in form and substance satisfactory to
Lender (and, as applicable, duly executed by each Loan Party a party thereto and dated the Closing
Date or an earlier date satisfactory to Lender):

               (a) Agreement. This Agreement.

               (b) Notes. Notes in favor of Lender representing the Loans.

               (c) Collateral Documents. The Guarantee and Collateral Agreement, all other
Collateral Documents, and all instruments, documents, certificates and agreements executed or
delivered pursuant thereto (including intellectual property assignments and pledged
Collateral, with undated irrevocable transfer powers executed in blank).

               (d) Financing Statements. Properly completed Uniform Commercial Code financing
statements and other filings and documents required by law or the Loan Documents to provide Lender
perfected Liens (subject only to Liens permitted pursuant to Section 7.2) in the
Collateral.

               (e) Lien Searches. Copies of Uniform Commercial Code search reports listing all
effective financing statements filed against any Loan Party, with copies of such financing
statements.

               (f) Mortgages. Mortgages providing Lender perfected Liens (subject only to Liens
permitted pursuant to Section 7.2) in the real property Collateral owned by Borrower or

30

 

any
Subsidiary of Borrower, with ALTA loan title insurance policies issued by insurers reasonably
acceptable to Lender, ALTA surveys and such flood and/or earthquake insurance as Lender may
reasonably request. Additionally, in the case of any leased real property of Borrower or any
Subsidiary of Borrower, a consent, in form and substance satisfactory to Lender, from the [owner
and/or mortgagee] (a) consenting to the Mortgage of the leasehold interest in favor of Lender with
respect to such property and (b) waiving any landlord’s Lien in respect of personal property kept
at the premises subject to such lease.

               (g) Collateral Access Agreements. Collateral Access Agreements reasonably requested
by Lender with respect to the Collateral.

               (h) Payoff; Release. Payoff letters evidencing repayment in full of all Debt to be
Repaid, termination of all agreements relating thereto and the release of all Liens granted in
connection therewith, with Uniform Commercial Code or other appropriate termination statements and
documents effective to evidence the foregoing.

               (i) Letter of Direction. A letter of direction containing funds flow information,
with respect to the proceeds of the Loans on the Closing Date.

               (j) Authorization Documents. For each Loan Party, such Person’s (i) charter (or
similar formation document), certified by the appropriate governmental authority, (ii) good
standing certificates in its state of incorporation (or formation) and in each other state
requested by Lender, (iii) bylaws (or similar governing document), (iv) resolutions of its board of
directors (or similar governing body) approving and authorizing such Person’s execution, delivery
and performance of the Loan Documents to which it is party and the transactions contemplated
thereby, and (v) signature and incumbency certificates of its officers executing any of the Loan
Documents, all certified by its secretary or an assistant secretary (or similar officer) as being
in full force and effect without modification.

               (k) Insurance. Certificates or other evidence of insurance in effect as required by
Section 6.3(b), with endorsements naming Lender as loss payee and/or additional insured, as
applicable.

               (l) Financials. The financial statements, projections and pro forma balance sheet
described in Section 5.4.

               (m) Appraisals. Appraisals of Collateral as reasonably requested by Lender, prepared
by appraisers reasonably satisfactory to Lender.

               (n) Environmental Reports. Environmental site assessment reports reasonably requested
by Lender, prepared by environmental engineers reasonably satisfactory to Lender.

               (o) Consents. Evidence that all necessary consents, permits and approvals
(governmental or otherwise, including pursuant to the Hart-Scott-Rodino Act and all related state
anti-trust laws and regulations) required for the execution, delivery and performance by each Loan
Party of the Loan Documents and the Related Transactions have been duly obtained and are in full
force and effect.

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               (p) [Availability Certificate. Availability Certificate reflecting required
information as of a date not more than 5 days prior to the Closing Date.]

               (q) Other Documents. Such other certificates, documents and agreements as Lender may
reasonably request.

     4.2 All Credit Extensions.

               The obligation of Lender to make each Loan is subject to the additional conditions precedent
that (unless such conditions are waived by Lender), both before and after giving effect to any
borrowing, (a) the representations and warranties of Borrower and each other Loan Party set forth
in this Agreement and the other Loan Documents shall be true and correct in all material respects
with the same effect as if then made (except to the extent stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and correct as of such
earlier date) and (b) no Event of Default or Default shall have then occurred and be continuing.
Each request by Borrower for the making of a Loan shall be deemed to constitute a representation
and warranty by Borrower that the conditions precedent set forth in Section 4.2 will be
satisfied at the time of the making of such Loan.

Section 5. Representations and Warranties.

               To induce Lender to enter into this Agreement and to induce Lender to make Loans hereunder,
Borrower represents and warrants to Lender that, both before and after giving effect to the Related
Transactions:

     5.1 Organization.

               Borrower is a corporation validly existing and in good standing under the laws of the State of
[                    ]; each other Loan Party is validly existing and in good standing under the laws of the
jurisdiction of its organization; and each Loan Party is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or properties, such qualification is
required, except for such jurisdictions where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.

     5.2 Authorization; No Conflict.

               Each of Borrower and each other Loan Party is duly authorized to execute and deliver each Loan
Document and each Related Agreement to which it is a party, Borrower is duly authorized to borrow
monies hereunder, and each of Borrower and each other Loan Party is duly authorized to perform its
Obligations under each Loan Document to which it is a party. The execution, delivery and
performance by Borrower of this Agreement and by each of Borrower and each other Loan Party of each
Loan Document to which it is a party, and the borrowings by Borrower hereunder, do not and will not
(a) require any consent or approval of any governmental agency or authority (other than any consent
or approval which has been obtained and is in full force and effect), (b) conflict with (i) any
provision of applicable law, (ii) the charter, by-laws or other organizational documents of
Borrower or any other Loan Party or (iii) any agreement, indenture, instrument or other document,
or any judgment, order or decree, which is binding upon Borrower or any other Loan Party or any of
their respective properties or (c) require, or

32

 

result in, the creation or imposition of any Lien on
any asset of Borrower, any Subsidiary or any other Loan Party (other than Liens in favor of Lender
created pursuant to the Collateral Documents).

     5.3 Validity; Binding Nature.

               Each of this Agreement and each other Loan Document to which Borrower or any other Loan Party
is a party is the legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting
the enforceability of creditors’ rights generally and to general principles of equity.

     5.4 Financial Condition.

               (a) The audited consolidated financial statements of Borrower and the Subsidiaries as at its
Fiscal Years ending [                    ] (the “Balance Sheet Date”) and [                    ], and the
unaudited consolidated financial statements of Borrower and the Subsidiaries as at [                    ],
copies of each of which have been delivered pursuant hereto, were prepared in accordance with GAAP
(subject, in the case of such unaudited statements, to the absence of footnotes and to normal
year-end adjustments) and present fairly the consolidated financial condition of such Persons as at
such dates and the results of their operations for the periods then ended.

               (b) The consolidated financial projections (including an operating budget and a cash flow
budget) of Borrower and the Subsidiaries for the [___] year period commencing [___, 2006]
delivered to Lender on or prior to the Closing Date (i) were prepared by Borrower in good faith and
(ii) were prepared in accordance with assumptions for which Borrower has a reasonable basis, and
the accompanying consolidated pro forma balance sheet of Borrower and the Subsidiaries as at the
Closing Date, adjusted to give effect to the consummation of the Related Transactions and the
financings contemplated hereby as if such transactions had occurred on such date, is consistent in
all material respects with such projections.

     5.5 No Material Adverse Change.

               Since the Balance Sheet Date, there has been no material adverse change in the financial
condition, operations, assets, business, properties or prospects of the Loan Parties taken as a
whole.

     5.6 Litigation.

               No litigation (including derivative actions), arbitration proceeding or governmental
investigation or proceeding is pending or, to Borrower’s knowledge, threatened against any Loan
Party which could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, except as set forth in Schedule 5.6. As of the Closing Date,
other than any liability incident to such litigation or proceedings, neither Borrower nor any other
Loan Party has any material Contingent Obligations not listed on Schedule 7.1.

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     5.7 Ownership of Properties; Liens.

               Each of Borrower and each other Loan Party owns good and, in the case of real property,
marketable title to all of its properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including infringement claims with
respect to patents, trademarks, service marks, copyrights and the like), except as permitted by
Section 7.2.

     5.8 Capitalization.

               All issued and outstanding equity securities of Borrower and the other Loan Parties are duly
authorized and validly issued, fully paid, non-assessable, and free and clear of all Liens other
than those in favor of Lender, and such securities were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. Schedule 5.8 sets forth the
authorized equity securities of each Loan Party as of the Closing Date. All of the issued and
outstanding equity of Holdings is owned as set forth on Schedule 5.8 as of the Closing
Date, all of the issued and outstanding equity of Borrower is owned by Holdings, and all of the
issued and outstanding equity of each Subsidiary is, directly or indirectly, owned by Borrower. As
of the Closing Date, except as set forth on Schedule 5.8, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights or other similar agreements or
understandings for the purchase or acquisition of any equity interests of Borrower or any other
Loan Party.

     5.9 Pension Plans.

               During the twelve-consecutive-month period prior to the Closing Date or the making of any
Loan, (i) no steps have been taken to terminate any Pension Plan and (ii) no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by Borrower or any other Loan Party of any
material liability, fine or penalty. All contributions (if any) have been made to any
Multiemployer Pension Plan that are required to be made by any Loan Party or any other member of
the Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither any Loan Party nor any member of the Controlled Group
has withdrawn or partially withdrawn from any Multiemployer Pension Plan, incurred any withdrawal
liability with respect to any such plan or received notice of any claim or demand for withdrawal
liability or partial withdrawal liability from any such plan, and no condition has occurred which,
if continued, could result in a withdrawal or partial withdrawal from any such plan, and neither
any Loan Party nor any member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or
has been funded at a rate less than that required under Section 412 of the IRC, that any such plan
is or may be terminated, or that any such plan is or may become insolvent.

34

 

     5.10 Investment Company Act.

               Neither Borrower nor any other Loan Party is an “investment company” within the meaning of the
Investment Company Act of 1940.

     5.11 Public Utility Holding Company Act.

               Neither Borrower nor any other Loan Party is a “holding company”, or a “subsidiary company” of
a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company”, within the meaning of the Public Utility Holding Company Act of 1935.

     5.12 Margin Stock.

               Neither Borrower nor any other Loan Party is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying Margin
Stock. No portion of the Obligations is secured directly or indirectly by Margin Stock.

     5.13 Taxes.

               Each of Borrower and each other Loan Party has filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.

     5.14 Solvency.

               On the Closing Date, and immediately prior to and after giving effect to each borrowing
hereunder and the use of the proceeds thereof, with respect to each of Borrower and each other Loan
Party, individually, (a) the fair value of its assets is greater than the amount of its liabilities
(including disputed, contingent and unliquidated liabilities) as such value is established and
liabilities evaluated, (b) the present fair saleable value of its assets is not less than the
amount that will be required to pay the probable liability on its debts as they become absolute and
matured, (c) it is able to realize upon its assets and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in the normal course
of business, (d) it does not intend to, and does not believe that it will, incur debts or
liabilities
beyond its ability to pay as such debts and liabilities mature and (e) it is not engaged in
business or a transaction, and is not about to engage in business or a transaction, for which its
property would constitute unreasonably small capital.

     5.15 Environmental Matters.

               The on-going operations of Borrower and each other Loan Party comply in all respects with all
Environmental Laws, except such non-compliance which could not (if enforced in accordance with
applicable law) reasonably be expected to result in a Material Adverse Effect. Borrower and each
other Loan Party have obtained, and maintained in good standing, all licenses, permits,
authorizations and registrations required under any Environmental Law and

35

 

necessary for their
respective ordinary course operations, and Borrower and each other Loan Party are in compliance
with all material terms and conditions thereof, except where the failure to do so could not
reasonably be expected to result in material liability to Borrower or any other Loan Party and
could not reasonably be expected to result in a Material Adverse Effect. None of Borrower, any
other Loan Party or any of their respective properties or operations is subject to any outstanding
written order from or agreement with any Federal, state or local governmental authority, nor
subject to any judicial or docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Substance. There are no Hazardous Substances or other conditions
or circumstances existing with respect to any property, or arising from operations prior to the
Closing Date, of Borrower or any other Loan Party that could reasonably be expected to result in a
Material Adverse Effect. Neither Borrower nor any other Loan Party has any underground storage
tanks that are not properly registered or permitted under applicable Environmental Laws or that are
leaking or disposing of Hazardous Substances.

     5.16 Insurance.

               Borrower and each other Loan Party and their respective properties are insured with
financially sound and reputable insurance companies which are not Affiliates of 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 Borrower or such
other Loan Party operates. A true and complete listing of such insurance as of the Closing Date,
including issuers, coverages and deductibles, is set forth on Schedule 5.16.

     5.17 Information.

               All information heretofore or contemporaneously herewith furnished in writing by Borrower or
any other Loan Party to Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter furnished by or on
behalf of Borrower or any Loan Party to Lender pursuant hereto or in connection herewith will be,
true and accurate in every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading in light of the circumstances under which
made (it being recognized by Lender that any projections and forecasts provided by Borrower are
based on good faith estimates and assumptions believed by Borrower to be reasonable as of the date
of the applicable projections or assumptions and that
actual results during the period or periods covered by any such projections and forecasts may
differ from projected or forecasted results).

     5.18 Intellectual Property.

               Borrower and each other Loan Party owns and possesses or has a license or other right to use
all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights and copyrights as are necessary for the conduct of the business of
Borrower and the other Loan Parties, without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.

36

 

     5.19 Restrictive Provisions.

               Neither Borrower nor any other Loan Party is a party to any agreement or contract or subject
to any restriction contained in its operative documents which could reasonably be expected to have
a Material Adverse Effect.

     5.20 Labor Matters.

               Except as set forth on Schedule 5.20, neither Borrower nor any other Loan Party is
subject to any labor or collective bargaining agreement. There are no existing or threatened
strikes, lockouts or other labor disputes involving Borrower or any other Loan Party that singly or
in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of Borrower and the other Loan Parties are not in any material
respect in violation of the Fair Labor Standards Act or any other applicable law, rule or
regulation dealing with such matters.

     5.21 No Default.

               No Event of Default or Default exists or would result from the incurrence by any Loan Party of
any Debt hereunder or under any other Loan Document.

Section 6. Affirmative Covenants.

