Document:

Exhibit
      10.3

     

    NOTICE
      OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU
MAY
      REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS
INSTRUMENT
      BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR
      SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

    

    
      	
              Tarrant
                County

            	 	
              County
                Recording Fee: $_____

            

    

    

    DEED
      OF TRUST

    

    
      	
              THE
                STATE OF TEXAS 

            	
              '

            	 
	 	
              ' 

            	
              Know
                All Men By These Presents

            
	
              COUNTY
                OF TARRANT

            	
              '

            	 

    

     

    
      	
              Date:

            	 	
              February
                28, 2007 

            
	 	 	 
	
              Grantor(Debtor):
                

            	 	
              BCI
                Communications, Inc.

            
	 	 	
              20
                Bushes Lane

            
	 	 	
              Elmwood
                Park, New Jersey 07407

            
	 	 	 
	
              Trustee:
                

            	 	
              Michael
                H. Myers

            
	
              Beneficiary

            	 	 
	
              (Secured
                Party): 

            	 	
              J&J
                Leasing Partnership

            
	 	 	
              (To
                Be Added)

            
	 	 	
              Arlington,
                Texas (TBD)

            

    

    

    Use
      of
      Loan Proceeds: To provide security for the herein described Note.

    

    Note(s):

    

    
      	
              Promissory
                Note:

            	 	 
	 	 	 
	
              Date:

            	 	
              February
                28, 2007 

            
	 	 	 
	
              Amount:
                

            	 	
              $1,750,000.00,
                which bears a fixed rate of interest as therein set
                forth.

            
	 	 	 
	
              Maker:

            	 	
              Grantor.

            
	 	 	 
	
              Payee:

            	 	
              Beneficiary.

            
	 	 	 
	
              Maturity
                Date: 

            	 	February
              28,
              2010
	 	 	 
	
              Property:
                

            	 	
              Being
                all of Block 10-R, ARLINGTON HEIGHTS ADDITION, an addition to the
                City of
                Arlington, Tarrant County, Texas, according to the Plat recorded
                in Volume
                388-48, Page 66, Plat Records of Tarrant County, Texas, in the E.
                Daggett
                Survey, A-430,
                together with all its present or future improvements, appurtenances,
                fixtures intended to be installed thereon or in or upon the improvements
                or used in the development of the above referenced real
                property.

            
	 	 	 
	
              Priority
                of Lien:

            	 	
              First

            
	 	 	 
	
              Prior
                Lien(s):

            	 	
              None

            

    

     

    
      
        	
                Deed
                  of Trust

              	
                Page
                  B 1

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    That
      Grantor, for value received and in consideration of the uses, purposes and
      trusts hereinafter set forth, has GRANTED, BARGAINED, SOLD and CONVEYED and
      by
      these presents does GRANT, SELL and CONVEY the Property unto Trustee, TO HAVE
      AND TO HOLD unto the Trustee and to his/her successors and assigns forever,
      hereby covenanting and agreeing forever to WARRANT AND DEFEND the Property
      unto
      said Trustee and to the substitute trustee and to the assigns of any trustee
      hereunder against all persons whomsoever lawfully claiming or to claim the
      same
      or any part thereof.

    This
      conveyance is intended as a trust however for the better securing of
      Beneficiary, and assigns in the payment of the Note. The word “note” anywhere
      used in this Deed of Trust shall mean “Notes,” if more than one Note. The word
“Grantor” hereinafter shall include the above named Grantor and any other
      obligor or obligors of the Note, whether primary, secondary or contingent.
      It is
      accordingly agreed that this Deed of Trust may be enforced and the powers herein
      given exercised in the event of default in the payment of the above described
      Note. The word “indebtedness” hereinafter used in this Deed of Trust means the
      above described Note.

    

    For
      the
      better securing of said indebtedness with all interest to become due thereon,
      Grantor hereby covenants and agrees as follows:

    

    
      	 	
              (1)

            	
              Grantor
                will pay said indebtedness and the interest thereon as the same become
                due
                and payable.

            

    

    

    
      	 	
              (2)

            	
              Grantor
                will pay before the same become delinquent, all taxes, assessments
                and
                special assessments (including paving) of every kind that may be
                assessed
                or levied against said Property or any part
                thereof.

            

    

    

    
      	 	
              (3)

            	
              If
                said indebtedness or lien(s) securing same or this Deed of Trust
                shall
                ever be taxed (excluding income or death taxes) Grantor will pay such
                taxes in addition to the interest provided for herein and in said
                Note
                and/or other evidence of said indebtedness, provided the total of
                such
                interest and such taxes shall never exceed the maximum rate of interest
                permitted by applicable law; and any excess if paid shall be applied
                on
                said principal.

            

    

     

    
      	
              Deed
                of Trust

            	
              Page
                B 2

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (4)

            	
              Until
                final payment of said indebtedness Grantor will keep all buildings
                that
                may at any time be on the above described land insured against fire,
                and
                other perils included within “extended coverage” insurance and against
                such other hazards, casualties and contingencies, including flood
                insurance if the Property shall at any time be located in an identified
                “flood prone area” in which flood insurance has ever been made available
                pursuant to the Flood Disaster Protection Act of 1973, and in such
                amounts
                and for such periods as may be required by Beneficiary, naming Beneficiary
                as an additional insured as its interest may
                appear.

            

    

    

    
      	 	
              (6)

            	
              Within
                ten days before or at any time after same become delinquent, Beneficiary
                may (but is not obligated) pay the aforementioned taxes, and Grantor
                shall
                promptly repay same. Any amount so paid shall become a part of the
                indebtedness secured by this Deed of Trust, and the repayment thereof
                shall be secured by the lien of this Deed of
                Trust.

            

    

    

    
      	 	
              (7)

            	
              During
                the life of this Deed of Trust should any improvements or alterations
                be
                made or erected upon the said Property, this Deed of Trust shall
                attach to
                such improvements and alterations as additional security and shall
                constitute a first lien not only against the real estate and present
                improvements but also against such future alterations or improvements
                prior to any other lien(s) that may be given or created and such
                other
                lien(s) shall be and remain a second lien inferior to the lien of
                this
                Deed of Trust.

            

    

    
      	 	
              (8)

            	
              Grantor
                may not sell, convey, transfer, dispose of or further encumber the
                Property or any part thereof or any interest therein or permit the
                assumption of the indebtedness secured by this Deed of Trust or agree
                to
                do so without first obtaining the written consent of Beneficiary
                thereto,
                which said consent will not be unreasonably withheld. Upon the occurrence
                of any of such events without the written consent of Beneficiary
                having
                first been obtained, then Beneficiary shall have the right, at its
                option,
                to declare all sums secured hereby immediately due and payable. If
                Beneficiary consents to any such transaction and/or to assumption
                of the
                indebtedness secured by this Deed of Trust, regardless of whether
                an
                assumption fee is charged and/or an increase in the interest rate
                is made,
                Grantor shall not be released from any obligations hereunder. Consent
                to
                any such transaction shall not be deemed to be consent or waiver
                of a
                necessity of consent to any other, further or successive
                transactions.

            

    

    

    
      	 	
              (9)

            	
              If
                this Deed of Trust lien should ever be held to be invalid as to any
                portion of said indebtedness, the first payments made on said indebtedness
                shall be applied on the portion as to which the lien is held
                invalid.

            

    

    

    
      	 	
              (10)

            	
              Any
                monies paid in condemnation proceedings or under threat thereof or
                in any
                governmental taking of all or any part of the mortgaged Property
                shall be
                paid to the Beneficiary for application on the indebtedness in such
                order
                as Beneficiary may determine, or Beneficiary, at its reasonable election,
                may release all or part of such monies for use in repairing or restoring
                the Property.

            

    

     

    
      	
              Deed
                of Trust

            	
              Page
                B 3

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	
              (11)

            	
              If
                the Property or any part shall have been sold at Trustee=s
                sale or foreclosure of this Deed of Trust, Beneficiary shall have
                the
                right to receive any insurance proceeds or award or payment as the
                case
                may be to the extent of any deficiency remaining after Trustee=s
                or foreclosure sale with interest thereon and reasonable
                attorneys=
                fees, costs and disbursements incurred by Beneficiary in connection
                with
                the collection of such monies.

            

    

    

    
      	 	
              (12)

            	
              No
                waiver by Beneficiary expressed or implied of any breach of any one
                or
                more of the covenants or agreements herein contained shall be deemed
                or
                taken to be a waiver of the continuation of such breach or any succeeding
                or other breach. No express waiver shall affect any default other
                than the
                default specified in the express waiver and then only for the time
                and to
                the extent therein stated.

            

    

    

    
      	 	
              (13)

            	
              The
                rights of Beneficiary under the clauses, covenants and agreements
                contained in this Deed of Trust shall be separate, distinct and cumulative
                and none of them shall be an exclusion of the other. No act of Beneficiary
                shall be construed as an election to proceed under any one provision
                herein to the exclusion of any other
                provision.

            

    

    

    
      	 	
              (14)

            	
              If
                Grantor or any subsequent owner of the above Property or any part
                thereof
                owns or at any time during the life of this Deed of Trust shall own
                any
                interest in the adjacent streets, roads, alleys or ways or improvements
                thereon, or any easements or appurtenances adjoining and used in
                connection with the above described Property, then such interest
                shall be
                included within the terms of this Deed of Trust and shall constitute
                a
                part of the Property subject to the lien
                hereof.

            

    

    
      	 	
              (15)

            	
              In
                the event of any breach by Grantor or failure to observe any of the
                agreements or covenants herein contained, then and at any time thereafter
                during the continuation of such breach or nonobservance, said indebtedness
                and all interest accrued thereon shall at the option of Beneficiary
                or
                other legal holder of said indebtedness or any part immediately become
                due
                and payable without notice, notice of intention to accelerate, notice
                of
                acceleration (notice being expressly waived), demand or presentment
                and
                the holder of said indebtedness or any part may proceed to collect
                same by
                sale under this Deed of Trust, suit for personal judgment, court
                foreclosure, receivership and/or otherwise as such holder may
                elect.

            

    

    

    
      	 	
              (16)

            	
              Notwithstanding
                of any other provision in this Deed of Trust, or in the Note, or
                any other
                evidence of indebtedness, Grantor shall never be required to pay
                any
                unearned interest on the indebtedness and shall never be required
                to pay
                interest thereon at any rate in excess of the maximum allowed by
                law. Any
                excess if paid shall be credited on
                principal.

            

    

     

    
      	
              Deed
                of Trust

            	
              Page
                B 4

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	
              (17)

            	
              Without
                affecting the liability of Grantor or any other person (except any
                person
                expressly released in writing) for payment of said indebtedness or
                for
                performance of any obligation contained herein, and without affecting
                the
                rights of Beneficiary with respect to any security not expressly
                released
                in writing, Beneficiary may, at any time and from time to time, either
                before or after the maturity of said indebtedness, and without notice
                or
                consent: (i) refuse to comply with any request of Grantor or any
                other
                party so obligated to take action to foreclose this mortgage; (ii)
                release
                any person liable for payment of all or any part of the indebtedness
                or
                for performance of any obligation; (iii) make any agreement extending
                the
                time or otherwise altering the terms of payment of all or any part
                of the
                indebtedness, or modifying or waiving any obligation, or subordinating,
                modifying or otherwise dealing with the lien or charge hereof; (iv)
                release regardless of consideration any part of the security held
                for
                indebtedness without, as to the remainder of security, in any way
                impairing or affecting the lien and rights under this Deed of Trust
                or
                other security or the priority of such lien(s) over any subordinate
                lien.
                Beneficiary may resort for the payment of said indebtedness to any
                security therefore in such order and manner as Beneficiary may
                elect.

            

    

    
      	 	
              (18)

            	
              Grantor
                covenants that, except in the ordinary course of Grantor’s business,: (a)
                no substances, including without limitation, asbestos or any substance
                containing asbestos and deemed hazardous under any Hazardous Material
                Law
                (defined below), the group of organic compounds known as polychorinated
                biphenyls, flammable explosives, radioactive materials, chemicals
                known to
                cause cancer or reproductive toxicity, pollutants, effluents,
                contaminants, emissions or related materials and any items included
                in the
                definition of hazardous or toxic waste, materials or substances
                (“Hazardous Materials”) under any law relating to the Resource
                Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. ''
                6901 et seq., the Comprehensive Environmental Response, Compensation
                and
                Liability Act of 1980 (“CERCLA”), 42 U.S.C. ''
                9601-9657, as amended by the Superfund Amendments and Reauthorization
                Act
                of 1986 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C.
                ''
                6901, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
                ''
                1251 et seq., the Clean Air Act, 42 U.S.C. 11 741 et seq., the Clean
                Water
                Act, 33 U.S.C. 175-401, the Toxic Substances Control Act, 15 U.S.C.
                ''
                2601-2629, the Safe Drinking Water Act, 42 U.S.C. ''
                300f-300j, and all similar federal, state and local environmental
                statutes, ordinances and regulations, orders, decrees now or hereafter
                promulgated thereunder (collectively, the “Hazardous Materials laws”),
                shall be installed, used, generated, manufactured, treated, handled
                refined, produced, processed, stored or disposed of, or otherwise
                present
                in, on or under the Property; (b) no activity shall be undertaken
                on the
                Property which would cause (i) the Property or any part thereof to
                become
                a hazardous waste treatment, storage or disposal facility within
                the
                meaning of, or otherwise bring the Property within the ambit of RCRA
                or
                any Hazardous Material Law, (ii) a release of threatened release
                of
                Hazardous Materials from the Property within the meaning of, or otherwise
                bring the Property within the ambit of CERCLA or SARA or any Hazardous
                Material Law, or (iii) the discharge of Hazardous Materials into
                any
                watercourse, body of surface or subsurface water or wetland, or the
                discharge into the atmosphere of any Hazardous Material which would
                require a permit under any Hazardous Material Law; (c) no activity
                shall
                be undertaken with respect to the Property which would cause a violation
                or support a claim under RCRA, CERCLA, SARA or any Hazardous Material
                Law;
                and (d) no underground storage tanks or underground deposits shall
                be
                located on the Property. 

            

    

    

    
      	
              Deed
                of Trust

            	
              Page
                B 5

            

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Grantor
      shall indemnify, defend, and hold harmless Beneficiary, its directors, officers,
      employees, agents, successors and assigns from and against, (a) any loss,
      liability, damage, cost, expense or claim arising from the imposition or
      recording of a lien or the incurring of costs of required repairs, clean up
      or
      detoxification and removal under any Hazardous Material Law with respect to
      the
      Property or liability to any third party in connection with any violation of
      a
      Hazardous Material Law (b) any other loss, liability, damage, expense or claim
      which may be incurred by or asserted against Grantor directly or indirectly
      arising from the presence on or under, or the discharge, emission or release
      from the Property into or upon the land, atmosphere, or any watercourse, body
      of
      surface or subsurface water or wetland, arising from the installation, use,
      generation, manufacture, treatment, handling, refining, production, processing,
      storage, removal, clean up or disposal of any Hazardous Material whether or
      not
      caused by Grantor; (c) loss of value of the Property as a result of any such
      lien, clean up, detoxification, loss, liability, damage, expense or claim or
      a
      failure or defect in title occasioned by any Hazardous Material or Hazardous
      Material Law; and (d) all foreseeable and unforeseeable incidental and
      consequential damages.

    
      	 	
              (19)

            	
              Grantor
                shall pay, and shall defend, protect, indemnify and save harmless
                the
                Trustee and Beneficiary, their heirs, legal representatives, successors
                and assigns, from and against, all liabilities, losses, damages,
                costs,
                expenses (including reasonable attorneys’ fees and expenses), causes of
                action, suits, claims, demands or judgments of any nature arising
                out of
                Grantor=s
                interest in the Property from and after the date hereof, or the use,
                condition or occupancy of such Property from and after the date hereof,
                including, without limitation, those arising from any or all of the
                following: (i) injury to or death of any person, on the Property
                or on
                adjoining sidewalks, streets or ways, or connected with the use,
                condition
                or occupancy thereof (not arising directly from the Trustee=s
                or the Beneficiary=s
                negligent acts or willful misconduct on or about the Property). Upon
                the
                occurrence of any event giving rise to liability of the Grantor under
                the
                indemnification contained in this Paragraph (19), the Trustee shall
                give
                the Grantor notice of such event and a copy of any communication
                or
                document received by the Trustee with respect to each event and Grantor
                shall be entitled to conduct the negotiation or defense of any claim,
                cause of action, suit, demand or judgment by counsel selected by
                Grantor,
                subject to the approval of such counsel by the Trustee in its reasonable
                judgment. The indemnification provided in this Paragraph (19) shall
                survive the discharge, release or satisfaction of this Deed of Trust
                and
                the payment in full of the Note as to any cause of action, suit,
                claim,
                demand or judgment arising from and hereafter the date hereof and
                prior to
                such discharge, release or satisfaction. This indemnification shall
                not
                extend to any willful misconduct, negligence or bad faith of Trustee
                or
                Beneficiary.

            

    

     

    
      	
              Deed
                of Trust

            	
              Page
                B 6

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    NOW,
      THEREFORE, if
      said
      indebtedness be fully paid, principal, interest, and collection expenses, if
      any, as the same become due and payable and if said covenants and agreements
      be
      kept and performed, then this conveyance shall terminate and this Deed of Trust
      and any other security shall be released at the expense of Grantor; otherwise
      to
      continue in full force and effect.

     

    In
      the
      case of default or failure, however, on the part of Grantor to pay said
      indebtedness, principal or interest, and collection expenses, if any, as the
      same become due and payable or to keep or perform any of the covenants or
      agreements herein contained, Grantor hereby authorizes and empowers said Trustee
      and his/her successors hereunder (and it is hereby made his or her duty at
      the
      request of said Beneficiary or other legal holder of any part of said
      indebtedness) to give notice of sale in the manner and for the time required
      by
      the laws of the State of Texas, and, at the time and place so advertised, to
      sell said Property or any part thereof at public sale for cash to the highest
      bidder. Trustee may sell said Property as a whole or in lots or parcels as
      to
      him/her may seem expedient. Beneficiary may become the purchaser at such sale,
      being the highest bidder. After such sale Trustee shall execute and deliver
      to
      the purchaser or purchasers thereof good and sufficient deed or deeds to the
      Property or portion thereof thus sold. The recitals in any such deed shall
      be
      prima facie evidence of the trust of the matters therein stated (even though
      such recitals are general and in the form of legal conclusions) and shall be
      accepted by all courts of law and equity as such and all prerequisites to said
      sale shall be presumed to have been performed and any such sale shall forever
      be
      a bar against Grantor, his heirs, personal representatives and assigns and
      all
      persons claiming under him. Trustee shall receive the proceeds of sale and
      apply
      the same as follows: first to expenses of foreclosure, advertising, sale and
      conveyance and a reasonable Trustee=s
      fee of
      five percent (5%) of the sale price and second to payment of said indebtedness
      which all interest thereon, attorneys=
      fees,
      taxes, as well as other payments that may have been made by Beneficiary as
      hereinbefore provided with interest and shall hold the remainder of the money,
      if any, for subordinate lien holders, if any, and Grantor. Should the proceeds
      of such sale, after having been applied as aforesaid be insufficient to pay
      Beneficiary the full amount of said indebtedness and any other amounts then
      owing to Beneficiary, Grantor shall remain liable for any
      deficiency.

    

    The
      right
      of sale hereunder shall not be exhausted by one or any sale, but, so long as
      any
      of the indebtedness evidenced by the Note remains undischarged, the Trustee
      or
      Successor or Substitute Trustee may make other successive sales until all the
      Property shall be legally sold.

    

    Without
      limiting any of the powers or remedies provided elsewhere, Grantor agrees that,
      in the event that the Note is payable in installments or include, at any time,
      items of matured as well as unmatured indebtedness, the holder of the matured
      installments or items of indebtedness, as the case may be, shall have the right
      to have the Property sold, subject to the part of the indebtedness evidenced
      by
      the Note which is unmatured at the time the Trustee is requested to make such
      sale, at Trustee=s
      sale to
      satisfy the lien and security interest hereof securing the then matured portion
      of said indebtedness and the Trustee is expressly authorized and empowered
      to
      conduct such sale which is called herein “Installment Foreclosure.” Any
      Installment Foreclosure made hereunder shall not affect the liens, assignments,
      and security interest of this Deed of Trust existing to secure that portion
      of
      the indebtedness to which the sale is to be made subject. No Installment
      Foreclosure shall exhaust the power of the Trustee to conduct future Installment
      Foreclosures or in any way limit the powers of sale provided elsewhere in this
      Deed of Trust. The provisions elsewhere in this Deed of Trust relating to manner
      of conducting Trustee=s
      sales,
      including the posting, filing, and giving of notices thereof, shall also apply
      to any Installment Foreclosure and the same presumptions shall be applicable
      to
      any Trustee=s
      deed or
      recital therein contained in connection with any Installment Foreclosure and
      to
      any other affidavit as hereinabove provided.

     

    
      	
              Deed
                of Trust

            	
              Page
                B 7

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    In
      the
      event of death of the Trustee or any Substitute Trustee appointed hereunder
      or
      refusal, failure or inability of any Trustee or Substitute Trustee for any
      reason to act hereunder or in the event the holder of said indebtedness shall
      deem it desirable to remove without cause the Trustee or any Substitute Trustee
      and appoint another to execute this trust, then and in any of said events the
      holder of said indebtedness shall have the right and is hereby authorized and
      empowered to appoint by instrument in writing a Substitute Trustee in lieu
      of
      the Trustee named herein or in lieu of any previously appointed Substitute
      Trustee, who shall thereupon (with or without filing his appointment of record)
      become vested with and succeed to all the title, power, and duties hereby
      conferred upon the Trustee named herein the same as if said Substitute Trustee
      had been named original Trustee in this Deed of Trust. 

    After
      any
      sale under this Deed of Trust, Grantor and any one claiming under it and in
      possession shall be a tenant at sufferance of the purchaser of said Property
      at
      Trustee=s
      sale
      and purchaser shall be entitled to immediate possession thereof and if Grantor
      or party in possession fails to vacate the premises immediately, purchaser
      shall
      have all the rights and remedies under the law against Grantor or such party
      in
      possession as a tenant at sufferance. Each such right and remedy is cumulative
      of the other. In the event any suit in forcible detainer or eviction be brought
      by the purchaser of the Property after the Trustee=s
      sale,
      Grantor, or his successors in title, waives all notices to quit said premises,
      and agrees that said action may be filed without said notice.

    

    In
      construing this Deed of Trust: Pronouns of any gender shall include the other
      genders, the singular or plural shall include the other, if Grantor consists
      of
      more than one party such Grantors shall be jointly and severally liable under
      any and all obligations, covenants and agreements of Grantor contained herein
      and if more than one party is or shall become the legal holder of said
      indebtedness the rights and remedies herein granted unto the Beneficiary shall
      accrue and inure to the benefit of said legal holders jointly and
      severally.

    

    This
      Deed
      of Trust and each and all the terms hereof inure to the benefit of the
      Beneficiary, its heirs, personal representatives, successors and assigns and
      are
      binding upon Grantor, his heirs, personal representatives, successors and
      assigns.

     

    
      	
              Deed
                of Trust

            	
              Page
                B 8

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Executed
      as of the Date Hereof.

    

    Grantor:

    BCI
      Communications, Inc.

    

    By:
      ____________________________________

    Name: Richard
      Berliner 

    

    Its:
      Chief Executive Officer

     

    
      	
              THE
                STATE OF TEXAS 

            	
              '

            	 
	 	
              ' 

            
	COUNTY
              OF
              TARRANT	
              ' 

            

    

     

    Before
      me
      ________________________ on this day personally appeared Richard Berliner,
      Chief
      Executive Officer of BCI Communications, Inc., known to me or proved to me
      through ____________________________ (State and DL or ID#) to be the person
      whose name is subscribed to the foregoing instrument and acknowledged and swore
      to me that he executed the same for the purposes and consideration therein
      expressed and in the capacity stated.

    

    Given
      under my hand and seal of office this ______ day of ____________,
      2007.

    

    __________________________________

    Notary
      Public, State of Texas

    Printed
      Name:________________________

    My
      Commission Expires________________

    

    MYERS
      WILSON P.C.

    Attention:
      Michael H. Myers

    16660
      Dallas Parkway, Suite 2500

    Dallas,
      Texas 75248

     

    
      	
              Deed
                of Trust

            	
              Page
                B 9Unassociated Document

    Exhibit
      10.1

     

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    by
      and
      among

     

    JAZZ
      SEMICONDUCTOR, INC.,

     

    and

     

    NEWPORT
      FAB, LLC,

    as
      Borrowers,

     

    JAZZ
      TECHNOLOGIES, INC.,

    as
      Parent
      Guarantor,

    

    WACHOVIA
      CAPITAL FINANCE CORPORATION (WESTERN),

    as
      Administrative Agent,

     

    WACHOVIA
      CAPITAL MARKETS, LLC,

    as
      Lead
      Arranger, Bookrunner and Syndication Agent

    

    and

    

    THE
      LENDERS FROM TIME TO TIME PARTY HERETO,

    as
      Lenders

    

    Dated
      as
      of: February 28, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      TABLE
        OF CONTENTS

       

    

    
      
        	 	 	 	
                Page

              
	
                SECTION
                  1. DEFINITIONS

              	
                2

              
	
                SECTION
                  2. CREDIT
                  FACILITIES

              	
                26

              
	
                2.1

              	 	
                Loans

              	
                26

              
	
                2.2

              	 	
                Letters
                  of Credit

              	
                27

              
	
                2.3

              	 	
                Commitments

              	
                30

              
	
                SECTION
                  3. INTEREST
                  AND FEES

              	
                30

              
	
                3.1

              	 	
                Interest

              	
                30

              
	
                3.2

              	 	
                Fees

              	
                32

              
	
                3.3

              	 	
                Changes
                  in Laws and Increased Costs of Loans

              	
                33

              
	
                SECTION
                  4. CONDITIONS
                  PRECEDENT

              	
                34

              
	
                4.1

              	 	
                Conditions
                  Precedent to Initial Loans and Letters of Credit

              	
                34

              
	
                4.2

              	 	
                Conditions
                  Precedent to All Loans and Letters of Credit

              	
                37

              
	
                SECTION
                  5. GRANT
                  AND PERFECTION OF SECURITY INTEREST

              	
                38

              
	
                5.1

              	 	
                Grant
                  of Security Interest

              	
                38

              
	
                5.2

              	 	
                Perfection
                  of Security Interests

              	
                40

              
	
                SECTION
                  6. COLLECTION
                  AND ADMINISTRATION

              	
                44

              
	
                6.1

              	 	
                Borrowers’
                  Loan Accounts

              	
                44

              
	
                6.2

              	 	
                Statements

              	
                44

              
	
                6.3

              	 	
                Collection
                  of Accounts

              	
                45

              
	
                6.4

              	 	
                Payments

              	
                46

              
	
                6.5

              	 	
                Authorization
                  to Make Loans

              	
                49

              
	
                6.6

              	 	
                Use
                  of Proceeds

              	
                49

              
	
                6.7

              	 	
                Pro
                  Rata Treatment

              	
                49

              
	
                6.8

              	 	
                Sharing
                  of Payments, Etc.