               Until the expiration or termination of the Commitments and thereafter until all Obligations
(other than contingent indemnification obligations to the extent no claim giving rise thereto has
been asserted) of Borrower and the other Loan Parties hereunder and under the other Loan Documents
are Paid in Full, Borrower agrees that, unless at any time Lender shall otherwise expressly consent
in writing, it will:

     6.1 Information.

               Furnish to Lender:

          6.1.1 Annual Report.
—

               Promptly when available and in any event within 90 days after the close of each Fiscal Year:
(a) a copy of the annual audit report of Holdings, Borrower and the Subsidiaries for
such Fiscal Year, including therein a consolidated balance sheet and statement of earnings and
cash flows of Holdings, Borrower and the Subsidiaries as at the end of such Fiscal Year, certified
without qualification (except for qualifications relating to changes in accounting principles or
practices reflecting changes in generally accepted principles of accounting and required or
approved by Borrower’s independent certified public accountants) by independent auditors of
recognized standing selected by Borrower and reasonably acceptable to Lender; and (b) a
consolidating balance sheet of Holdings, Borrower and the Subsidiaries as of the end of such Fiscal
Year and consolidating statements of earnings and cash flows for Holdings, Borrower and the
Subsidiaries for such Fiscal Year, together with a comparison of actual results for such Fiscal
Year with the budget for such Fiscal Year, each certified by the chief financial officer of
Borrower.

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          6.1.2 Interim Reports.

               Promptly when available and in any event within 30 days after the end of each month, (i)
consolidated and consolidating balance sheets of Holdings, Borrower and the Subsidiaries as of the
end of such month, together with consolidated and consolidating statements of earnings and a
consolidated and consolidating statement of cash flows for such month and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such month, together with a
comparison with the corresponding period of the previous Fiscal Year and a comparison with the
budget for such period of the current Fiscal Year, certified by the chief financial officer of
Borrower, and (ii) a written statement of Borrower’s management setting forth a discussion of
Borrower’s financial condition, changes in financial condition and results of operations.

          6.1.3 Compliance Certificate.

               Contemporaneously with the furnishing of a copy of each annual audit report pursuant to
Section 6.1.1 and each set of interim reports issued at the end of each Fiscal Quarter
pursuant to Section 6.1.2 a duly completed Compliance Certificate, with appropriate
insertions, dated the date of such annual report or such quarterly statements, and signed by the
chief financial officer of Borrower, containing a computation of the financial ratios and
restrictions set forth in Section 7.14 and to the effect that such officer has not become
aware of any Event of Default or Default that has occurred and is continuing or, if there is any
such event, describing it and the steps, if any, being taken to cure it

          6.1.4 Notice of Default; Litigation; ERISA Matters.

               Promptly upon becoming aware of any of the following, written notice describing the same and
the steps being taken by Borrower or the applicable Loan Party affected thereby with respect
thereto:

               (a) the occurrence of an Event of Default or a Default;

               (b) any litigation, arbitration or governmental investigation or proceeding not previously
disclosed by Borrower to Lender which has been instituted or, to the knowledge of Borrower, is
threatened against Borrower or any other Loan Party or to which any of the
properties of any thereof is subject which could reasonably be expected to have a Material
Adverse Effect;

               (c) the institution of any steps by any member of the Controlled Group or any other Person to
terminate any Pension Plan, or the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give rise to a Lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the taking of any action with
respect to a Pension Plan which could result in the requirement that Borrower or any other Loan
Party furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan or Multiemployer Pension Plan which could result in the
incurrence by any member of the Controlled Group of any material liability, fine or penalty
(including any claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in the

38

 

contingent liability of Borrower or
any other Loan Party with respect to any post-retirement welfare plan benefit, or any notice that
any Multiemployer Pension Plan is in reorganization, that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of an excise tax, that any such plan is or
has been funded at a rate less than that required under Section 412 of the IRC, that any such plan
is or may be terminated, or that any such plan is or may become insolvent;

               (d) any cancellation or material change in any insurance maintained by Borrower or any other
Loan Party; or

               (e) any other event (including (i) any violation of any Environmental Law or the assertion of
any Environmental Claim or (ii) the enactment or effectiveness of any law, rule or regulation)
which could reasonably be expected to have a Material Adverse Effect.

          6.1.5 Management Report.

               Promptly upon receipt thereof, copies of all detailed financial and management reports
submitted to Borrower or any other Loan Party by independent auditors in connection with each
annual or interim audit made by such auditors of the books of Borrower or any other Loan Party.

          6.1.6 [Reserved].

          6.1.7 Non-Senior Debt Notices.

               Promptly following receipt, copies of any notices (including notices of default or
acceleration) received from any holder or trustee of, under or with respect to any Non-Senior Debt.

          6.1.8 Other Information.

               Promptly from time to time, such other information concerning Borrower and any other Loan
Party as Lender may reasonably request.

          6.1.9 [Availability Certificate.

               Within 10 days of the end of each month, an Availability Certificate dated as of the end of
the most recently ended month and executed by the chief financial officer of Borrower on behalf of
Borrower; provided that at any time an Event of Default exists, Lender may require Borrower to
deliver Availability Certificates more frequently.]

          6.2 Books; Records; Inspections.

               Keep, and cause each other Loan Party to keep, its books and records in accordance with sound
business practices sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each other Loan Party to permit, Lender or any representative thereof to
inspect the properties and operations of Borrower or such other Loan Party; and permit, and cause
each other Loan Party to permit, at any reasonable time and

39

 

with reasonable notice (or at any time
without notice if an Event of Default exists), Lender or any representative thereof to visit any or
all of its offices, to discuss its financial matters with its officers and its independent auditors
(and Borrower hereby authorizes such independent auditors to discuss such financial matters with
Lender or any representative thereof), and to examine (and, at the expense of Borrower or the
applicable Loan Party, photocopy extracts from) any of its books or other records; and permit, and
cause each other Loan Party to permit, Lender and its representatives to inspect the Collateral and
other tangible assets of Borrower or such Loan Party, to perform appraisals of the equipment of
Borrower or such Party, and to inspect, audit, check and make copies of and extracts from the
books, records, computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to any Collateral. All such inspections or audits by Lender shall be at
Borrower’s expense, provided that so long as no Event of Default or Default exists, Borrower shall
not be required to reimburse Lender for appraisals more frequently than once each Fiscal Year.

     6.3 Maintenance of Property; Insurance.

               (a) Keep, and cause each other Loan Party to keep, all property useful and necessary in the
business of Borrower or such other Loan Party in good working order and condition, ordinary wear
and tear excepted.

               (b) Maintain, and cause each other Loan Party to maintain, with responsible insurance
companies, such insurance coverage as shall be required by all laws, governmental regulations and
court decrees and orders applicable to it and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly situated; provided
that in any event, such insurance shall insure against all risks and liabilities of the type
insured against as of the Closing Date and shall have insured amounts no less than, and deductibles
no higher than, those amounts provided for as of the Closing Date. Upon request of Lender,
Borrower shall furnish to Lender a certificate setting forth in reasonable detail the nature and
extent of all insurance maintained by Borrower and each other Loan Party. Borrower shall cause
each issuer of an insurance policy to provide Lender with an endorsement (i) showing Lender as a
loss payee with respect to each policy of property or casualty insurance and naming Lender as an
additional insured with respect to each policy of liability insurance, (ii) providing that 30 days’
notice will be given to Lender prior to any cancellation of, or reduction or change
in coverage provided by or other material modification to such policy and (iii) reasonably
acceptable in all other respects to Lender. Borrower shall execute and deliver to Lender a
collateral assignment, in form and substance satisfactory to Lender, of each business interruption
insurance policy maintained by the Loan Parties.

               (c) Unless Borrower provides Lender with evidence of the continuing insurance coverage
required by this Agreement, Lender may purchase insurance at Borrower’s expense to protect Lender’s
interests in the Collateral. This insurance may, but need not, protect Borrower’s and each other
Loan Party’s interests. The coverage that Lender purchases may, but need not, pay any claim that
is made against Borrower or any other Loan Party in connection with the Collateral. Borrower may
later cancel any insurance purchased by Lender, but only after providing Lender with evidence that
Borrower has obtained the insurance coverage required by this Agreement. If Lender purchases
insurance for the Collateral, as set forth above, Borrower will be responsible for the costs of
that insurance, including interest and any other charges that

40

 

may be imposed with the placement of
the insurance, until the effective date of the cancellation or expiration of the insurance and the
costs of the insurance may be added to the principal amount of the Loans owing hereunder.

     6.4 Compliance with Laws; Payment of Taxes and Liabilities.

               Comply, and cause each other Loan Party to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and permits, except where
failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without
limiting clause (a) above, ensure, and cause each other Loan Party to ensure, that no person who
owns a controlling interest in or otherwise controls a Loan Party is or shall be (i) listed on the
Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets
Control (“OFAC”), Department of the Treasury, and/or any other similar lists maintained by
OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated
under Section 1(b), (c) or (d) or Executive Order No. 13224 (September 23, 2001), any related
enabling legislation or any other similar Executive Orders; (c) without limiting clause (a) above,
comply and cause each other Loan Party to comply, with all applicable Bank Secrecy Act and
anti-money laundering laws and regulations and (d) pay, and cause each other Loan Party to pay,
prior to delinquency, all taxes and other governmental charges against it or any of its property,
as well as claims of any kind which, if unpaid, could become a Lien on any of its property;
provided that the foregoing shall not require Borrower or any other Loan Party to pay any such tax
or charge so long as it shall contest the validity thereof in good faith by appropriate proceedings
and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP.

     6.5 Maintenance of Existence.

               Maintain and preserve, and (subject to Section 7.5) cause each other Loan Party to
maintain and preserve, (a) its existence and good standing in the jurisdiction of its organization
and (b) its qualification to do business and good standing in each jurisdiction where the nature of
its business makes such qualification necessary, other than any such jurisdiction where the failure
to be qualified or in good standing could not reasonably be expected to have a Material Adverse
Effect.

     6.6 Employee Benefit Plans.

               Maintain, and cause each other Loan Party to maintain, each Pension Plan in substantial
compliance with all applicable requirements of law and regulations.

     6.7 Environmental Matters.

               If any release or disposal of Hazardous Substances shall occur or shall have occurred on any
real property or any other assets of Borrower or any other Loan Party, cause, or direct the
applicable Loan Party to cause, the prompt containment and removal of such Hazardous Substances and
the remediation of such real property or other assets as is necessary to comply with all
Environmental Laws and to preserve the value of such real property or other assets. Without
limiting the generality of the foregoing, Borrower shall, and shall cause each other Loan Party to,
comply with each valid Federal or state judicial or administrative order

41

 

requiring the performance
at any real property by Borrower or any other Loan Party of activities in response to the release
or threatened release of a Hazardous Substance.

     6.8 Further Assurances.

               Take, and cause each other Loan Party to take, such actions as are necessary or as Lender may
reasonably request from time to time to ensure that the Obligations of Borrower and each other Loan
Party under the Loan Documents are secured by substantially all of the assets of Borrower and each
Loan Party (as well as all equity interests of Borrower and each Subsidiary) and guaranteed by each
Loan Party (including, promptly upon the acquisition or creation thereof, any Subsidiary acquired
or created after the Closing Date), in each case including (a) the execution and delivery of
guaranties, security agreements, pledge agreements, mortgages, deeds of trust, financing statements
and other documents, and the filing or recording of any of the foregoing and (b) the delivery of
certificated securities and other Collateral with respect to which perfection is obtained by
possession.

Section 7. Negative Covenants.

               Until the expiration or termination of the Commitments and thereafter until all Obligations
(other than contingent indemnification obligations to the extent no claim giving rise thereto has
been asserted) of Borrower and the other Loan Parties hereunder and under the other Loan Documents
are Paid in Full, Borrower agrees that, unless at any time Lender shall otherwise expressly consent
in writing, it will:

     7.1 Debt.

               Not, and not permit any other Loan Party to, create, incur, assume or suffer to exist any
Debt, except:

               (a) Obligations under this Agreement and the other Loan Documents;

               (b) Debt secured by Liens permitted by Section 7.2(d), and extensions, renewals and
refinancings thereof; provided that the aggregate amount of all such Debt at any time outstanding
shall not exceed $250,000;

               (c) Debt of Borrower to any domestic Wholly-Owned Subsidiary or Debt of any domestic
Wholly-Owned Subsidiary to Borrower or another domestic Wholly-Owned Subsidiary; provided that such
Debt shall be evidenced by a demand note in form and substance reasonably satisfactory to Lender
and pledged and delivered to Lender pursuant to the Guarantee and Collateral Agreement as
additional collateral security for the Obligations, and the obligations under such demand note
shall be subordinated to the Obligations hereunder in a manner reasonably satisfactory to Lender;

               (d) Debt described on Schedule 7.1 as of the Closing Date, and any extension, renewal
or refinancing thereof so long as the principal amount thereof is not increased;

               (e) an aggregate outstanding amount of unsecured Non-Senior Debt not at any time exceeding
$200,000 (exclusive of Debt permitted under Section 7.1(c));

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               (f) Contingent Obligations arising with respect to customary indemnification obligations in
favor of purchasers in connection with Dispositions permitted under Section 7.5;

               (g) [the U. S. Bank Letter of Credit Obligations4];

               (h) other Debt, in addition to the Debt listed above, in an aggregate outstanding amount not
at any time exceeding $100,000.

     7.2 Liens.

               Not, and not permit any other Loan Party to, create or permit to exist any Lien on any of its
real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter
acquired), except:

               (a) Liens for taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or being diligently contested in good faith by appropriate proceedings and,
in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or
other enforcement of which is effectively stayed;

               (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics, landlords and materialmen and other similar Liens imposed by law and (ii)
Liens incurred in connection with worker’s compensation, unemployment compensation and other types
of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or being diligently contested in
good faith by appropriate proceedings and not involving any deposits or advances or borrowed money
or the deferred purchase price of property or services and, in each case, for which it maintains
adequate reserves in accordance with GAAP and the execution or other enforcement of which is
effectively stayed;

               (c) Liens described on Schedule 7.2 as of the Closing Date;

               (d) subject to the limitation set forth in Section 7.1(b), (i) Liens arising in
connection with Capital Leases (and attaching only to the property being leased), (ii) Liens
existing on property at the time of the acquisition thereof by Borrower or any Subsidiary (and not
created in contemplation of such acquisition) and (iii) Liens that constitute purchase money
security interests on any property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien attaches to such property
within 60 days of the acquisition thereof and attaches solely to the property so acquired;

               (e) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding
$100,000 arising in connection with court proceedings; provided that the execution or other
enforcement of such Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;

 

			
	4	 	Note: Applicable only to the CBS Personnel
Credit Agreement; capitalized term to be defined]

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               (f) easements, rights of way, restrictions, minor defects or irregularities in title and other
similar Liens not interfering in any material respect with the ordinary conduct of the business of
Borrower or any Subsidiary;

               (g) Liens arising under the Loan Documents;

               (h) [Liens on Accounts and securing the Indebtedness permitted under Section 7.1(g);]
and

               (i) the replacement, extension or renewal of any Lien permitted by clause (c) above upon or in
the same property subject thereto arising out of the extension, renewal or replacement of the Debt
secured thereby (without increase in the amount thereof).

     7.3 Operating Leases.

               Not permit the aggregate amount of all rental payments under Operating Leases made (or
scheduled to be made) by Borrower and the Subsidiaries (on a consolidated basis) to exceed
[$                    ] in any Fiscal Year.

     7.4 Restricted Payments.

               Not, and not permit any other Loan Party to, (a) make any dividend or other distribution to
any of its equity holders, (b) purchase or redeem any of its equity interests or any warrants,
options or other rights in respect thereof, (c) except for payments to Manager and [                    ], pay
any management fees or similar fees to any of its equity holders or any Affiliate thereof, (d) make
any redemption, prepayment (whether mandatory or optional), defeasance, repurchase or any other
payment in respect of any Non-Senior Debt or (e) set aside funds for any of the foregoing.
Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make other distributions to
Borrower or to a domestic Wholly-Owned Subsidiary; (ii) so long as no Event of Default exists or
would result therefrom, Borrower may make distributions to Holdings to permit Holdings to pay
federal and state income taxes then due and owing by Holdings (or its equity holders), so long as
the amount of such distributions shall not be greater, nor the receipt by Borrower of tax benefits
less, than they would have been had Borrower not filed consolidated income tax returns with such
Person; (iii) in each case to the extent due and payable on a non-accelerated basis and permitted
under any applicable subordination provisions thereof, Borrower
may make regularly scheduled payments of interest in respect of Non-Senior Debt; (iv) any Loan
Party may make repurchases of capital stock deemed to occur upon the exercise of options or
warrants (i.e., a cashless exercise); and (v) any Loan Party may repurchase or redeem capital stock
from any former officers, directors and employees (or their estates, spouses or former spouses) of
any Loan Party in connection with the termination of such Person’s employment (or such directors’
directorship) with the Loan Party; provided that, in connection with such transactions, the total
cash payments under this Section shall not exceed [$                    ] in the aggregate during any
Fiscal Year; provided, further, that all Term B Loans shall be paid in accordance with the terms of
this Agreement and any restriction imposed on Non-Senior Debt by this Section 7.4 shall not
apply to the Term B Loans.

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     7.5 Mergers; Consolidations; Asset Sales.

          (a) Not, and not permit any other Loan Party to, be a party to any merger or consolidation,
except for any such merger or consolidation of any Subsidiary into Borrower or any domestic
Wholly-Owned Subsidiary.

          (b) Not, and not permit any other Loan Party to, sell, transfer, dispose of, convey or lease
any of its assets or equity interests, or sell or assign with or without recourse any receivables,
except for (i) sales of Inventory in the ordinary course of business and (ii) sales and
dispositions of assets (excluding any equity interests of Borrower or any Subsidiary) for at least
fair market value (as determined by the Board of Directors of Borrower) so long as the net book
value of all assets sold or otherwise disposed of in any Fiscal Year does not exceed 10% of the net
book value of the consolidated assets of Borrower and the Subsidiaries as of the last day of the
preceding Fiscal Year.

     7.6 Modification of Organizational Documents.

               Not permit the charter, by-laws or other organizational documents of Borrower or any other
Loan Party to be amended or modified in any way which could reasonably be expected to materially
adversely affect the interests of Lender.

     7.7 Use of Proceeds.

               Use the proceeds of the Loans solely to prepay or repay the Debt to be Repaid, for working
capital, for Capital Expenditures and for other general business purposes of Borrower and the
Subsidiaries [and to redeem common stock and terminate stock options of CBS Personnel Holdings,
Inc. on the Closing Date pursuant to the Related Transactions]; and not use or permit any proceeds
of any Loan to be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of “purchasing or carrying” any Margin Stock.

     7.8 Transactions with Affiliates.

               Not, and not permit any other Loan Party to, enter into, or cause, suffer or permit to exist
any transaction, arrangement or contract with any of its other Affiliates, which is on terms which
are less favorable than are obtainable from any Person which is not one of its Affiliates.

     7.9 Inconsistent Agreements.

               Not, and not permit any other Loan Party to, enter into any agreement containing any provision
which would (a) be violated or breached by any borrowing by Borrower hereunder or by the
performance by Borrower or any other Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit Borrower or any other Loan Party from granting to Lender a Lien
on any of its assets or (c) create or permit to exist or become effective any encumbrance or
restriction on the ability of any other Loan Party to (i) pay dividends or make other distributions
to Borrower or any other Subsidiary, or pay any Debt owed to Borrower or any other Subsidiary, (ii)
make loans or advances to Borrower or any other Loan Party or (iii) transfer any of its assets or
properties to Borrower or any other Loan Party other than

45

 

(A) customary restrictions and conditions contained in agreements relating to the sale of all or a
substantial part of the capital stock or assets of any Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted
hereunder (B) restrictions or conditions imposed by any agreement relating to purchase money Debt,
Capital Leases and other secured Debt permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Debt and (C) customary provisions in
leases and other contracts restricting the assignment thereof.

     7.10 Business Activities.

               Not, and not permit any other Loan Party to, engage in any line of business other than the
businesses engaged in on the Closing Date and businesses reasonably related thereto. Not, and not
permit any other Loan Party to, issue any equity interest other than (a) any issuance of shares of
Holdings’ common equity securities pursuant to any employee or director option or stock purchase
program, benefit plan or compensation program, or (b) any issuance by a Subsidiary to Borrower or
another Subsidiary in accordance with Section 7.4.

     7.11 Investments.

               Not, and not permit any other Loan Party to, make or permit to exist any Investment in any
other Person or create or establish any Subsidiary (other than any Subsidiary formed in compliance
with Section 7.16), except the following:

             (a) contributions by Borrower to the capital of any Wholly-Owned Subsidiary in existence on
the Closing Date that is also a Domestic Subsidiary, or by any Subsidiary to the capital of any
other Wholly-Owned Subsidiary in existence on the Closing Date that is also a Domestic Subsidiary,
so long as the recipient of any such capital contribution has guaranteed the Obligations and such
guaranty is secured by a pledge of all of its equity interests and substantially all of its real
and personal property, in each case in accordance with Section 6.8;

             (b) Investments constituting Debt permitted by Section 7.1(c);

             (c) Contingent Obligations constituting Debt permitted by Section 7.1 or Liens
permitted by Section 7.2;

             (d) Cash Equivalent Investments;

             (e) bank deposits in the ordinary course of business;

             (f) Investments in securities of Account Debtors received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors;

             (g) Investments listed on Schedule 7.11 as of the Closing Date; and

             (h) any purchase or other acquisition by Borrower or any Wholly-Owned Subsidiary that is also
a Domestic Subsidiary of the assets or equity interests of any Domestic Subsidiary.

46

 

     7.12 Restriction of Amendments to Certain Documents.

               Not amend or otherwise modify, or
waive any rights under (a) any Related Agreement, other than
immaterial amendments, modifications and waivers not adverse to the interests of Lender or (b) any
provisions of any Non-Senior Debt (other than Term B Loans, which amendment, modification or waiver
of rights shall be governed by this Agreement).

     7.13 Fiscal Year.

               Not change its Fiscal Year.

     7.14 Financial Covenants.1

          7.14.1 Fixed Charge Coverage Ratio.

               Not permit the Fixed Charge Coverage Ratio for any Computation Period to be less than the
applicable ratio set forth below for such Computation Period:

	 	 	 	 	 
	Computation	 	 	 	Fixed Charge
	Period Ending	 	 	 	Coverage Ratio
	 
	 	[dates and levels to
come]
	 	 

          7.14.2 Senior Debt to EBITDA Ratio.

               Not permit the Senior Debt to EBITDA Ratio as of the last day of any Computation Period to
exceed the applicable ratio set forth below for such Computation Period:

	 	 	 	 	 
	Computation	 	 	 	Senior Debt to
	Period Ending	 	 	 	EBITDA Ratio
	 
	 	[dates and levels to come]
	 	 

          7.14.3 Total Debt to EBITDA Ratio.

               Not permit the Total Debt to EBITDA Ratio as of the last day of any Computation Period to
exceed the applicable ratio set forth below for such Computation Period:

	 	 	 	 	 
	Computation	 	 	 	Total Debt to
	Period Ending	 	 	 	EBITDA Ratio
	 
	 	[dates and levels to come]
	 	 

 

			
	1	 	Note: One or more of these financial
covenants will be included in each of the Credit Agreements.

47

 

          7.14.4 Capital Expenditures.

               Not permit the aggregate amount of all Capital Expenditures made by Borrower and the
Subsidiaries in any Fiscal Year to exceed the applicable amount set forth below for such Fiscal
Year:

	 	 	 	 	 
	 	 	 	 	Capital
	Fiscal Year	 	 	 	Expenditures
	 
	 	[dates and levels to come]
	 	 

     If Borrower does not utilize the entire amount of Capital Expenditures permitted in any Fiscal
Year, so long as no Default or Event of Default exists or would be caused thereby, Borrower may
carry forward to the immediately succeeding Fiscal Year only, 50% of such un-utilized amount (with
Capital Expenditures made by Borrower in such succeeding Fiscal Year applied last to such
unutilized amount).

     7.15 Bank Accounts.

               Not, and not permit any other Loan Party, to maintain or establish any new bank accounts other
than the bank accounts set forth on Schedule 7.15 without prior written notice to Lender
and unless Lender, Borrower or such other Loan Party and the bank at which the account is to be
opened enter into a tri-party agreement regarding such bank account pursuant to which such bank
acknowledges the security interest and control of Lender in such bank account and agrees to limit
its set-off rights on terms satisfactory to Lender and otherwise acceptable to Lender.

     7.16 Subsidiaries.

               Not, and not permit any other Loan Party, to establish or acquire any Subsidiary unless the
Loan Parties shall have caused such new Subsidiary to take all actions pursuant to Section
6.8 hereof with respect to such Subsidiary and such other actions as reasonably requested by
Lender, including (a) execution by such Subsidiary of a joinder to the Guarantee and Collateral
Agreement, (b) a pledge to Lender of the capital securities of such Subsidiary, (c) such amendments
to this Agreement and the other Loan Documents related to the addition of such Subsidiary as may be
requested by Lender, and (d) such certificates, resolutions, instruments, copies of filings and
notices, and other materials relating to such Subsidiary as Lender may reasonably request.

Section 8. Events of Default; Remedies.

     8.1 Events of Default.

               Each of the following shall constitute an Event of Default under this Agreement:

48

 

          8.1.1 Non-Payment of Credit.

               Default in the payment when due of the principal of any Loan; or default, and continuance
thereof for 2 days, in the payment when due of any interest, fee or other amount payable by any
Loan Party hereunder or under any other Loan Document.

          8.1.2 Default Under Other Debt.

               Any default shall occur and continue until the termination of any applicable cure period under
the terms applicable to any other Debt of any Loan Party in an aggregate amount (for all such Debt
so affected and including un-drawn committed or available amounts and amounts owing to all
creditors under any combined or syndicated credit arrangement) exceeding $250,000 and such default
shall (a) consist of the failure to pay such Debt when due, whether by acceleration or otherwise,
or (b) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee
or agent for such holder or holders, to cause such Debt to become due and payable (or require
Borrower or any other Loan Party to purchase or redeem such Debt or post cash collateral in respect
thereof) prior to its expressed maturity.

          8.1.3 Bankruptcy; Insolvency.

               Any Loan Party becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or any Loan Party applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian for such Loan Party or any
property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for
any Loan Party or for a substantial part of the property of any thereof and is not discharged
within 60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced
in respect of any Loan Party, and if such case or proceeding is not commenced by such Loan Party,
it is consented to or acquiesced in by such Loan Party, or remains for 60 days un-dismissed; or any
Loan Party takes any action to authorize, or in furtherance of, any of the foregoing.

          8.1.4 Non-Compliance with Loan Documents.

               (a) Failure by Borrower to comply with or to perform any covenant set forth in Sections
6.1.1, 6.1.2, 6.1.3, 6.1.4, 6.1.9, 6.1.6,
6.1.7, 6.3(b) and 6.3(c), 6.5, 6.7 and Section 7;
or (b) failure by any Loan Party to comply with or to perform any other provision of this Agreement
or any other Loan Document applicable to it (and not constituting an Event of Default under any
other provision of this Section 8) and continuance of such failure described in this clause
(b) for 30 days.

          8.1.5 Representations; Warranties.

               Any representation or warranty made by any Loan Party herein or any other Loan Document is
breached or is false or misleading in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by any Loan Party to

49

 

Lender in connection herewith is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.

          8.1.6 Pension Plans.

               Institution of any steps by any Person to terminate a Pension Plan if as a result of such
termination any Loan Party or any member of the Controlled Group could be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to such Pension Plan,
in excess of $100,000; (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (c) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Pension Plan and the withdrawal liability
(without unaccrued interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that Borrower or any other Loan Party or any member
of the Controlled Group have incurred on the date of such withdrawal) exceeds $100,000.

          8.1.7 Judgments.

               Final judgments which exceed an aggregate of $250,000 shall be rendered against any Loan Party
and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.

          8.1.8 Invalidity of Collateral Documents.

               Any Collateral Document shall cease to be in full force and effect; or any Loan Party (or any
Person by, through or on behalf of any Loan Party) shall contest in any manner the validity,
binding nature or enforceability of any Collateral Document.

          8.1.9 Invalidity of Subordination Provisions.

               Any subordination provision in any document or instrument governing Non-Senior Debt, or any
subordination provision in any subordination agreement that relates to any Non-Senior Debt or any
subordination provision in any guaranty by any Loan Party of any Non-Senior Debt, shall cease to be
in full force and effect, or any Person (including the holder of any applicable Non-Senior Debt)
shall contest in any manner the validity, binding nature or enforceability of any such provision.

          8.1.10 Change of Control.

               (a) Manager and its Investment Affiliates shall collectively cease to, directly or indirectly,
(i) own and control at least 51% of the outstanding equity interests of Holdings owned by them on
the Closing Date (after giving effect to the Related Transactions) or (ii) possess the right to
elect (through contract, ownership of voting securities or otherwise) at all times a majority of
the board of directors (or similar governing body) of Holdings and to direct the management
policies and decisions of Holdings, (b) Holdings shall cease to directly own and control 100% of
each class of the outstanding equity interests of Borrower, or (c) a “Change of Control” or other
similar event shall occur, as defined in, or under, any documentation evidencing or otherwise
relating to any Non-Senior Debt.

50

 

          8.1.11 Activities of Holdings.

               Holdings (i) conducts any business other than its ownership of equity securities of Borrower,
or (ii) incurs any Debt or liabilities other than liabilities incidental to the conduct of its
business as a holding company.