              	
                49

              
	
                6.9

              	 	
                Settlement
                  Procedures

              	
                50

              
	
                6.10

              	 	
                Obligations
                  Several; Independent Nature of Lenders’ Rights

              	
                52

              
	
                SECTION
                  7. COLLATERAL
                  REPORTING AND COVENANTS

              	
                53

              
	
                7.1

              	 	
                Collateral
                  Reporting

              	
                53

              
	
                7.2

              	 	
                Accounts
                  Covenants

              	
                53

              
	
                7.3

              	 	
                Inventory
                  Covenants

              	
                54

              

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      
         

        TABLE
          OF CONTENTS

        (continued)

         

      

      
        	
              	 	 	
                Page

              

      

      
        	
                7.4

              	 	
                Equipment
                  Covenants

              	
                55

              
	
                7.5

              	 	
                Power
                  of Attorney

              	
                56

              
	
                7.6

              	 	
                Right
                  to Cure

              	
                56

              
	
                7.7

              	 	
                Access
                  to Premises

              	
                57

              
	
                SECTION
                  8. REPRESENTATIONS
                  AND WARRANTIES

              	
                57

              
	
                8.1

              	 	
                Corporate
                  Existence, Power and Authority

              	
                57

              
	
                8.2

              	 	
                Name;
                  State of Organization; Chief Executive Office; Collateral
                  Locations

              	
                58

              
	
                8.3

              	 	
                Financial
                  Statements; No Material Adverse Change

              	
                58

              
	
                8.4

              	 	
                Priority
                  of Liens; Title to Properties

              	
                59

              
	
                8.5

              	 	
                Tax
                  Returns

              	
                59

              
	
                8.6

              	 	
                Litigation

              	
                59

              
	
                8.7

              	 	
                Compliance
                  with Other Agreements and Applicable Laws

              	
                59

              
	
                8.8

              	 	
                Environmental
                  Compliance

              	
                60

              
	
                8.9

              	 	
                Employee
                  Benefits

              	
                61

              
	
                8.10

              	 	
                Bank
                  Accounts

              	
                61

              
	
                8.11

              	 	
                Intellectual
                  Property

              	
                62

              
	
                8.12

              	 	
                Subsidiaries;
                  Capitalization; Solvency

              	
                62

              
	
                8.13

              	 	
                Labor
                  Disputes

              	
                63

              
	
                8.14

              	 	
                Restrictions
                  on Credit Parties

              	
                63

              
	
                8.15

              	 	
                Material
                  Contracts

              	
                64

              
	
                8.16

              	 	
                Payable
                  Practices

              	
                64

              
	
                8.17

              	 	
                Accuracy
                  and Completeness of Information

              	
                64

              
	
                8.18

              	 	
                Survival
                  of Warranties; Cumulative

              	
                64

              
	
                SECTION
                  9. AFFIRMATIVE
                  AND NEGATIVE COVENANTS

              	
                64

              
	
                9.1

              	 	
                Maintenance
                  of Existence

              	
                64

              
	
                9.2

              	
                 

              	
                New
                  Collateral Locations

              	
                65

              
	
                9.3

              	 	
                Compliance
                  with Laws, Regulations, Etc

              	
                65

              
	
                9.4

              	 	
                Payment
                  of Taxes and Claims

              	
                66

              
	
                9.5

              	 	
                Insurance

              	
                67

              
	
                9.6

              	 	
                Financial
                  Statements and Other Information

              	
                67

              

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

      
         

        TABLE
          OF CONTENTS

        (continued)

         

      

      
        	
              	 	 	
                Page

              

      

      
        	
                9.7

              	 	
                Sale
                  of Assets, Consolidation, Merger, Dissolution, Etc

              	
                69

              
	
                9.8

              	 	
                Encumbrances

              	
                73

              
	
                9.9

              	 	
                Indebtedness

              	
                75

              
	
                9.10

              	 	
                Loans,
                  Investments, Etc

              	
                78

              
	
                9.11

              	 	
                Dividends
                  and Redemptions

              	
                82

              
	
                9.12

              	 	
                Transactions
                  with Affiliates

              	
                83

              
	
                9.13

              	 	
                Compliance
                  with ERISA

              	
                83

              
	
                9.14

              	 	
                End
                  of Fiscal Years; Fiscal Quarters

              	
                84

              
	
                9.15

              	 	
                Change
                  in Business

              	
                84

              
	
                9.16

              	 	
                Limitation
                  of Restrictions Affecting Subsidiaries

              	
                84

              
	
                9.17

              	 	
                Intentionally
                  Omitted

              	
                85

              
	
                9.18

              	 	
                Minimum
                  Consolidated EBITDA

              	
                85

              
	
                9.19

              	 	
                License
                  Agreements

              	
                85

              
	
                9.20

              	 	
                Foreign
                  Assets Control Regulations, Etc

              	
                86

              
	
                9.21

              	 	
                After
                  Acquired Real Property

              	
                86

              
	
                9.22

              	 	
                Costs
                  and Expenses

              	
                87

              
	
                9.23

              	 	
                Further
                  Assurances

              	
                87

              
	
                SECTION
                  10. EVENTS
                  OF DEFAULT AND REMEDIES

              	
                88

              
	
                10.1

              	 	
                Events
                  of Default

              	
                88

              
	
                10.2

              	 	
                Remedies

              	
                90

              
	
                SECTION
                  11. JURY
                  TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

              	
                93

              
	
                11.1

              	 	
                Governing
                  Law; Choice of Forum; Service of Process; Jury Trial Waiver; California
                  Judicial Reference

              	
                93

              
	
                11.2

              	 	
                Amendments
                  and Waivers

              	
                95

              
	
                11.3

              	 	
                Waiver
                  of Counterclaims

              	
                97

              
	
                11.4

              	 	
                Indemnification

              	
                97

              
	
                SECTION
                  12. JOINT
                  AND SEVERAL LIABILITY; SURETYSHIP WAIVERS; ETC

              	
                97

              
	
                12.1

              	 	
                Independent
                  Obligations; Subrogation

              	
                97

              
	
                12.2

              	 	
                Authority
                  to Modify Obligations and Security

              	
                98

              

      

       

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

       

        TABLE
          OF CONTENTS

        (continued)

         

      

      
        	 	 	 	
                Page

              
	
                12.3

              	 	
                Waiver
                  of Defenses

              	
                98

              
	
                12.4

              	 	
                Exercise
                  of Lender’s Rights

              	
                99

              
	
                12.5

              	 	
                Additional
                  Waivers

              	
                99

              
	
                12.6

              	 	
                Additional
                  Indebtedness

              	
                99

              
	
                12.7

              	 	
                Waiver
                  of Notices

              	
                99

              
	
                12.8

              	 	
                Subordination

              	
                100

              
	
                12.9

              	 	
                Revival

              	
                100

              
	
                12.10

              	 	
                Understanding
                  of Waivers

              	
                101

              
	
                12.11

              	 	
                Appointment,
                  Powers and Immunities

              	
                101

              
	
                12.12

              	 	
                Reliance
                  by Agent

              	
                101

              
	
                12.13

              	 	
                Events
                  of Default

              	
                101

              
	
                12.14

              	 	
                Wachovia
                  in its Individual Capacity

              	
                102

              
	
                12.15

              	 	
                Indemnification

              	
                102

              
	
                12.16

              	 	
                Non-Reliance
                  on Agent and Other Lenders

              	
                103

              
	
                12.17

              	 	
                Failure
                  to Act

              	
                103

              
	
                12.18

              	 	
                Additional
                  Loans

              	
                103

              
	
                12.19

              	 	
                Concerning
                  the Collateral and the Related Financing Agreements

              	
                104

              
	
                12.20

              	 	
                Field
                  Audit, Examination Reports and other Information; Disclaimer by
                  Lenders

              	
                104

              
	
                12.21

              	 	
                Collateral
                  Matters

              	
                104

              
	
                12.22

              	 	
                Agency
                  for Perfection

              	
                106

              
	
                12.23

              	 	
                Successor
                  Agent

              	
                106

              
	
                12.24

              	 	
                Other
                  Agent Designations

              	
                107

              
	
                SECTION
                  13. TERM
                  OF AGREEMENT; MISCELLANEOUS

              	
                107

              
	
                13.1

              	 	
                Term

              	
                107

              
	
                13.2

              	 	
                Interpretative
                  Provisions

              	
                108

              
	
                13.3

              	 	
                Notices

              	
                110

              
	
                13.4

              	 	
                Partial
                  Invalidity

              	
                111

              
	
                13.5

              	 	
                Confidentiality

              	
                111

              
	
                13.6

              	 	
                Successors

              	
                112

              

      

       

      
        
          
          

        

        
          -iv-

          
            

          

        

        
          
          

        

      

      
         

        TABLE
          OF CONTENTS

        (continued)

         

        
          	 	 	 	
                  Page

                

        

      

      
        	
                13.7

              	 	
                Assignments;
                  Participations

              	
                112

              
	
                13.8

              	 	
                Entire
                  Agreement

              	
                114

              
	
                13.9

              	 	
                USA
                  Patriot Act

              	
                114

              
	
                13.10

              	 	
                Counterparts,
                  Etc

              	
                115

              

      

       

      
        
          
          

        

        
          -v-

          
            

          

        

        
          
          

        

      

    

     

    INDEX

    TO

    EXHIBITS
      AND SCHEDULES

    

      
        	
                Exhibit
                  A

              	 	
                Assignment
                  and Acceptance Agreement

              
	
                Exhibit
                  B

              	 	
                Information
                  Certificate

              
	
                Exhibit
                  C

              	 	
                Form
                  of Compliance Certificate

              
	
                Exhibit
                  D

              	 	
                Form
                  of Borrowing Base Certificate

              
	
                Exhibit
                  E

              	 	
                Form
                  of Non-U.S. Lender Statement

              
	
                Schedule
                  1.30

              	 	
                Consolidated
                  EBITDA

              
	
                Schedule
                  1.46

              	 	
                Equipment
                  Sublimit

              
	
                Schedule
                  1.57

              	 	
                Existing
                  Letters of Credit

              
	
                Schedule
                  1.104

              	 	
                Permitted
                  Holders

              
	
                Schedule
                  1.110

              	 	
                Qualified
                  Cash Accounts

              
	
                Schedule
                  8.8

              	 	
                Environmental
                  Compliance

              
	
                Schedule
                  8.13

              	 	
                Labor
                  Disputes

              
	
                Schedule
                  8.15

              	 	
                Material
                  Contracts

              
	
                Schedule
                  9.9

              	 	
                Permitted
                  Indebtedness

              
	
                Schedule
                  9.10

              	 	
                Existing
                  Loans and Advances

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    This
      Amended and Restated Loan and Security Agreement dated as of February 28, 2007
      (this “Agreement”)
      is
      entered into by and among Jazz Semiconductor, Inc., a Delaware corporation
      (“Jazz”
as
      hereinafter further defined), Newport Fab, LLC (d/b/a Jazz Semiconductor
      Operating Company), a Delaware limited liability company (“Operating
      Company”
as
      hereinafter further defined, and Operating Company together with Jazz,
      collectively, the “Borrowers”
and
      each of them individually, a “Borrower”
as
      hereinafter further defined), Jazz Technologies, Inc., formerly known as
      Acquicor Technology Inc., a Delaware corporation (“Parent
      Guarantor”
and
      together with its successors (whether by merger or operation of law) and any
      other Person that at any time after the Effective Date becomes a Guarantor,
      each
      individually a “Guarantor”
and
      collectively, “Guarantors”
as
      hereinafter further defined), the parties hereto from time to time as lenders,
      whether by execution of this Agreement or an Assignment and Acceptance (each
      individually, a “Lender”
and
      collectively, “Lenders”
as
      hereinafter further defined), Wachovia Capital Markets, LLC, as lead arranger,
      bookrunner and syndication agent (“Syndication
      Agent”),
      and
      Wachovia Capital Finance Corporation (Western), a California corporation
      (“Agent”
as
      hereinafter further defined). 

     

    WITNESSETH:

     

    WHEREAS,
      Wachovia (as defined below) and Borrowers previously have entered into that
      certain Loan and Security Agreement dated as of January 6, 2006 (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Original
      Loan Agreement”),
      pursuant to which Wachovia has provided certain loans and other financial
      accommodations to Borrowers;

     

    WHEREAS,
      the parties hereto have agreed to amend and restate in their entirety the
      agreements contained in the Original Loan Agreement as amongst themselves;
      

     

    WHEREAS,
      each Lender is willing to agree (severally and not jointly) to make loans and
      provide financial accommodations to Borrowers on a pro rata basis according
      to
      its Commitment (as defined below) on the terms and conditions set forth herein
      and Agent is willing to act as administrative agent for Lenders on the terms
      and
      conditions set forth herein and in the other Financing Agreements (as defined
      below); and

     

    WHEREAS,
      each Borrower hereby restates, ratifies and reaffirms each and every term and
      condition set forth in the Original Loan Agreement, as amended and restated
      hereby, and the other Financing Agreements effective as of the date
      hereof;

     

    NOW,
      THEREFORE, in consideration of the mutual conditions and agreements set forth
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the parties hereto amend and
      restate the Original Loan Agreement and agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      1.  DEFINITIONS

     

    For
      purposes of this Agreement, the following terms shall have the respective
      meanings given to them below:

     

    1.1  “Accounts”
shall
      mean, as to each Borrower and Guarantor, all present and future rights of such
      Borrower and Guarantor to payment of a monetary obligation, whether or not
      earned by performance, which is not evidenced by chattel paper or an instrument,
      (a) for property that has been or is to be sold, leased, licensed, assigned,
      or
      otherwise disposed of, (b) for services rendered or to be rendered, (c) for
      a
      secondary obligation incurred or to be incurred, or (d) arising out of the
      use
      of a credit, charge or debit card or information contained on or for use with
      such card.

     

    1.2  “Accounts
      Sublimit”
      shall
      mean, at any time, the amount equal to $25,000,000, as reduced by any reduction
      thereof pursuant to Section 2.1(c) hereof.

     

    1.3  “ACH
      Transactions”
shall
      mean any overdrafts, cash management or related services, including the
      automatic clearing house transfer of funds by Agent or any of its Affiliates
      for
      the account of any Borrower, any Guarantor or any of their respective
      Subsidiaries, in each case pursuant to agreements entered into with such
      Borrower, such Guarantor or any their respective Subsidiaries.

     

    1.4  “Act”
shall
      have the meaning set forth in Section 13.9 hereof.

     

    1.5  “Adjusted
      Eurodollar Rate”
shall
      mean, with respect to each Interest Period for any Eurodollar Rate Loan
      comprising part of the same borrowing (including conversions, extensions and
      renewals), the rate per annum determined by dividing (a) the London Interbank
      Offered Rate for such Interest Period by (b) a percentage equal to: (i) one
      (1)
minus
      (ii) the
      Reserve Percentage. For purposes hereof, “Reserve Percentage” shall mean for any
      day, that percentage (expressed as a decimal) which is in effect from time
      to
      time under Regulation D of the Board of Governors of the Federal Reserve System
      (or any successor), as such regulation may be amended from time to time or
      any
      successor regulation, as the maximum reserve requirement (including, without
      limitation, any basic, supplemental, emergency, special, or marginal reserves)
      applicable with respect to Eurocurrency liabilities as that term is defined
      in
      Regulation D (or against any other category of liabilities that includes
      deposits by reference to which the interest rate of Eurodollar Loans is
      determined), whether or not any Lender has any Eurocurrency liabilities subject
      to such reserve requirement at that time. Eurodollar Loans shall be deemed
      to
      constitute Eurocurrency liabilities and as such shall be deemed subject to
      reserve requirements without benefits of credits for proration, exceptions
      or
      offsets that may be available from time to time to a Lender. The Adjusted
      Eurodollar Rate shall be adjusted automatically on and as of the effective
      date
      of any change in the Reserve Percentage.

     

    1.6  “Affiliate”
shall
      mean, with respect to a specified Person, any other Person which directly or
      indirectly, through one or more intermediaries, controls or is controlled by
      or
      is under common control with such Person, and without limiting the generality
      of
      the foregoing, includes (a) any Person which beneficially owns or holds twenty
      percent (20%) or more of any class of Voting Stock of such Person or other
      equity interests in such Person, (b) any Person of which such Person
      beneficially owns or holds twenty percent (20%) or more of any class of Voting
      Stock or in which such Person beneficially owns or holds twenty percent (20%)
      or
      more of the equity interests and (c) any director or executive officer of such
      Person. For the purposes of this definition, the term “control” (including with
      correlative meanings, the terms “controlled by” and “under common control
      with”), as used with respect to any Person, means the possession, directly or
      indirectly, of the power to direct or cause the direction of the management
      and
      policies of such Person, whether through the ownership of Voting Stock, by
      agreement or otherwise.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.7  “Agent”
shall
      mean Wachovia Capital Finance Corporation (Western), in its capacity as agent
      on
      behalf of Lenders pursuant to the terms hereof and any replacement or successor
      agent hereunder.

     

    1.8  “Agent
      Payment Account”
shall
      mean account no. 5000000030321 of Agent at Wachovia Bank, National Association,
      or such other account of Agent as Agent may from time to time designate to
      Borrowers as the Agent Payment Account for purposes of this Agreement and the
      other Financing Agreements.

     

    1.9  “Agreement
      and Plan of Merger”
shall
      have the meaning set forth in Section 4.1(p) hereof.

     

    1.10  “Assignment
      and Acceptance”
shall
      mean an Assignment and Acceptance substantially in the form of Exhibit A
      attached hereto (with blanks appropriately completed) delivered to Agent in
      connection with an assignment of a Lender’s interest hereunder in accordance
      with the provisions of Section 13.7 hereof.

     

    1.11  “Bank
      Products”
shall
      mean any one or more of the following types of services or facilities extended
      to Borrowers, Guarantors, or any of their respective Subsidiaries upon Borrowers
      request by a Bank Product Provider: (a) credit cards, (b) ACH Transactions,
      (c)
      Hedging Transactions, and (d) foreign exchange contracts.

     

    1.12  “Bank
      Product Providers”
shall
      mean Wachovia and any of its Affiliates.

     

    1.13  “Bank
      Product Reserve”
shall
      mean any and all reserves that Agent may establish from time to time with
      Borrowers’ consent for the Bank Products provided by any Bank Product Provider
      which are then outstanding.

     

    1.14  “Blocked
      Accounts”
shall
      have the meaning set forth in Section 6.3 hereof.

     

    1.15  “Borrowers”
shall
      mean, collectively, the following (together with their respective successors
      and
      assigns): (a)
      Jazz
      Semiconductor, Inc., a Delaware corporation; (b)
      Newport
      Fab, LLC (d/b/a Jazz Semiconductor Operating Company), a Delaware limited
      liability company; and (c)
      any
      other Person that at any time after the date hereof becomes a Borrower; each
      sometimes being referred to herein individually as a “Borrower”.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.16  “Borrowing
      Base”
shall
      mean, at any time, the sum of:

     

    (a)  the
      amount equal to the lesser of: (i) eighty-five percent (85%) of the Eligible
      Accounts of Borrowers, minus
      Reserves
      relating to Accounts, or (ii) the Accounts Sublimit; plus

     

    (b)  the
      amount equal to the lesser of: (i) (A) the product of (I) seventy percent (70%)
      times
      (II) the
“net orderly liquidation value” of the Eligible Equipment of Borrowers
      determined in a “balanced market”, as such balanced market, as of any date of
      determination, shall be defined in the most recent appraisal of Equipment then
      received by Agent in accordance with Section 7.4 hereof, minus
      (B)
      Reserves relating to Equipment, or (ii) the Equipment Sublimit; minus

     

    (c)  $5,000,000;
      minus

     

    (d)  Reserves
      other than those set forth in Sections 1.16(a) or (b) hereof and actually
      applied.

     

    1.17  “Borrowing
      Base Certificate”
shall
      have the meaning given to such term in Section 7.1(a)(ii) hereof.

     

    1.18  “Business
      Day”
shall
      mean any day other than a Saturday, Sunday, or other day on which commercial
      banks are authorized or required to close under the laws of the State of
      California, the State of New York or the State of North Carolina, and a day
      on
      which the Reference Bank and Agent are open for the transaction of business,
      except that if a determination of a Business Day shall relate to any Eurodollar
      Rate Loans, the term Business Day shall also exclude any day on which banks
      are
      closed for dealings in dollar deposits in the London interbank market or other
      applicable Eurodollar Rate market.

     

    1.19  “Capital
      Leases”
shall
      mean, as applied to any Person, any lease of (or any agreement conveying the
      right to use) any property (whether real, personal or mixed) by such Person
      as
      lessee which in accordance with GAAP, is required to be reflected as a capital
      lease on the balance sheet of such Person.

     

    1.20  “Capital
      Stock”
shall
      mean, with respect to any Person, any and all shares, interests, participations
      or other equivalents (however designated) of such Person's capital stock or
      partnership, limited liability company or other equity interests at any time
      outstanding, and any and all rights, warrants or options exchangeable for or
      convertible into such capital stock or other interests (but excluding any debt
      security that is exchangeable for or convertible into such capital
      stock).

     

    1.21  “Cash
      Equivalents”
shall
      mean, at any time, (a) any evidence of Indebtedness with a maturity date of
      ninety (90) days or less issued or directly and fully guaranteed or insured
      by
      the United States of America or any agency or instrumentality thereof;
provided,
      that
      the full faith and credit of the United States of America is pledged in support
      thereof; (b) certificates of deposit or bankers' acceptances with a maturity
      of
      ninety (90) days or less of any financial institution that is a member of the
      Federal Reserve System having combined capital and surplus and undivided profits
      of not less than $1,000,000,000; (c) commercial paper (including variable rate
      demand notes) with a maturity of ninety (90) days or less issued by a
      corporation (except an Affiliate of any Borrower or Guarantor) organized under
      the laws of any State of the United States of America or the District of
      Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a
      division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody's Investors
      Service, Inc.; (d) repurchase obligations with a term of not more than thirty
      (30) days for underlying securities of the types described in clause (a) above
      entered into with any financial institution having combined capital and surplus
      and undivided profits of not less than $1,000,000,000; (e) repurchase agreements
      and reverse repurchase agreements relating to marketable direct obligations
      issued or unconditionally guaranteed by the United States of America or issued
      by any governmental agency thereof and backed by the full faith and credit
      of
      the United States of America, in each case maturing within ninety (90) days
      or
      less from the date of acquisition; provided,
      that
      the terms of such agreements comply with the guidelines set forth in the Federal
      Financial Agreements of Depository Institutions with Securities Dealers and
      Others, as adopted by the Comptroller of the Currency on October 31, 1985;
      (f)
      investments in money market funds and mutual funds which invest substantially
      all of their assets in securities of the types described in clauses (a) through
      (e) above; and (g) investments in any Borrower’s or Guarantor’s investment plan
      as in effect on the Effective Date or as previously disclosed to and approved
      by
      Agent.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    1.22  “Change
      of Control”
shall
      mean (a) the transfer (in one transaction or a series of transactions) of all
      or
      substantially all of the assets of any Borrower or Guarantor to any Person
      or
      group (as such term is used in Section 13(d)(3) of the Exchange Act), other
      than
      as permitted in Section 9.7 hereof; (b) the liquidation or dissolution of any
      Borrower or Guarantor or the adoption of a plan by the stockholders of any
      Borrower or Guarantor relating to the dissolution or liquidation of such
      Borrower or Guarantor, other than as permitted in Section 9.7 hereof; (c) the
      acquisition by any Person or group (as such term is used in Section 13(d)(3)
      of
      the Exchange Act), except for one or more Permitted Holders, of beneficial
      ownership, directly or indirectly, of thirty-five percent (35%) of the voting
      power of the total outstanding Voting Stock of any Borrower or Guarantor; (d)
      during any period of two (2) consecutive years, individuals who at the beginning
      of such period constituted the Board of Directors of any Borrower or Guarantor
      (together with any new directors who have been appointed by any Permitted
      Holder, or whose nomination for election by the stockholders of such Borrower
      or
      Guarantor, as the case may be, was approved by a vote of at least sixty-six
      and
      two-thirds (66 2/3%) percent of the directors then still in office who were
      either directors at the beginning of such period or whose election or nomination
      for election was previously so approved) cease for any reason to constitute
      a
      majority of the Board of Directors of any Borrower or Guarantor then still
      in
      office; or (e) the failure of Parent Guarantor to own directly or indirectly
      one
      hundred (100%) percent of the voting power of the total outstanding Voting
      Stock
      of any other Borrower or Guarantor.

     

    1.23  “Code”
shall
      mean the Internal Revenue Code of 1986, as the same now exists or may from
      time
      to time hereafter be amended, modified, recodified or supplemented, together
      with all rules, regulations and interpretations thereunder or related
      thereto.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    1.24  “Collateral”
shall
      have the meaning set forth in Section 5.1 hereof.

     

    1.25  “Collateral
      Access Agreement”
shall
      mean an agreement in writing, in form and substance reasonably satisfactory
      to
      Agent, from (a)
      any
      lessor of premises located in the United States to any Borrower or Guarantor
      where Collateral with a fair market value in excess of $2,500,000 in the
      aggregate is stored, or (b)
      any
      other person (i)
      to whom
      any Collateral with a fair market value in excess of $2,500,000 in the aggregate
      is consigned or (ii)
      who has
      custody, control or possession of any such Collateral in the United States
      with
      a fair market value in excess of $2,500,000 in the aggregate or (iii)
      is
      otherwise the owner or operator of any premises located in the United States
      on
      which (A) any financial books and records of any Borrower or Guarantor is
      located or (B) any Borrower or Guarantor stores, manufactures or fabricates
      any
      of such Collateral with a fair market value in excess of $2,000,000 in the
      aggregate (including, without limitation, as of the Effective Date, the
      following location: 4321 Jamboree Road, Newport Beach, California 92660), in
      favor of Agent with respect to such Collateral at such premises or otherwise
      in
      the custody, control or possession of such lessor, consignee or other
      person.

     

    1.26  “Commitment”
shall
      mean, at any time, as to each Lender, the principal amount set forth below
      such
      Lender’s signature on the signatures pages hereto designated as the Commitment
      or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which
      such Lender became a Lender hereunder in accordance with the provisions of
      Section 13.7 hereof, as the same may be adjusted from time to time in accordance
      with the terms hereof; sometimes being collectively referred to herein as
“Commitments”.

     

    1.27  “Commitment
      Letter”
shall
      mean the letter agreement, dated September 26, 2006, by and among Parent
      Guarantor, Agent and Syndication Agent, as amended, supplemented or otherwise
      modified from time to time.

     

    1.28  “Conexant”
shall
      mean Conexant Systems, Inc., a Delaware corporation.

     

    1.29  "Conexant
      Lease Agreements"
      shall
      mean collectively: (i) the Half Dome Lease Agreement between Specialtysemi
      and
      Conexant dated March 12, 2002, as amended, supplemented or otherwise modified
      from time to time; and (ii) the El Capitan Lease Agreement between Specialtysemi
      and Conexant dated March 12, 2002, as amended, supplemented or otherwise
      modified from time to time.