     8.2 Remedies.

               If any Event of Default described in Section 8.1.3 shall occur, the Commitments shall
immediately terminate and the Loans and all other Obligations shall become immediately due and
payable, all without presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, Lender shall declare the Commitments to be terminated in
whole or in part and/or declare all or any part of the Loans and other Obligations to be due and
payable, whereupon the Commitments shall immediately terminate (or be reduced, as applicable)
and/or the Loans and other Obligations shall become immediately due and payable (in whole or in
part, as applicable), all without presentment, demand, protest or notice of any kind. Lender shall
promptly advise Borrower of any such declaration, but failure to do so shall not impair the effect
of such declaration. Notwithstanding the foregoing, the effect as an Event of Default of any event
described in Section 8.1.1 may only be waived by the written concurrence of Lender, and the
effect as an Event of Default of any other event described in this Section 8 may be waived
by the written concurrence of Lender. Any cash collateral delivered hereunder shall be held by
Lender (without liability for interest thereon) and applied to the Obligations and any excess shall
be delivered to Borrower or as a court of competent jurisdiction may elect.

Section 9. Miscellaneous.

     9.1 Waiver; Amendments.

               No delay on the part of Lender in the exercise of any right, power or remedy shall operate as
a waiver thereof, nor shall any single or partial exercise by it any right, power or remedy
preclude other or further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any provision of this
Agreement, the Notes or any of the other Loan Documents (or any subordination and intercreditor
agreement or other subordination provisions relating to any Non-Senior Debt) shall in any event be
effective unless the same shall be in writing and approved by Lender, and then any such amendment,
modification, waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

     9.2 Notices.

               Except as otherwise provided in Sections 2.2.2, all notices hereunder shall be in
writing (including facsimile transmission) and shall be sent to the applicable party at its address
shown on Annex II or at such other address as such party may, by written notice received by
the other parties, have designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to
have been given three Business Days after the date when sent by registered or certified mail,
postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed

51

 

to have been given when received. For purposes of Sections 2.2.2, Lender shall be
entitled to rely on telephonic instructions from any person that Lender in good faith believes is
an authorized officer or employee of Borrower, and Borrower shall hold Lender harmless from any
loss, cost or expense resulting from any such reliance. Each of Borrower and Lender hereby agree
that Lender may, in its discretion, deliver information and notices to such financial institutions
as may be a party hereto from time to time using the internet service “Intralinks.”

     9.3 Computations.

               Unless otherwise specifically provided herein, any accounting term used in this Agreement
shall have the meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently applied. The
explicit qualification of terms or computations by the phrase “in accordance with GAAP” shall in no
way be construed to limit the foregoing.

     9.4 Costs; Expenses.

               Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of Lender
(including Legal Costs) in connection with the preparation, execution, syndication, delivery and
administration (including perfection and protection of Collateral) of this Agreement, the other
Loan Documents and all other documents provided for herein or delivered or to be delivered
hereunder or in connection herewith (including any proposed or actual amendment, supplement or
waiver to any Loan Document), and all reasonable out-of-pocket costs and expenses (including Legal
Costs) incurred by Lender after an Event of Default in connection with the collection of the
Obligations and enforcement of this Agreement, the other Loan Documents or any such other
documents. In addition, Borrower agrees to pay, and to save Lender harmless from all liability
for, any fees of Borrower’s auditors in connection with any reasonable exercise by Lender of their
rights pursuant to Section 6.4. All Obligations provided for in this Section 9.4
shall survive repayment of the Loans, cancellation of the Notes and termination of this Agreement).

     9.5 Indemnification by Borrower.

               In consideration of the execution and delivery of this Agreement by Lender and the agreement
to extend the Commitments provided hereunder, Borrower hereby agrees to indemnify, exonerate and
hold Lender, and each of the officers, directors, employees, Affiliates and agents of Lender (each
a “Lender Party”) free and harmless from and against any and all actions, causes of action,
suits, losses, liabilities, damages and expenses, including Legal Costs (collectively, the
“Indemnified Liabilities”), incurred by Lender Parties or any of them as a result of, or
arising out of, or relating to (a) any tender offer, merger, purchase of equity interests, purchase
of assets (including the Related Transactions) or other similar transaction financed or proposed to
be financed in whole or in part, directly or indirectly, with the proceeds of any of the Loans, (b)
the use, handling, release, emission, discharge, transportation, storage, treatment or disposal of
any Hazardous Substance at any property owned or leased by Borrower or any other Loan Party, (c)
any violation of any Environmental Laws with respect to conditions at any property owned or leased
by any Loan Party or the operations conducted thereon, (d) the investigation, cleanup or
remediation of offsite locations at which any Loan Party or their

52

 

respective predecessors are alleged to have directly or indirectly disposed of Hazardous
Substances or (e) the execution, delivery, performance or enforcement of this Agreement or any
other Loan Document by Lender, except to the extent any such Indemnified Liabilities result from
the applicable Lender Party’s own gross negligence or willful misconduct as determined by a court
of competent jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. All Obligations provided for in this Section 9.5 shall survive repayment
of the Loans, cancellation of the Notes, any foreclosure under, or any modification, release or
discharge of, any or all of the Collateral Documents and termination of this Agreement.

     9.6 Marshaling; Payments Set Aside.

               Lender shall be under no obligation to marshal any assets in favor of Borrower or any other
Person or against or in payment of any or all of the Obligations. To the extent that Borrower
makes a payment or payments to Lender, or Lender enforces its Liens or exercises its rights of
set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required (including pursuant to any settlement entered into by Lender in its discretion) to be
repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or
similar proceeding, or otherwise, then to the extent of such recovery, the obligation hereunder 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 enforcement or setoff had not occurred.

     9.7 Nonliability of Lender.

               The relationship between Borrower on the one hand and Lender on the other hand shall be solely
that of borrower and lender. Lender shall have no fiduciary responsibility to Borrower. Lender
undertakes no responsibility to Borrower to review or inform Borrower of any matter in connection
with any phase of Borrower’s business or operations. Execution of this Agreement by Borrower
constitutes a full, complete and irrevocable release of any and all claims which Borrower may have
at law or in equity in respect of all prior discussions and understandings, oral or written,
relating to the subject matter of this Agreement and the other Loan Documents. Lender shall not
have any liability with respect to, and Borrower hereby waives, releases and agrees not to sue for,
any special, indirect, punitive or consequential damages or liabilities.

     9.8 Assignments; Participations.

          9.8.1 Assignments.

             (a) Lender may at any time assign to one or more Persons (any such Person, an
“Assignee”) all or any portion of Lender’s Loans and Commitments. Borrower shall be
entitled to continue to deal solely and directly with Lender in connection with the interests so
assigned to an Assignee until Lender shall have received and accepted an effective Assignment
Agreement executed, delivered and fully completed by the applicable parties thereto. No assignment
may be made to any Person if at the time of such assignment Borrower would be obligated to pay any

53

 

greater amount under Section 3 to the Assignee than Borrower is then obligated to pay
to the assigning Lender under such Section 3 (and if any assignment is made in violation of
the foregoing, Borrower will not be required to pay such greater amounts). Any attempted
assignment not made in accordance with this Section 9.8.1 shall be treated as the sale of a
participation under Section 9.8.2. Borrower shall be deemed to have granted its consent to
any assignment hereunder unless Borrower has expressly objected to such assignment within three
Business Days after notice thereof.

             (b) From and after the date on which the conditions described above have been met, (i) such
Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights
and obligations hereunder have been assigned to such Assignee pursuant to such Assignment
Agreement, shall have the rights and obligations of a “Lender” hereunder and (ii) the assigning
Lender, to the extent that rights and obligations hereunder have been assigned by it pursuant to
such Assignment Agreement, shall be released from its rights (other than its indemnification
rights) and obligations hereunder. For the avoidance of doubt, upon Lender’s assignment of any or
all of its Loans and/or Commitments to an Assignee, such Assignee shall have all of the rights and
obligations of Lender in respect of such assigned Loans and/or Commitments, and shall be deemed to
be “Lender” hereunder, as if such Person were an original party hereto. Upon the request of the
Assignee (and, as applicable, the assigning Lender) pursuant to an effective Assignment Agreement,
Borrower shall execute and deliver to Lender for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata Share of the Revolving
Loan Commitment plus the principal amount of the Assignee’s Term Loans (and, as applicable, a Note
in the principal amount of the Pro Rata Share of the Revolving Loan Commitment retained by the
assigning Lender plus the principal amount of the Term Loans retained by the assigning Lender).
Each such Note shall be dated the effective date of such assignment. Upon receipt by the assigning
Lender of such Note, the assigning Lender shall return to Borrower any prior Note held by it.

             (c) Lender, acting solely for this purpose as an agent of Borrower, shall maintain at one of
its offices in the United States a copy of each Assignment Agreement delivered to it and a register
for the recordation of the names and addresses of Lender and each Assignee, and the Commitments of,
and principal amount of the Loans owing to, Lender and each Assignee pursuant to the terms hereof.
The entries in such register shall be conclusive, and Borrower and Lender may treat each Person
whose name is recorded therein pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. Such register shall be available for
inspection by Borrower, Lender and any Assignee, at any reasonable time upon reasonable prior
notice to Lender.

             (d) Notwithstanding the foregoing provisions of this Section 9.8.1 or any other
provision of this Agreement, Lender may at any time assign all or any portion of its Loans and its
Notes (i) as collateral security to a Federal Reserve Bank or, as applicable, to Lender’s trustee
for the benefit of its investors (but no such assignment shall release Lender from any of its
obligations hereunder) and (ii) to (x) an Affiliate of Lender or (y) an Eligible Institution.

54

 

          9.8.2 Participations.

               Lender may at any time sell to one or more Persons participating interests in its Loans,
Commitments or other interests hereunder (any such Person, a “Participant”). In the event
of a sale by Lender of a participating interest to a Participant, (a) Lender’s obligations
hereunder shall remain unchanged for all purposes, (b) Borrower shall continue to deal solely and
directly with Lender in connection with Lender’s rights and obligations hereunder and (c) all
amounts payable by Borrower shall be determined as if Lender had not sold such participation and
shall be paid directly to Lender. No Participant shall have any direct or indirect voting rights
hereunder. Borrower agrees that if amounts outstanding under this Agreement are due and payable
(as a result of acceleration or otherwise), each Participant shall be deemed to have the right of
set-off in respect of its participating interest in such amounts to the same extent as if the
amount of its participating interest were owing directly to it as Lender under this Agreement;
provided that such right of set-off shall be subject to the obligation of each Participant to share
with Lender, and Lender agrees to share with each Participant, as provided in Section
2.11.4. Borrower also agrees that each Participant shall be entitled to the benefits of
Section 3 as if it were a Lender (provided that no Participant shall receive any greater
compensation pursuant to Section 3 than would have been paid to Lender if no participation
had been sold).

     9.9 Confidentiality.

               Lender agrees to use commercially reasonable efforts (equivalent to the efforts Lender applies
to maintain the confidentiality of its own confidential information) to maintain as confidential
all information provided to them by any Loan Party and designated as confidential, except that
Lender may disclose such information (a) to Persons employed or engaged by Lender or any of its
Affiliates (including collateral managers of Lender) in evaluating, approving, structuring or
administering the Loans and the Commitments; (b) to any assignee or participant or potential
assignee or participant that has agreed to comply with the covenant contained in this Section
9.9 (and any such assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause (a) above); (c) as
required or requested by any federal or state regulatory authority or examiner, or any insurance
industry association, or as reasonably believed by Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of Lender’s counsel, is
required by law; (e) in connection with the exercise of any right or remedy under the Loan
Documents or in connection with any litigation to which Lender is a party; (f) to any nationally
recognized rating agency or investor of Lender that requires access to information about Lender’s
investment portfolio in connection with ratings issued or investment decisions with respect to
Lender; (g) that ceases to be confidential through no fault of Lender; (h) to a Person that is an
investor or prospective investor in a Securitization that agrees that its access to information
regarding the Borrower and the Loans and Commitments is solely for purposes of evaluating an
investment in such Securitization and who agrees to treat such information as confidential; or (i)
to a Person that is a trustee, collateral manager, servicer, noteholder or secured party in a
Securitization in connection with the administration, servicing and reporting on the assets serving
as collateral for such Securitization. For purposes of this Section, “Securitization”
means a public or private offering by Lender or any of its Affiliates or their respective
successors and assigns, of securities which represent an interest in, or which are collateralized,
in whole or in part, by the Loans or the Commitments. Notwithstanding the

55

 

foregoing, Borrower consents to the publication by Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this Agreement, and
Lender reserves the right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.

     9.10 Captions.

               Captions used in this Agreement are for convenience only and shall not affect the construction
of this Agreement.

     9.11 Nature of Remedies.

               All Obligations of Borrower and rights of Lender expressed herein or in any other Loan
Document shall be in addition to and not in limitation of those provided by applicable law. No
failure to exercise and no delay in exercising, on the part of Lender, 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 preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

     9.12 Counterparts.

               This Agreement may be executed in any number of counterparts and by the different parties
hereto on separate counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement. Receipt by
telecopy of any executed signature page to this Agreement or any other Loan Document shall
constitute effective delivery of such signature page.

     9.13 Severability.

               The illegality or unenforceability of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

     9.14 Entire Agreement.

               This Agreement, together with the other Loan Documents, embodies the entire agreement and
understanding among the parties hereto and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject matter hereof and
thereof and any prior arrangements made with respect to the payment by Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or
on behalf of Lender.

     9.15 Successors; Assigns.

               This Agreement shall be binding upon Borrower and Lender and their respective successors and
assigns, and shall inure to the benefit of Borrower and Lender and the successors and assigns of
Lender. No other Person shall be a direct or indirect legal beneficiary of, or have

56

 

any direct or indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. Borrower may not assign or transfer any of its rights or Obligations
under this Agreement without the prior written consent of Lender.

     9.16 Governing Law.

               THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES TO THE EXTENT THAT SUCH PRINCIPLES WOULD
REQUIRE THE APPLICATION OF LAWS OF ANOTHER JURSIDICTION.

     9.17 Forum Selection; Consent to Jurisdiction.

               ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH
CASE, SITTING IN THE BOROUGH OF MANHATTAN); PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

     9.18 Waiver of Jury Trial.

               EACH OF BORROWER AND LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT
AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.

57

 

[SIGNATURE PAGES FOLLOW]

58

 

               The parties hereto have caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the date first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	[                                        ],	 	 	 	 	 	 
	 	 	as Borrower	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	COMPASS GROUP DIVERSIFIED HOLDINGS LLC,

as Lender
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

59

 

ANNEX I

Commitments and Pro Rata Shares

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Commitment	 	 	Pro Rata	 	 	Term A Loan	 	 	Pro Rata	 	 	Term B Loan	 	Pro Rata	 
	Lender	 	Amount	 	 	Share	 	 	Amounts	 	 	Share	 	 	Amounts	 	Share	 
	 
	Compass Group Diversified
Holdings LLC
	 	 	[$                    ]	 	 	 	100	%	 	 	[$                    ]	 	 	 	100	%	 	 	[$                    ]	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTALS
	 	 	[$                    ]	 	 	 	100	%	 	 	[$                    ]	 	 	 	100	%	 	 	[$                    ]	 	 	 	100	%

Annex
I

 

 

Annex II

Addresses

	 	 	 
	                                        
	                                                            
	                                                            
	Attention:

	 	                    
	Telephone:

	 	                    
	Telecopy:

	 	                    

Compass Group Diversified Holdings LLC,

as Lender

Address for Notices:

	 	 	 
	Sixty One Wilton Road, Second Floor
	Westport, Connecticut 06880
	Attention:

	 	I. Joseph Massoud
	Telephone:

	 	(203) 221-1703
	Telecopy:

	 	(203) 221-8253
	Address for Payments:

Bank: [   
                                        ]

ABA #:     [                                        ]

Account #:   [                                        ]

Reference:   Compass Group Diversified Holdings LLC

Address:     [                                        ]

Annex

II

 

 

Exhibit A

Form of Assignment Agreement

     This Assignment Agreement (this “Assignment Agreement”) is entered into as of
                     by and between the Assignor named on the signature page hereto (“Assignor”) and
the Assignee named on the signature page hereto (“Assignee”). Reference is made to the
Credit Agreement dated as of [                    , 200___] (as amended or otherwise modified from time to time,
the “Credit Agreement”) by and between [                                        ] (“Borrower”) and Compass
Group Diversified Holdings LLC, as lender (together with any successors or assigns, the “Lender”).
Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in
the Credit Agreement.

     Assignor and Assignee agree as follows:

     1. Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases and assumes
from Assignor the interests set forth on the schedule attached hereto, in and to Assignor’s rights
and obligations under the Credit Agreement and the other Loan Documents as of the Effective Date
(as defined below). Such purchase and sale is made without recourse, representation or warranty
except as expressly set forth herein.

     2. Assignor (i) represents that, as of the Effective Date, it is the legal and beneficial
owner of the interests assigned hereunder free and clear of any adverse claim; (ii) makes no other
representation or warranty and assumes no responsibility with respect to any statement, warranties
or representations made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any Loan
Documents or any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
any Loan Party or any other Person or the performance or observance by any Loan Party of its
Obligations under the Credit Agreement or the Loan Documents or any other instrument or document
furnished pursuant thereto.

     3. Assignee (i) represents and warrants that it is legally authorized to enter into this
Assignment Agreement; (ii) confirms that it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant thereto and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment Agreement; (iii) agrees that it will, independently and without
reliance upon Assignor or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iv) agrees that it will perform in accordance with their terms
all obligations which by the terms of the Credit Agreement are required to be performed by it as a
Lender; (vi) represents that on the date of this Assignment Agreement it is not presently aware of
any facts that would cause it to make a claim under the Credit Agreement; and (vii) if organized
under the laws of a jurisdiction outside the United States, attaches the forms prescribed by the
Internal Revenue Service of the United States, which have been duly executed, certifying as to
Assignee’s exemption from United States withholding taxes with respect to all payments to be made
to Assignee under the Agreement or

A-1

 

such other documents as are necessary to indicate that all such payments are subject to such
tax at a rate reduced by an applicable tax treaty.

     4. The effective date for this Assignment Agreement shall be as set forth on the schedule
attached hereto (the “Effective Date”).

     5. Upon such acceptance and recording, from and after the Effective Date, (i) Assignee shall
be a party to the Credit Agreement and, to the extent provided in this Assignment Agreement, have
the rights and obligations of a Lender thereunder and (ii) Assignor shall, to the extent provided
in this Assignment Agreement, relinquish its rights (other than indemnification rights) and be
released from its obligations under the Credit Agreement.

     6. Upon such acceptance and recording, from and after the Effective Date, Borrower shall make
all payments in respect of the interest assigned hereby (including payments of principal, interest,
fees and other amounts) to Assignee. Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to the Effective Date with respect to the making of this assignment
directly between themselves.

     7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

     8. This Assignment may be executed in any number of counterparts and by the different parties
hereto on separate counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Assignment. Receipt by
telecopy of any executed signature page to this Assignment shall constitute effective delivery of
such signature page.

A-2

 

     The parties hereto have caused this Agreement to be executed and delivered as of the date
first written above.

	 	 	 	 	 	 	 
	 	 	ASSIGNOR:	 	 
	 	 	                                                            	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE:	 	 
	 	 	                                                            	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[Consented to:	 	 
	 
	 	 	 	 	 	 
	 	 	[                                                            ,	 	 
	 	 	as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:
	 	                                                                                                                             ]	 	 

A-3

 

Schedule to Assignment Agreement

	 	 	 	 	 
	Assignor:
	 	 	 	 
	 

	 	 

	 	 
	Assignee:
	 	 	 	 
	 

	 	 

	 	 
	Effective Date:
	 	 	 	 
	 

	 	 

	 	 

Credit Agreement dated as of [                    , 2006] (as amended or otherwise
modified from time to time, the “Credit Agreement”) among
[                                        ] (“Borrower”) and Compass Group Diversified
Holdings LLC, as Lender

     Interests Assigned:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving Loan	 	 	Term A Loan	 	 	Term B Loan	 
	Commitment/Loan	 	Commitment	 	 	Commitment	 	 	Commitment	 
	Assignor Amounts
	 	$	 	 	 	$	 	 	 	$	 	 
	Amounts Assigned
	 	$	 	 	 	$	 	 	 	$	 	 
	Assignee Amounts
(post-assignment)
	 	$	 	 	 	$	 	 	 	$	 	 

Assignee Information:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Address for Notices:	 	Address for Payments:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Bank:	 	 	 	 
	 	 	 	 	 	 	 	 
	Attention:
	 	 	 	 	 	ABA #:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Telephone:
	 	 	 	 	 	Account #:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Telecopy:
	 	 	 	 	 	Reference:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 

A-4

 

Exhibit B

Form of Compliance Certificate

     Please refer to the Credit Agreement dated as of [                    , 2006] (as amended or otherwise
modified from time to time, the “Credit Agreement”) between the undersigned
(“Borrower”) and Compass Group Diversified Holdings LLC, as lender (together with any
successors or assigns, the “Lender”). This certificate (this “Certificate”), together with
supporting calculations attached hereto, is delivered to Lender pursuant to the terms of the Credit
Agreement. Terms used but not otherwise defined herein are used herein as defined in the Credit
Agreement.

     Enclosed herewith is a copy of the [annual audited/quarterly] report of Borrower as at
[                    , 200___] (the “Computation Date”), which report fairly presents in all material
respects the financial condition and results of operations [(subject to the absence of footnotes
and to normal year-end adjustments)] of Borrower as of the Computation Date and has been prepared
in accordance with GAAP consistently applied.

     Borrower hereby certifies and warrants that the computations set forth on the schedule
attached hereto correspond to the ratios and/or financial restrictions contained in the Credit
Agreement and such computations are true and correct as at the Computation Date.

     Borrower further certifies that no Event of Default or Default has occurred and is continuing.

     Borrower has caused this Certificate to be executed and delivered by its officer thereunto
duly authorized on [                    , 200___].

[                                                            ]

By:

Title:

B-1

 

Schedule to Compliance Certificate

Dated as of [______, 200__]

	 	 	 	 	 	 	 	 	 	 	 	 	 
	A.	 	Section 7.14.1 - Minimum Fixed Charge Coverage Ratio	 	 	 	 	 	 
	 	 	1.	 	Consolidated Net Income	 	$                    	 	 	 	 
	 
	 	2.	 	Plus:	 	Interest Expense	 	$                    	 	 	 	 
	 
	 	 	 	 	 	income tax expense	 	$                    	 	 	 	 
	 
	 	 	 	 	 	depreciation	 	$                    	 	 	 	 
	 
	 	 	 	 	 	amortization	 	$                    	 	 	 	 
	 
	 	 	 	 	 	other non-cash charges	 	$                    	 	 	 	 
	 
	 	 	 	 	 	management fees paid or accrued	 	$                    	 	 	 	 
	 	 	3.	 	Total (EBITDA)	 	$                    	 	 	 	 
	 	 	4.	 	Income taxes paid	 	$                    	 	 	 	 
	 	 	5.	 	Tax distributions	 	$                    	 	 	 	 
	 	 	6.	 	Capital Expenditures	 	$                    	 	 	 	 
	 	 	7.	 	Sum of (4), (5) and (6)	 	$                    	 	 	 	 
	 	 	8.	 	Remainder of (3) minus (7)	 	$                    	 	 	 	 
	 	 	9.	 	Interest Expense paid in cash	 	$                    	 	 	 	 
	 	 	10.	 	Required payments of principal of
Funded Debt (including Term Loans but
excluding Revolving Loans)	 	$                    	 	 	 	 
	 	 	11.	 	Management fees paid in cash	 	$                    	 	 	 	 
	 	 	12.	 	Sum of (9), (10) and (11)	 	$                    	 	 	 	 
	 	 	13.	 	Ratio of (8) to (12)	 	____ to 1	 	 	 	 
	 	 	12.	 	Minimum Required	 	____ to 1	 	 	 	 
	B.	 	Section 7.14.2 - Maximum Total Debt to EBITDA Ratio	 	 	 	 	 	 
	 	 	1.	 	Total Debt	 	$                    	 	 	 	 
	 	 	2.	 	EBITDA	 	$                    	 	 	 	 
	 	 	 	 	(from Item A(3) above)	 	 	 	 	 	 
	 	 	3.	 	Ratio of (1) to (2)	 	____ to 1	 	 	 	 
	 	 	4.	 	Maximum allowed	 	____ to 1	 	 	 	 
	C.	 	Section 7.14.3 - Capital Expenditures	 	 	 	 	 	 
	 	 	1.	 	Capital Expenditures for the Fiscal Year	 	$                    	 	 	 	 
	 	 	2.	 	Maximum Permitted Capital Expenditures	 	$                    	 	 	 	 

B-2

 

Exhibit C

Form of Availability Certificate

     Please refer to the Credit Agreement dated as of [                    , 2006] (as amended or otherwise
modified from time to time, the “Credit Agreement”) between the undersigned
(“Borrower”) and Compass Group Diversified Holdings LLC, as lender (together with any
successors or assigns, the “Lender”). This certificate (this “Certificate”), together with
supporting calculations attached hereto, is delivered to Lender pursuant to the terms of the Credit
Agreement. Capitalized terms used but not otherwise defined herein shall have the same meanings
herein as in the Credit Agreement.

     Borrower hereby certifies and warrants that at the close of business on [                    , 200___] (the
“Calculation Date”), Borrowing Availability was [$                    ], computed as set forth on the
schedule attached hereto.

     Borrower has caused this Certificate to be executed and delivered by its officer thereunto
duly authorized on [                    , 200___].

[                                                            ]

By:

Title:

C-1

 

	 	 	 	 	 	 	 
	1.

	 	Gross Accounts
	 	 	 	$                    
	2.

	 	Less Ineligibles	 	 	 	 
	 

	 	- Does not arise from sale of goods or services
	 	$                    	 	 
	 

	 	- Lender’s Lien not perfected/Subject to other Lien
	 	$                    	 	 
	 

	 	- Subject to offset, etc.
	 	$                    	 	 
	 

	 	- Account Debtor in bankruptcy
	 	$                    	 	 
	 

	 	- Account Debtor not in U.S. or Canada
	 	$                    	 	 
	 

	 	- Sale on approval, sale or return, bill and hold or consignment
	 	$                    	 	 
	 

	 	- Arises outside the ordinary course
	 	$                    	 	 
	 

	 	- Governmental Accounts
	 	$                    	 	 
	 

	 	- Exceeds credit limits
	 	$                    	 	 
	 

	 	- Chattel Paper
	 	$                    	 	 
	 

	 	- Over 60 days past due or over 90 days past invoice date
	 	$                    	 	 
	 

	 	- Affiliate receivables
	 	$                    	 	 
	 

	 	- Cross-age
	 	$                    	 	 
	 

	 	- Concentration
	 	$                    	 	 
	 

	 	- Not denominated in Dollars
	 	$                    	 	 
	 

	 	- Other
	 	$                    	 	 
	 

	 	- Total
	 	 	 	$                    
	3.

	 	Eligible Accounts [Item 1 minus Item 2]
	 	 	 	$                    
	4.

	 	Item 3 times 85%
	 	 	 	$                    
	5.

	 	Gross Inventory
	 	 	 	$                    
	6.

	 	Less Ineligibles	 	 	 	 
	 

	 	- Lender’s Lien not
perfected/Subject to other Lien
	 	$                    	 	 
	 

	 	- Not Salable
	 	$                    	 	 
	 

	 	- Located off-site and no
Collateral Access Agreement
	 	$                    	 	 
	 

	 	- Arises outside the ordinary course
	 	$                    	 	 
	 

	 	- “Hot Goods”
	 	$                    	 	 
	 

	 	- Restrictive Agreement
	 	$                    	 	 
	 

	 	- Not located in U.S.
	 	$                    	 	 
	 

	 	- In-transit or held or delivered on consignment
	 	$                    	 	 
	 

	 	- Other
	 	$                    	 	 
	 

	 	- Total
	 	 	 	$                    
	7.

	 	Eligible Inventory [Item 5 minus Item 6]
	 	 	 	$                    
	8.

	 	Item 7 times 50%
	 	 	 	$                    
	9.

	 	Item 4 plus Item 8
	 	 	 	$                    

C-2

 

	 	 	 	 	 	 	 
	10.

	 	Lesser of Item 9 and Revolving Loan Commitment
	 	 	 	$                    
	11.

	 	Reserves and allowances
	 	 	 	$                    
	12.

	 	Borrowing Availability [Item 10 minus Item 11]
	 	 	 	$                    
	13.

	 	Revolving Loans
	 	 	 	$                    
	14.

	 	Net Availability [Excess of Item 12 over Item 13]
	 	 	 	$                    
	15.

	 	Required Prepayment [Excess of Item 13 over Item 12]
	 	 	 	$                    

C-3

 

Exhibit D

Form of Note

	 	 	 
	 

	 	[                        , 200___]
	$                                        

	 	[Westport, Connecticut]

     The undersigned (“Borrower”), for value received, promises to pay to the order of
Compass Group Diversified Holdings LLC (“Lender”) at its principal office of 61 Wilton
Road, Westport, Connecticut 06880, the aggregate unpaid amount of all Loans made to Borrower by
Lender pursuant to the Credit Agreement referred to below, such principal amount to be payable on
the dates set forth in the Credit Agreement.

     Borrower further promises to pay interest on the unpaid principal amount of each Loan from the
date of such Loan until such Loan is paid in full, payable at the rate(s) and at the time(s) set
forth in the Credit Agreement. Payments of both principal and interest are to be made in lawful
money of the United States of America.

     This Note evidences indebtedness incurred under, and is subject to the terms and provisions
of, the Credit Agreement, dated as of [                    , 2006] (as amended or otherwise modified from time
to time, the “Credit Agreement”; terms not otherwise defined herein are used herein as
defined in the Credit Agreement), between Borrower and Compass Group Diversified Holdings LLC, as
lender, to which Credit Agreement reference is hereby made for a statement of the terms and
provisions under which this Note may or must be paid prior to its due date or its due date
accelerated.