     

    1.30  “Consolidated
      EBITDA”
shall
      mean, with respect to any Person for any period, Consolidated Net Income of
      such
      Person and its Subsidiaries for such period plus, without duplication and to
      the
      extent reflected as a charge in the statement of such Consolidated Net Income
      for such period, the sum of (a) income tax expense, (b) Consolidated Net
      Interest Expense of such Person and its Subsidiaries, amortization or write-off
      of debt discount and debt issuance costs and commissions, discounts and other
      fees and charges associated with Indebtedness (including unused line fees and
      administrative fees and charges with respect to the Credit Facility), (c)
      depreciation and amortization expense, (d) amortization or impairment of
      intangibles (including, but not limited to, goodwill) and organization costs,
      (e) any extraordinary, unusual or non-recurring expenses or losses (including,
      whether or not otherwise includable as a separate item in the statement of
      such
      Consolidated Net Income for such period, losses on sales of assets outside
      of
      the ordinary course of business), (f) any other non-cash charges, expenses
      or
      losses, including in relation to earn-outs and similar obligations (except
      to
      the extent such charges, expenses or losses represent an accrual of or reserve
      for cash expenses in any future period or an amortization of a prepaid cash
      expense paid in a prior period), (g) restructuring and integration costs related
      to any acquisition transaction or Joint Venture permitted hereby, (h)
      stock-option based compensation expenses, (i) transaction costs, fees and
      expenses related to this Agreement, or related to a completed acquisition
      transaction or a Joint Venture transaction permitted hereby, (j) the non-cash
      portion of straight-line rent expense, (k) proceeds from any business
      interruption insurance (in the case of this clause (k) to the extent not
      reflected as revenue or income in such statement of such Consolidated Net
      Income), (l) losses recognized and expenses incurred in connection with the
      effect of currency and exchange rate fluctuations on intercompany balances
      and
      other balance sheet items, (m) cash expenses relating to earn-outs and similar
      obligations, and (n) to the extent incurred prior to March 31, 2007 and paid,
      and to the extent reasonably approved of by Agent: (A) all costs and expenses
      incurred by Parent Guarantor and its Subsidiaries in connection with the
      acquisition by Parent Guarantor of Jazz, (B) all management fees, and (C) all
      purchased research and development costs, and minus,
      to the
      extent included in the statement of such Consolidated Net Income for such
      period, the sum of (i) interest income (except to the extent deducted in
      determining Consolidated Net Interest Expense), (ii) any extraordinary, unusual
      or non-recurring income or gains (including, whether or not otherwise includable
      as a separate item in the statement of such Consolidated Net Income for such
      period, gains on the sales of assets outside of the ordinary course of
      business), (iii) any other non-cash income or gains (other than the accrual
      of
      revenue in the ordinary course), all as determined on a consolidated basis,
      (iv)
      cash payments in connection with “straight-line” rent expense which exceed the
      amount expensed in respect of such rent expense and (v) gains realized and
      income accrued in connection with the effect of currency and exchange rate
      fluctuations on intercompany balances and other balance sheet items.
      Notwithstanding the foregoing, Consolidated EBITDA for Parent Guarantor and
      its
      Subsidiaries for each fiscal quarter ending in 2006 shall be the amount set
      forth for such fiscal quarter on Schedule 1.30 hereto.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    1.31  “Consolidated
      Net Income”
shall
      mean, with respect to any Person for any period, the consolidated net income
      (or
      loss) of such Person and its Subsidiaries for such period, determined on a
      consolidated basis in accordance with GAAP; provided,
      however,
      with
      respect to Parent Guarantor, Consolidated Net Income shall not include the
      consolidated net income (or loss) of any Person in which any other Person (other
      than any Borrower, any Guarantor, or any of their respective wholly-owned
      Subsidiaries) has a joint interest, except to the extent of the amount of
      dividends or other distributions actually paid to a Borrower, Guarantor or
      any
      of their respective wholly-owned Subsidiaries by such Person during such
      period.

     

    1.32  “Consolidated
      Net Interest Expense”
shall
      mean, with respect to any Person for any period, (a) total cash interest expense
      (including that attributable to capital lease obligations) of such Person and
      its Subsidiaries for such period with respect to all outstanding Indebtedness
      of
      such Person and its Subsidiaries, minus
      (b)
      total cash interest income of such Person and its Subsidiaries for such period,
      in each case determined in accordance with GAAP.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    1.33  “Credit
      Facility”
shall
      mean the loans and letters of credit provided to or for the benefit of any
      Borrower pursuant to Sections 2.1 and 2.2 hereof.

     

    1.34  “Credit
      Party”
shall
      mean, collectively, each Borrower, each Guarantor, and each Subsidiary of any
      Borrower or Guarantor (other than any Foreign Subsidiary of any Borrower or
      Guarantor, any Joint Venture, and Jazz WOFE).

     

    1.35  “Customer
      Concession Reserve”
shall
      mean a Reserve established for concessions made or reasonably expected to be
      made by any Borrower to its customers consisting of credits other than product
      returns, which Reserve shall be calculated quarterly based on sales made during
      the twelve-month period prior to, and ending on, any date of determination
      and
      the concessions actually made during such period and to the extent reflected
      on
      such Borrower's books and records consistent with its historical
      practices.

     

    1.36  “Default”
shall
      mean an act, condition or event which with notice or passage of time or both
      would constitute an Event of Default.

     

    1.37  “Defaulting
      Lender”
shall
      have the meaning set forth in Section 6.9 hereof.

     

    1.38  “Deposit
      Account Control Agreement”
shall
      mean an agreement in writing, in form and substance reasonably satisfactory
      to
      Agent, by and among Agent, the Borrower or Guarantor with a deposit account
      (other than any deposit account specifically and exclusively used for payroll,
      payroll taxes and other employee wage and benefit payments to or for the benefit
      of any Borrower’s or Guarantor’s salaried employees) at any bank and the bank at
      which such deposit account is at any time maintained, which provides that such
      bank will comply with instructions originated by Agent directing disposition
      of
      the funds in the deposit account without further consent by such Borrower or
      Guarantor and has such other terms and conditions as Agent may reasonably
      require.

     

    1.39  “Domestic
      Subsidiary”
shall
      mean, with respect to any Person, any Subsidiary of such Person incorporated
      or
      organized under the laws of any jurisdiction of any state or territory of the
      United States or the District of Columbia.

     

    1.40  “Effective
      Date”
shall
      mean the date hereof.

     

    1.41  “Eligible
      Accounts”
shall
      mean Accounts created by each Borrower that in each case satisfy the criteria
      set forth below as determined by Agent. Accounts shall be Eligible Accounts
      if:

     

    (a)  such
      Accounts arise from the actual and bona fide sale and delivery of goods by
      such
      Borrower or rendition of services by such Borrower in
      the
      ordinary course of its business which transactions are completed in accordance
      with the terms and provisions contained in any documents related
      thereto;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b)  such
      Accounts are not unpaid more than sixty (60) days past due or one hundred twenty
      (120) days after the date of the original invoice for them;

     

    (c)  such
      Accounts comply with the terms and conditions contained in Section 7.2(b) of
      this Agreement;

     

    (d)  such
      Accounts do not arise from sales on consignment, guaranteed sale, sale and
      return, sale on approval, or other terms under which payment by the account
      debtor may be conditional or contingent;

     

    (e)  the
      chief
      executive office of the account debtor with respect to such Accounts is located
      in the United States of America or Canada (provided,
      that,
      at any
      time promptly upon Agent's request, such Borrower shall either (A) exclude
      Accounts of an account debtor with its chief executive office or principal
      place
      of business in Canada unless any such Account is otherwise reasonably acceptable
      to Agent (subject to such lending formula with respect thereto as Agent may
      determine) or (B) execute and deliver, or cause to be executed and delivered,
      such other agreements, documents and instruments as may be required by Agent
      to
      perfect the security interests of Agent in those Accounts of an account debtor
      with its chief executive office or principal place of business in Canada in
      accordance with the applicable laws of the Province of Canada in which such
      chief executive office or principal place of business is located and take or
      cause to be taken such other and further actions as Agent may reasonably request
      to enable Agent as secured party with respect thereto to collect such Accounts
      under the applicable Federal or Provincial laws of Canada), or if the chief
      executive office and principal place of business of the account debtor with
      respect to such Accounts is located other than in the United States of America
      or Canada, then if either: (i) the account debtor has delivered to such Borrower
      an irrevocable letter of credit issued or confirmed by a bank satisfactory
      to
      Agent and payable only in the United States of America and in U.S. dollars,
      sufficient to cover such Account, in form and substance satisfactory to Agent
      and if required by Agent, the original of such letter of credit has been
      delivered to Agent or Agent's agent and the issuer thereof, and such Borrower
      has complied with the terms of Section 5.2(f) hereof with respect to the
      assignment of the proceeds of such letter of credit to Agent or naming Agent
      as
      transferee beneficiary thereunder, as Agent may specify, (ii) such Account
      is
      subject to credit insurance payable to Agent issued by an insurer and on terms
      and in an amount reasonably acceptable to Agent, (iii) such Account is
      guaranteed in form, manner and substance reasonably satisfactory to Agent by
      an
      affiliated entity of such Account Debtor located in the U.S., or (iv) such
      Account is otherwise reasonably acceptable to Agent (subject to such lending
      formula with respect thereto as Agent may determine);

     

    (f)  such
      Accounts do not consist of progress billings (such that the obligation of the
      account debtors with respect to such Accounts is conditioned upon such
      Borrower's satisfactory completion of any further performance under the
      agreement giving rise thereto), bill and hold invoices or retainage invoices,
      except as to bill and hold invoices, if Agent shall have received an agreement
      in writing from the account debtor, in form and substance reasonably
      satisfactory to Agent, confirming the unconditional obligation of the account
      debtor to take the goods related thereto and pay such invoice;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (g)  the
      account debtor with respect to such Accounts has not asserted a counterclaim,
      defense or dispute, or such counterclaim, defense or dispute is not otherwise
      reflected in such Borrower’s financial statements, or such account debtor is not
      owed or does not claim to be owed any amounts that may give rise to any right
      of
      setoff or recoupment against such Accounts (but the portion of the Accounts
      of
      such account debtor in excess of the amount at any time and from time to time
      owed by such Borrower to such account debtor or claimed owed by such account
      debtor shall be deemed Eligible Accounts to the extent that such portion would
      otherwise be eligible as "Eligible Accounts" pursuant to this
      Section);

     

    (h)  there
      are
      no facts, events or occurrences which would materially impair the validity,
      enforceability or collectability of such Accounts;

     

    (i)  such
      Accounts are subject to the first priority, valid and perfected security
      interest of Agent and any goods giving rise thereto are not, and were not at
      the
      time of the sale thereof, subject to any liens except those permitted in this
      Agreement;

     

    (j)  other
      than any Person that is an Affiliate of any Borrower because a director or
      officer of such Person serves as a director of such Borrower, neither the
      account debtor nor any officer or employee of the account debtor, as applicable,
      with respect to such Accounts is an officer, employee, agent or other Affiliate
      of any Borrower or Guarantor;

     

    (k)  the
      account debtors with respect to such Accounts are not any foreign government,
      the United States of America, any State, political subdivision, department,
      agency or instrumentality thereof, unless, if the account debtor is the United
      States of America, any State, political subdivision, department, agency or
      instrumentality thereof, upon Agent's request, the Federal Assignment of Claims
      Act of 1940, as amended or any similar State or local law, if applicable, has
      been complied with in a manner reasonably satisfactory to Agent;

     

    (l)  there
      are
      no proceedings or actions which are pending against the account debtors with
      respect to such Accounts which could reasonably be expected to result in any
      material adverse change in any such account debtor's financial condition
      (including, without limitation, any bankruptcy, dissolution, liquidation,
      reorganization or similar proceeding);

     

    (m)  the
      aggregate amount of such Eligible Accounts owing by a single account debtor
      (other than Conexant and Skyworks) do not constitute more than ten percent
      (10%)
      of the aggregate amount of all otherwise Eligible Accounts, and such Accounts
      owing by Conexant do not constitute more than twenty percent (20%) of the
      aggregate amount of all otherwise Eligible Accounts, and such Accounts owing
      by
      Skyworks do not constitute more than thirty percent (30%) of the aggregate
      amount of all otherwise Eligible Accounts (but the portion of the Accounts
      not
      in excess of the applicable percentages shall be deemed Eligible Accounts to
      the
      extent that such portion would otherwise be eligible as "Eligible Accounts"
      pursuant to this Section);

     

    (n)  such
      Accounts are not owed by an account debtor who has Accounts unpaid more than
      sixty (60) days past due or one hundred twenty (120) days after the original
      invoice date for them which constitute more than fifty (50%) percent of the
      total Accounts of such account debtor; 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (o)  the
      account debtor is not located in a state requiring the filing of a Notice of
      Business Activities Report or similar report in order to permit such Borrower
      to
      seek judicial enforcement in such State of payment of such Account, unless
      such
      Borrower has qualified to do business in such state or has filed a Notice of
      Business Activities Report or equivalent report for the then current year or
      such failure to file and inability to seek judicial enforcement is capable
      of
      being remedied without any material delay or material cost;

     

    (p)  such
      Accounts are not non-trade Accounts, including without limitation billings
      for
      facility services and repairs; and 

     

    (q)  such
      Accounts are not Accounts that have been paid or otherwise satisfied by customer
      deposits, except to the extent in excess of such deposits, maintained by any
      Borrower.

     

    Any
      new
      criteria for Eligible Accounts may only be established by Agent in good faith
      based on either: (i) an event, condition or other circumstance arising after
      the
      date hereof, or (ii) an event, condition or other circumstance existing on
      the
      date hereof to the extent Agent has no notice thereof prior to the date hereof,
      in either case under clause (i) or (ii) which materially adversely affects
      or
      could reasonably be expected to materially adversely affect the Eligible
      Accounts. Any Accounts that are not Eligible Accounts shall nevertheless be
      part
      of the Collateral.

     

    1.42  “Eligible
      Equipment”
shall
      mean, as to each Borrower, Equipment of such Borrower used in the ordinary
      course of such Borrower’s business, that in each case satisfy the criteria set
      forth below as reasonably determined by Agent. Eligible Equipment shall not
      include: (a)
      Equipment located outside the United States; (b)
      items of
      Equipment that are or have become fixtures other than trade fixtures which
      are
      readily removable from the premises on which they are located; (c)
      leased
      Equipment; (d)
      Equipment subject to a lien or security interest of any Person other than Agent
      except for non-consensual liens or security interests that are permitted under
      Sections 9.8(b), (c) or (d) hereof; (e)
      worn-out, obsolete or out-of-service Equipment; (f)
      Equipment acquired by any Borrower after the date hereof located on or affixed
      to the Premises (as defined in that certain Landlord Agreement dated
on
      or
      about the Original Closing Date,
      by and
      among Jazz, Conexant and Agent (the "Conexant
      Landlord Agreement")
      with
      respect to which Equipment the parties to such Conexant Landlord Agreement
      shall
      not have agreed upon and delivered a revised Exhibit B to such Conexant Landlord
      Agreement pursuant to the terms thereof, which revised Exhibit B shall designate
      such Equipment as added to or included within the definition of "Personal
      Property" as set forth in the Conexant Landlord Agreement; and (g)
      any
      individual items of Equipment with an original cost or purchase price of less
      than $10,000. Any new criteria for Eligible Equipment may only be established
      by
      Agent in good faith based on either: (i) an event, condition or other
      circumstance arising after the date hereof, or (ii) an event, condition or
      other
      circumstance existing on the date hereof to the extent Agent has no notice
      thereof prior to the date hereof, in either case under clause (i) or (ii) which
      materially adversely affects or could reasonably be expected to materially
      adversely affect the Eligible Equipment in the good faith determination of
      Agent. Any Equipment that is not Eligible Equipment shall nevertheless be part
      of the Collateral.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    1.43  “Eligible
      Transferee”
shall
      mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate
      of such Lender which is at least fifty (50%) percent owned by such Lender or
      its
      parent company; (c) any person (whether a corporation, partnership, trust or
      otherwise) that is engaged in the business of making, purchasing, holding or
      otherwise investing in bank loans and similar extensions of credit in the
      ordinary course of its business and is administered or managed by a Lender
      or
      with respect to any Lender that is a fund which invests in bank loans and
      similar extensions of credit, any other fund that invests in bank loans and
      similar extensions of credit and is managed by the same investment advisor
      as
      such Lender or by an Affiliate of such investment advisor, and in each case
      is
      approved by Agent; and (d) any other commercial bank, financial institution
      or
“accredited investor” (as defined in Regulation D under the Securities Act of
      1933) approved by Agent and, absent an Event of Default, Borrowers (which
      approval by Borrowers shall not be unreasonably withheld), provided,
      that,
      (i)
      neither any Borrower nor any Guarantor or any Affiliate of any Borrower or
      Guarantor shall qualify as an Eligible Transferee and (ii) no Person to whom
      any
      Indebtedness which is in any way subordinated in right of payment to any other
      Indebtedness of any Borrower or Guarantor shall qualify as an Eligible
      Transferee, except as Agent may otherwise specifically agree.

     

    1.44  “Environmental
      Laws”
shall
      mean all foreign, Federal, State and local laws (including common law),
      legislation, rules, codes, licenses, permits (including any conditions imposed
      therein), authorizations, judicial or administrative decisions, injunctions
      or
      agreements between any Borrower or Guarantor and any Governmental Authority,
      (a)
      relating to pollution and the protection, preservation or restoration of the
      environment (including air, water vapor, surface water, ground water, drinking
      water, drinking water supply, surface land, subsurface land, plant and animal
      life or any other natural resource), or to human health or safety, (b) relating
      to the exposure to, or the use, storage, recycling, treatment, generation,
      manufacture, processing, distribution, transportation, handling, labeling,
      production, release or disposal, or threatened release, of Hazardous Materials,
      or (c) relating to all laws with regard to recordkeeping, notification,
      disclosure and reporting requirements respecting Hazardous Materials. The term
      “Environmental Laws” includes (i) the Federal Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, the Federal Superfund
      Amendments and Reauthorization Act, the Federal Water Pollution Control Act
      of
      1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
      Resource Conservation and Recovery Act of 1976 (including the Hazardous and
      Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
      Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
      Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
      applicable state counterparts to such laws and (iii) any common law or equitable
      doctrine that may impose liability or obligations for injuries or damages due
      to, or threatened as a result of, the presence of or exposure to any Hazardous
      Materials.

     

    1.45  “Equipment”
shall
      mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor’s
      now owned and hereafter acquired equipment, wherever located, including
      machinery, data processing and computer equipment, computer hardware, computer
      software (whether owned or licensed and including embedded software), vehicles,
      tools, furniture, fixtures, all attachments, accessions and property now or
      hereafter affixed thereto or used in connection therewith, and substitutions
      and
      replacements thereof, wherever located.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    1.46  “Equipment
      Sublimit”
shall
      mean the amount set forth on Schedule 1.46 with respect to the period set forth
      opposite such amount.

     

    1.47  “Equity
      Contribution”
shall
      have the meaning set forth in Section 4.1(r) hereof.

     

    1.48  “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, together with all
      rules, regulations and interpretations thereunder or related
      thereto.

     

    1.49  “ERISA
      Affiliate”
shall
      mean any person required to be aggregated with any Borrower, any Guarantor
      or
      any of their respective Subsidiaries under Sections 414(b), 414(c), 414(m)
      or
      414(o) of the Code.

     

    1.50  “ERISA
      Event”
shall
      mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the
      regulations issued thereunder, with respect to a Pension Plan, other than events
      as to which the requirement of notice has been waived in regulations by the
      Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to
      a
      Pension Plan that would require the provision of security pursuant to Section
      401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or partial
      withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a
      Multiemployer Plan or a cessation of operations which is treated as such a
      withdrawal or notification that a Multiemployer Plan is in reorganization;
      (d)
      the filing of a notice of intent to terminate, the treatment of a Pension Plan
      amendment as a termination under Section 4041 or 4041A of ERISA, or the
      commencement of proceedings by the Pension Benefit Guaranty Corporation to
      terminate a Pension Plan; (e) an event or condition which might reasonably
      be
      expected to constitute grounds under Section 4042 of ERISA for the termination
      of, or the appointment of a trustee to administer, any Plan; (f) the imposition
      of any liability under Title IV of ERISA, other than the Pension Benefit
      Guaranty Corporation premiums due but not delinquent under Section 4007 of
      ERISA, upon any Borrower or any other Credit Party in excess of $1,000,000
      and
      (g) any other event or condition with respect to a Plan including any Pension
      Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA
      Affiliate that could reasonably be expected to result in liability of any
      Borrower in excess of $1,000,000.

     

    1.51  “Eurodollar
      Rate Loans”
shall
      mean any Loans or portion thereof on which interest is payable based on the
      Adjusted Eurodollar Rate in accordance with the terms hereof.

     

    1.52  “Event
      of Default”
shall
      mean the occurrence or existence of any event or condition described in Section
      10.1 hereof.

     

    1.53  “Excess
      Availability”
shall
      mean the amount calculated at any date, equal to: (a) the lesser of: (i) the
      Borrowing Base, (ii) the Maximum Credit minus
      $5,000,000 or (iii) the amount equal to (A) the Accounts Sublimit plus
      (B) the
      Equipment Sublimit minus
      (C)
      $5,000,000, minus
      (b) the
      sum of: (i) the amount of all then outstanding and unpaid Obligations of
      Borrowers plus
      (ii) the
      aggregate amount of all then outstanding and unpaid trade payables and other
      obligations of each Borrower which are outstanding more than sixty (60) days
      past due as of the end of the immediately preceding month (other than trade
      payables or other obligations being contested or disputed by such Borrower
      in
      good faith), plus
      (iii)
      without duplication, the amount of checks issued by each Borrower to pay trade
      payables and other obligations which are more than sixty (60) days past due
      as
      of the end of the immediately preceding month (other than trade payables or
      other obligations being contested or disputed by such Borrower in good faith),
      but not yet sent. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    1.54  “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, together with all rules, regulations
      and interpretations thereunder or related thereto.

     

    1.55  “Excluded
      Subsidiaries”
shall
      mean a collective reference to any Subsidiary of Parent Guarantor that: (a)
      is
      acquired or formed by Parent Guarantor or any of Parent Guarantor’s Subsidiaries
      after the date hereof; and (b) is designated as an Excluded Subsidiary by Parent
      Guarantor by written notice to Agent prior to the date of such acquisition
      or
      formation.

     

    1.56  “Executive
      Order”
shall
      have the meaning given to such term in Section 9.20 hereof.

     

    1.57  “Existing
      Letters of Credit”
shall
      mean, collectively, the letters of credit issued for the account of a Borrower
      or Guarantor or for which such Borrower or Guarantor is otherwise liable listed
      on Schedule 1.57 hereto, as the same now exist or may hereafter be amended,
      modified, supplemented, extended, renewed, restated or replaced.

     

    1.58  “Fee
      Letter”
shall
      mean the letter agreement, dated of even date herewith, by and among Borrowers
      and Agent, setting forth certain fees payable by Borrowers to Agent for the
      benefit of itself and Lenders, as the same now exists or may hereafter be
      amended, modified, supplemented, extended, renewed, restated or
      replaced.

     

    1.59  “Financing
      Agreements”
shall
      mean, collectively, this Agreement, the Fee Letter and all notes, guarantees,
      security agreements, deposit account control agreements, investment property
      control agreements, intercreditor agreements and all other agreements, documents
      and instruments now or at any time hereafter executed and/or delivered by any
      Borrower, any Guarantor or any Guarantor in connection with this
      Agreement.

     

    1.60  “Foreign
      Assets Control Regulations”
shall
      have the meaning given to such term in Section 9.20 hereof.

     

    1.61  “Foreign
      Subsidiary”
shall
      mean, with respect to any Person, any Subsidiary of such Person incorporated
      or
      organized under the laws of any jurisdiction other than a state or territory
      of
      the United States or the District of Columbia.

     

    1.62  “Funding
      Bank”
shall
      have the meaning given to such term in Section 3.3(a) hereof.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    1.63  “GAAP”
shall
      mean generally accepted accounting principles in the United States of America
      as
      in effect from time to time as set forth in the opinions and pronouncements
      of
      the Accounting Principles Board and the American Institute of Certified Public
      Accountants and the statements and pronouncements of the Financial Accounting
      Standards Board which are applicable to the circumstances as of the date of
      determination consistently applied, except that, for purposes of Section 9.18
      hereof, GAAP shall be determined on the basis of such principles in effect
      on
      the date hereof and consistent with those used in the preparation of the most
      recent audited financial statements delivered to Agent prior to the date
      hereof.

     

    1.64  “Guaranty”
shall
      mean a Guaranty executed by Parent Guarantor or a Subsidiary (other than a
      Foreign Subsidiary) of
      any
      Borrower or Guarantor in favor of Agent.

     

    1.65  “Governmental
      Authority”
shall
      mean any nation or government, any state, province, or other political
      subdivision thereof, any central bank (or similar monetary or regulatory
      authority) thereof, and any public entity exercising executive, legislative,
      judicial, regulatory or administrative functions of or pertaining to
      government.

     

    1.66  “Hazardous
      Materials”
shall
      mean any hazardous, toxic or dangerous substances, materials and wastes,
      including hydrocarbons (including naturally occurring or man-made petroleum
      and
      hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
      radioactive materials, biological substances, polychlorinated biphenyls,
      pesticides, herbicides and any other kind and/or type of pollutants or
      contaminants (including materials which include hazardous constituents), sewage,
      sludge, industrial slag, solvents and/or any other similar substances,
      materials, or wastes and including any other substances, materials or wastes
      that are or become regulated under any Environmental Law (including any that
      are
      or become classified as hazardous or toxic under any Environmental
      Law).

     

    1.67  “Hedging
      Transactions”
shall
      mean (a) any and all rate swap transactions, basis swaps, forward rate
      transactions, commodity swaps, commodity options, forward commodity contracts,
      equity or equity index swaps or options, bond or bond price or bond index swaps
      or options, forward bond or forward bond price or forward bond index
      transactions, interest rate options, forward foreign exchange transactions,
      cap
      transactions, floor transactions, collar transactions, currency swap
      transactions, cross-currency rate swap transaction, currency options or any
      other similar transactions or any combination of any of the foregoing (including
      any options to enter into any of the foregoing), whether or not any such
      transaction is governed by or subject to any master agreement, or (b) any and
      all transactions of any kind, and the related confirmations, that are subject
      to
      the terms or conditions of, or governed by, any form of master agreement
      published by the International Swaps and Derivatives Association, Inc., or
      any
      other master agreement, as amended, restated, extended, supplemented or
      otherwise modified in writing from time to time, including but not limited
      to,
      any such obligations or liabilities under any such agreement.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    1.68  “Indebtedness”
shall
      mean, with respect to any Person, any liability, whether or not contingent,
      (a)
      in respect of borrowed money (whether or not the recourse of the lender is
      to
      the whole of the assets of such Person or only to a portion thereof) or
      evidenced by bonds, notes, debentures or similar instruments; (b) representing
      the balance deferred and unpaid of the purchase price of any property or
      services (other than an account payable to a trade creditor (whether or not
      an
      Affiliate) incurred in the ordinary course of business of such Person and
      payable in accordance with customary trade practices); (c) all obligations
      as
      lessee under leases which have been, or should be, in accordance with GAAP
      recorded as Capital Leases; (d) any contractual obligation, contingent or
      otherwise, of such Person to pay or be liable for the payment of any
      indebtedness described in this definition of another Person, including, without
      limitation, any such indebtedness, directly or indirectly guaranteed, or any
      agreement to purchase, repurchase, or otherwise acquire such indebtedness,
      obligation or liability or any security therefor, or to provide funds for the
      payment or discharge thereof, or to maintain solvency, assets, level of income,
      or other financial condition; (e) all obligations with respect to redeemable
      stock and redemption or repurchase obligations under any Capital Stock or other
      equity securities issued by such Person which obligations become due prior
      to
      the maturity date hereof; (f) all reimbursement obligations and other
      liabilities of such Person with respect to surety bonds (whether bid,
      performance or otherwise), letters of credit, banker's acceptances, drafts
      or
      similar documents or instruments issued for such Person's account; (g) all
      indebtedness of such Person in respect of indebtedness of another Person for
      borrowed money or indebtedness of another Person otherwise described in this
      definition which is secured by any consensual lien, security interest,
      collateral assignment, conditional sale, mortgage, deed of trust, or other
      encumbrance on any asset of such Person, whether or not such obligations,
      liabilities or indebtedness are assumed by or are a personal liability of such
      Person, all as of such time, provided
      that if
      such indebtedness is not assumed by such Person, the amount of such indebtedness
      shall be the lesser of the fair market value of the property subject to such
      lien or encumbrance and the amount of such indebtedness; (h) all obligations,
      liabilities and indebtedness of such Person (marked to market) arising under
      swap agreements, cap agreements and collar agreements and other agreements
      or
      arrangements designed to protect such person against fluctuations in interest
      rates or currency or commodity values; (i) indebtedness of any partnership
      or
      joint venture in which such Person is a general partner or a joint venturer
      to
      the extent such Person is liable therefor as a result of such Person’s ownership
      interest in such entity, except to the extent that the terms of such
      indebtedness expressly provide that such Person is not liable therefor or such
      Person has no liability therefor as a matter of law and (j) the principal and
      interest portions of all rental obligations of such Person under any synthetic
      lease or similar off-balance sheet financing where such transaction is
      considered to be borrowed money for tax purposes but is classified as an
      operating lease in accordance with GAAP.