     This Note is made under and governed by the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.

[                                        ]

By:                                                                                     

Title:                                                                                  

D-1

 

Exhibit E

Form of Notice of Borrowing

     Please refer to the Credit Agreement dated as of [                    , 2006] (as amended or
otherwise modified from time to time, the “Credit Agreement”) between the undersigned
(“Borrower”) and Compass Group Diversified Holdings LLC, as Lender. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement.
This notice is given pursuant to Section 2.2.2 of the Credit Agreement. Borrower hereby
requests a borrowing under the Credit Agreement as follows:

     The aggregate amount of the proposed borrowing is [$                    ]. The requested borrowing date
for the proposed borrowing (which is a Business Day) is [                    , 200___]. The Revolving Loans
comprising the proposed borrowing are [Base Rate][LIBOR] Loans. The duration of the Interest
Period for each LIBOR Loan made as part of the proposed borrowing, if applicable, is [                    ] months
(which shall be 1, 2, 3 or 6 months).

     Borrower has caused this Notice to be executed and delivered by its officer thereunto duly
authorized on [                    , 200___].

[                                        ]

By:                                                                                     

Title:                                                                                  

E-1

 

Exhibit F

Form of Notice of Conversion/Continuation

     Please refer to the Credit Agreement dated as of [                    , 2006] (as amended or otherwise
modified from time to time, the “Credit Agreement”) between the undersigned
(“Borrower”) and Compass Group Diversified Holdings LLC, as Lender. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement.
This notice is given pursuant to Section 2.2.3 of the Credit Agreement. Borrower hereby
requests a [conversion][continuation] of [Term A Loans][Term B Loans][Revolving Loans] as follows:

     The date of the proposed [conversion] [continuation] is [                    , 200___] (which shall be a
Business Day). The aggregate amount of the [Term [A][B] Loans] [Revolving Loans] proposed to be
[converted] [continued] is $                                        . [Specify which part is to be converted and which part
is to be continued, if appropriate.] The Loans to be [continued] [converted] are [Base Rate Loans]
[LIBOR Loans] and the Loans resulting from the proposed [conversion] [continuation] will be [Base
Rate Loans] [LIBOR Loans]. The duration of the requested Interest Period for each LIBOR Loan made
as part of the proposed [conversion] [continuation] is [___] months (which shall be 1, 2, 3 or 6
months).

     Borrower has caused this Notice to be executed and delivered by its officer thereunto duly
authorized on [                    , 200___].

[                                        ]

By:                                                                                     

Title:                                                                                  

F-1exv4w5

 

Exhibit 4.5

PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

     This PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this “Agreement”), is dated
as of April 24, 2006, and is made between ENDWAVE CORPORATION, a Delaware corporation (the
“Company”), and OAK INVESTMENT PARTNERS XI, LIMITED PARTNERSHIP, a Delaware limited partnership
(the “Purchaser”).

RECITALS:

     A. Whereas, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, an aggregate of three hundred thousand (300,000)
shares (the “Shares”) of a newly designated class of the Company’s Preferred Stock, par value
one-tenth of one cent ($0.001) per share (“Preferred Stock”), entitled Series B Preferred Stock
(the “Series B Preferred Stock”), at a per share price of one hundred fifty dollars ($150.00) and
having a total aggregate purchase price of forty-five million dollars ($45,000,000);

     B. Whereas, the Company has filed a Certificate of Designation of Series B
Preferred Stock with the Secretary of State of the State of Delaware setting forth the rights,
preferences and privileges of the Series B Preferred Stock in the form attached hereto as
Exhibit A (the “Certificate of Designation”); and

     C. Whereas, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, a warrant to purchase an aggregate of ninety
thousand (90,000) shares of Series B Preferred Stock, in the form attached hereto as Exhibit
B (the “Warrant”), for a purchase price of thirty-three thousand seven hundred fifty dollars
($33,750.00).

AGREEMENT:

     In consideration of the foregoing premises and the mutual covenants contained herein, the
sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

SECTION 1. PURCHASE AND SALE OF PREFERRED STOCK AND WARRANT.

     1.1 Purchase and Sale.

          (a) Purchase and Sale. Subject to satisfaction of the conditions set forth herein, on
the date hereof or such other date agreed to by the Purchaser and the Company (the “Closing Date”),
Purchaser shall pay forty-five million dollars ($45,000,000) for the Shares and thirty-three
thousand seven hundred fifty dollars ($33,750.00) for the Warrant (the “Purchase Price”) to the
Company in immediately available funds by wire transfer to an account at a bank named by the
Company. At the Closing, subject to the terms and conditions hereof, in exchange for the Purchase
Price, the Company shall issue and sell to Purchaser three hundred thousand (300,000) shares of
Series B Preferred Stock and the Warrant to purchase ninety thousand (90,000) shares of Series B
Preferred Stock.

 

 

          (b) Time and Place of Closing. The closing of the purchase and sale of the Shares and
the Warrant (the “Closing”) shall occur on the Closing Date. The Closing shall be held by
facsimile or .pdf (with originals of the Warrant and the stock certificate and, if requested, other
documents to follow).

     1.2 Closing Delivery. On the Closing Date, subject to the terms and conditions hereof:

          (a) Purchaser shall pay the applicable amount specified in Section 1.1(a) above by wire
transfer of immediately available U.S. funds to an account designated in writing by the Company;
and

          (b) The Company shall execute and deliver to Purchaser a stock certificate representing the
Series B Preferred Stock and the Warrant.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants as
of the date hereof to Purchaser that:

     2.1 Organization and Standing; Certificate of Incorporation and Bylaws. The Company has been
duly incorporated and is an existing corporation in good standing under the laws of the State of
Delaware, with requisite corporate power and authority to own its properties and conduct its
business as presently conducted. The Company is duly qualified to do business as a foreign
corporation in good standing in all other U.S. jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the condition (financial or other),
business, properties or results of operations of the Company and its subsidiaries, taken as a whole
(hereinafter, a “Material Adverse Effect”). The Company has made available to representatives of
the Purchaser with correct and complete copies of the Certificate of Incorporation and Bylaws of
the Company, both as amended and currently in effect.

     2.2 Subsidiaries. Each subsidiary of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own its properties and conduct its business as presently
conducted. Each subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other U.S. jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect; all of the issued and outstanding capital
stock of each subsidiary of the Company has been duly authorized and validly issued and is fully
paid and nonassessable and is owned of record by the Company.

     2.3 Capitalization.

          (a) As of the date hereof, the authorized capital stock of the Company consists of: (i) one
hundred million (100,000,000) shares of common stock, par value one-tenth of one cent ($0.001) per
share, of the Company (the “Common Stock”), and (ii) five million (5,000,000) shares of Preferred
Stock, three hundred thousand (300,000) of which have been designated Series A Junior Participating
Preferred Stock and three hundred ninety thousand (390,000) of which have been designated Series B
Preferred Stock. As of April 5, 2006, eleven

2

 

million three hundred seventy-one thousand seven hundred forty seven (11,371,747) shares of
Common Stock were issued and outstanding. As of the date hereof, no shares of Preferred Stock are
issued and outstanding, and, other than the rights issued pursuant to the Rights Agreement, dated
December 5, 2005, between the Company and Computershare Trust Company, Inc. (the “Rights
Agreement”) and shares of Common Stock reserved for issuance under the Company’s equity incentive
plans and employee stock purchase plan, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy or stockholder
agreements, or agreements of any kind for the purchase or acquisition from the Company of any of
its equity securities.

          (b) The Shares, the shares of Series B Preferred Stock issuable upon exercise of the Warrant
(the “Exercise Shares”) and the shares of Common Stock issuable upon conversion of the Shares and
the Exercise Shares (the “Conversion Shares” and, with the Shares, the Exercise Shares and the
Warrant, the “Offered Securities”), and all outstanding shares of capital stock of the Company have
been duly authorized; all outstanding shares of capital stock of the Company are, and, when the
Shares have been delivered and paid for in accordance with this Agreement on the Closing Date, and,
when the Exercise Shares and Conversion Shares have been delivered in accordance with the terms of
the Certificate of Designation or the Warrant, as applicable, such Shares, Exercise Shares and
Conversion Shares will have been, validly issued, fully paid and nonassessable. None of the
Shares, Exercise Shares or Conversion Shares is subject to any preemptive right or any right of
refusal.

     2.4 Governmental Consents, etc. Subject to the accuracy of the Purchaser’s representations
herein, no consent, approval, authorization, or order of, or filing with, any governmental agency
or body or any court is required for the consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the Offered Securities by the Company, except
for the filing of a Form D with the Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”), the filing of the Listing of Additional
Shares Application with Nasdaq and such as may be required under state securities laws.

     2.5 Authorization. This Agreement has been duly authorized, executed and delivered by the
Company. All corporate action on the part of the Company and its stockholders, directors and
officers necessary for the authorization, execution and delivery of this Agreement, the performance
of all the Company’s obligations hereunder and for the authorization, issuance or reservation for
issuance, sale and delivery of the Offered Securities has been taken. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies, and (iii) the limitations imposed by applicable federal or
state securities laws on the indemnification provisions contained in this Agreement.

     2.6 Compliance. The execution, delivery and performance of this Agreement and the issuance
and sale of the Offered Securities will not result in a breach or violation of (i) any of the terms
and provisions of the Certificate of Incorporation or bylaws of the Company or any of its
subsidiaries, nor (ii) any of the terms and provisions of, or constitute a default under any
statute,

3

 

rule, regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their
properties, or any agreement or instrument to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject (except where such breaches, violations or defaults
individually or in the aggregate would not have a Material Adverse Effect or materially and
adversely affect the ability of the Company to carry out its obligations hereunder). The Company
has full corporate power and authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.

     2.7 Brokers or Finders. There have been no investment bankers, brokers or finders used by the
Company or its affiliates in connection with the transactions contemplated by this Agreement and no
persons or entities are entitled to a fee or compensation from the Company or its subsidiaries in
respect thereof other than Needham & Company.

     2.8 Title to Properties; Liens. The Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by them that are material to
the operation of the Company’s business, in each case free from liens, encumbrances and defects
that would materially affect the value thereof or materially interfere with the use made or to be
made thereof by them; and the Company and its subsidiaries hold any leased real or personal
property that are material to the operation of the Company’s business under valid and enforceable
leases with no exceptions that would materially interfere with the use made or to be made thereof
by them.

     2.9 Permits. The Company and its subsidiaries possess adequate permits, licenses, regulatory
approvals, certificates, or authorities issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such permit, license, regulatory
approval, certificate, or authority that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

     2.10 Litigation. To the Company’s knowledge, there are no pending actions, suits or
proceedings against or affecting the Company, any of its subsidiaries or any of their respective
properties or any director, officer or employee (related to any such person’s services as a
director, officer or employee of the Company) that, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to perform its obligations under
this Agreement, and, to the Company’s knowledge, no such actions, suits or proceedings are
threatened. The Company has not initiated and has no plan to initiate any action, suit or
proceeding that, if decided adversely to the Company, would, individually or in the aggregate,
result in a Material Adverse Effect.

     2.11 SEC Documents. All statements, reports, schedules, forms and other documents required
to have been filed by the Company with the SEC since January 1, 2005 (the “SEC Documents”) have
been so filed. As of their respective dates (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such amendment or superseding filing): (i) each of the
SEC Documents complied in all material respects with the applicable

4

 

requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as the case may be; and (ii) none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

     2.12 Financial Statements. The financial statements included in the SEC Documents present
fairly the financial position of the Company and its consolidated subsidiaries as of the dates
shown and their results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by Form 10-Q and Form
8-K of the SEC, and except that the unaudited financial statements were subject to normal and
recurring year-end adjustments which were not, or are not reasonably expected to be, individually
or in the aggregate, material in amount), and complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto.

     2.13 Proprietary Rights. The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, sufficient legal rights to all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable
propriety or confidential information, systems or procedures), trademarks, service marks and trade
names currently employed by them in connection with the business now operated by them and neither
the Company nor any of its subsidiaries has received any notice of, nor has any knowledge of, nor
is aware of any facts that would constitute the reasonable basis for any claim of infringement of
or conflict with asserted rights of others with respect to any of the foregoing that, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.

     2.14 No Sale or Offering. Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act) (an “Affiliate”) of the Company has, directly, or through
any agent, (a) sold, offered for sale, solicited any offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or will be integrated with the
sales of the Offered Securities in a manner that would require the registration under the
Securities Act of the Offered Securities; or (b) offered, solicited offers to buy or sold the
Offered Securities in any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act; and the Company will not engage in any of the
actions described in subsections (a) and (b) of this paragraph.

     2.15 Offering. Subject to the accuracy of the Purchaser’s representations herein and in the
Warrant, it is not necessary in connection with the offer, sale and delivery of the Offered
Securities to the Purchaser in the manner contemplated by this Agreement to register the offer and
sale of the Offered Securities under the Securities Act.

     2.16 Anti-Dilution. The issuance of the Offered Securities, neither individually nor in the
aggregate, constitute an anti-dilution event for any existing securityholders of the Company,
pursuant to which such securityholders would be entitled to additional securities or a reduction in

5

 

the applicable conversion price or exercise price of any securities due to any issuance
proposed to be conducted hereunder.

     2.17 Registrable Securities. As of the date hereof, assuming the Registrable Securities (as
herein after defined) were issued as of the date hereof, the Company satisfies the requirements for
use of Form S-3 for registration of the resale of the Registrable Securities by the Holders (as
hereinafter defined).

     2.18 Application of Takeover Protections. The transactions contemplated by this Agreement,
including without limitation, the Company’s issuance of the Offered Securities and the Purchaser’s
ownership of the Offered Securities, have been approved by the Company’s Board of Directors within
the meaning of Section 203 of the Delaware General Corporation Law.

     2.19 Rights Agreement. Assuming the accuracy of the Purchaser’s representations in Section
3.7 of this Agreement (i) the Purchaser is not intended to be nor will the Purchaser be deemed to
be an Acquiring Person within the meaning of the Rights Agreement solely because of the acquisition
of the Offered Securities pursuant to this Agreement (or exercise of the Warrant or conversion of
the Shares, as applicable) and (ii) the acquisition of the Offered Securities alone pursuant to
this Agreement, shall not, under any circumstances, trigger a Distribution Date within the meaning
of the Rights Agreement. As of the date hereof, no beneficial owner of the Company’s Common Stock
is an Acquiring Person under the Rights Agreement, and no Distribution Date has been triggered
thereunder.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby represents and
warrants to the Company, as of the date hereof, as follows:

     3.1 Organization and Standing. Purchaser is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all requisite limited
partnership power and authority to consummate the transactions contemplated hereby. Oak Associates
XI, LLC (the “General Partner”) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite corporate power and authority to
consummate the transactions contemplated hereby. The General Partner has the power and authority
to execute and deliver this Agreement on behalf of Purchaser.