     

    1.69  “Indemnitee”
shall
      have the meaning given to such term in Section 11.4 hereof.

     

    1.70  “Information
      Certificate”
shall
      mean, collectively, the Information Certificates of Borrowers and Guarantors
      constituting Exhibit B hereto containing material information with respect
      to
      Borrowers and Guarantors, their respective businesses and assets provided by
      or
      on behalf of Borrowers and Guarantors to Agent in connection with the
      preparation of this Agreement and the other Financing Agreements and the
      financing arrangements provided for herein.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    1.71  “Intellectual
      Property”
shall
      mean, as to each Borrower and Guarantor, all of such Borrower's or Guarantor’s
      now owned and hereafter arising or acquired: patents, patent rights, patent
      applications, copyrights, works which are the subject matter of copyrights,
      copyright applications, copyright registrations, trademarks, servicemarks,
      trade
      names, trade styles, trademark and service mark applications, and licenses
      and
      rights to use any of the foregoing and all applications, registrations and
      recordings relating to any of the foregoing as may be filed in the United States
      Copyright Office, the United States Patent and Trademark Office or in any
      similar office or agency of the United States, any State thereof, any political
      subdivision thereof or in any other country or jurisdiction, together with
      all
      rights and privileges arising under applicable law with respect to any
      Borrower’s or Guarantor’s use of any of the foregoing; all extensions, renewals,
      reissues, divisions, continuations, and continuations-in-part of any of the
      foregoing; all rights to sue for past, present and future infringement of any
      of
      the foregoing; inventions, trade secrets, formulae, processes, compounds,
      drawings, designs, blueprints, surveys, reports, manuals, and operating
      standards; goodwill (including any goodwill associated with any trademark or
      servicemark, or the license of any trademark or servicemark); customer and
      other
      lists in whatever form maintained; trade secret rights, copyright rights, rights
      in works of authorship, domain names and domain name registrations; software
      and
      contract rights relating to computer software programs, in whatever form created
      or maintained.

     

    1.72  “Interest
      Period”
shall
      mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2),
      three (3), or six (6) months duration as Borrowers may elect, the exact duration
      to be determined in accordance with the customary practice in the applicable
      Eurodollar Rate market; provided, that,
      Borrowers may not elect an Interest Period which will end after the last day
      of
      the then-current term of this Agreement.

     

    1.73  “Interest
      Rate”
shall
      mean,

     

    (a)  as
      to
      Prime Rate Loans, a rate equal to three quarters of one percent (0.75%) per
      annum in excess of the Prime Rate,

     

    (b)  as
      to
      Eurodollar Rate Loans, a rate equal to two and one-half percent (2.50%) per
      annum in excess of the Adjusted Eurodollar Rate (based on the London Interbank
      Offered Rate applicable for the Interest Period selected by Borrowers as in
      effect two (2) Business Days prior to the commencement of the Interest Period,
      whether such rate is higher or lower than any rate previously quoted to any
      Borrower).

     

    (c)  Notwithstanding
      anything to the contrary contained in clauses (a) and (b) of this definition,
      the Interest Rate shall mean the rate of two and three-quarters percent (2.75%)
      per annum in excess of the Prime Rate as to Prime Rate Loans and the rate of
      four and one-half percent (4.50%) per annum in excess of the Adjusted Eurodollar
      Rate as to Eurodollar Rate Loans, at Agent’s option, without notice, (i) for the
      period from and after the date of the occurrence of any Event of Default, and
      for so long as such Event of Default is continuing as reasonably determined
      by
      Agent or (ii) on Loans and Letters of Credit outstanding in excess of the
      Borrowing Base (whether or not such excess(es) arise or are made with or without
      Agent’s or any Lender’s knowledge or consent and whether made before or after an
      Event of Default).

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    1.74  “Inventory”
shall
      mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor’s
      now owned and hereafter existing or acquired goods, wherever located, which
      (a)
      are leased by such Borrower or Guarantor as lessor; (b) are held by such
      Borrower or Guarantor for sale or lease or to be furnished under a contract
      of
      service; (c) are furnished by such Borrower or Guarantor under a contract of
      service; or (d) consist of raw materials, work in process, finished goods or
      materials used or consumed in its business.

     

    1.75  “Investment
      Property Control Agreement”
shall
      mean an agreement in writing, in form and substance reasonably satisfactory
      to
      Agent, by and among Agent, any Borrower or Guarantor (as the case may be) and
      any securities intermediary, commodity intermediary or other person who has
      custody, control or possession of any investment property of such Borrower
      or
      Guarantor, acknowledging that such securities intermediary, commodity
      intermediary or other person has custody, control or possession of such
      investment property on behalf of Agent, that it will comply with entitlement
      orders originated by Agent with respect to such investment property, or other
      instructions of Agent, and has such other terms and conditions as Agent may
      reasonably require.

     

    1.76  “Jazz”
shall
      mean Jazz Semiconductor, Inc., a Delaware corporation, and its successors and
      assigns.

     

    1.77  “Jazz
      WOFE”
      shall
      mean Jazz Semiconductor (Shanghai) Co., Ltd., a China Wholly Owned Foreign
      Entity, organized and existing under the laws of China.

     

    1.78  “Joint
      Venture”
      shall
      mean (a)
      Operating Company’s partnerships with Advanced Semiconductor Manufacturing
      Corporation, a company organized and existing under the laws of Shanghai PRC,
      and Hua Hong NEC Electronics Co., Ltd., a company organized and existing under
      the laws of Shanghai PRC, and (b)
      following the date hereof, Operating Company’s other partnerships or joint
      ventures with any Person that is not a wholly owned Subsidiary of any Borrower
      or any Guarantor.

     

    1.79  “Joy”
shall
      mean Joy Acquisition Corp., a Delaware corporation.

     

    1.80  “Lenders”
shall
      mean, collectively, the financial institutions who are signatories hereto as
      Lenders and other Persons made a party to this Agreement as a lender in
      accordance with Section 13.7 hereof, and their respective successors and
      permitted assigns; each sometimes being referred to herein individually as
      a
“Lender”.

     

    1.81  “Letter
      of Credit Documents”
shall
      mean, with respect to any Letter of Credit, such Letter of Credit, any
      amendments thereto, any documents delivered in connection therewith, any
      application therefor, and any agreements, instruments, guarantees or other
      documents (whether general in application or applicable only to such Letter
      of
      Credit) governing or providing for (a) the rights and obligations of the parties
      concerned or at risk or (b) any collateral security for such
      obligations.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    1.82  “Letter
      of Credit Limit”
shall
      mean $5,000,000.

     

    1.83  “Letter
      of Credit Obligations”
shall
      mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters
      of
      Credit outstanding at such time, plus
      (b) the
      aggregate amount of all drawings under Letters of Credit for which the issuer
      thereof has not at such time been reimbursed, plus (c) without duplication,
      the
      aggregate amount of all payments made by each Lender to the issuer with respect
      to such Lender’s participation in Letters of Credit as provided in Section 2.2
      for which Borrowers have not at such time reimbursed the Lenders, whether by
      way
      of a Loan or otherwise.

     

    1.84  “Letters
      of Credit”
shall
      mean all letters of credit (whether documentary or stand-by and whether for
      the
      purchase of inventory, equipment or otherwise) issued by an issuer for the
      account of Borrowers pursuant to this Agreement, and all amendments, renewals,
      extensions or replacements thereof. The issuer of the Letters of Credit shall
      be, and all references to such issuer herein shall mean, Wachovia Bank, National
      Association and its successors and assigns or such other bank as Agent may
      from
      time to time designate.

     

    1.85  “License
      Agreement”
and
      “License
      Agreements”
shall
      have the meanings set forth in Section 8.11 hereof.

     

    1.86  “Loans”
shall
      mean the loans now or hereafter made by or on behalf of Agent and the Lenders
      on
      a revolving basis pursuant to the Credit Facility (involving advances,
      repayments and readvances) as set forth in Section 2.1 hereof.

     

    1.87  “London
      Interbank Offered Rate”
shall
      mean, with respect to any Eurodollar Loan for the Interest Period applicable
      thereto, the rate of interest per annum (rounded upwards, if necessary, to
      the
      nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page)
      as
      the London interbank offered rate for deposits in U.S. Dollars at approximately
      11:00 A.M. (London time) two (2) Business Days prior to the first day of such
      Interest Period for a term comparable to such Interest Period; provided,
      that,
      if more than one rate is specified on Telerate Page 3750, the applicable rate
      shall be the arithmetic mean of all such rates. If, for any reason, such rate
      is
      not available, the term “London Interbank Offered Rate” shall mean, with respect
      to any Eurodollar Loan for the Interest Period applicable thereto, the rate
      of
      interest per annum (rounded upwards, if necessary, to the nearest 1/100 of
      1%)
      appearing on Reuters Screen LIBO Page as the London interbank offered rate
      for
      deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business
      Days prior to the first day of such Interest Period for a term comparable to
      such Interest Period; provided,
      however,
      if more
      than one rate is specified on Reuters Screen LIBO Page, the applicable rate
      shall be the arithmetic mean of all such rates.

     

    1.88  “Material
      Adverse Effect”
shall
      mean a material adverse effect on (a) the financial condition, business,
      performance or results of operations of Borrowers taken as a whole; (b) the
      legality, validity or enforceability of this Agreement or any of the other
      Financing Agreements; (c) the legality, validity, enforceability, perfection
      or
      priority of the security interests and liens of Agent upon the Collateral;
      (d)
      the Collateral or its value; (e) the ability of any Borrower to perform its
      obligations under this Agreement or any of the other Financing Agreements as
      and
      when to be performed; or (f) the ability of Agent or any Lender to enforce
      the
      Obligations or realize upon the Collateral or otherwise with respect to the
      rights and remedies of Agent and Lenders under this Agreement or any of the
      other Financing Agreements.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    1.89  “Material
      Contract”
shall
      mean any contract or other agreement (other than the Financing Agreements),
      whether written or oral, to which any Borrower or Guarantor is a party as to
      which the breach, nonperformance, cancellation or failure to renew by any party
      thereto would have a Material Adverse Effect.

     

    1.90  “Maturity
      Date”
shall
      have the meaning set forth in Section 13.1 hereof.

     

    1.91  “Maximum
      Credit”
shall
      mean the amount equal to $65,000,000, as reduced by any reduction thereof
      pursuant to Section 2.1(c) hereof. 

     

    1.92  “Multiemployer
      Plan”
shall
      mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is
      or was at any time during the current year or the immediately preceding six
      (6)
      years contributed to by any Borrower, Guarantor or any ERISA Affiliate and
      with
      respect to which any Borrower, Guarantor or any other Credit Party is reasonably
      expected to incur any material liability.

     

    1.93  “New
      Subsidiary”
shall
      have the meaning given to such term in Section 9.10(i) hereof.

     

    1.94  “Non-Excluded
      Taxes”
shall
      have the meaning given to such term in Section 6.4(c) hereof.

     

    1.95  “Non-U.S.
      Lender”
shall
      have the meaning given to such term in Section 6.4(e) hereof.

     

    1.96  “Obligations”
shall
      mean any and all Loans, Letter of Credit Obligations and all other obligations,
      liabilities and indebtedness of every kind, nature and description owing by
      any
      or all of the Borrowers to Agent or any Lender and/or any of their Affiliates,
      including all obligations arising under or in connection with Bank Products,
      in
      each case including principal, interest, charges, fees, costs and expenses,
      however evidenced, whether as principal, surety, endorser, guarantor or
      otherwise, in each case, arising under this Agreement or any of the other
      Financing Agreements or on account of any Letter of Credit and all other Letter
      of Credit Obligations, whether now existing or hereafter arising, whether
      arising before, during or after the initial or any renewal term of this
      Agreement or after the commencement of any case with respect to any Borrower
      under the United States Bankruptcy Code or any similar statute (including the
      payment of interest and other amounts which would accrue and become due but
      for
      the commencement of such case, whether or not such amounts are allowed or
      allowable in whole or in part in such case), whether direct or indirect,
      absolute or contingent, joint or several, due or not due, primary or secondary,
      liquidated or unliquidated, or secured or unsecured.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    1.97  “Operating
      Company”
shall
      mean Newport Fab, LLC (doing business as Jazz Semiconductor Operating Company),
      a Delaware limited liability company, and its successors and
      assigns.

     

    1.98  “Original
      Closing Date”
shall
      mean January 6, 2006.

     

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

     

    1.100  “Parent
      Guarantor”
shall
      mean Jazz Technologies, Inc., a Delaware corporation, and its successors and
      assigns.

     

    1.101  “Participant”
shall
      mean any financial institution that acquires and holds a participation in the
      interest of any Lender in any of the Loans and Letters of Credit in conformity
      with the provisions of Section 13.7 of this Agreement governing
      participations.

     

    1.102  “Pension
      Plan”
shall
      mean a pension plan (as defined in Section 3(2) of ERISA) subject to Title
      IV of
      ERISA which any Borrower or Guarantor sponsors, maintains, or to which any
      Borrower, Guarantor or any ERISA Affiliate makes, is making, or is obligated
      to
      make contributions, other than a Multiemployer Plan and with respect to which
      any Borrower, any Guarantor or any other Credit Party is reasonably expected
      to
      incur any material liability.

     

    1.103  “Permits”
shall
      have the meaning given to such term in Section 8.7(b) hereof.

     

    1.104  “Permitted
      Holders”
shall
      mean the persons listed on Schedule 1.104 hereto, Affiliates thereof and their
      respective successors and assigns.

     

    1.105  “Person”
or
      “person”
shall
      mean any individual, sole proprietorship, partnership, corporation (including
      any corporation which elects subchapter S status under the Code), limited
      liability company, limited liability partnership, business trust, unincorporated
      association, joint stock corporation, trust, joint venture or other entity
      or
      any government or any agency or instrumentality or political subdivision
      thereof.

     

    1.106  “Plan”
shall
      mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any
      Borrower or Guarantor sponsors, maintains, or to which it makes, is making,
      or
      is obligated to make contributions, or in the case of a Multiemployer Plan
      has
      made contributions at any time during the immediately preceding six (6) plan
      years and with respect to which any Borrower, any Guarantor or any other Credit
      Party is reasonably expected to incur any material liability.

     

    1.107  “Prime
      Rate”
shall
      mean the rate from time to time publicly announced by Wachovia Bank, National
      Association, or its successors, as its prime rate, whether or not such announced
      rate is the best rate available at such bank.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    1.108  “Prime
      Rate Loans”
shall
      mean any Loans or portion thereof on which interest is payable based on the
      Prime Rate in accordance with the terms thereof.

     

    1.109  “Pro
      Rata Share”
shall
      mean as to any Lender, the fraction (expressed as a percentage) the numerator
      of
      which is such Lender's Commitment and the denominator of which is the aggregate
      amount of all of the Commitments of Lenders, as adjusted from time to time
      in
      accordance with the provisions of Section 13.7 hereof; provided,
      that,
      if the
      Commitments have been terminated, the numerator shall be the unpaid amount
      of
      such Lender's Loans and its interest in the Letters of Credit and the
      denominator shall be the aggregate amount of all unpaid Loans and Letters of
      Credit.

     

    1.110  “Qualified
      Cash”
shall
      mean, as of any date of determination, the amount of unrestricted cash and
      Cash
      Equivalents of Borrowers, Guarantors and their respective Subsidiaries that
      is
      in deposit accounts or in securities accounts or investment property accounts,
      or any combination thereof, and each of which deposit accounts or securities
      accounts or investment property accounts is subject to the first priority lien
      of Agent pursuant to a Deposit Account Control Agreement or Investment Property
      Control Agreement, as applicable, and not otherwise encumbered other than by
      the
      banker's lien or right of offset of the bank or securities intermediary or
      commodity intermediary at which such account is located, and is maintained
      by a
      branch office of the bank or securities intermediary or commodity intermediary
      located within the United States, and is set forth on Schedule 1.110 (as such
      Schedule may be updated from time to time upon the opening of any such account
      in accordance with Section 5.2(d) or Section 5.2(e), as applicable);
provided,
      that
      "Qualified Cash" shall not include any such amount of unrestricted cash and
      Cash
      Equivalents that is (a) in any such accounts or combination thereof (i)
      specifically and exclusively used for payroll, payroll taxes and other employee
      wage and benefit payments to or for the benefit of any Borrower’s, any
      Guarantor’s or any such Subsidiary's salaried employees, or (ii) that are
      operating, overnight or other accounts, the amounts in which are subject to
      being debited in order to honor or otherwise satisfy checks written or issued
      thereon, but only to the extent checks actually have been written in respect
      of
      such amounts, and (b) in any Blocked Account to the extent such amounts have
      been applied against the Loans pursuant to Section 6.3(b) hereof; and
further provided,
      that
      "Qualified Cash" shall only include such amounts of unrestricted cash and Cash
      Equivalents for which Borrowers or Guarantors have provided evidence thereof
      with respect to such accounts to Agent, which evidence shall be reasonably
      satisfactory to Agent.

     

    1.111  “Real
      Property”
shall
      mean, as to any Borrower or Guarantor, all now owned and hereafter acquired
      real
      property of such Borrower or such Guarantor, including leasehold interests,
      together with all buildings, structures, and other improvements located thereon
      and all licenses, easements and appurtenances relating thereto, wherever
      located.

     

    1.112  “Receivables”
shall
      mean all of the following now owned or hereafter arising or acquired property
      of
      each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late
      charges, penalties, collection fees and other amounts due or to become due
      or
      otherwise payable in connection with any Account; (c) all payment intangibles
      of
      such Borrower or Guarantor; (d) letters of credit, indemnities, guarantees,
      security or other deposits and proceeds thereof issued payable to any Borrower
      or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor
      in connection with any Account; or (e) all other accounts, contract rights,
      chattel paper, instruments, notes, general intangibles and other forms of
      obligations owing to any Borrower or Guarantor, whether from the sale and lease
      of goods or other property, licensing of any property (including Intellectual
      Property or other general intangibles), rendition of services or from loans
      or
      advances by any Borrower or Guarantor or to or for the benefit of any third
      person (including loans or advances to any Affiliates or Subsidiaries of any
      Borrower or Guarantor) or otherwise associated with any Accounts, Inventory
      or
      general intangibles of any Borrower or Guarantor (including, without limitation,
      choses in action, causes of action, tax refunds, tax refund claims, any funds
      which may become payable to any Borrower or Guarantor in connection with the
      termination of any Plan or other employee benefit plan and any other amounts
      payable to any Borrower or Guarantor from any Plan or other employee benefit
      plan, rights and claims against carriers and shippers, rights to
      indemnification, business interruption insurance and proceeds thereof, casualty
      or any similar types of insurance and any proceeds thereof and proceeds of
      insurance covering the lives of employees on which any Borrower or Guarantor
      is
      a beneficiary).

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    1.113  “Records”
shall
      mean, as to each Borrower and Guarantor, all of such Borrower's and Guarantor’s
      present and future books of account of every kind or nature, purchase and sale
      agreements, invoices, ledger cards, bills of lading and other shipping evidence,
      statements, correspondence, memoranda, credit files and other data relating
      to
      the Collateral or any account debtor, together with the tapes, disks, diskettes
      and other data and software storage media and devices, file cabinets or
      containers in or on which the foregoing are stored (including any rights of
      any
      Borrower or Guarantor with respect to the foregoing maintained with or by any
      other person).

     

    1.114  “Reference
      Bank”
shall
      mean Wachovia Bank, National Association, or such other bank as Agent may from
      time to time designate.

     

    1.115  “Register”
shall
      have the meaning set forth in Section 13.7 hereof.

     

    1.116  “Required
      Lenders”
shall
      mean, at any time, those Lenders whose pro rata share of the obligations to
      make
      Loans and/or issue Letters of Credit, as the case may be, pursuant to Section
      2
      hereof aggregate at least fifty and one tenth of one percent (50.1%) of all
      such
      obligations, or if such obligations shall have been terminated or have otherwise
      expired, Lenders to whom at least fifty and one tenth of one percent (50.1%)
      of
      the then outstanding Obligations are owing.

     

    1.117  “Reserves”
shall
      mean as of any date of determination, such amounts as Agent may from time to
      time establish and revise in good faith reducing the amount of Loans and Letters
      of Credit which would otherwise be available to Borrowers under the lending
      formula(s) provided for herein: (a) to reflect events, conditions, contingencies
      or risks which, as determined by Agent in good faith, materially adversely
      affect, or would have a reasonable likelihood of materially adversely affecting,
      (i) the Collateral constituting Accounts or Equipment, its value or the amount
      that would reasonably be likely to be received by Agent from the sale or other
      disposition or realization upon such Collateral, or (ii) the security interests
      and other rights of Agent in the Collateral constituting Accounts or Equipment
      (including the enforceability, perfection and priority thereof) or (b) to
      reflect Agent's good faith belief that any collateral report relating to
      Accounts or Equipment furnished by or on behalf of any Borrower or any Guarantor
      to Agent is or may have been incomplete, inaccurate or misleading in any
      material respect or (c) to reflect outstanding Letters of Credit as provided
      in
      Section 2.2 hereof or (d) in respect of any state of facts which Agent
      determines in good faith constitutes a Default or an Event of Default. Without
      limiting the generality of the foregoing, Reserves may, at Agent’s option, be
      established to reflect: (A) dilution with respect to the Accounts (based on
      the
      ratio of the aggregate amount of non-cash reductions in Accounts, other than
      reductions specifically reserved in Customer Concession Reserves, for any period
      to the aggregate dollar amount of the sales of such Borrower for such period)
      as
      calculated by Agent for any period is or is reasonably anticipated to be greater
      than five percent (5%); (B) except as provided in the Customer Concession
      Reserve, returns, discounts, claims, credits and allowances of any nature that
      are not paid pursuant to the reduction of Accounts; (C) amounts past due to
      owners and lessors of premises where any Collateral is located, other than
      for
      those locations where Agent has received a Collateral Access Agreement that
      Agent has accepted in writing; (D) the Customer Concession Reserve; (E) the
      Sales Return Reserve; (F) the Bank Products Reserve; and (G) any other Reserve,
      including without limitation any Reserve for deferred revenue to the extent
      reserved by any Borrower on its books and records consistent with its historical
      practices. The amount of any Reserve established by Agent shall have a
      reasonable relationship to the event, condition, Event of Default or other
      matter which is the basis for such reserve as determined by Agent in good faith.
      To the extent Agent may revise the lending formulas used to determine the
      Borrowing Base or establish new criteria (with respect to new information,
      circumstances or facts) or revise existing criteria for Eligible Accounts or
      Eligible Equipment so as to address any circumstances, condition, event or
      contingency in a manner satisfactory to Agent, Agent shall not establish a
      Reserve for the same purpose or a Reserve that is otherwise duplicative of
      any
      other Reserve or change in criteria. 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    1.118  “Responsible
      Officer”
shall
      mean, with respect to any Person, the chief executive officer, president, chief
      financial officer, treasurer, or any equivalent senior officer of such Person
      having the duties of any such officer.

     

    1.119  “Sales
      Return Reserve”
shall
      mean a Reserve established for potential future returned sale items to any
      Borrower, which Reserve shall be calculated quarterly based on returns made
      during the twelve-month period prior to, and ending on, any date of
      determination and to the extent reflected on such Borrower's books and records
      consistent with its historical practices.

     

    1.120  “Secured
      Parties”
shall
      mean, collectively, (a) Agent, (b) Wachovia Bank, National Association, (c)
      Lenders, and (d) Bank Product Providers (to the extent approved by
      Agent).

     

    1.121  “Senior
      Notes”
shall
      mean the 8% Convertible Senior Notes due 2011, or “Securities” as defined in the
      Senior Note Indenture.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    1.122  “Senior
      Note Indenture”
shall
      mean that certain Indenture, dated as of December 19, 2006, by and among Parent
      Guarantor, certain Affiliates of Parent Guarantor, and U.S. Bank National
      Association, as trustee.

     

    1.123  “SiGe
      Technology License Agreements”
shall
      mean collectively: (i) IP License Agreement between Specialtysemi, Operating
      Company and Conexant dated March 12, 2002, as amended, supplemented or otherwise
      modified from time to time; (ii) Transferred IP License Agreement between
      Specialtysemi, Operating Company and Conexant dated March 12, 2002, as amended,
      supplemented or otherwise modified from time to time; and (iii) License
      Agreement between Jazz and Conexant dated as of July 2, 2004.

     

    1.124  “Skyworks”
shall
      mean Skyworks Solutions, Inc., a Delaware corporation.

     

    1.125  “Solvent”
shall
      mean, at any time with respect to any Person, that at such time such Person
      (a)
      is able to pay its debts as they mature and has (and has a reasonable basis
      to
      believe it will continue to have) sufficient capital (and not unreasonably
      small
      capital) to carry on its business consistent with its practices as of the date
      hereof, and (b) the assets and properties of such Person at a fair valuation
      (and including as assets for this purpose at a fair valuation all rights of
      subrogation, contribution or indemnification arising pursuant to any guarantees
      given by such Person) are greater than the Indebtedness of such Person, and
      including subordinated and contingent liabilities computed at the amount which,
      such person has a reasonable basis to believe, represents an amount which can
      reasonably be expected to become an actual or matured liability (and including
      as to contingent liabilities arising pursuant to any guarantee the face amount
      of such liability as reduced to reflect the probability of it becoming a matured
      liability).

     

    1.126  “Special
      Agent Advances”
shall
      have the meaning set forth in Section 12.21(a) hereof.

     

    1.127  Specialtysemi”
shall
      mean Specialtysemi, Inc., a Delaware corporation (now named "Jazz Semiconductor,
      Inc.").

     

    1.128  “Subsidiary”
or
      “subsidiary”
shall
      mean, with respect to any Person, any corporation, limited liability company,
      limited liability partnership or other limited or general partnership, trust,
      association or other business entity of which an aggregate of at least a
      majority of the outstanding Capital Stock or other interests entitled to vote
      in
      the election of the board of directors of such corporation (irrespective of
      whether, at the time, Capital Stock of any other class or classes of such
      corporation shall have or might have voting power by reason of the happening
      of
      any contingency), managers, trustees or other controlling persons, or an
      equivalent controlling interest therein, of such Person is, at the time,
      directly or indirectly, owned by such Person and/or one or more subsidiaries
      of
      such Person.

     

    1.129  “Subsidiary
      Investment”
shall
      have the meaning given to such term in Section 9.10(i) hereof.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    1.130  “Target”
shall
      have the meaning given to such term in Section 9.10(i) hereof.

     

    1.131  “Trading
      With the Enemy Act”
shall
      have the meaning given to such term in Section 9.20 hereof.

     

    1.132  “UCC”
shall
      mean the Uniform Commercial Code as in effect in the State of California, and
      any successor statute, as in effect from time to time (except that terms used
      herein which are defined in the Uniform Commercial Code as in effect in the
      State of California on the date hereof shall continue to have the same meaning
      notwithstanding any replacement or amendment of such statute except as Agent
      may
      otherwise determine).

     

    1.133  “U.S.”
or
      “United
      States”
shall
      mean the United States of America.

     

    1.134  “voidable
      transfers”
shall
      have the meaning set forth in Section 12.9.

     

    1.135  “Voting
      Stock”
shall
      mean with respect to any Person, (a) one (1) or more classes of Capital Stock
      of
      such Person having general voting powers to elect at least a majority of the
      board of directors, managers or trustees of such Person, irrespective of whether
      at the time Capital Stock of any other class or classes have or might have
      voting power by reason of the happening of any contingency, and (b) any Capital
      Stock of such Person convertible or exchangeable without restriction at the
      option of the holder thereof into Capital Stock of such Person described in
      clause (a) of this definition.

     

    1.136  “Wachovia”
shall
      mean Wachovia Capital Finance Corporation (Western), a California corporation,
      in its individual capacity, and its successors and assigns.

     

    SECTION
      2.  CREDIT
      FACILITIES

     

    2.1  Loans.

     

    (a)  Subject
      to and upon the terms and conditions contained herein, each Lender severally
      (and not jointly) agrees to make its Pro Rata Share of revolving loans to
      Borrowers from time to time on any Business Day on or after the Effective Date
      in amounts requested by Borrowers up to the aggregate amount outstanding for
      all
      Lenders at any time equal to the lesser of: (i) the Borrowing Base, (ii) an
      amount equal to the Maximum Credit minus
      $5,000,000, or (iii) an amount equal to (A) the Accounts Sublimit plus
      (B) the
      Equipment Sublimit minus
      (C)
      $5,000,000.

     

    (b)  Except
      in
      Agent's discretion, at no time shall, the aggregate amount of the outstanding
      Loans and the Letter of Credit Obligations exceed an amount equal to the lesser
      of: (i) the Borrowing Base, (ii) an amount equal to the Maximum Credit
minus
      $5,000,000, or (iii) an amount equal to (A) the Accounts Sublimit plus
      (B) the
      Equipment Sublimit minus
      (C)
      $5,000,000. If the event set forth in the preceding sentence of this Section
      2.1(b) shall have occurred, such event shall not limit, waive or otherwise
      affect any rights of Agent or Lenders in such circumstances or on any future
      occasions, and Borrowers shall, upon demand by Agent, which may be made at
      any
      time or from time to time, promptly repay to Agent the entire amount of any
      such
      excess that results from the occurrence of any such event for which payment
      is
      demanded. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (c)  By
      providing ten (10) Business Days' written notice to Agent, Borrowers may request
      that the amount set forth in the definition of "Maximum Credit" hereof be
      reduced in an amount or amounts which shall not cause such amount set forth
      in
      such definition to be less than $30,000,000, which reduction shall be in
      increments of no less than $5,000,000; provided,
      that no
      Default or Event of Default shall have occurred and be continuing prior to
      or
      after giving effect to any such reduction; and further provided,
      that
      Borrowers may not make any such request more than two (2) times per year. Upon
      giving effect to such reduction, the amounts set forth in the definitions of
      “Accounts Sublimit” and “Equipment Sublimit” shall be reduced pro rata with such
      reduction.

     

    2.2  Letters
      of Credit.

     

    (a)  Subject
      to and upon the terms and conditions contained herein and in the Letter of
      Credit Documents, at the request of Borrowers, Agent agrees to provide or
      arrange for the account of Borrowers one or more Letters of Credit, for the
      ratable risk of each Lender according to its Pro Rata Share, containing terms
      and conditions acceptable to Agent and the issuer thereof.

     

    (b)  Borrowers
      shall give Agent three (3) Business Days’ prior written notice of its request
      for the issuance of a Letter of Credit. Such notice shall be irrevocable and
      shall specify the original face amount of the Letter of Credit requested, the
      effective date (which date shall be a Business Day and in no event shall be
      a
      date less than ten (10) days prior to the end of the then current term of this
      Agreement) of issuance of such requested Letter of Credit, whether such Letter
      of Credit may be drawn in a single or in partial draws, the date on which such
      requested Letter of Credit is to expire (which date shall be a Business Day
      and
      shall not be more than one year from the date of issuance), the purpose for
      which such Letter of Credit is to be issued, and the beneficiary of the
      requested Letter of Credit. Borrowers shall attach to such notice the proposed
      terms of the Letter of Credit. The renewal or extension of any Letter of Credit
      shall, for purposes hereof, be treated in all respects the same as the issuance
      of a new Letter of Credit hereunder.

     

    (c)  In
      addition to being subject to the satisfaction of the applicable conditions
      precedent contained in Section 4 hereof and the other terms and conditions
      contained herein, no Letter of Credit shall be available unless each of the
      following conditions precedent have been satisfied in a manner reasonably
      satisfactory to Agent: (i) Borrowers shall have delivered to the proposed issuer
      of such Letter of Credit at such times and in such manner as such proposed
      issuer may require, an application, in form and substance reasonably
      satisfactory to such proposed issuer and Agent, for the issuance of the Letter
      of Credit and such other Letter of Credit Documents as may be required pursuant
      to the terms thereof, and the form and terms of the proposed Letter of Credit
      shall be reasonably satisfactory to Agent and such proposed issuer; (ii) as
      of
      the date of issuance, no order of any court, arbitrator or other Governmental
      Authority shall purport by its terms to enjoin or restrain money center banks
      generally from issuing letters of credit of the type and in the amount of the
      proposed Letter of Credit, and no law, rule or regulation applicable to money
      center banks generally and no request or directive (whether or not having the
      force of law) from any Governmental Authority with jurisdiction over money
      center banks generally shall prohibit, or request that the proposed issuer
      of
      such Letter of Credit refrain from, the issuance of letters of credit generally
      or the issuance of such Letters of Credit; (iii) after giving effect to the
      issuance of such Letter of Credit, the Letter of Credit Obligations shall not
      exceed the Letter of Credit Limit; and (iv) the Excess Availability, prior
      to
      giving effect to any Reserves with respect to such Letter of Credit, on the
      date
      of the proposed issuance of any Letter of Credit, shall be equal to or greater
      than an amount equal to one hundred percent (100%) of the Letter of Credit
      Obligations with respect thereto. Effective on the issuance of each Letter
      of
      Credit, a Reserve shall be established in the amount set forth in Section
      2.2(c)(iv).

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (d)  Except
      in
      Agent's discretion, the amount of all outstanding Letter of Credit Obligations
      shall not at any time exceed the Letter of Credit Limit.

     

    (e)  Borrowers
      shall reimburse immediately the issuer of a Letter of Credit for any draw under
      any Letter of Credit issued for the account of Borrowers by such issuer and
      pay
      such issuer the amount of all other charges and fees payable to such issuer
      in
      connection with any Letter of Credit issued for the account of Borrowers
      immediately when due, irrespective of any claim, setoff, defense or other right
      which Borrowers, or any of them, may have at any time against such issuer or
      any
      other Person. Each drawing under any Letter of Credit or other amount payable
      in
      connection therewith when due shall constitute a request by Borrowers to Agent
      for a Prime Rate Loan in the amount of such drawing or other amount then due
      and
      shall be made by Agent on behalf of Lenders as a Loan. The date of such Loan
      shall be the date of the drawing or as to other amounts, the due date therefor.
      Any payments made by or on behalf of Agent or any Lender to an issuer and/or
      related parties in connection with any Letter of Credit shall constitute
      additional Loans to Borrowers pursuant to this Section 2.

     

    (f)  Borrowers
      and Guarantors shall indemnify and hold Agent and Lenders harmless from and
      against any and all losses, claims, damages, liabilities, costs and expenses
      which Agent or any Lender may suffer or incur in connection with any Letter
      of
      Credit and any documents, drafts or acceptances relating thereto, including
      any
      losses, claims, damages, liabilities, costs and expenses due to any action
      taken
      by any issuer or correspondent with respect to any Letter of Credit, except
      for
      such losses, claims, damages, liabilities, costs or expenses that are a direct
      result of the gross negligence or willful misconduct of Agent or any Lender.
      Each Borrower and Guarantor assumes all risks with respect to the acts or
      omissions of the drawer under or beneficiary of any Letter of Credit and for
      such purposes the drawer or beneficiary shall be deemed such Borrower's agent.
      Each Borrower and Guarantor assumes all risks for, and agrees to pay, all
      foreign, Federal, State and local taxes, duties and levies relating to any
      goods
      subject to any Letter of Credit or any documents, drafts or acceptances
      thereunder. Each Borrower and Guarantor hereby releases and holds Agent and
      Lenders harmless from and against any acts, waivers, errors, delays or
      omissions, with respect to or relating to any Letter of Credit, except for
      the
      gross negligence or willful misconduct of Agent or any Lender. The provisions
      of
      this Section 2.2(f) shall survive the payment of Obligations and the termination
      of this Agreement.

     

    (g)  In
      connection with Inventory purchased pursuant to any Letter of Credit, Borrowers
      and Guarantors shall, at Agent’s request, instruct all suppliers, carriers,
      forwarders, customs brokers, warehouses or others receiving or holding cash,
      checks, Inventory, documents or instruments in which Agent holds a security
      interest that upon Agent’s request, such items are to be delivered to Agent
      and/or subject to Agent’s order, and if they shall come into any Borrower’s or
      Guarantor’s possession, to deliver them, upon Agent's request, to Agent in their
      original form. Except as otherwise provided herein, Agent shall not exercise
      such right to request such items so long as no Event of Default shall exist
      or
      have occurred and be continuing. Except as Agent may otherwise specify,
      Borrowers shall designate Agent or the issuer of the Letter of Credit related
      thereto, as the consignee on all bills of lading and other negotiable and
      non-negotiable documents.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (h)  Each
      Borrower and Guarantor hereby irrevocably authorizes and directs any issuer
      of a
      Letter of Credit to name such Borrower or Guarantor as the account party therein
      and to deliver to Agent all instruments, documents and other writings and
      property received by issuer pursuant to the Letter of Credit and to accept
      and
      rely upon Agent’s instructions and agreements with respect to all matters
      arising in connection with the Letter of Credit or the Letter of Credit
      Documents with respect thereto. Nothing contained herein shall be deemed or
      construed to grant any Borrower or Guarantor any right or authority to pledge
      the credit of Agent or any Lender in any manner. Agent and Lenders shall have
      no
      liability of any kind with respect to any Letter of Credit provided by an issuer
      other than Agent unless Agent has duly executed and delivered to such issuer
      the
      application or a guarantee or indemnification in writing with respect to such
      Letter of Credit. Borrowers and Guarantors shall be bound by any reasonable
      interpretation made in good faith by Agent, or any other issuer or correspondent
      under or in connection with any Letter of Credit or any documents, drafts or
      acceptances thereunder, notwithstanding that such interpretation may be
      inconsistent with any instructions of any Borrower or Guarantor.

     

    (i)  Immediately
      upon the issuance or amendment of any Letter of Credit, each Lender shall be
      deemed to have irrevocably and unconditionally purchased and received, without
      recourse or warranty, an undivided interest and participation to the extent
      of
      such Lender’s Pro Rata Share of the liability with respect to such Letter of
      Credit and the obligations of Borrowers with respect thereto (including all
      Letter of Credit Obligations with respect thereto). Each Lender shall
      absolutely, unconditionally and irrevocably assume, as primary obligor and
      not
      as surety, and be obligated to pay to the issuer of any such Letter of Credit
      therefor and discharge when due, its Pro Rata Share of all of such obligations
      arising under such Letter of Credit. Without limiting the scope and nature
      of
      each Lender’s participation in any Letter of Credit, to the extent that the
      issuer has not been reimbursed or otherwise paid as required hereunder or under
      any such Letter of Credit, each such Lender shall pay to the issuer its Pro
      Rata
      Share of such unreimbursed drawing or other amounts then due to issuer in
      connection therewith.

     

    (j)  The
      obligations of Borrowers to pay each Letter of Credit Obligations and the
      obligations of Lenders to make payments to Agent for the account of any issuer
      with respect to Letters of Credit shall be absolute, unconditional and
      irrevocable and shall be performed strictly in accordance with the terms of
      this
      Agreement under any and all circumstances, whatsoever, notwithstanding the
      occurrence or continuance of any Default, Event of Default, the failure to
      satisfy any other condition set forth in Section 4 or any other event or
      circumstance. If such amount is not made available by a Lender when due, Agent
      shall be entitled to recover such amount on demand from such Lender with
      interest thereon, for each day from the date such amount was due until the
      date
      such amount is paid to Agent at the interest rate then payable by any Borrower
      in respect of Loans that are Prime Rate Loans. Any such reimbursement shall
      not
      relieve or otherwise impair the obligation of Borrowers to reimburse the issuer
      under any Letter of Credit or make any other payment in connection
      therewith.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    (k)  So
      long
      as no Event of Default exists or has occurred and is continuing, any Borrower
      may, after notice to Agent, (i) approve or resolve any questions of
      non-compliance of documents, (ii) give any instructions as to acceptance or
      rejection of any documents or goods, (iii) execute any and all applications
      for
      steamship or airway guaranties, indemnities or delivery orders, and (iv) with
      Agent's consent, grant any extensions of the maturity of, time of payment for,
      or time of presentation of, any drafts, acceptances, or documents, and agree
      to
      any amendments, renewals, extensions, modifications, changes or cancellations
      of
      any of the terms or conditions of any of the Letter of Credit
      Documents.

     

    (l)  At
      any
      time an Event of Default exists or has occurred and is continuing, Agent shall
      have the right and authority to, and none of the Borrowers shall, without the
      prior written consent of Agent, (i) approve or resolve any questions of
      non-compliance of documents, (ii) give any instructions as to acceptance or
      rejection of any documents or goods, (iii) execute any and all applications
      for
      steamship or airway guaranties, indemnities or delivery orders, (iv) grant
      any
      extensions of the maturity of, time of payments for, or time of presentation
      of,
      any drafts, acceptances, or documents, and (v) agree to any amendments,
      renewals, extensions, modifications, changes or cancellations of any of the
      terms or conditions of any of the Letter of Credit Documents. Agent may take
      such actions either in its own name or in any Borrower's name.

     

    (m)  Any
      rights, remedies, duties or obligations granted or undertaken by any Borrower
      to
      any issuer or correspondent in any application for any Letter of Credit, or
      any
      other agreement in favor of any issuer or correspondent relating to any Letter
      of Credit, shall be deemed to have been granted or undertaken by such Borrower
      to Agent. Any duties or obligations undertaken by Agent to any issuer or
      correspondent in any application for any Letter of Credit, or any other
      agreement by Agent in favor of any issuer or correspondent relating to any
      Letter of Credit, shall be deemed to have been undertaken by Borrowers to Agent
      and to apply in all respects to Borrowers.

     

    2.3  Commitments.
      The
      aggregate amount of each Lender’s Pro Rata Share of the Loans and Letter of
      Credit Obligations shall not exceed the amount of such Lender’s Commitment, as
      the same may from time to time be amended in accordance with the provisions
      hereof.

     

    SECTION
      3.  INTEREST
      AND FEES

     

    3.1  Interest.

     

    (a)  Borrowers
      shall pay to Agent, for the benefit of Lenders, interest on the outstanding
      principal amount of the Loans at the Interest Rate. All interest accruing
      hereunder on and after the date of any Event of Default and during the
      continuation thereof or termination hereof shall be payable on
      demand.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    (b)  Borrowers
      may from time to time request Eurodollar Rate Loans or may request that Prime
      Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar
      Rate Loans continue for an additional Interest Period. Such request from
      Borrowers shall be received at least three (3) Business Days prior to the end
      of
      the applicable Interest Period and shall specify the amount of the Eurodollar
      Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar
      Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject
      to the limits set forth below) and the Interest Period to be applicable to
      such
      Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
      after receipt by Agent of such a request from Borrowers and after the end of
      the
      applicable Interest Period, such Eurodollar Rate Loans shall be made or Prime
      Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
      Loans shall continue, as the case may be, provided,
      that,
      (i) no
      Default or Event of Default shall exist or have occurred and be continuing,
      (ii)
      no party hereto shall have sent any notice of termination of this Agreement,
      (iii) Borrowers shall have complied with such customary procedures as are
      established by Agent and specified by Agent to Borrowers from time to time
      for
      requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4)
      Interest Periods may be in effect at any one time, (v) the aggregate amount
      of
      the Eurodollar Rate Loans must be in an amount not less than $3,000,000 or
      an
      integral multiple of $250,000 in excess thereof, (vi) the maximum amount of
      the
      Eurodollar Rate Loans in the aggregate at any time requested by Borrowers shall
      not exceed the amount equal to the lowest principal amount of the Loans which
      it
      is anticipated will be outstanding during the applicable Interest Period, in
      each case as determined by Borrower in good faith, and (vii) Agent and each
      Lender shall have determined that the Interest Period or Adjusted Eurodollar
      Rate is available to Agent and such Lender through the Reference Bank and can
      be
      readily determined as of the date of the request for such Eurodollar Rate Loan
      by Borrowers. Any request by Borrowers for Eurodollar Rate Loans or to convert
      Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar
      Rate Loans shall be irrevocable. Notwithstanding anything to the contrary
      contained herein, Agent, Lenders and Reference Bank shall not be required to
      purchase United States Dollar deposits in the London interbank market or other
      applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
      provisions hereof shall be deemed to apply as if Agent, Lenders and Reference
      Bank had purchased such deposits to fund the Eurodollar Rate Loans.

     

    (c)  Any
      Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon
      the
      last day of the applicable Interest Period, unless Agent has received and
      approved a request to continue such Eurodollar Rate Loan at least three (3)
      Business Days prior to such last day in accordance with the terms hereof. Any
      Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent to
      Borrowers, be subsequently converted to Prime Rate Loans upon termination of
      this Agreement. Borrowers shall pay to Agent, for the benefit of Lenders, upon
      demand by Agent (or Agent may, at its option, charge any loan account of any
      Borrower) any amounts required to compensate any Lender, the Reference Bank
      or
      any Participant for any loss (including loss of anticipated profits), cost
      or
      expense incurred by such person, as a result of the conversion of Eurodollar
      Rate Loans to Prime Rate Loans pursuant to any of the foregoing other than
      any
      such conversion as set forth in the first sentence of this subsection
      (c).

     

    (d)  Interest
      shall be payable by Borrowers to Agent, for the account of Lenders, monthly
      in
      arrears not later than the first day of each calendar month commencing on March
      1, 2007 and shall be calculated on the basis of a three hundred sixty (360)
      day
      year and actual days elapsed. The interest rate on non-contingent Obligations
      (other than Eurodollar Rate Loans) shall increase or decrease by an amount
      equal
      to each increase or decrease in the Prime Rate effective on the day any change
      in such Prime Rate is announced. In no event shall charges constituting interest
      payable by Borrowers to Agent and Lenders exceed the maximum amount or the
      rate
      permitted under any applicable law or regulation, and if any such part or
      provision of this Agreement is in contravention of any such law or regulation,
      such part or provision shall be deemed amended to conform thereto.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    3.2  Fees.

     

    (a)  Borrowers
      shall pay to Agent, for the account of Lenders, monthly, an unused line fee
      at a
      rate equal to three-eighths of one percent (0.375%) per annum calculated upon
      the amount by which (i)
      the
      lesser of (A) the Maximum Credit minus
      $5,000,000, or (B) the sum of the Accounts Sublimit plus
      the
      Equipment Sublimit minus
      $5,000,000, exceeds (ii)
      the
      average daily principal balance of the outstanding Loans and Letters of Credit
      during the immediately preceding month (or part thereof) while this Agreement
      is
      in effect and for so long thereafter as any of the Obligations are outstanding,
      which fee shall be payable on the first day of each month in
      arrears.

     

    (b)  In
      the
      case of letters of credit, Borrowers shall pay to Agent, for the account of
      Lenders, a fee at a rate equal to one and one-quarter percent (1.25%) per annum
      on the average daily maximum amount available to be drawn under all of such
      Letters of Credit for the immediately preceding month (or part thereof), payable
      in arrears as of the first day of each succeeding month, computed for each
      day
      from the date of issuance to the date of expiration; except that Borrowers
      shall
      pay, at Agent’s option, without notice, such fee at a rate two percent (2%)
      greater than the otherwise applicable rate on such average daily maximum amount
      for: (i) the period from and after the date of termination hereof until Lenders
      have received full and final payment of all Obligations (notwithstanding entry
      of a judgment against any Borrower or Guarantor) and (ii) the period from and
      after the date of the occurrence of an Event of Default for so long as such
      Event of Default is continuing as determined by Agent. Such letter of credit
      fees shall be calculated on the basis of a three hundred sixty (360) day year
      and actual days elapsed and the obligations of Borrowers to pay such fee shall
      survive the termination of this Agreement. In addition to the letter of credit
      fees provided above, Borrowers shall pay to the issuer of any Letter of Credit
      a
      fronting fee at a rate equal to one-eighth of one percent (0.125%) per annum
      on
      the undrawn face amount of such Letter of Credit, as well as the customary
      charges from time to time of such issuer with respect to the issuance,
      amendment, transfer, administration, cancellation and conversion of, and
      drawings under, such Letters of Credit..

     

    (c)  Borrowers
      shall pay to Agent the other fees and amounts set forth in the Fee Letter in
      the
      amounts and at the times specified therein. To the extent payment in full of
      the
      applicable fee is received by Agent from Borrowers on or about the date hereof,
      Agent shall pay to each Lender its share of such fees in accordance with the
      terms of the arrangements of Agent with such Lender. 

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    3.3  Changes
      in Laws and Increased Costs of Loans.

     

    (a)  If
      after
      the date hereof, either (i) any change in, or in the interpretation of, any
      law
      or regulation is introduced, including, without limitation, with respect to
      reserve requirements, applicable to any Lender or any banking or financial
      institution from whom any Lender borrows funds or obtains credit (a
“Funding
      Bank”),
      or
      (ii) a Funding Bank or any Lender complies with any future guideline or request
      from any central bank or other Governmental Authority in effect after the date
      hereof or (iii) a Funding Bank or any Lender determines that the adoption of
      any
      applicable law, rule or regulation regarding capital adequacy, or any change
      therein, 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, in each case, as in effect after
      the
      date hereof, has or would have the effect described below, or a Funding Bank
      or
      any Lender complies 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, in each case, as in effect after the date hereof, and in
      the
      case of any event set forth in this clause (iii), such adoption, change or
      compliance has or would have the direct or indirect effect of reducing the
      rate
      of return on any Lender’s capital as a consequence of its obligations hereunder
      to a level below that which such Lender could have achieved but for such
      adoption, change or compliance (taking into consideration the Funding Bank’s or
      Lender’s policies with respect to capital adequacy) by an amount deemed by such
      Lender to be material, and the result of any of the foregoing events described
      in clauses (i), (ii) or (iii) is or results in an increase in the cost to any
      Lender of funding or maintaining the Loans, the Letters of Credit or its
      Commitment, then Borrowers and Guarantors shall from time to time within 30
      days
      of receipt of a reasonably detailed written invoice therefor pay to Agent
      additional amounts sufficient to indemnify such Lender against such increased
      cost on an after-tax basis (after taking into account applicable deductions
      and
      credits in respect of the amount indemnified). A certificate as to the amount
      of
      such increased cost shall be submitted to Borrowers by Agent and shall be
      presumptively correct, absent manifest error.

     

    (b)  If
      prior
      to the first day of any Interest Period, (i) Agent shall have determined in
      good
      faith (which determination shall be presumptively correct) that, by reason
      of
      circumstances affecting the relevant market, adequate and reasonable means
      do
      not exist for ascertaining the Adjusted Eurodollar Rate for such Interest
      Period, (ii) Agent determines that the Adjusted Eurodollar Rate determined
      or to
      be determined for such Interest Period will not adequately and fairly reflect
      the cost to Lenders of making or maintaining Eurodollar Rate Loans during such
      Interest Period, or (iii) Dollar deposits in the principal amounts of the
      Eurodollar Rate Loans to which such Interest Period is to be applicable are
      not
      generally available in the London interbank market, Agent shall give telecopy
      or
      telephonic notice thereof to Borrowers as soon as practicable thereafter, and
      will also give prompt written notice to Borrowers when such conditions no longer
      exist. If such notice is given (A) any Eurodollar Rate Loans requested to be
      made on the first day of such Interest Period shall be made as Prime Rate Loans,
      (B) any Loans that were to have been converted on the first day of such Interest
      Period to or continued as Eurodollar Rate Loans shall be converted to or
      continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan
      shall be converted, on the last day of the then-current Interest Period thereof,
      to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further
      Eurodollar Rate Loans shall be made or continued as such, nor shall Borrowers
      have the right to convert Prime Rate Loans to Eurodollar Rate
      Loans.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    (c)  Notwithstanding
      any other provision herein, if the adoption of or any change in any law, treaty,
      rule or regulation or final, non-appealable determination of an arbitrator
      or a
      court or other Governmental Authority or in the interpretation or application
      thereof, in each case, occurring after the date hereof shall make it unlawful
      for Agent or any Lender to make or maintain Eurodollar Rate Loans as
      contemplated by this Agreement, (i) Agent or such Lender shall promptly give
      written notice of such circumstances to Borrowers (which notice shall be
      withdrawn whenever such circumstances no longer exist), (ii) the commitment
      of
      such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate
      Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall
      forthwith be canceled and, until such time as it shall no longer be unlawful
      for
      such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then
      have a commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan
      is
      requested and (iii) such Lender’s Loans then outstanding as Eurodollar Rate
      Loans, if any, shall be converted automatically to Prime Rate Loans on the
      respective last days of the then current Interest Periods with respect to such
      Loans or within such earlier period as required by law. If any such conversion
      of a Eurodollar Rate Loan occurs on a day which is not the last day of the
      then
      current Interest Period with respect thereto, Borrowers and Guarantors shall
      pay
      to such Lender such amounts, if any, as may be required pursuant to Section
      3.3(d) below.

     

    (d)  Borrowers
      and Guarantors shall indemnify Agent and each Lender and to hold Agent and
      each
      Lender harmless from any loss or expense which Agent or such Lender may sustain
      or incur as a consequence of (i) default by Borrowers in making a borrowing
      of,
      conversion into or extension of Eurodollar Rate Loans after Borrowers have
      given
      a notice requesting the same in accordance with the provisions of this
      Agreement, (ii) default by Borrowers in making any prepayment of a Eurodollar
      Rate Loan after Borrowers have given a notice thereof in accordance with the
      provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar
      Rate Loans on a day which is not the last day of an Interest Period with respect
      thereto. With respect to Eurodollar Rate Loans, such indemnification may include
      an amount equal to the excess, if any, of (A) the amount of interest which
      would
      have accrued on the amount so prepaid, or not so borrowed, converted or
      extended, for the period from the date of such prepayment or of such failure
      to
      borrow, convert or extend to the last day of the applicable Interest Period
      (or,
      in the case of a failure to borrow, convert or extend, the Interest Period
      that
      would have commenced on the date of such failure) in each case at the applicable
      rate of interest for such Eurodollar Rate Loans provided for herein over (B)
      the
      amount of interest (as determined by Agent or such Lender) which would have
      accrued to Agent or such Lender on such amount by placing such amount on deposit
      for a comparable period with leading banks in the interbank Eurodollar market.
      This covenant shall survive the termination of this Agreement and the payment
      of
      the Obligations.