     3.2 Authorization. Purchaser has full limited partnership power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the
legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with
its terms, subject to (a) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, (b) rules of law governing specific performance, injunctive relief and other
equitable remedies, and (c) the limitations imposed by applicable federal or state securities laws
on the indemnification provisions contained in this Agreement.

     3.3 Compliance. The execution, delivery and performance of this Agreement, and the purchase
and acceptance of the Offered Securities by Purchaser will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under any statute, rule, regulation or
order of any governmental agency or body or any court, domestic or foreign, having jurisdiction
over Purchaser or any subsidiary of Purchaser or any of their properties, or

6

 

any material agreement or instrument to which Purchaser or any such subsidiary is a party or
by which Purchaser or any such subsidiary is bound or to which any of the properties of Purchaser
or any such subsidiary is subject, or the certificate of limited partnership, partnership
agreement, and other organizational documents of Purchaser or any such subsidiary (except where any
such breaches, violations or defaults individually or in the aggregate would not have a material
adverse effect on Purchaser’s ability to perform this Agreement).

     3.4 Investment Representations.

          (a) Investment Experience and Intent. Purchaser and General Partner are sophisticated in
transactions of this type and capable of evaluating the merits and risks of the transactions
described herein and have the capacity to protect their own interests. Purchaser has not been
formed solely for the purpose of entering into the transactions described herein and is acquiring
the Offered Securities for investment for its own account, not as a nominee or agent, and not with
the view to, or for resale, distribution thereof, in whole or in part.

          (b) Restrictions on Transfer. Purchaser has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or
pledge the Series B Preferred Stock, other than a sale, transfer or pledge to an affiliate, partner
or former partner of Purchaser in compliance with the Securities Act.

          (c) Accredited Investor. Purchaser acknowledges its understanding that the Company intends to
sell the Offered Securities pursuant to a private placement exempt from registration under the
Securities Act. In furtherance thereof, Purchaser represents and warrants that it is an
“accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act,
has the financial ability to bear the economic risk of its investment, has adequate means for
providing for its current needs and personal contingencies and has no need for liquidity with
respect to its investment in the Company. The Purchaser further represents and warrants that the
General Partner is an “accredited investor” as that term is defined in Rule 501 of Regulation D
under the Securities Act.

          (d) Limitations on Disposition. Purchaser agrees that it shall not sell or otherwise transfer
any of the Offered Securities without registration under the Securities Act, pursuant to Rule 144
(or any successor rule) under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company that no violation of the Securities Act will be involved in such
transfer. Purchaser fully understands that Offered Securities have not been registered under the
Securities Act or under the securities laws of any applicable state or other jurisdiction and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless subsequently
registered under the Securities Act and under the applicable securities laws of such states or
jurisdictions or an exemption from such registration is available. Purchaser understands that the
Company is under no obligation to register the Offered Securities on its behalf with the exception
of certain registration rights set forth herein. Purchaser understands the lack of liquidity and
restrictions on transfer of the Offered Securities and that this investment is suitable only for a
person or entity of adequate financial means that has no need for liquidity of this investment and
that can afford a total loss of its investment.

7

 

          (e) Residence. The office or offices of Purchaser in which its investment decision was made
is located at the address of Purchaser set forth in Section 10 hereto.

     3.5 Proceedings. There is no legal, administrative, arbitration or other action or proceeding
or governmental investigation pending, or to the knowledge of Purchaser threatened, against
Purchaser that challenges the validity or performance of this Agreement or which, if successful,
could hinder or prevent Purchaser from performing its obligations hereunder.

     3.6 Brokers or Finders. There have been no investment bankers, brokers or finders used by
Purchaser or its affiliates in connection with the transactions contemplated by this Agreement and
no persons or entities are entitled to a fee or compensation in respect thereof.

     3.7 Ownership. Neither the Purchaser, nor any of its affiliated funds, “owns” (as defined in
Section 203 of the Delaware General Corporation Law) any interest in any securities of the Company
other than by virtue of this Agreement to purchase the Offered Securities.

SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of the Purchaser to
purchase and pay for the Shares and the Warrant on the Closing Date will be subject to the
satisfaction, or waiver by Purchaser, of each of the conditions below:

     4.1 Representations, Warranties, Covenants. The representations and warranties of the Company
herein must be correct and complete on the Closing Date and the Company must have performed or
complied with all of its obligations, covenants, agreements and conditions hereunder required to be
performed on or prior to the Closing Date, each in all material respects.

     4.2 Blue Sky. The Company must have obtained all necessary “blue sky” law permits and
qualifications, or have the availability of exemptions therefrom, required by any state for the
offer and sale of the Offered Securities.

     4.3 Authorizations. All authorizations, approvals or permits, if any, of any governmental
authority or regulatory body that are required in connection with the lawful issuance and sale of
the Shares and the Warrant pursuant to this Agreement have been duly obtained and must be effective
as of the Closing. Specifically, the Company must have received confirmation by NASDAQ that the
consummation of the transaction contemplated by this Agreement does not require stockholder
approval or otherwise breach applicable Nasdaq rules.

     4.4 Certificate of Designation. The Company must have filed the Certificate of Designation
with the Secretary of State of the State of Delaware.

     4.5 Certificate, Warrant. The Company must execute and deliver to Purchaser: (i) a
certificate representing the Shares, (ii) a customary certificate from the secretary of the Company
satisfactory to Purchaser and (iii) the Warrant.

     4.6 Company Counsel Legal Opinion. Purchaser must have received a customary opinion, dated
the Closing Date, from Cooley Godward LLP, counsel for the Company, reasonably acceptable to
Purchaser.

8

 

     4.7 Compliance Certificate. Purchaser must have received a certificate, dated the Closing
Date, of an officer of the Company in which such officer shall state that: the representations and
warranties of the Company in Section 2 of this Agreement are correct in all material
respects and the Company has complied in all material respects with all agreements and satisfied in
all material respects all conditions on its part that are required to be performed or satisfied
hereunder at or prior to the Closing Date.

SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the Company to sell
the Shares and the Warrant on the Closing Date to Purchaser will be subject to the satisfaction, or
waiver by the Company, of the following conditions:

     5.1 Representations, Warranties, Obligations. The representations and warranties of Purchaser
herein must be correct and complete on the Closing Date and Purchaser must have performed all of
its obligations hereunder required to be performed prior to the Closing Date.

     5.2 Authorizations. All authorizations, approvals or permits, if any, of any governmental
authority or regulatory body that are required in connection with the lawful issuance and sale of
the Shares and the Warrant pursuant to this Agreement have been duly obtained and must be effective
as of the Closing. Specifically, the Company must have received confirmation by NASDAQ that the
consummation of the transaction contemplated by this Agreement does not require stockholder
approval or otherwise breach applicable Nasdaq rules.

SECTION 6. REGISTRATION OF THE REGISTRABLE SECURITIES; COMPLIANCE WITH THE SECURITIES ACT.

     6.1 Registration Procedures. The Company is obligated to do the following:

          (a) The Company shall prepare and file with the SEC by March 16, 2007, one or more
registration statements (the “Registration Statement(s)”) in order to register with the SEC the
resale by the Holders (as defined below), from time to time, of the Registrable Securities (as
defined below) (other than Registrable Securities issuable upon conversion of the Series B
Preferred Stock issuable upon exercise of any unexercised Warrant, unless applicable rules and
regulations permit such Registrable Securities to be included in such registration without naming
the holder of such Warrant as an underwriter of such registration) through NASDAQ or the facilities
of any national securities exchange on which the Company’s Common Stock is then traded, or in
privately negotiated transactions. The Company shall use its best efforts to cause such
Registration Statement(s) to be declared effective on or prior to the Lock-up Expiration Date, as
defined below. The Company shall promptly notify the Holders of the effectiveness of the
Registration Statement(s). The holders of Registrable Securities (including Purchaser’s permitted
transferees hereunder) are referred to herein as the “Holders.” “Registrable Securities” shall
mean (i) the Conversion Shares and (ii) Common Stock issued as (or issuable upon the conversion of
exercise of any warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the Shares, the Exercise
Shares or the Conversion Shares. The Company agrees to use its best efforts to keep such
Registration Statement(s) effective until all Registrable Securities registered thereunder cease to
be “Registrable Securities,” which occurs on the earlier of (A) the date that such securities are
sold pursuant to the Registration Statement(s), or (B) such time that all

9

 

Registrable Securities registered thereunder held by a Holder can be sold pursuant to Rule
144(k) under the Securities Act (and the Company has provided an opinion of counsel to such effect
reasonably acceptable to the Holder of such Registrable Securities). Each Holder shall provide the
Company such information in writing as is reasonably requested to enable the Company and its
counsel to ascertain whether or not the Holder is eligible to sell the Registrable Securities
pursuant to Rule 144 of the Securities Act.

          (b) The Company shall prepare, and as soon as practicable but in no event later than the later
of (i) the date which is 30 days after the exercise date of all or any portion of the Warrant if
Form S-3 is available for such registration and 60 days after the exercise date of all or any
portion of the Warrant if Form S-3 is unavailable for such registration and (ii) March 16, 2007,
file with the SEC an additional Registration Statement (or a supplement or amendment to an existing
registration statement) covering the resale of all of the Registrable Securities related to the
exercised Warrant. The Company shall use its best efforts to have each such additional
Registration Statement declared effective by the SEC as soon as practicable and to keep such
Registration Statement effective until all Registrable Securities cease to be “Registrable
Securities” as described in Section 6.1(a).

          (c) The Company shall prepare and file with the SEC (i) such amendments and supplements to any
Registration Statement(s) and the prospectus used in connection therewith, and (ii) such other
filings required by the SEC, in each case as may be necessary to keep the Registration Statement(s)
continuously effective and not misleading until the earlier of (A) the date that the holders of
Registrable Securities have completed the distribution related to the Registrable Securities, or
(B) such time that there are no longer any Registrable Securities outstanding; provided, however,
that at any time, upon written notice to the Purchaser and for a period not to exceed fifteen (15)
calendar days thereafter (the “Suspension Period”), the Company may delay the filing or
effectiveness of any Registration Statement(s) or suspend the use or effectiveness of any
Registration Statement(s) (and the Holders hereby agree not to offer or sell any Registrable
Securities pursuant to such Registration Statement(s) during the Suspension Period) if the Company
reasonably believes that the Company may, in the absence of such delay or suspension hereunder, be
required under state or federal securities laws to disclose any corporate development the
disclosure of which could reasonably be expected to have an adverse effect upon the Company, its
stockholders, a potentially significant transaction or event involving the Company, or any
negotiations, discussions, or proposals directly relating thereto. The Company may extend the
Suspension Period for an additional consecutive fifteen (15) calendar days upon written notice to
the Holders. The Company agrees to use its commercially reasonable efforts to ensure that the
Suspension Period is kept to a minimum number of days. If so directed by the Company, each Holder
shall use its best efforts to deliver to the Company (at the Company’s expense) all copies, other
than permanent file copies then in such Holder’s possession, of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.

          (d) The Company shall furnish to the Holders such number of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

10

 

          (e) The Company shall use its best efforts to register and qualify the securities covered by
such Registration Statement(s) under such other securities or Blue Sky laws of such domestic
jurisdictions as shall be reasonably requested by a Holder; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or domestic jurisdictions, unless the
Company is already subject to service in such jurisdiction and except as required by the Securities
Act.

          (f) The Company shall notify each Holder whose Registrable Securities are covered by such
Registration Statement(s) at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of which the
prospectus included in such Registration Statement(s), as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing. The Company shall use reasonable efforts to promptly amend or supplement such prospectus
in order to cause such prospectus not to include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

          (g) The Company shall use commercially reasonable efforts to cause all such Registrable
Securities registered pursuant hereunder to be listed on NASDAQ and/or each other securities
exchange on which similar securities issued by the Company are then listed.

     6.2 Transfer of Securities. Each holder of the Series B Preferred Stock and each Holder,
severally and not jointly, agrees that it will not effect any disposition of the Offered Securities
that would constitute a sale within the meaning of the Securities Act, unless:

          (a) (i) pursuant to a Registration Statement(s) then in effect covering such disposition, if
such disposition is made in accordance with such Registration Statement(s); or (ii) such Holder
shall have notified the Company of the proposed disposition and shall have furnished the Company
with a reasonably detailed statement of the circumstances surrounding the proposed disposition, and
if reasonably requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, or other evidence, reasonably
satisfactory to the Company, that such disposition will not require registration of such
Registrable Securities under the Securities Act; and

          (b) the Company is given written notice prior to said transfer or assignment, stating the name
and address of the transferee or assignee and identifying the Registrable Securities that are
intended to be transferred or assigned and (y) the transferee or assignee of such rights delivers
to the Company, in a form reasonably acceptable to the Company, an agreement evidencing the
assumption of all of the rights and obligations of such Holder under this Agreement, including the
obligations set forth in Section 9.4, if applicable to the transferred Registrable Securities, and
Section 9.3; provided, it is agreed that this Section 6.2(b) will not apply to dispositions of
Registrable Securities pursuant to and in accordance with a Registration Statement(s) (or other
registration statement declared effective under the Securities Act) or dispositions of Registrable
Securities pursuant to and in compliance with Rule 144.

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     6.3 Legends. Each certificate representing Offered Securities shall (unless otherwise
permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a standard
legend regarding restrictions under applicable securities laws and the lock-up provisions described
in Section 9.4.

     6.4 Expenses of Registration. Except as specifically provided herein, all expenses incurred
by the Company in complying with Section 6 hereof, including, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company, reasonable and actual
fees and expenses of one counsel to the Holders (not to exceed seven thousand five hundred dollars
($7,500) unless such registration is on Form S-1, is an underwritten offering or there are other
unanticipated circumstances), blue sky fees and expenses, fees and the expense of any special
audits incident to or required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company) (collectively, the
“Registration Expenses”) shall be borne by the Company. All underwriting discounts and
brokerage/selling commissions applicable to a sale incurred in connection with any registrations
hereunder shall be borne by the holders of the securities so registered pro rata on the basis of
the number of shares registered for resale. The Holders shall also be responsible, on a pro rata
basis, for paying legal expenses of counsel to the Holders which are not Registration Expenses
pursuant to this Section 6.4.

     6.5 Indemnification. In the event any Registrable Securities are included in a registration
statement under this Section 6.

          (a) The Company will indemnify and hold harmless each Holder, the partners, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning of the Securities
Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to each such Holder,
partner, officer, director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement contained in this
Section 6.5 shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the Company, which
consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written information furnished
specifically for use in connection with such

12

 

registration by such Holder, partner, officer, director, underwriter or controlling person of
such Holder.