     

    SECTION
      4.  CONDITIONS
      PRECEDENT

     

    4.1  Conditions
      Precedent to Effectiveness of this Agreement.
      Each of
      the following is a condition precedent to the effectiveness of this Agreement
      and to this Agreement amending and restating the Original Loan Agreement in
      its
      entirety:

     

    (a)  all
      requisite corporate or limited liability company action and proceedings in
      connection with this Agreement and the other Financing Agreements shall be
      reasonably satisfactory in form and substance to Agent, and Agent shall have
      received records of requisite corporate or limited liability company action
      and
      proceedings which Agent may have requested in connection therewith, such
      documents where requested by Agent or its counsel to be certified by appropriate
      corporate or limited liability company officers or Governmental Authority (and
      including a copy of the certificate of incorporation or certificate of
      formation, as the case may be, of each Borrower and Guarantor certified by
      the
      Secretary of State (or equivalent Governmental Authority) which shall set forth
      the same complete corporate or limited liability company name of such Borrower
      or Guarantor as is set forth herein and such document as shall set forth the
      organizational identification number of such Borrower or Guarantor, if one
      is
      issued in its jurisdiction of incorporation or formation);

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    (b)  Agent
      shall have received each of the following: (i) a full inventory appraisal by
      Emerald
      Technology Valuations, LLC,
      satisfactory to Agent, which confirms there is not a decline of more than ten
      percent (10%) in the balanced market values since the March 2006 appraisal,
      (ii)
      a full field examination of the business and collateral of Borrowers and
      Guarantors satisfactory to Agent and in accordance with Agent’s customary
      procedures and practices and as otherwise required by the nature of the
      businesses of Borrowers and Guarantors; and (iii) evidence, satisfactory to
      Agent, that Borrowers’ year-to-date Consolidated EBITDA as of December 31, 2006
      is at least $20,000,000;

     

    (c)  Agent
      shall have received the Collateral Access Agreements, duly executed and
      delivered by the parties thereto;

     

    (d)  the
      sum
      of the Excess Availability as determined by Agent, as of the date hereof,
plus
      Qualified Cash shall be not less than $30,000,000 after giving effect to (i)
      the
      initial Loans made or to be made and Letters of Credit issued or to be issued
      in
      connection with the initial transactions hereunder and the payment of all fees
      and expenses with respect thereto, (ii) the application of the Equity
      Contribution, and (iii) the payment of the acquisition costs and all fees and
      expenses associated with the acquisition of Jazz by Parent
      Guarantor;

     

    (e)  Agent
      shall have received, in form and substance satisfactory to Agent, Deposit
      Account Control Agreements by and among Agent, each Borrower and Guarantor,
      as
      the case may be, and each bank where such Borrower (or Guarantor) has a new
      deposit account opened after January 6, 2006 (other than any deposit account
      specifically and exclusively used for payroll, payroll taxes and other employee
      wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s
      salaried employees), in each case, duly authorized, executed and delivered
      by
      such bank and Borrower or Guarantor, as the case may be;

     

    (f)  Agent
      shall have received evidence, in form and substance satisfactory to Agent,
      that
      Agent has a valid perfected first priority security interest in all of the
      Collateral;

     

    (g)  (i)Agent
      shall have received and reviewed lien and judgment search results for the
      jurisdiction of organization of each Borrower and Guarantor, the jurisdiction
      of
      the chief executive office of each Borrower and Guarantor and all jurisdictions
      in which assets of each Borrower and Guarantor are located, which search results
      shall be in form and substance satisfactory to Agent; and (ii)
      Agent
      shall have received, in form and substance reasonably satisfactory to Agent,
      all
      releases, terminations and such other documents as Agent may request to evidence
      and effectuate the termination by all secured parties, with a lien or security
      interest on any Collateral with priority over the security interest of Agent
      granted hereby, of their respective financing arrangements with Borrowers or
      any
      Borrower, as the case may be, and the termination and release by it or them,
      as
      the case may be, of any interest in and to any assets and properties of
      Borrowers or such Borrower and each Guarantor, duly authorized, executed and
      delivered by it or each of them, including, but not limited to, (A)
      UCC
      termination statements for all UCC financing statements previously filed by
      it
      or any of them or their predecessors, as secured party and Borrowers, any
      Borrower or any Guarantor, as the case may be, as debtor; and (B)
      satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
      debt by Borrowers, any Borrower or any Guarantor, as the case may be, in favor
      of it or any of them, in form acceptable for recording with the appropriate
      Governmental Authority;

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (h)  Agent
      shall have received completed background checks with respect to Borrowers’ and
      Guarantors’ prospective senior management, the results of which are satisfactory
      to Agent;

     

    (i)  for
      verification purposes as part of the measures required by Agent pursuant to
      the
      US Patriot Act, Agent shall have received all information that Agent requests
      concerning each Borrower’s and each Guarantor’s identity, the results of which
      are satisfactory to Agent;

     

    (j)  Agent
      shall have received all financial information, projections, budgets, business
      plans, cash flows and such other information as Agent shall request from time
      to
      time, including (i) projected quarterly balance sheets, income statements,
      statements of cash flows and availability of Borrowers for the period through
      the end of the 2007 fiscal year, (ii) projected annual balance sheets, income
      statements, statements of cash flows and availability of Borrowers and
      Guarantors through the end of the 2009 fiscal year, in each case as to the
      projections described in clauses (i) and (ii), with the results and assumptions
      set forth in all of such projections in form and substance satisfactory to
      Agent, and an opening pro forma balance sheet for Borrowers and Guarantors
      in
      form and substance reasonably satisfactory to Agent, (iii) any updates or
      modifications to the projected financial statements of Jazz and its subsidiaries
      previously received by Agent, in each case in form and substance reasonably
      satisfactory to Agent and (iv) current agings of receivables, current perpetual
      inventory records and/or rollforwards of accounts and inventory through the
      Effective Date, together with supporting documentation;

     

    (k)  Agent
      shall have received evidence of insurance and loss payee endorsements required
      hereunder, in form and substance reasonably satisfactory to Agent, and
      certificates of insurance policies and/or endorsements naming Agent as loss
      payee;

     

    (l)  Agent
      shall have received, in form and substance reasonably satisfactory to Agent,
      such opinion letters of counsel to Borrowers and Guarantors with respect to
      the
      Financing Agreements and such other matters as Agent may reasonably request;
      

     

    (m)  Agent
      shall have received payment of the fees and commissions due under this Agreement
      through the date of the initial Loans or Letters of Credit and, to the extent
      invoiced, expenses incurred by Agent through such date and required to be paid
      by the Borrowers under Section 9.22 hereof, including all legal expenses, to
      the
      extent invoiced, incurred through the date of this Agreement; 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    (n)  Agent
      shall have received an Investment Property Control Agreement with respect to
      any
      investment account, securities account, commodity account or other similar
      account existing on the date hereof held by or in the name of any Borrower
      or
      Guarantor, duly executed and delivered by the parties thereto;

     

    (o)  Agent
      shall have received evidence, in form and substance satisfactory to Agent,
      that
Borrowers
      have obtained all necessary corporate governance, regulatory and SEC approval
      in
      connection with the acquisition of Borrowers which will be consummated
      substantially concurrently with the closing of the Credit Facility;

     

    (p)  Agent
      shall have received and reviewed any amendments or modifications to the
      Agreement and Plan of Merger, dated September 26, 2006 (the “Agreement
      and Plan of Merger”),
      by
      and among Parent Guarantor, Joy, Jazz and TC Group, L.L.C., made after the
      date
      of execution of such agreement, and such amendments or modifications shall
      be in
      form and substance satisfactory to Agent;

     

    (q)  Agent
      shall have received evidence, in form and substance satisfactory to Agent,
      that
      Joy has merged with and into Jazz;

     

    (r)  Agent
      shall have received evidence, in form and substance satisfactory to Agent,
      that
      at least $125,000,000 has been distributed and made available to Borrowers
      from
      a trust account established by Parent Guarantor (the “Equity
      Contribution”);

     

    (s)  Agent
      shall have received evidence, in form and substance satisfactory to Agent,
      that
      at least $100,000,000 of the proceeds from the issuance of the Senior Notes
      has
      been released from escrow to Parent Guarantor;

     

    (t)  no
      “Material Adverse Effect” (as defined in the Commitment Letter), and no material
      pending or threatened, litigation, proceeding, bankruptcy or insolvency,
      injunction, order or unpaid judgments with respect to Borrowers and Guarantors
      shall exist on the Effective Date which would constitute a default or event
      of
      default, which has not been cured or waived, under the Original Loan Agreement;
      and

     

    (u)  this
      Agreement and the other Financing Agreements and all instruments and documents
      hereunder and thereunder shall have been duly executed and delivered to Agent
      and shall be effective on or before March 31, 2007.

     

    4.2  Conditions
      Precedent to All Loans and Letters of Credit.
      The
      obligation of Lenders to make any of the Loans, including the initial Loans,
      or
      of Agent and Lenders to arrange or provide for any Letter of Credit, including
      the initial Letters of Credit, is subject to the further satisfaction of, or
      waiver of, immediately prior to or concurrently with the making of each such
      Loan or the issuance of such Letter of Credit of each of the following
      conditions precedent:

    
       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

    

    (a)  all
      representations and warranties contained herein and in the other Financing
      Agreements shall be true and correct, in all material respects, with the same
      effect as though such representations and warranties had been made on and as
      of
      the date of the making of each such Loan or providing each such Letter of Credit
      and after giving effect thereto, except to the extent that such representations
      and warranties expressly relate solely to an earlier date (in which case such
      representations and warranties shall have been true and accurate, in all
      material respects, on and as of such earlier date);

     

    (b)  no
      law,
      regulation, order, judgment or decree of any Governmental Authority shall exist,
      and no action, suit, investigation, litigation or proceeding shall be pending
      or
      threatened in any court or before any arbitrator or Governmental Authority,
      which (i) purports to enjoin, prohibit or restrain the making of the Loans
      or
      providing the Letters of Credit; 

     

    (c)  no
      event
      or condition shall exist or have occurred and be continuing since September
      26,
      2006 that has a reasonable likelihood of creating or resulting in a Material
      Adverse Effect; and

     

    (d)  no
      Default or Event of Default shall exist or have occurred and be continuing
      since
      the Effective Date and on and as of the date of the making of such Loan or
      providing each such Letter of Credit and after giving effect
      thereto.

     

    SECTION
      5.  GRANT
      AND PERFECTION OF SECURITY INTEREST

     

    5.1  Grant
      of Security Interest.
      To
      secure payment and performance of all Obligations, each Borrower and Guarantor
      hereby grants to Agent, for itself and the benefit of the Secured Parties,
      a
      continuing security interest in, and a lien upon, all personal property and
      fixtures, and interests in personal property and fixtures, of such Borrower
      or
      Guarantor, whether now owned or hereafter acquired or existing, and wherever
      located (together with all other collateral security for the Obligations at
      any
      time granted to or held or acquired by Agent or any Lender, collectively, the
      “Collateral”),
      including:

     

    (a)  all
      Accounts;

     

    (b)  all
      general intangibles, including, without limitation, all Intellectual
      Property;

     

    (c)  all
      goods, including, without limitation, Inventory and Equipment;

     

    (d)  all
      fixtures;

     

    (e)  all
      chattel paper, including, without limitation, all tangible and electronic
      chattel paper;

     

    (f)  all
      instruments, including, without limitation, all promissory notes;

     

    (g)  all
      documents;

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    (h)  all
      deposit accounts (other than deposit accounts specifically and exclusively
      used
      for payroll, payroll taxes and other employee wage and benefit payments to
      or
      for the benefit of any Borrower’s or Guarantor’s salaried
      employees);

     

    (i)  all
      letters of credit, banker’s acceptances and similar instruments and including
      all letter-of-credit rights;

     

    (j)  all
      supporting obligations and all present and future liens, security interests,
      rights, remedies, title and interest in, to and in respect of Receivables and
      other Collateral, including (i) rights and remedies under or relating to
      guaranties, contracts of suretyship, letters of credit and credit and other
      insurance related to the Collateral, (ii) rights of stoppage in transit,
      replevin, repossession, reclamation and other rights and remedies of an unpaid
      vendor, lienor or secured party, (iii) goods described in invoices, documents,
      contracts or instruments with respect to, or otherwise representing or
      evidencing, Receivables or other Collateral, including returned, repossessed
      and
      reclaimed goods, and (iv) deposits by and property of account debtors or other
      persons securing the obligations of account debtors;

     

    (k)  all
      (i)
      investment property (including securities, whether certificated or
      uncertificated, securities accounts, security entitlements, commodity contracts
      or commodity accounts); provided,
      that
      with respect to the Capital Stock of any Foreign Subsidiary of such Borrower
      or
      such Guarantor, the amount of such Capital Stock of such Foreign Subsidiary
      included as Collateral hereunder shall be limited to 65% of the Capital Stock
      of
      such Subsidiary; and (ii) monies, credit balances, deposits and other property
      of such Borrower or Guarantor now or hereafter held or received by or in transit
      to Agent, any Lender or its Affiliates or at any other depository or other
      institution from or for the account of any Borrower or Guarantor, whether for
      safekeeping, pledge, custody, transmission, collection or
      otherwise;

     

    (l)  all
      commercial tort claims, including, without limitation, those identified in
      the
      Information Certificate;

     

    (m)  to
      the
      extent not otherwise described above, all Receivables;

     

    (n)  all
      Records; and

     

    (o)  all
      products and proceeds of the foregoing, in any form, including insurance
      proceeds and all claims against third parties for loss or damage to or
      destruction of or other involuntary conversion of any kind or nature of any
      or
      all of the other Collateral.

     

    Notwithstanding
      the foregoing, "Collateral" shall not include: (a) any lease, license, permit,
      contract, property right or agreement to which any Borrower or Guarantor is
      a
      party or under which any Borrower or Guarantor has any right or interest
      (including any Intellectual Property or Equipment of such Borrower or Guarantor
      that is the subject of such lease, license, permit, contract, property right
      or
      agreement) if and only for so long as the grant of a security interest hereunder
      shall constitute or result in a breach, termination or default under any such
      lease, license, permit, contract, property right or agreement (other than to
      the
      extent that any such term would be rendered ineffective under Sections 9406,
      9407, 9408 or 9409 of the UCC or any other applicable law or principle of
      equity); provided,
      however,
      that
      such security interest shall attach immediately to any portion of such lease,
      license, permit, contract, property right or agreement that does not result
      in
      any of the consequences specified above in this paragraph; and (b) any Capital
      Stock of any Excluded Subsidiary. 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    5.2  Perfection
      of Security Interests.

     

    (a)  Each
      Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or
      its
      agent) to file at any time and from time to time such financing statements
      with
      respect to the Collateral naming Agent or its designee as the secured party
      and
      such Borrower or Guarantor as debtor, as Agent may require, and including any
      other information with respect to such Borrower or Guarantor or otherwise
      required by part 5 of Article 9 of the Uniform Commercial Code of such
      jurisdiction as may be necessary to perfect the security interest granted
      herein, together with any amendment and continuations with respect thereto,
      which authorization shall apply to all financing statements filed on, prior
      to
      or after the date hereof. Each Borrower and Guarantor hereby ratifies and
      approves all financing statements naming Agent or its designee as secured party
      and such Borrower or Guarantor, as the case may be, as debtor with respect
      to
      the Collateral (and any amendments with respect to such financing statements)
      filed by or on behalf of Agent prior to the date hereof and ratifies and
      confirms the authorization of Agent to file such financing statements (and
      amendments, if any). Each Borrower and Guarantor hereby authorizes Agent to
      adopt on behalf of such Borrower and Guarantor any symbol required for
      authenticating any electronic filing. In the event that the description of
      the
      collateral in any financing statement naming Agent or its designee as the
      secured party and any Borrower or Guarantor as debtor includes assets and
      properties of such Borrower or Guarantor that do not at any time constitute
      Collateral, whether hereunder, under any of the other Financing Agreements
      or
      otherwise, the filing of such financing statement shall nonetheless be deemed
      authorized by such Borrower or Guarantor to the extent of the Collateral
      included in such description and it shall not render the financing statement
      ineffective as to any of the Collateral or otherwise affect the financing
      statement as it applies to any of the Collateral, and each Borrower and
      Guarantor authorizes Agent to file a financing statement with a collateral
      description of "all assets" or "all personal property". Except as otherwise
      provided in this Agreement with respect to Agent's obligations to provide
      releases of Collateral or termination statements, in no event shall any Borrower
      or Guarantor at any time file, or permit or cause to be filed, any correction
      statement or termination statement with respect to any financing statement
      (or
      amendment or continuation with respect thereto) naming Agent or its designee
      as
      secured party and such Borrower or Guarantor as debtor.

     

    (b)  None
      of
      the Borrowers or Guarantors has any chattel paper (whether tangible or
      electronic) or instruments as of the date hereof, except as set forth in the
      Information Certificate. In the event that any Borrower or Guarantor shall
      be
      entitled to or shall receive any chattel paper or instrument after the date
      hereof, Borrowers and Guarantors shall promptly notify Agent thereof in writing.
      Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor
      (including by any agent or representative), such Borrower or Guarantor shall
      deliver, or cause to be delivered to Agent, all tangible chattel paper and
      instruments that such Borrower or Guarantor has or may at any time acquire,
      accompanied by such instruments of transfer or assignment duly executed in
      blank
      as Agent may from time to time specify, in each case except as Agent may
      otherwise agree; provided,
      that,
      so long as no Event of Default has occurred and is continuing, Borrowers and
      Guarantors shall not be required to deliver to Agent up to $1,000,000 in the
      aggregate of any such chattel paper or instruments and instruments of transfer
      or assignment. At Agent’s option, each Borrower and Guarantor shall, or Agent
      may at any time on behalf of any Borrower or Guarantor, cause the original
      of
      any such instrument or chattel paper to be conspicuously marked in a form and
      manner acceptable to Agent with the following legend referring to chattel paper
      or instruments as applicable: “This [chattel paper][instrument] is subject to
      the security interest of Wachovia Capital Finance Corporation (Western) and
      any
      sale, transfer, assignment or encumbrance of this [chattel paper][instrument]
      violates the rights of such secured party.”; provided,
      that,
      so long as no Event of Default has occurred and is continuing, Borrowers and
      Guarantors shall not be required to mark up to $1,000,000 in the aggregate
      of
      any such chattel paper and instruments.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (c)  In
      the
      event that any Borrower or Guarantor shall at any time hold or acquire an
      interest in any electronic chattel paper or any “transferable record” (as such
      term is defined in Section 201 of the Federal Electronic Signatures in Global
      and National Commerce Act or in Section 16 of the Uniform Electronic
      Transactions Act as in effect in any relevant jurisdiction), such Borrower
      or
      Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent’s
      request, such Borrower or Guarantor shall take, or cause to be taken, such
      actions as Agent may request to give Agent control of such electronic chattel
      paper under Section 9105 of the UCC and control of such transferable record
      under Section 201 of the Federal Electronic Signatures in Global and National
      Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
      Transactions Act, as in effect in such jurisdiction.

     

    (d)  None
      of
      the Borrowers or Guarantors has any deposit accounts as of the date hereof,
      except as set forth in the Information Certificate. No Borrower or Guarantor
      shall, directly or indirectly, after the date hereof open, establish or maintain
      any deposit account unless each of the following conditions is satisfied: (i)
      Agent shall have received not less than five (5) Business Days prior written
      notice of the intention of such Borrower or Guarantor to open or establish
      such
      account which notice shall specify in reasonable detail and specificity
      reasonably acceptable to Agent the name of the account, the owner of the
      account, the name and address of the bank at which such account is to be opened
      or established, the individual at such bank with whom such Borrower or Guarantor
      is dealing and the purpose of the account, (ii) the bank where such account
      is
      opened or maintained shall be reasonably acceptable to Agent, and (iii) on
      or
      before the opening of such deposit account, such Borrower or Guarantor shall
      deliver to Agent a Deposit Account Control Agreement with respect to such
      deposit account duly authorized, executed and delivered by such Borrower or
      Guarantor and the bank at which such deposit account is opened and maintained.
      The terms of this subsection (d) shall not apply to deposit accounts
      specifically and exclusively used for payroll, payroll taxes and other employee
      wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s
      salaried employees. Borrowers and Guarantors shall not maintain at any one
      time
      an aggregate amount of more than One Million Dollars ($1,000,000) in deposit
      accounts maintained at any location outside the United States, and Agent and
      Lenders shall not require Borrowers and Guarantors to deliver to Agent any
      Deposit Account Control Agreements otherwise required under the terms of this
      subsection (d) with respect to such deposit accounts located outside of the
      United States so long as Borrowers and Guarantors are in compliance with the
      terms of this sentence.

     

    (e)  None
      of
      the Borrowers or Guarantors owns or holds, directly or indirectly, beneficially
      or as record owner or both, any investment property, as of the date hereof,
      or
      have any investment account, securities account, commodity account or other
      similar account with any bank or other financial institution or other securities
      intermediary or commodity intermediary as of the date hereof, in each case
      except as set forth in the Information Certificate.

    
       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

    

    (i)  In
      the
      event that any Borrower or Guarantor shall be entitled to or shall at any time
      after the date hereof hold or acquire any certificated securities, such Borrower
      or Guarantor shall promptly endorse, assign and deliver the same to Agent,
      accompanied by such instruments of transfer or assignment duly executed in
      blank
      as Agent may from time to time specify. If any securities, now or hereafter
      acquired by such Borrower or Guarantor are uncertificated and are issued to
      such
      Borrower or Guarantor or its nominee directly by the issuer thereof, such
      Borrower or Guarantor shall immediately notify Agent thereof and shall (A)
      cause
      the issuer to agree to comply with instructions from Agent as to such
      securities, without further consent of any Borrower or Guarantor or such
      nominee, and (B) upon the occurrence and continuation of an Event of Default,
      arrange for Lender to become the registered owner of the
      securities.

     

    (ii)  No
      Borrower or Guarantor shall, directly or indirectly, after the date hereof
      open,
      establish or maintain any investment account, securities account, commodity
      account or any other similar account (other than a deposit account) with any
      securities intermediary or commodity intermediary unless each of the following
      conditions is satisfied: (A) Agent shall have received not less than five (5)
      Business Days prior written notice of the intention of such Borrower or
      Guarantor to open or establish such account which notice shall specify in
      reasonable detail and specificity acceptable to Agent the name of the account,
      the owner of the account, the name and address of the securities intermediary
      or
      commodity intermediary at which such account is to be opened or established,
      the
      individual at such intermediary with whom such Borrower or Guarantor is dealing
      and the purpose of the account, (B) the securities intermediary or commodity
      intermediary (as the case may be) where such account is opened or maintained
      shall be acceptable to Agent, and (C) on or before the opening of such
      investment account, securities account or other similar account with a
      securities intermediary or commodity intermediary, such Borrower or Guarantor
      shall (i) execute and deliver, and cause to be executed and delivered to Agent,
      an Investment Property Control Agreement with respect thereto duly authorized,
      executed and delivered by such Borrower or Guarantor and such securities
      intermediary or commodity intermediary, and (ii) upon the occurrence and
      continuation of an Event of Default, arrange for Agent to become the entitlement
      holder with respect to such investment property on terms and conditions
      acceptable to Agent. The terms of this subsection (e)(ii) shall not apply to
      deposit accounts specifically and exclusively used for payroll, payroll taxes
      and other employee wage and benefit payments to or for the benefit of any
      Borrower’s or Guarantor’s salaried employees.

     

    (f)  None
      of
      the Borrowers or Guarantors is the beneficiary or otherwise entitled to any
      right to payment under any letter of credit, banker’s acceptance or similar
      instrument as of the date hereof, except as set forth in the Information
      Certificate or on Schedule 1.57 hereof. In the event that any Borrower or
      Guarantor shall be entitled to or shall receive any right to payment under
      any
      letter of credit, banker’s acceptance or any similar instrument, whether as
      beneficiary thereof or otherwise after the date hereof, such Borrower or
      Guarantor shall promptly give written notice to Agent thereof; provided,
      that so
      long as no Event of Default has occurred and is continuing, Borrowers and
      Guarantors shall not be required to notify Agent in writing of up to $1,000,000
      in the aggregate of all such letters of credit, banker’s acceptances or similar
      instruments. Such Borrower or Guarantor shall immediately, as Agent may specify,
      either: (i) prior to the occurrence of an Event of Default, use all commercially
      reasonable efforts to deliver, or cause to be delivered to Agent, with respect
      to any such letter of credit, banker’s acceptance or similar instrument with a
      face value in excess of $1,000,000 in the aggregate for all such letters of
      credit, banker’s acceptances or similar instruments, the written agreement of
      the issuer and any other nominated person obligated to make any payment in
      respect thereof (including any confirming or negotiating bank), in form and
      substance reasonably satisfactory to Agent, consenting to the assignment of
      the
      proceeds of the letter of credit to Agent by such Borrower or Guarantor and
      agreeing to make all payments thereon directly to Agent or as Agent may
      otherwise direct, provided,
      that,
      upon
      the occurrence and continuation of an Event of Default, without regard to the
      face value of such letters of credit, banker’s acceptances or instruments, all
      such written agreements of such issuer and such other nominated person obligated
      to make any payment in respect thereof shall be so delivered to Agent; or (ii)
      after an Event of Default has occurred and is continuing, cause Agent to become,
      at Borrowers’ expense, the transferee beneficiary of the letter of credit,
      banker’s acceptance or similar instrument (as the case may be).

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    (g)  None
      of
      the Borrowers or Guarantors has any commercial tort claims in excess of
      $1,000,000 as of the date hereof, except as set forth in the Information
      Certificate. In the event that any Borrower or Guarantor shall at any time
      after
      the date hereof have any commercial tort claims in excess of $1,000,000, such
      Borrower or Guarantor shall promptly notify Agent thereof in writing, which
      notice shall (i) set forth in reasonable detail the basis for and nature of
      such
      commercial tort claim and (ii) include the express grant by such Borrower or
      Guarantor to Agent of a security interest in such commercial tort claim (and
      the
      proceeds thereof). In the event that such notice does not include such grant
      of
      a security interest, the sending thereof by such Borrower or Guarantor to Agent
      shall be deemed to constitute such grant to Agent. Upon the sending of such
      notice, any commercial tort claim described therein shall constitute part of
      the
      Collateral and shall be deemed included therein. Without limiting the
      authorization of Agent provided in Section 5.2(a) hereof or otherwise arising
      by
      the execution by such Borrower or Guarantor of this Agreement or any of the
      other Financing Agreements, Agent is hereby irrevocably authorized from time
      to
      time and at any time to file such financing statements naming Agent or its
      designee as secured party and such Borrower or Guarantor as debtor, or any
      amendments to any financing statements, covering any such commercial tort claim
      as Collateral. In addition, each Borrower and Guarantor shall promptly upon
      Agent’s request, execute and deliver, or cause to be executed and delivered, to
      Agent such other agreements, documents and instruments as Agent may require
      in
      connection with such commercial tort claim.

     

    (h)  None
      of
      the Borrowers or Guarantors has any goods, documents of title or other
      Collateral in the custody, control or possession of a third party as of the
      date
      hereof, except as set forth in the Information Certificate and except for goods
      located in the United States in transit to a location of a Borrower or Guarantor
      permitted herein in the ordinary course of business of such Borrower or
      Guarantor in the possession of the carrier transporting such goods. In the
      event
      that any goods, documents of title or other Collateral in excess of $1,000,000
      are at any time after the date hereof in the custody, control or possession
      of
      any other person not referred to in the Information Certificate or such
      carriers, Borrowers and Guarantors shall promptly notify Agent thereof in
      writing. Promptly upon Agent’s request, Borrowers and Guarantors shall use
      commercially reasonably efforts deliver to Agent a Collateral Access Agreement
      duly authorized, executed and delivered by such person and the Borrower or
      Guarantor that is the owner of such Collateral; provided,
      that in
      the absence of such executed Collateral Access Agreement, Agent shall establish
      a Reserve in an amount equal to two (2) months of monthly bailment, carrier
      or
      other similar fees with respect to such location.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    (i)  Each
      Borrower and Guarantor shall take any other actions reasonably requested by
      Agent from time to time to cause the attachment, perfection and first priority
      of, and the ability of Agent to enforce, the security interest of Agent in
      any
      and all of the Collateral, including, without limitation, (i) executing,
      delivering and, where appropriate, filing financing statements and amendments
      relating thereto under the UCC or other applicable law, to the extent, if any,
      that any Borrower's or Guarantor’s signature thereon is required therefor, (ii)
      causing Agent’s name to be noted as secured party on any certificate of title
      for a titled good if such notation is a condition to attachment, perfection
      or
      priority of, or ability of Agent to enforce, the security interest of Agent
      in
      such Collateral, (iii) complying with any provision of any statute, regulation
      or treaty of the United States as to any Collateral if compliance with such
      provision is a condition to attachment, perfection or priority of, or ability
      of
      Agent to enforce, the security interest of Agent in such Collateral, (iv)
      obtaining the consents and approvals of any Governmental Authority or third
      party, including, without limitation, any consent of any licensor, lessor or
      other person obligated on Collateral, upon the occurrence and continuation
      of an
      Event of Default or to the extent necessary to avoid the occurrence of a
      Material Adverse Effect, and taking all actions required by any earlier versions
      of the UCC or by other law, as applicable in any relevant
      jurisdiction.

     

    SECTION
      6.  COLLECTION
      AND ADMINISTRATION

     

    6.1  Borrowers’
      Loan Accounts.
      Agent
      shall maintain one or more loan account(s) on its books in which shall be
      recorded (a) all Loans, Letters of Credit and other Obligations and the
      Collateral, (b) all payments made by or on behalf of any Borrower or Guarantor
      and (c) all other appropriate debits and credits as provided in this Agreement,
      including fees, charges, costs, expenses and interest. All entries in the loan
      account(s) shall be made in accordance with Agent's customary practices as
      in
      effect from time to time.

     

    6.2  Statements.
      Agent
      shall render to Borrowers each month a statement setting forth the balance
      in
      Borrowers’ loan account(s) maintained by Agent for Borrowers pursuant to the
      provisions of this Agreement, including principal, interest, fees, costs and
      expenses. Each such statement shall be subject to subsequent adjustment by
      Agent
      but shall, absent manifest errors or omissions, be considered presumptively
      correct and, absent manifest errors or omissions, deemed accepted by Borrowers
      and Guarantors and conclusively binding upon Borrowers and Guarantors as an
      account stated except to the extent that Agent receives a written notice from
      Borrowers of any specific exceptions of Borrowers thereto within thirty (30)
      days after the date such statement has been mailed by Agent. Until such time
      as
      Agent shall have rendered to Borrowers a written statement as provided above,
      the balance in any Borrower's loan account(s) shall be presumptive evidence
      of
      the amounts due and owing to Agent and Lenders by Borrowers and
      Guarantors.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    6.3  Collection
      of Accounts.

     

    (a)  Subject
      to Section 6.3(d) below, Borrowers shall establish and maintain, at their
      expense, blocked accounts or lockboxes and related blocked accounts (in either
      case, “Blocked
      Accounts”),
      as
      Agent may specify, with such banks as are reasonably acceptable to Agent into
      which Borrowers shall promptly deposit and direct its account debtors to
      directly remit all payments on Receivables and all payments constituting
      proceeds of Inventory or other Collateral in the identical form in which such
      payments are made, whether by cash, check or other manner. Borrowers shall
      deliver, or cause to be delivered to Agent a Deposit Account Control Agreement
      duly authorized, executed and delivered by each bank where a Blocked Account
      is
      maintained as provided in Section 5.2 hereof (which agreement shall provide
      that
      upon notice from Agent (which shall be given upon the occurrence of any event
      set forth in Sections 6.3(d)(i) or 6.3(d)(ii) below, as applicable), such bank
      will send funds on a daily basis to the Agent Payment Account and otherwise
      take
      instructions with respect to such Blocked Account only from Agent), or at any
      time following the occurrence of any event set forth in Sections 6.3(d)(i)
      or
      6.3(d)(ii) below, Agent may become the bank’s customer with respect to any of
      the Blocked Accounts and promptly upon Agent’s request, Borrowers shall execute
      and deliver such agreements and documents as Agent may require in connection
      therewith. Upon the occurrence of any event set forth in Section 6.3(d) below,
      each Borrower and Guarantor agrees that all payments made to such Blocked
      Accounts or other funds received and collected by Agent or any Lender, whether
      in respect of the Receivables, as proceeds of Inventory or other Collateral
      or
      otherwise shall be treated as payments to Agent and Lenders in respect of the
      Obligations and therefore shall constitute the property of Agent and Lenders
      to
      the extent of the then outstanding Obligations.

     

    (b)  
      Upon the
      occurrence of any event set forth in Section 6.3(d) below, for purposes of
      calculating the amount of the Loans available to each Borrower, such payments
      will be applied (conditional upon final collection) to the Obligations on the
      Business Day of receipt by Agent of immediately available funds in the Agent
      Payment Account provided such payments and notice thereof are received in
      accordance with Agent’s usual and customary practices as in effect from time to
      time and within sufficient time to credit such Borrower's loan account on such
      day, and if not, then on the next Business Day. 

     

    (c)  Upon
      the
      occurrence of any event set forth in Section 6.3(d) below, each Borrower and
      Guarantor and their respective employees, agents and Subsidiaries shall, acting
      as trustee for Agent, receive, as the property of Agent, any monies, checks,
      notes, drafts or any other payment relating to and/or proceeds of Accounts
      or
      other Collateral which come into their possession or under their control and
      immediately upon receipt thereof, shall deposit or cause the same to be
      deposited in the Blocked Accounts, or remit the same or cause the same to be
      remitted, in kind, to Agent. In no event shall the same be commingled with
      any
      Borrower's or Guarantor’s own funds. Borrowers agree, upon the occurrence of any
      event set forth in Section 6.3(d) below, to reimburse Agent on demand for any
      amounts owed or paid to any bank or other financial institution at which a
      Blocked Account or any other deposit account or investment account is
      established or any other bank, financial institution or other person involved
      in
      the transfer of funds to or from the Blocked Accounts arising out of Agent
      's
      payments to or indemnification of such bank, financial institution or other
      person. The obligation of Borrowers to reimburse Agent for such amounts pursuant
      to this Section 6.3 shall survive the termination of this
      Agreement.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    (d)  Notwithstanding
      the foregoing in this Section 6.3, Agent shall exercise control over the Blocked
      Accounts and shall be entitled to receive payments on and/or proceeds of
      Accounts only in the event that (i)
      the
      aggregate outstanding amount of Loans and Letter of Credit Obligations shall
      be
      equal to or greater than $35,000,000 for any period of three (3) consecutive
      Business Days, or (ii)
      an Event
      of Default has occurred and is continuing. Following any exercise of control
      by
      Agent over the Blocked Accounts pursuant to clause (i) of this Section 6.3(d),
      Agent shall relinquish such control over the Blocked Accounts if at any time
      thereafter, for a period equal to or greater than ninety (90) calendar days,
      the
      aggregate outstanding amount of Loans and Letter of Credit Obligations is less
      than $35,000,000.

     

    6.4  Payments.

     

    (a)  All
      Obligations shall be payable to the Agent Payment Account as provided in Section
      6.3 or such other place as Agent may designate from time to time. Subject to
      the
      other terms and conditions contained herein, Agent shall apply payments received
      or collected from any Borrower or Guarantor or for the account of any Borrower
      or Guarantor (including the monetary proceeds of collections or of realization
      upon any Collateral) as follows: first,
      to pay
      any fees, indemnities or expense reimbursements then due to Agent and Lenders
      from any Borrower or Guarantor and any Obligations due with respect to Bank
      Products to the extent reserved from the Borrowing Base; second,
      to pay
      interest due in respect of any Loans or Letter of Credit Obligations;
third,
      to pay
      principal due in respect of any Loans and Letter of Credit Obligations;
fourth,
      to pay
      or prepay any other Obligations whether or not then due, in such order and
      manner as Agent determines and at any time an Event of Default exists or has
      occurred and is continuing, to provide cash collateral for any Letter of Credit
      Obligations; fifth,
      to pay
      any Obligations due with respect to Bank Products to the extent not reserved
      from the Borrowing Base. Notwithstanding anything to the contrary contained
      in
      this Agreement, unless so directed by Borrowers, or unless a Default or an
      Event
      of Default shall exist or have occurred and be continuing, Agent shall not
      apply
      any payments which it receives to any Eurodollar Rate Loans, except (A) on
      the
      expiration date of the Interest Period applicable to any such Eurodollar Rate
      Loans or (B) in the event that there are no outstanding Prime Rate
      Loans.

     

    (b)  At
      Agent
      's option, all principal, interest, fees (except for payments of fees and
      disbursements of counsel as may be limited by Section 9.22(g)), costs, expenses
      and other charges provided for in this Agreement and then due and payable or
      the
      other Financing Agreements may be charged directly to the loan account(s) of
      any
      Borrower maintained by Agent. Borrowers shall make all payments to Agent on
      the
      Obligations free and clear of, and without deduction or withholding for or
      on
      account of, any setoff, counterclaim or defense of any kind. If after receipt
      of
      any payment of, or proceeds of Collateral applied to the payment of, any of
      the
      Obligations, Agent or any Lender is required to surrender or return such payment
      or proceeds to any Person for any reason, then the Obligations intended to
      be
      satisfied by such payment or proceeds shall be reinstated and continue and
      this
      Agreement shall continue in full force and effect as if such payment or proceeds
      had not been received by Agent or such Lender. Borrowers and Guarantors shall
      be
      liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders
      harmless for the amount of any payments or proceeds surrendered or returned.
      This Section 6.4 shall remain effective notwithstanding any contrary action
      which may be taken by Agent or any Lender in reliance upon such payment or
      proceeds. This Section 6.4 shall survive the payment of the Obligations and
      the
      termination of this Agreement.

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    (c)  Except
      as
      otherwise required by applicable law or as provided in this Agreement, each
      Borrower and Guarantor shall make all payments to each Lender on the Obligations
      free and clear of, and without deduction or withholding for, any present or
      future taxes, levies, imposts, duties, charges, fees deductions withholdings
      now
      or hereafter imposed, levied, collected, withheld or assessed by any
      Governmental Authority, excluding net income taxes, net profits, capital taxes
      and franchise taxes (imposed in lieu of income taxes) and any branch profits
      taxes imposed by the United States or any similar tax imposed on any Lender
      as a
      result of a present or former connection between such Lender and the
      Governmental Authority imposing such tax or any political subdivision or taxing
      authority thereof (other than any such connection arising solely from such
      Lender having executed, delivered and performed its obligations or received
      a
      payment under, or enforced, this Agreement). If any such non-excluded taxes,
      levies, imposts, duties, charges, fees, deductions or withholdings
      (“Non-Excluded
      Taxes”)
      are
      required to be withheld from any amounts payable by the relevant Borrower or
      Guarantor to a Lender hereunder, (i) the amounts so payable to such Lender
      shall
      be increased to the extent necessary to yield to such Lender (after payment
      of
      all Non-Excluded Taxes and Other Taxes) interest or any such other amounts
      payable hereunder at the rates or in the amounts specified in this Agreement,
      (ii) the Borrowers and Guarantors shall make such deductions and (iii) the
      Borrowers and Guarantors shall pay the full amount deducted to the relevant
      Governmental Authority in accordance with applicable law, provided,
      however,
      that no
      Borrower or Guarantor shall be required to increase any amounts payable to
      a
      Lender with respect to any Non-Excluded Taxes, and each Borrower and Guarantor
      shall be permitted to withhold any Non-Excluded Taxes, (A) that are attributable
      to such Lender’s failure to comply with the requirements of paragraphs (e) or
      (f) of this Section or (B) that are United States withholding taxes that are
      in
      effect and apply to amounts payable to a Lender at the time such Lender becomes
      a party to this Agreement. The Borrowers and Guarantors shall pay any Other
      Taxes to the relevant Governmental Authority in accordance with applicable
      law.

     

    (d)  Whenever
      any Non-Excluded Taxes or Other Taxes are payable by a Borrower or Guarantor
      to
      a Governmental Authority, as promptly as possible thereafter the relevant
      Borrower or Guarantor shall send to each Lender a copy of an original official
      receipt received by the Borrower or Guarantor showing payment thereof. If such
      Borrower or Guarantor fails to pay any Non-Excluded Taxes or Other Taxes when
      due to the appropriate taxing authority or fails to remit to each Lender the
      required receipts or other required documentary evidence, the Borrowers and
      Guarantors shall indemnify each Lender for any incremental taxes, interest
      or
      penalties that become payable by the Lender as a result of such failure. The
      determination of whether any Non-Excluded Taxes are due to be paid by a Borrower
      or Guarantor shall be based on the forms that are provided to the Borrowers
      and
      Guarantors pursuant to Sections 6.4(e) and (f) hereof and the Borrowers and
      Guarantors shall not be obligated to indemnify any Lender for any amounts under
      this Section if such forms are not properly completed and duly
      executed.

     

    (e)  Each
      Lender (including an assignee of a Lender) that is not a United States person
      (as such term is defined in Section 7701(a)(3) of the Code (a “Non-U.S.
      Lender”)
      shall
      deliver to the Borrowers, as provided below, (i) two accurate and complete
      copies of IRS Form W-8ECI or W-8BEN, or, (ii) in the case of a Non-U.S. Lender
      claiming exemption from United States federal withholding tax under Sections
      871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a
      statement substantially in the form of Exhibit E hereof and two accurate and
      complete copies of IRS Form W-8BEN, or any subsequent versions or successors
      to
      such forms, in each case properly completed and duly executed by such Non-U.S.
      Lender claiming complete exemption from, or a reduced rate of, United States
      federal withholding tax on all Obligations. Such forms shall be delivered by
      each Non-U.S. Lender on or before the date it becomes a party to this Agreement.
      In addition, each Non-U.S. Lender shall deliver such forms promptly upon the
      obsolescence or invalidity of any form previously delivered by such Non-U.S.
      Lender. In addition, each Non-U.S. Lender agrees that it will deliver to the
      Borrowers, within a reasonable time after a request therefor, updated versions
      of the foregoing documentation and such other forms as may be required to
      confirm or establish the entitlement of a Non-U.S. Lender to a continued
      exemption from, or reduction in withholding tax. Each Non-U.S. Lender shall
      promptly notify the Borrowers at any time it determines that it is no longer
      in
      a position to provide any previously delivered certificate to the Borrowers
      (or
      any other form of certification adopted by the United States taxing authority
      for such purpose). Notwithstanding any other provision of this paragraph, a
      Non-U.S. Lender shall not be required to deliver any form pursuant to this
      paragraph that such Non-U.S. Lender is not legally available to
      deliver.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    (f)  Each
      Lender (including an assignee of a Lender) that is a United States person as
      defined in Section 7701(a)(30) of the Code shall deliver to the Borrowers,
      on or
      before such Lender becomes a party to this Agreement, two accurate and complete
      copies of IRS Form W-9 (or successor form) establishing that the Lender is
      a
      United States person and is not subject to backup withholding. In addition,
      each
      Lender that is a United States person shall deliver such forms promptly upon
      the
      obsolescence or invalidity of any form previously delivered by such Lender.
      In
      addition, each Lender that is a United States person agrees that it will deliver
      to the Borrowers, within a reasonable time after a request therefor, updated
      versions of the foregoing documentation and such other forms as may be required
      to confirm or establish the entitlement of a Lender to a continued exemption
      from withholding tax.

     

    (g)  If
      a
      Lender determines in its reasonable judgment that it has received a refund
      of
      any Non-Excluded Taxes, Other Taxes or other amounts as to which it has been
      indemnified by the Borrowers or with respect to which the Borrowers have paid
      additional amounts pursuant to this Section 6.4, it shall pay over such refund
      to the relevant Borrower (but only to the extent of indemnity payments made,
      or
      additional amounts paid, by the Borrower under this Section 6.4 with respect
      to
      Non-Excluded Taxes or Other Taxes giving rise to such refund) net of all
      out-of-pocket expenses of the Lender and without interest (other than any
      interest paid by the relevant Governmental Authority with respect to such
      refund), provided,
      that
      the Borrowers, upon the request of such Lender, agree to repay the amount paid
      over the Borrowers to such Lender in the event such Lender is required to repay
      such refund to such Governmental Authority. This paragraph shall not be
      construed to require any Lender to make available its tax return (or any other
      information relating to its taxes which it considers confidential) to the
      Borrowers.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    6.5  Authorization
      to Make Loans.
      Agent
      and Lenders are authorized to make the Loans based upon telephonic or other
      instructions received from anyone purporting to be an officer of any Borrower
      or
      other authorized person or, at the discretion of Agent, if such Loans are
      necessary to satisfy any Obligations then due and payable (except for payments
      of fees and disbursements of counsel as may be limited by Section 9.22(g)).
      All
      requests for Loans or Letters of Credit hereunder shall specify the date on
      which the requested advance is to be made (which day shall be a Business Day)
      and the amount of the requested Loan. Requests received after 11:00 a.m.
      Pasadena, California time on any day shall be deemed to have been made as of
      the
      opening of business on the immediately following Business Day. All Loans and
      Letters of Credit under this Agreement shall be conclusively presumed to have
      been made to, and at the request of and for the benefit of, any Borrower or
      Guarantor when deposited to the credit of any Borrower or Guarantor or otherwise
      disbursed or established in accordance with the instructions of any Borrower
      or
      Guarantor or in accordance with the terms and conditions of this
      Agreement.

     

    6.6  Use
      of
      Proceeds.
      Borrowers shall use the initial proceeds of the Loans and Letters of Credit
      hereunder only for: (a) payments to each of the persons listed in the
      disbursement direction letter furnished by Borrowers to Agent on or about the
      date hereof, (b) costs, expenses and fees in connection with the preparation,
      negotiation, execution and delivery of this Agreement and the other Financing
      Agreements, and (c) costs, expenses and fees in connection with the acquisition
      of Jazz and Operating Company by Parent Guarantor. All other Loans made or
      Letters of Credit provided by Agent and Lenders to or for the benefit of any
      Borrower pursuant to the provisions hereof shall be used by such Borrower only
      for general operating, working capital, capital expenditure and other proper
      corporate purposes of Borrower not otherwise prohibited by the terms hereof,
      including, without limitation, permitted investments and permitted acquisitions.
      None of the proceeds will be used, directly or indirectly, for the purpose
      of
      purchasing or carrying any margin security or for the purposes of reducing
      or
      retiring any indebtedness which was originally incurred to purchase or carry
      any
      margin security or for any other purpose which might cause any of the Loans
      to
      be considered a “purpose credit” within the meaning of Regulation U of the Board
      of Governors of the Federal Reserve System, as amended.

     

    6.7  Pro
      Rata Treatment.
      Except
      to the extent otherwise provided in this Agreement or as otherwise agreed by
      Lenders: (a) the making and conversion of Loans shall be made among the Lenders
      based on their respective Pro Rata Shares as to the Loans and (b) each payment
      on account of any Obligations to or for the account of one or more of Lenders
      in
      respect of any Obligations due on a particular day shall be allocated among
      the
      Lenders entitled to such payments based on their respective Pro Rata Shares
      and
      shall be distributed accordingly.

     

    6.8  Sharing
      of Payments, Etc.

     

    (a)  Each
      Borrower and Guarantor agrees that, in addition to (and without limitation
      of)
      any right of setoff, banker's lien or counterclaim Agent or any Lender may
      otherwise have, each Lender shall be entitled, at its option (but subject,
      as
      among Agent and Lenders, to the provisions of Section 12.13(b) hereof), to
      offset balances held by it for the account of such Borrower or Guarantor at
      any
      of its offices, in dollars or in any other currency, against any principal
      of or
      interest on any Loans owed to such Lender or any other amount payable to such
      Lender hereunder, that is not paid when due (regardless of whether such balances
      are then due to such Borrower or Guarantor), in which case it shall promptly
      notify the Borrowers and Agent thereof; provided,
      that,
      such
      Lender's failure to give such notice shall not affect the validity
      thereof.

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    (b)  If
      any
      Lender (including Agent) shall obtain from any Borrower or Guarantor payment
      of
      any principal of or interest on any Loan owing to it or payment of any other
      amount under this Agreement or any of the other Financing Agreements through
      the
      exercise of any right of setoff, banker's lien or counterclaim or similar right
      or otherwise (other than from Agent as provided herein), and, as a result of
      such payment, such Lender shall have received more than its Pro Rata Share
      of
      the principal of the Loans or more than its share of such other amounts then
      due
      hereunder or thereunder by any Borrower or Guarantor to such Lender than the
      percentage thereof received by any other Lender, it shall promptly pay to Agent,
      for the benefit of Lenders, the amount of such excess and simultaneously
      purchase from such other Lenders a participation in the Loans or such other
      amounts, respectively, owing to such other Lenders (or such interest due
      thereon, as the case may be) in such amounts, and make such other adjustments
      from time to time as shall be equitable, to the end that all Lenders shall
      share
      the benefit of such excess payment (net of any expenses that may be incurred
      by
      such Lender in obtaining or preserving such excess payment) in accordance with
      their respective Pro Rata Shares or as otherwise agreed by Lenders. To such
      end
      all Lenders shall make appropriate adjustments among themselves (by the resale
      of participation sold or otherwise) if such payment is rescinded or must
      otherwise be restored.

     

    (c)  Each
      Borrower and Guarantor agrees that any Lender purchasing a participation (or
      direct interest) as provided in this Section may exercise, in a manner
      consistent with this Section, all rights of setoff, banker's lien, counterclaim
      or similar rights with respect to such participation as fully as if such Lender
      were a direct holder of Loans or other amounts (as the case may be) owing to
      such Lender in the amount of such participation.

     

    (d)  Nothing
      contained herein shall require any Lender to exercise any right of setoff,
      banker’s lien, counterclaims or similar rights or shall affect the right of any
      Lender to exercise, and retain the benefits of exercising, any such right with
      respect to any other Indebtedness or obligation of any Borrower or Guarantor.
      If, under any applicable bankruptcy, insolvency or other similar law, any Lender
      receives a secured claim in lieu of a setoff to which this Section applies,
      such
      Lender shall, to the extent practicable, assign such rights to Agent for the
      benefit of Lenders and, in any event, exercise its rights in respect of such
      secured claim in a manner consistent with the rights of Lenders entitled under
      this Section to share in the benefits of any recovery on such secured
      claim.

     

    6.9  Settlement
      Procedures.

     

    (a)  In
      order
      to administer the Credit Facility in an efficient manner and to minimize the
      transfer of funds between Agent and Lenders, Agent may, at its option, subject
      to the terms of this Section, make available, on behalf of Lenders, the full
      amount of the Loans requested or charged to any Borrower's loan account(s)
      or
      otherwise to be advanced by Lenders pursuant to the terms hereof, without
      requirement of prior notice to Lenders of the proposed Loans.

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    (b)  With
      respect to all Loans made by Agent on behalf of Lenders as provided in this
      Section, the amount of each Lender’s Pro Rata Share of the outstanding Loans
      shall be computed weekly, and shall be adjusted upward or downward on the basis
      of the amount of the outstanding Loans as of 5:00 p.m. Pasadena, California
      time
      on the Business Day immediately preceding the date of each settlement
      computation; provided,
      that,
      Agent
      retains the absolute right at any time or from time to time to make the above
      described adjustments at intervals more frequent than weekly, but in no event
      more than twice in any week. Agent shall deliver to each of the Lenders after
      the end of each week, or at such lesser period or periods as Agent shall
      determine, a summary statement of the amount of outstanding Loans for such
      period (such week or lesser period or periods being hereinafter referred to
      as a
“Settlement Period”). If the summary statement is sent by Agent and received by
      a Lender prior to 12:00 p.m. Pasadena, California time, then such Lender shall
      make the settlement transfer described in this Section by no later than 3:00
      p.m. Pasadena, California time on the same Business Day and if received by
      a
      Lender after 12:00 p.m. Pasadena, California time, then such Lender shall make
      the settlement transfer by not later than 3:00 p.m. Pasadena, California time
      on
      the next Business Day following the date of receipt. If, as of the end of any
      Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding
      Loans is more than such Lender's Pro Rata Share of the outstanding Loans as
      of
      the end of the previous Settlement Period, then such Lender shall forthwith
      (but
      in no event later than the time set forth in the preceding sentence) transfer
      to
      Agent by wire transfer in immediately available funds the amount of the
      increase. Alternatively, if the amount of a Lender's Pro Rata Share of the
      outstanding Loans in any Settlement Period is less than the amount of such
      Lender's Pro Rata Share of the outstanding Loans for the previous Settlement
      Period, Agent shall forthwith transfer to such Lender by wire transfer in
      immediately available funds the amount of the decrease. The obligation of each
      of the Lenders to transfer such funds and effect such settlement shall be
      irrevocable and unconditional and without recourse to or warranty by Agent.
      Agent and each Lender agrees to mark its books and records at the end of each
      Settlement Period to show at all times the dollar amount of its Pro Rata Share
      of the outstanding Loans and Letters of Credit. Each Lender shall only be
      entitled to receive interest on its Pro Rata Share of the Loans to the extent
      such Loans have been funded by such Lender. Because the Agent on behalf of
      Lenders may be advancing and/or may be repaid Loans prior to the time when
      Lenders will actually advance and/or be repaid such Loans, interest with respect
      to Loans shall be allocated by Agent in accordance with the amount of Loans
      actually advanced by and repaid to each Lender and the Agent and shall accrue
      from and including the date such Loans are so advanced to but excluding the
      date
      such Loans are either repaid by Borrowers or actually settled with the
      applicable Lender as described in this Section.

     

    (c)  To
      the
      extent that Agent has made any such amounts available and the settlement
      described above shall not yet have occurred, upon repayment of any Loans by
      a
      Borrower, Agent may apply such amounts repaid directly to any amounts made
      available by Agent pursuant to this Section. In lieu of weekly or more frequent
      settlements, Agent may, at its option, at any time require each Lender to
      provide Agent with immediately available funds representing its Pro Rata Share
      of each Loan, prior to Agent's disbursement of such Loan to Borrower. In such
      event, all Loans under this Agreement shall be made by the Lenders
      simultaneously and proportionately to their Pro Rata Shares. No Lender shall
      be
      responsible for any default by any other Lender in the other Lender's obligation
      to make a Loan requested hereunder nor shall the Commitment of any Lender be
      increased or decreased as a result of the default by any other Lender in the
      other Lender's obligation to make a Loan hereunder.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    (d)  If
      Agent
      is not funding a particular Loan to a Borrower pursuant to Sections 6.9(a)
      and
      6.9(b) above on any day, but is requiring each Lender to provide Agent with
      immediately available funds on the date of such Loan as provided in Section
      6.9(c) above, Agent may assume that each Lender will make available to Agent
      such Lender's Pro Rata Share of the Loan requested or otherwise made on such
      day
      and Agent may, in its discretion, but shall not be obligated to, cause a
      corresponding amount to be made available to or for the benefit of such Borrower
      on such day. If Agent makes such corresponding amount available to a Borrower
      and such corresponding amount is not in fact made available to Agent by such
      Lender, Agent shall be entitled to recover such corresponding amount on demand
      from such Lender together with interest thereon for each day from the date
      such
      payment was due until the date such amount is paid to Agent at the Federal
      Funds
      Rate for each day during such period (as published by the Federal Reserve Bank
      of New York or at Agent’s option based on the arithmetic mean determined by
      Agent of the rates for the last transaction in overnight Federal funds arranged
      prior to 9:00 a.m. (New York City time) on that day by each of the three leading
      brokers of Federal funds transactions in New York City selected by Agent) and
      if
      such amounts are not paid within three (3) days of Agent’s demand, at the
      highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
      Rate Loans. During the period in which such Lender has not paid such
      corresponding amount to Agent, notwithstanding anything to the contrary
      contained in this Agreement or any of the other Financing Agreements, the amount
      so advanced by Agent to or for the benefit of any Borrower shall, for all
      purposes hereof, be a Loan made by Agent for its own account. Upon any such
      failure by a Lender to pay Agent, Agent shall promptly thereafter notify
      Borrowers of such failure and Borrowers shall pay such corresponding amount
      to
      Agent for its own account within five (5) Business Days of Borrowers’ receipt of
      such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans
      made available by the Agent on such Lender’s behalf, or any Lender who fails to
      pay any other amount owing by it to Agent, is a “Defaulting
      Lender”.
      Agent
      shall not be obligated to transfer to a Defaulting Lender any payments received
      by Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender
      be
      entitled to the sharing of any payments hereunder (including any principal,
      interest or fees). Amounts payable to a Defaulting Lender shall instead be
      paid
      to or retained by Agent. Agent may hold and, in its discretion, relend to a
      Borrower the amount of all such payments received or retained by it for the
      account of such Defaulting Lender. For purposes of voting or consenting to
      matters with respect to this Agreement and the other Financing Agreements and
      determining Pro Rata Shares, such Defaulting Lender shall be deemed not to
      be a
“Lender” and such Lender's Commitment shall be deemed to be zero (0). This
      Section shall remain effective with respect to a Defaulting Lender until such
      default is cured. The operation of this Section shall not be construed to
      increase or otherwise affect the Commitment of any Lender, or relieve or excuse
      the performance by any Borrower or Guarantor of their duties and obligations
      hereunder.