          (b) Each Holder will, if Registrable Securities held by such Holder are included in the
securities as to which registration, qualifications or compliance is being effected, indemnify and
hold harmless the Company, each of its directors, its officers and each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter and any other Holder
selling securities under such registration statement or any of such other Holder’s partners,
directors or officers or any person who controls such Holder, against any losses, claims, damages
or liabilities (joint or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, or partner, director, officer or controlling person of
such other Holder may become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written information furnished by
such Holder specifically for use in connection with such registration; and each such Holder will
pay as incurred any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other person registering shares under such
registration, or partner, officer, director or controlling person of such other person registering
shares under such registration in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement contained in this
Section 6.5 shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 6.5 exceed the net proceeds from sale of Registrable Securities pursuant to the
Registration Statement received by such Holder (i.e., gross proceeds less discounts and
commissions).

          (c) Promptly after receipt by an indemnified party under this Section 6.5 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 6.5,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonable and actual fees and expenses to be
paid by the indemnifying party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party under this Section
6.5, but the omission so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under this Section 6.5.

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          (d) If the indemnification provided for in this Section 6.5 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the Violation(s) that resulted in
such loss, claim, damage or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be determined by a
court of law by reference to, among other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission; provided, that in
no event shall any contribution by a Holder hereunder exceed the net proceeds from sale of
Registrable Securities pursuant to the Registration Statement received by such Holder (i.e., gross
proceeds less discounts and commissions).

          (e) The obligations of the Company and the Holders under this Section 6.5 shall survive
completion of any offering of Registrable Securities in a registration statement and the
termination of this Agreement. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.

     6.6 Agreement to Furnish Information. In connection with a registration in which a Holder is
participating, such Holder agrees to execute and deliver such other agreements as may be reasonably
requested by the Company or the underwriter. In addition, if requested by the Company or the
representative of the underwriters of Common Stock (or other securities) of the Company, each
Holder shall provide, within ten (10) calendar days of such request, such information related to
such Holder as may be required by the Company or such representative in connection with the
completion of any public offering of the Company’s securities pursuant to a registration statement
filed under the Securities Act.

     6.7 Rule 144 Reporting. With a view to making available to the Holder the benefits of certain
rules and regulations of the SEC which may permit the sale of the Registrable Securities to the
public without registration, the Company agrees to use commercially reasonable efforts to:

          (a) Make and keep public information available, as those terms are understood and defined in
Rule 144 of the Securities Act or any similar or analogous rule promulgated under the Securities
Act;

          (b) File with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and

14

 

          (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon
request: a written statement by the Company as to its compliance with the reporting requirements
of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing it to sell any such securities without
registration.

     6.8 S-3 Eligibility. The Company will use commercially reasonable efforts to meet the
requirements for the use of Form S-3 for registration of the resale by the Holders of the
Registrable Securities. The Company will use commercially reasonable efforts to file all reports
required to be filed by the Company with the SEC in a timely manner and take all other reasonably
necessary action so as to maintain such eligibility for the use of Form S-3.

     6.9 Restrictions on Transfer of Section 6 Rights and Obligations. In addition to the
requirements of Section 6.2 hereof, the rights and obligations of a Holder under this Section
6 may be transferred or assigned by a Holder only (i) to a transferee or assignee of not less
than one million (1,000,000) Registrable Securities (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock splits, and the like) or
(ii) by a Holder (A) that is a partnership to its partners or former partners in accordance with
partnership interests, (B) that is a limited liability company to its members or former members in
accordance with their interest in the limited liability company, (C) that is a corporation to its
majority owned subsidiaries or affiliates or (D) that is an individual to the Holder’s family
member or trust for the benefit of Holder or his or her family members or an entity whose equity
owners consist solely of the Holder and his or her family members; provided that in all instances
(x) the Company is given written notice prior to said transfer or assignment, stating the name and
address of the transferee or assignee and identifying the Registrable Securities that are intended
to be transferred or assigned and (y) the transferee or assignee of such rights delivers to the
Company, in a form reasonably acceptable to the Company, an agreement evidencing the assumption of
all of the rights and obligations of such Holder under this Agreement, including the obligations
set forth in Section 9.4, if applicable to the transferred Registrable Securities, and Section 9.3.

SECTION 7. TAX REPORTING COVENANT. The parties agree that the Shares and Exercise Shares
will be treated as other than preferred stock for purposes of Internal Revenue Code of 1986, as
amended, Section 305(b)(4) (“IRC 305(b)(4)”). Accordingly, the parties agree that no amount shall
be currently includable in the income of a Holder by reason of IRC 305(b)(4). The parties agree to
report the tax consequences of the Shares and the Exercise Shares consistent with this treatment.

SECTION 8. COVENANTS OF THE COMPANY.

     8.1 Appointed Director Nominated by Purchaser. The Company hereby agrees to cooperate in
electing an individual nominated by Purchaser (hereinafter “Appointed Director”) (pursuant to Board
of Director election rights set forth in the Certificate of Designation) to the Board of Directors,
either through appointment by the Board of Directors or through a meeting of the holders of Shares,
as long as Purchaser or its affiliated funds are the holders of all

15

 

outstanding shares of Series B Preferred Stock at the time of such nomination. Upon such
election to the Company’s Board of Directors, the Company hereby agrees to do the following (in
addition to the automatic grant of a stock option pursuant to the Company’s 2000 Non-Employee
Directors’ Stock Option Plan ):

          (a) To add the Appointed Director as a covered person under the Company’s director and officer
insurance policy with the same coverage and treatment as the Company’s other non-employee
directors; and

          (b) To enter into an indemnity agreement with the Appointed Director in the form filed as an
exhibit to the Company’s Annual Report on Form 10-K.

     8.2 Rights Agreement Covenant. If the Purchaser (or any transferee or successor in interest
to the Purchaser that acquires Series B Preferred Stock or the Warrant from Purchaser or a
transferee thereof) converts its Series B Preferred Stock into shares of Common Stock following a
Distribution Date and before the earlier of the Redemption Date or the Final Expiration Date (as
such terms are defined in the Rights Agreement), the Company agrees (i) to issue to such person,
effective immediately upon such conversion, an appropriate number of Rights and Right Certificates
(as such terms are defined in the Rights Agreement) such that Purchaser shall be treated in a
manner substantially consistent and proportionate (based on number of shares of Common Stock held
on an as-converted basis) with holders of Common Stock as of the Distribution Date (other than the
Acquiring Person (as such term is defined in the Rights Agreement) and other persons identified in
the second paragraph of Section 11(a)(ii) of the Rights Agreement who, by virtue of such section,
hold Rights that are null and void) (“Proportionate Treatment”) and (ii) to otherwise take such
action reasonably requested by Purchaser (including, without limitation, using commercially
reasonable efforts to amend the Rights Agreement) such that such persons will receive Proportionate
Treatment.

SECTION 9. COVENANTS OF THE PURCHASER AND HOLDERS.

     9.1 [INTENTIONALLY OMITTED.]

     9.2 Public Disclosure. The Company and the Purchaser agree that, as soon as practicable after
the Closing, the Company shall disclose the terms of this Agreement pursuant to a Form 8-K and a
press release, each in form that complies with any applicable securities laws. The press release
shall be in a form that is reasonably acceptable to both the Company and the Purchaser.

     9.3 Prohibition on Use of Insider Information. Each Purchaser and Holder understands that
federal and state securities laws prohibit trading in the Company’s securities while such Purchaser
or Holder is in the possession of “material nonpublic information” concerning the Company and/or
its affiliates. Each Purchaser represents that it has been advised by its counsel of such laws and
the consequences of breaking such laws. The Purchaser and each Holder covenant not to enter into
any transactions that would violate applicable securities laws.

     9.4 Lock-up Period. The Purchaser and each Holder hereby agree that from the date hereof and
until the expiration dates described below, such Purchaser or Holder will not (i) offer,

16

 

sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Offered
Securities, or (ii) enter into a transaction that would have the same effect, or (iii) enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Offered Securities, whether any such aforementioned transaction is
to be settled by delivery of the Offered Securities or other securities, in cash or otherwise, or
(iv) publicly disclose the intention (x) to make any such offer, sale, pledge or disposition (other
than actions taken by the Holders in connection with the filing of the Registration Statement(s) by
the Company), or (y) to enter into any such transaction, swap, hedge or other arrangement, without,
in each case, the prior written consent of the Company. The foregoing sentence shall expire with
respect to 25% of the total number of Offered Securities (allocated pro rata among the Conversion
Shares issuable upon conversion of the Shares and the Conversion Shares issuable upon conversion of
the Exercise Shares) on each of October 24, 2007, January 24, 2008,
April 24, 2008, and July 24,
2008, and shall expire in its entirety upon the earliest to occur of (1) a Liquidation (as such
term is defined in the Certificate of Designation) or (2) the date of a Price-Based Automatic
Conversion (as such term is defined in the Certificate of Designation) (the first date of
expiration of the lock-up period described herein is referred to as the “Lock-up Expiration Date”).

     9.5 Standstill. At any time following the date of this Agreement and until the two year
anniversary of the Closing Date, except with the prior written consent of the Company, the
Purchaser, on its own behalf and that of its affiliated funds, shall not acquire any additional
shares of Common Stock the Company (or rights or options therefor), except pursuant to this
Agreement, the exercise of its Warrant or conversion of the Series B Preferred Stock.

SECTION 10. NOTICES. All communications hereunder will be in writing and, (a) if sent to
Purchaser, will be mailed, delivered or faxed and confirmed to Oak Investment Partners XI, Limited
Partnership, 525 University Avenue, Suite 1300, Palo Alto, CA 94301, Attention: Bandel L. Carano
and Virginia Eddington; with a copy to Hughes & Luce, LLP, 1717 Main Street, Suite 2800, Dallas, TX
75201, fax number (214) 939-5849, Attention: Benjamin D. Nelson, (b) if sent to any Holder, will
be mailed, delivered or faxed and confirmed to such Holder’s address as set forth on the written
notice delivered to the Company pursuant to Section 6.2(b) of this Agreement, with a copy to Oak
Investment Partners XI, Limited Partnership, 525 University Avenue, Suite 1300, Palo Alto, CA
94301, Attention: Bandel L. Carano and Virginia Eddington; with a copy to Hughes & Luce LLP, 1717
Main Street, Suite 2800, Dallas, TX 75201, fax number (214) 939-5849, Attention: Benjamin D.
Nelson, and (c) if sent to the Company, will be mailed, delivered or faxed and confirmed to it at
776 Palomar Avenue, Sunnyvale, CA 94085, fax number (408) 522-3102, Attention: Brett Wallace,
Chief Financial Officer, with a copy to Cooley Godward LLP, 101 California Street, 5th
Floor, San Francisco, CA 94111-5800, fax number (415) 693-2222, Attention: Jodie Bourdet.

SECTION 11. EXPENSES. The Company, on the one hand, and Purchaser, on the other hand, are each
responsible for its own expenses associated with the purchases and sales of the Series B Preferred
Stock pursuant to the terms of this Agreement; provided, that the Company will pay, on the Closing
Date, the reasonable legal fees and expenses of Hughes & Luce LLP and Wilson Sonsini Goodrich &
Rosati, legal counsel to the Purchaser, not expected to exceed forty thousand dollars ($40,000).

17

 

SECTION 12. AMENDMENT AND WAIVER. Except as otherwise expressly provided, this Agreement may be
amended, waived, discharged or terminated only upon the written consent of the Company and the
Holders of a majority of the Registrable Securities then outstanding (assuming conversion of all
outstanding shares of Series B Preferred Stock). Each such amendment, waiver, discharge or
termination effected in accordance with this paragraph shall be binding upon each Holder and each
future holder of all such securities of Holder. Each Holder acknowledges that by the operation of
this paragraph, the Holders of a majority of the Registrable Securities (assuming conversion of all
outstanding shares of Series B Preferred Stock) will have the right and power to diminish or
eliminate all rights of such Holder under this Agreement.

SECTION 13. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and no other person will have any right or
obligation hereunder.

SECTION 14. COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement. The parties may execute this agreement by
facsimile or .pdf, and will, at the request of the other party, deliver original signature pages.

SECTION 15. SURVIVAL. The representations, warranties, covenants and agreements made in this
Agreement shall survive any investigation made by any party hereto and the Closing.

SECTION 16. WAIVER OF CONFLICTS. Purchaser acknowledges that Cooley Godward llp (“Cooley
Godward”), outside corporate counsel to the Company, may have in the past performed and is or may
now or in the future represent Purchaser or its affiliates in matters unrelated to the transactions
contemplated by this Agreement (the “Financing”), including representation of the Purchaser or its
affiliates in matters of a similar nature to the Financing. The applicable rules of professional
conduct require that Cooley Godward inform the Purchaser of this representation and obtain its
consent. Cooley Godward has served as outside corporate counsel to the Company and has negotiated
the terms of the Financing solely on behalf of the Company. The Company and the Purchaser hereby
(a) acknowledge that they have had an opportunity to ask for and have obtained information relevant
to such representation, including disclosure of the reasonably foreseeable adverse consequences of
such representation; (b) acknowledge that with respect to the Financing, Cooley Godward has
represented solely the Company, and not any Purchaser or any stockholder, director or employee of
the Company or any Purchaser; and (c) give their informed consent to Cooley Godward’s
representation of the Company in the Financing.

SECTION 17. APPLICABLE LAW AND VENUE. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, without regard to principles of conflicts of
laws. Any dispute under this Agreement that is not settled by mutual consent shall be finally
adjudicated by any federal or state court sitting in Santa Clara County, California, and each party
consents to the exclusive jurisdiction of such courts (or any appellate court therefrom) over any
such dispute. Each party further consents to personal jurisdiction in the courts mentioned in the
prior sentence. In the event that any suit or action is instituted to enforce any

18

 

provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from
the losing party all fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation, such reasonable fees and expenses
of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses
of appeals.

[Signature Page Follows]

19

 

In Witness Whereof, this Agreement is entered into by the undersigned parties as of the
date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ENDWAVE CORPORATION
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Edward A. Keible, Jr.
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Edward A. Keible, Jr.
	 	 	 	 	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Address: 776 Palomar Avenue
	 	 	 	 	 	 	Sunnyvale, CA 94085
	 	 	 	 	 	 	Facsimile: (408) 522-3102
	 
	 	 	 	 	 	 	 	 
	OAK INVESTMENT PARTNERS XI,
 LIMITED
PARTNERSHIP	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	Oak Associates XI, LLC,	 	 	 	 	 	 
	 

	 	its general partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Bandel L.
Carano	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:

	 	Bandel L. Carano	 	 	 	 	 	 
	Title:

	 	Managing Member	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address: 525 University Avenue,
Suite 1300	 	 	 	 	 	 
	Palo Alto, CA 94301	 	 	 	 	 	 
	Facsimile: (650) 328-6345	 	 	 	 	 	 

 

 

EXHIBIT A

FORM OF CERTIFICATE OF DESIGNATION

 

 

EXHIBIT B

FORM OF WARRANT

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