     

    (e)  Nothing
      in this Section or elsewhere in this Agreement or the other Financing Agreements
      shall be deemed to require Agent to advance funds on behalf of any Lender or
      to
      relieve any Lender from its obligation to fulfill its Commitment hereunder
      or to
      prejudice any rights that any Borrower may have against any Lender as a result
      of any default by any Lender hereunder in fulfilling its
      Commitment.

     

    6.10  Obligations
      Several; Independent Nature of Lenders’ Rights.
      The
      obligation of each Lender hereunder is several, and no Lender shall be
      responsible for the obligation or commitment of any other Lender hereunder.
      Nothing contained in this Agreement or any of the other Financing Agreements
      and
      no action taken by the Lenders pursuant hereto or thereto shall be deemed to
      constitute the Lenders to be a partnership, an association, a joint venture
      or
      any other kind of entity. The amounts payable at any time hereunder to each
      Lender shall be a separate and independent debt, and subject to Section 12.13
      hereof, each Lender shall be entitled to protect and enforce its rights arising
      out of this Agreement and it shall not be necessary for any other Lender to
      be
      joined as an additional party in any proceeding for such purpose.

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.  COLLATERAL
      REPORTING AND COVENANTS

     

    7.1  Collateral
      Reporting.

     

    (a)  Borrowers
      shall provide Agent with the following documents in a form reasonably
      satisfactory to Agent:

     

    (i)  on
      a
      monthly basis as required by Agent, schedules of sales made, credits issued
      and
      cash received;

     

    (ii)  as
      soon
      as possible after the end of each calendar month (but in any event within ten
      (10) Business Days after the end thereof), on a monthly basis, (A)
      a
      completed borrowing base certificate pertaining to the fiscal month then ended
      substantially in the form of Exhibit D hereto (each such certificate, a
      "Borrowing
      Base Certificate"),
      which
      Borrowing Base Certificate shall not include, in the case of Eligible Equipment,
      any items subject to capital leases or similar arrangements, (B)
      agings
      of accounts receivable (together with a reconciliation to the previous month’s
      aging and general ledger) and (C) agings of accounts payable; and 

     

    (iii)  upon
      Agent's reasonable request, but no more frequently than once a month, (A) copies
      of customer statements, purchase orders, sales invoices, credit memos,
      remittance advices and reports, and copies of deposit slips and bank statements,
      (B) copies of shipping and delivery documents, and (C) copies of purchase
      orders, invoices and delivery documents for Equipment acquired by any Borrower
      or Guarantor.

     

    (b)  If
      any of
      any Borrower's or Guarantor’s records or reports of the Collateral are prepared
      or maintained by an accounting service, contractor, shipper or other agent,
      such
      Borrower and Guarantor hereby irrevocably authorizes such service, contractor,
      shipper or agent to deliver such records, reports, and related documents to
      Agent and to follow Agent's instructions with respect to further services at
      any
      time that an Event of Default exists or has occurred and is
      continuing.

     

    7.2  Accounts
      Covenants.

     

    (a)  Borrowers
      shall notify Agent promptly of: (i) with respect to Eligible Accounts, any
      material delay in any Borrower's performance of any of its material obligations
      to any account debtor or the assertion of any material claims, offsets, defenses
      or counterclaims by any account debtor, or any material disputes with account
      debtors, or any material settlement, adjustment or compromise thereof, (ii)
      with
      respect to Eligible Accounts, all material adverse information known to any
      Borrower or Guarantor relating to the financial condition of any account debtor
      and (iii) any event or circumstance which, to the best of any Borrower's or
      Guarantor’s knowledge, would cause Agent to consider any then existing Eligible
      Accounts as no longer constituting Eligible Accounts. No credit, discount,
      allowance or extension or agreement for any of the foregoing shall be granted
      to
      any account debtor without Agent's consent, except in the ordinary course of
      a
      Borrower's or Guarantor’s business in accordance with past practices and except
      as set forth in the schedules delivered to Agent pursuant to Section 7.1(a)
      above. So long as no Event of Default exists or has occurred and is continuing,
      Borrowers and Guarantors shall settle, adjust or compromise any claim, offset,
      counterclaim or dispute with any account debtor. At any time that an Event
      of
      Default exists or has occurred and is continuing, Agent shall, at its option,
      have the exclusive right to settle, adjust or compromise any claim, offset,
      counterclaim or dispute with account debtors or grant any credits, discounts
      or
      allowances.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    (b)  With
      respect to each Account: (i) the amounts shown on any invoice delivered to
      Agent
      or schedule thereof delivered to Agent shall be true and complete, (ii) no
      payments shall be made thereon except payments immediately delivered to a
      Blocked Account, (iii) no credit, discount, allowance or extension or agreement
      for any of the foregoing shall be granted to any account debtor except as
      reported to Agent in accordance with this Agreement and except for credits,
      discounts, allowances or extensions made or given in the ordinary course of
      each
      Borrower's business in accordance with past practices, (iv) none of the
      transactions giving rise thereto will violate any applicable foreign, Federal,
      State or local laws or regulations, all documentation relating thereto will
      be
      legally sufficient under such laws and regulations and all such documentation
      will be legally enforceable in accordance with its terms; and with respect
      to
      Eligible Accounts, there shall be no setoffs, deductions, contras, defenses,
      counterclaims or disputes existing or asserted with respect thereto except
      as
      reported to Agent in accordance with the terms of this Agreement.

     

    (c)  Agent
      shall have the right, at any time or times, to verify the validity, amount
      or
      any other matter relating to any Receivables or other Collateral, by
(i)
      mail,
      electronic mail or facsimile transmission with Borrowers initiating the
      confirmation and Agent receiving such confirmation directly from the relevant
      account debtor or other Person in connection with such Receivables or holder
      of
      such Collateral, provided
      that
      Agent shall have the right to select any such Receivable or Collateral that
      is
      the subject of such verification or confirmation, or (ii)
      telephone, provided that one or more officers, employees or other
      representatives of a Borrower initiates and conducts any telephone call
      regarding any such verification while Agent is present on such call;
provided,
      that
      each Borrower shall make itself and one or more of its officers, employees
      or
      other representatives reasonably available to be present on any such telephone
      call; and further provided,
      that
      upon the failure of either of the Borrowers to make itself and such officers,
      employees or representatives so available or, in any event, upon the occurrence
      and continuation of an Event of Default, Agent shall have right to verify any
      Receivables or other Collateral as set forth above in this clause (c) by
      telephone without any Borrower's participation in any such telephone
      call.

     

    7.3  Inventory
      Covenants.
      With
      respect to the Inventory: (a)
      none of
      the Borrowers or Guarantors shall remove any Inventory with a fair market value
      in excess of $1,000,000 in the aggregate for all such Inventory of the Borrowers
      or Guarantors from the locations set forth or permitted herein, without prior
      notice to Agent, except for sales of Inventory in the ordinary course of its
      business and except to move Inventory directly from one location set forth
      or
      permitted herein to another such location and except for Inventory shipped
      from
      the manufacturer thereof to a Borrower or Guarantor which is in transit to
      the
      locations set forth or permitted herein; (b)
      each
      Borrower and Guarantor shall produce, use, store and maintain the Inventory
      with
      all reasonable care and caution and in accordance with applicable standards
      of
      any insurance and in conformity with applicable laws (including the requirements
      of the Federal Fair Labor Standards Act of 1938, as amended and all rules,
      regulations and orders related thereto); (c)
      none of
      the Inventory or other Collateral constitutes farm products or the proceeds
      thereof; and (d)
      each
      Borrower and Guarantor assumes all responsibility and liability arising from
      or
      relating to the production, use, sale or other disposition of the
      Inventory.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    7.4  Equipment
      Covenants.
      With
      respect to the Equipment: (a) upon Agent’s request, Borrowers and Guarantors
      shall, at their expense, no more than one (1) time in any twelve (12) month
      period, but at any time or times as Agent may request on or after an Event
      of
      Default has occurred and is continuing, deliver or cause to be delivered to
      Agent written appraisals as to the Equipment, in form, scope and methodology
      reasonably acceptable to Agent and by Emerald
      Technology Valuations, LLC
      or an
      appraiser reasonably acceptable to Agent, addressed to Agent and upon which
      Agent is expressly permitted to rely; without limiting in any way the foregoing
      in this clause (a), Agent, at its expense, shall have the right to have such
      an
      appraiser, at any time, perform such additional appraisals as to the Equipment;
      (b) Borrowers and Guarantors shall keep the Equipment necessary in the conduct
      of their business in good order, repair, running and marketable condition
      (ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the
      Equipment, with all reasonable care and caution and in accordance with
      applicable standards of any insurance and in conformity in all material respects
      with all applicable laws; (d) the Equipment is and shall be used in the business
      of Borrowers and Guarantors and not for personal, family, household or farming
      use; (e) without prior notice to Agent, Borrowers and Guarantors shall not
      remove (i) any Eligible Equipment or (ii) any other Equipment with a fair market
      value in excess of $1,000,000 in the aggregate for all such Equipment of the
      Borrowers or Guarantors from the locations set forth or permitted herein, except
      to the extent necessary to have any Equipment repaired or maintained in the
      ordinary course of its business or to move Equipment directly from one location
      set forth or permitted herein to another such location and except for the
      movement of motor vehicles used by or for the benefit of Borrowers or Guarantors
      in the ordinary course of business; (f) the Equipment is now and shall remain
      personal property and Borrowers and Guarantors shall not permit any of the
      Equipment to be or become a part of or affixed to real property; and (g) each
      Borrower and Guarantor assumes all responsibility and liability arising from
      the
      use of the Equipment. 

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    7.5  Power
      of Attorney.
      Each
      Borrower and Guarantor hereby irrevocably designates and appoints Agent (and
      all
      persons designated by Agent) as such Borrower's and Guarantor’s true and lawful
      attorney-in-fact, and authorizes Agent, in such Borrower's, Guarantor’s or
      Agent's name, to: (a) at any time an Event of Default exists or has occurred
      and
      is continuing (i) demand payment on Receivables or other Collateral, (ii)
      enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise
      all of such Borrower's or Guarantor’s rights and remedies to collect any
      Receivable or other Collateral, (iv) sell or assign any Receivable upon such
      terms, for such amount and at such time or times as Agent deems advisable,
      (v)
      settle, adjust, compromise, extend or renew an Account, (vi) discharge and
      release any Receivable, (vii) prepare, file and sign such Borrower's or
      Guarantor’s name on any proof of claim in bankruptcy or other similar document
      against an account debtor or other obligor in respect of any Receivables or
      other Collateral, (viii) notify the post office authorities to change the
      address for delivery of remittances from account debtors or other obligors
      in
      respect of Receivables or other proceeds of Collateral to an address designated
      by Agent, and open and dispose of all mail addressed to such Borrower or
      Guarantor and handle and store all mail relating to the Collateral, provided
      that
      Agent shall return to such Borrower or Guarantor all other such mail not related
      to the Collateral within a reasonable time after its receipt thereof, and (ix)
      do all acts and things which are necessary, in Agent's determination, to fulfill
      such Borrower's or Guarantor’s obligations under this Agreement and the other
      Financing Agreements, (b) at any time after Agent is entitled to exercise
      control over Blocked Accounts or to receive payments on and/or proceeds of
      Accounts pursuant to Section 6.3(d), (i) take control in any manner of any
      item
      of payment in respect of Receivables or constituting Collateral or otherwise
      received in or for deposit in the Blocked Accounts or otherwise received by
      Agent or any Lender, (ii) have access to any lockbox or postal box into which
      remittances from account debtors or other obligors in respect of Receivables
      or
      other proceeds of Collateral are sent or received, (iii) endorse such Borrower's
      or Guarantor’s name upon any items of payment in respect of Receivables or
      constituting Collateral or otherwise received by Agent or any Lender and deposit
      the same in Agent's account for application to the Obligations, (iv) endorse
      such Borrower's or Guarantor’s name upon any chattel paper, document,
      instrument, invoice, or similar document or agreement relating to any Receivable
      or any goods pertaining thereto or any other Collateral, including any warehouse
      or other receipts, or bills of lading and other negotiable or non-negotiable
      documents, (v) clear Inventory the purchase of which was financed with a Letter
      of Credit through U.S. Customs or foreign export control authorities in such
      Borrower’s or Guarantor’s name, Agent’s name or the name of Agent’s designee,
      and to sign and deliver to customs officials powers of attorney in such
      Borrower’s or Guarantor’s name for such purpose, and to complete in such
      Borrower’s or Guarantor’s or Agent’s name, any order, sale or transaction,
      obtain the necessary documents in connection therewith and collect the proceeds
      thereof, and (c) at any time, sign such Borrower's or Guarantor’s name on any
      verification of Receivables and notices thereof to account debtors or any
      secondary obligors or other obligors in respect thereof, provided
      that,
      unless an Event of Default has occurred and is continuing, any such notice
      shall
      be in form and substance reasonably satisfactory to Borrowers and Agent. Each
      Borrower and Guarantor hereby releases Agent and Lenders and their respective
      officers, employees and designees from any liabilities arising from any act
      or
      acts under this power of attorney and in furtherance thereof, whether of
      omission or commission, except as a result of Agent’s or any Lender’s own gross
      negligence or willful misconduct or the gross negligence or willful misconduct
      of Agent’s or any Lender's officers, employees or designees.

     

    7.6  Right
      to Cure.
      (a)
      If an
      Event of Default has occurred and is continuing or (i)
      if an
      Event of Default would occur as a result of Agent's failure to take any of
      the
      actions listed in this clause (i), Agent may, at its option, upon notice to
      Borrowers, cure any default by any Borrower or Guarantor under any material
      agreement with a third party that would, or could reasonably be expected to,
      have a Material Adverse Effect with respect to the Collateral, its value or
      the
      ability of Agent to collect, sell or otherwise dispose of the Collateral or
      the
      rights and remedies of Agent or any Lender therein or the ability of any
      Borrower or Guarantor to perform its obligations hereunder or under any of
      the
      other Financing Agreements, and (ii)
      if a
      Material Adverse Effect or an Event of Default would occur as a result of
      Agent's failure to take any of the actions listed in subclauses (A) or (B)
      of
      this clause (ii), Agent may, at its option, upon notice to Borrowers, (A) pay
      or
      bond on appeal any judgment entered against any Borrower or Guarantor, and
      (B)
      discharge taxes, liens, security interests or other encumbrances at any time
      levied on or existing with respect to the Collateral, except with respect to
      any
      such liens, security interests or other encumbrances permitted pursuant to
      Section 9.8 hereof, and (b)
      in order
      to prevent the occurrence of a Material Adverse Effect or an Event of Default,
      Agent may, at its option, upon notice to Borrowers, pay any amount, incur any
      expense or perform any act which, in Agent's judgment, is necessary or
      appropriate to preserve, protect, insure or maintain the Collateral and the
      rights of Agent and Lenders with respect thereto. Agent may add any amounts
      so
      expended to the Obligations and charge any Borrower's account therefor, such
      amounts to be repayable by Borrowers on demand. Agent and Lenders shall be
      under
      no obligation to effect such cure, payment or bonding and shall not, by doing
      so, be deemed to have assumed any obligation or liability of any Borrower or
      Guarantor. Any payment made or other action taken by Agent or any Lender under
      this Section shall be without prejudice to any right to assert an Event of
      Default hereunder and to proceed accordingly.

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    7.7  Access
      to Premises.
      From
      time to time as requested by Agent, subject to the provisions of Section 9.22
      hereof, (a) Agent or its designee shall have complete access to all of each
      Borrower's and Guarantor’s premises during normal business hours and after
      notice to Borrowers, or at any time and without notice to Borrowers if an Event
      of Default exists or has occurred and is continuing, for the purposes of
      inspecting, verifying and auditing the Collateral and all of each Borrower's
      and
      Guarantor’s books and records, including the Records, and (b) each Borrower and
      Guarantor shall promptly furnish to Agent such copies of such reasonably
      available books and records or extracts therefrom as Agent may request, and
      Agent or any Lender or Agent’s designee may use during normal business hours any
      of such Borrower's and Guarantor’s personnel, equipment, supplies and premises
      as may be reasonably necessary for the foregoing and if an Event of Default
      exists or has occurred and is continuing for the collection of Receivables
      and
      realization of other Collateral.

     

    SECTION
      8.  REPRESENTATIONS
      AND WARRANTIES

     

    Each
      Borrower and Guarantor hereby represents and warrants to Agent and Lenders
      the
      following (which shall survive the execution and delivery of this
      Agreement):

     

    8.1  Corporate
      Existence, Power and Authority.
      Each
      Borrower and Guarantor is an organization duly organized and in good standing
      under the laws of its jurisdiction of organization and is duly qualified as
      a
      foreign entity and in good standing in all states or other jurisdictions where
      the nature and extent of the business transacted by it or the ownership of
      assets makes such qualification necessary, except for those jurisdictions in
      which the failure to so qualify would not have a material adverse effect on
      such
      Borrower's or Guarantor’s financial condition, results of operation or business
      or the rights of Agent in or to any of the Collateral. The execution, delivery
      and performance of this Agreement, the other Financing Agreements and the
      transactions contemplated hereunder and thereunder (a) are all within each
      Borrower's and Guarantor’s organizational powers, (b) have been duly authorized,
      (c) are not in contravention of law (except as could not reasonably be expected
      to have a Material Adverse Effect) or the terms of any Borrower's or Guarantor’s
      certificate of incorporation, certificate of formation, by-laws, operating
      or
      limited liability company agreement or other organizational documentation,
      or
      except as could not reasonably be expected to have a Material Adverse Effect,
      any indenture, agreement or undertaking to which any Borrower or Guarantor
      is a
      party or by which any Borrower or Guarantor or its property are bound and (d)
      will not result in the creation or imposition of, or require or give rise to
      any
      obligation to grant, any lien, security interest, charge or other encumbrance
      upon any property of any Borrower or Guarantor other than the liens, security
      interests, charges or other encumbrances granted in favor of Agent pursuant
      to
      this Agreement and the other Financing Documents. This Agreement and the other
      Financing Agreements constitute legal, valid and binding obligations of each
      Borrower and Guarantor enforceable in accordance with their respective terms,
      except as enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditor's rights generally any by general equitable principles (whether
      enforcement is sought by proceedings in equity or at law).

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    8.2  Name;
      State of Organization; Chief Executive Office; Collateral
      Locations.

     

    (a)  As
      of the
      date hereof, the exact legal name of each Borrower and Guarantor is as set
      forth
      on the signature page of this Agreement and in the Information Certificate.
      No
      Borrower or Guarantor has, during the five years prior to the date of this
      Agreement, been known by or used any other corporate or fictitious name or
      been
      a party to any merger or consolidation, or acquired all or substantially all
      of
      the assets of any Person, or acquired any of its property or assets out of
      the
      ordinary course of business, except as set forth in the Information
      Certificate.

     

    (b)  As
      of the
      date hereof, each Borrower and Guarantor is an organization of the type and
      organized in the jurisdiction set forth in the Information Certificate. As
      of
      the date hereof, the Information Certificate accurately sets forth the
      organizational identification number of each Borrower and Guarantor or
      accurately states that such Borrower or Guarantor has none and accurately sets
      forth the federal employer identification number of each Borrower and
      Guarantor.

     

    (c)  As
      of the
      date hereof, the chief executive office and mailing address of each Borrower
      and
      Guarantor and each Borrower's and Guarantor’s Records concerning Accounts are
      located only at the address identified as such in Sections 12 and 13 of the
      Information Certificate and its only other places of business and the only
      other
      locations of Collateral, if any, are the addresses set forth in Section 14
      of
      the Information Certificate, subject to the right of any Borrower or Guarantor
      to establish new locations in accordance with Section 9.2 below. As of the
      date
      hereof, the Information Certificate correctly identifies any of such locations
      which are not owned by a Borrower or Guarantor and sets forth the owners and/or
      operators thereof.

     

    8.3  Financial
      Statements; No Material Adverse Change.
      All
      financial statements relating to any Borrower or Guarantor which have been
      or
      may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders
      have been prepared in accordance with GAAP (except as to any interim financial
      statements, to the extent such statements are subject to normal year-end
      adjustments and do not include any notes) and fairly present in all material
      respects the financial condition and the results of operation of such Borrower
      and Guarantor as at the dates and for the periods set forth therein. Except
      as
      disclosed in any interim financial statements furnished by Borrowers and
      Guarantors to Agent prior to the date of this Agreement, there has been no
      act,
      condition or event which has had or is reasonably likely to have a “Material
      Adverse Effect” (as defined in the Commitment Letter) since the date of the most
      recent audited financial statements of any Borrower or Guarantor furnished
      by
      any Borrower or Guarantor to Agent prior to the date of this Agreement. The
      quarterly projections through December 31, 2007 and annual projections through
      December 2009 that have been delivered to Agent or any projections hereafter
      delivered to Agent have been prepared in light of the past operations of the
      businesses of Borrowers and Guarantors and are based upon estimates and
      assumptions believed to be reasonable in light of the circumstances when
      made.

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

       

    

    8.4  Priority
      of Liens; Title to Properties.
      The
      security interests and liens granted to Agent under this Agreement and the
      other
      Financing Agreements constitute valid and perfected first priority liens and
      security interests in and upon the Collateral subject only to the liens
      indicated in Section 23 of the Information Certificate and the other liens
      permitted under Section 9.8 hereof. Each Borrower and Guarantor has good, valid
      and merchantable title to all of its properties and assets, which are shown
      of
      the most recent Borrowing Base Certificate or are necessary in the conduct
      of
      such Borrower's or Guarantor’s business as currently conducted, subject to no
      liens, mortgages, pledges, security interests, encumbrances or charges of any
      kind, except those granted to Agent and such others as are specifically listed
      in Section 23 of the Information Certificate or permitted under Section 9.8
      hereof.

     

    8.5  Tax
      Returns.
      Each
      Borrower and Guarantor has filed, or caused to be filed, in a timely manner
      all
      material tax returns, reports and declarations which are required to be filed
      by
      it. All information in such tax returns, reports and declarations is complete
      and accurate in all material respects. Each Borrower and Guarantor has paid
      or
      caused to be paid all material taxes due and payable or claimed due and payable
      in any assessment received by it, except taxes the validity of which are being
      contested in good faith by appropriate proceedings diligently pursued and
      available to such Borrower or Guarantor and with respect to which adequate
      reserves in accordance with GAAP have been set aside on its books. Adequate
      provision has been made for the payment of all accrued and unpaid Federal,
      State, county, local, foreign and other taxes whether or not yet due and payable
      and whether or not disputed.

     

    8.6  Litigation.
      Except
      as set forth in Section 22 of the Information Certificate, (a) there is no
      investigation by any Governmental Authority pending, or to the best of any
      Borrower's or Guarantor’s knowledge threatened, against or affecting any
      Borrower, any other Credit Party or their respective assets or business and
      (b)
      there is no action, suit, proceeding or claim by any Person pending, or to
      the
      best of any Borrower's or any such other Credit Party’s knowledge threatened,
      against such Borrower or such other Credit Party or their respective assets
      or
      goodwill, or against or affecting any transactions contemplated by this
      Agreement, in each case in clauses (a) and (b) of this Section 8.6, which could
      reasonably be expected to have a Material Adverse Effect.

     

    8.7  Compliance
      with Other Agreements and Applicable Laws.

     

    (a)  No
      Borrower and no other Credit Party is in default in any respect under, or in
      violation in any respect of the terms of, any material agreement, contract,
      instrument, lease or other commitment to which it is a party or by which it
      or
      any of its assets are bound, except to the extent that such default or violation
      could not reasonably be expected to have a Material Adverse Effect. Each
      Borrower and each other Credit Party is in compliance with the requirements
      of
      all applicable laws, rules, regulations and orders of any Governmental Authority
      relating to its business, including, without limitation, those set forth in
      or
      promulgated pursuant to the Occupational Safety and Health Act of 1970, as
      amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code,
      as
      amended, and the rules and regulations thereunder, and all Environmental Laws,
      except to the extent that any failure of compliance therewith could not
      reasonably be expected to have a Material Adverse Effect. 

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    (b)  Each
      Borrower and each other Credit Party has obtained all material permits,
      licenses, approvals, consents, certificates, orders or authorizations of any
      Governmental Authority required for the lawful conduct of its business (the
      “Permits”),
      except to the extent that failure to do so could not reasonably be expected
      to
      have a Material Adverse Effect. All of the Permits are valid and subsisting
      and
      in full force and effect except as could not reasonably be expected to have
      a
      Material Adverse Effect. Except as could not reasonably be expected to have
      a
      Material Adverse Effect, there are no actions, claims or proceedings pending
      or
      to any Borrower’s or Guarantor’s knowledge, threatened that seek the revocation,
      cancellation, suspension or modification of any of the Permits.

     

    8.8  Environmental
      Compliance.

     

    (a)  Except
      as
      set forth on Schedule 8.8 hereto or except as could not reasonably be expected
      to have a Material Adverse Effect, neither any Borrower nor any other Credit
      Party has generated, used, stored, treated, transported, manufactured, handled,
      produced or disposed of any Hazardous Materials, on or off its premises (whether
      or not owned by it) in any manner which at any time violates in any material
      respect any applicable Environmental Law or Permit, and the operations of each
      Borrower and other Credit Party are in compliance with all Environmental Laws
      and all Permits in all material respects except to the extent that failure
      to be
      in compliance therewith could not reasonably be expected to have a Material
      Adverse Effect.

     

    (b)  Except
      as
      set forth on Schedule 8.8 hereto or except as could not reasonably be expected
      to have a Material Adverse Effect, there has been no investigation by any
      Governmental Authority or any proceeding, complaint, order, directive, claim,
      citation or notice by any Governmental Authority or any other person nor is
      any
      pending or to any Borrower's or any other Credit Party’s knowledge threatened,
      with respect to any non-compliance with or violation of the requirements of
      any
      Environmental Law by any Borrower or any other Credit Party or the release,
      spill or discharge, threatened or actual, of any Hazardous Material or the
      generation, use, storage, treatment, transportation, manufacture, handling,
      production or disposal of any Hazardous Materials or any other environmental,
      health or safety matter, which adversely affects or could reasonably be expected
      to adversely affect in any material respect any Borrower, any such other Credit
      Party or their respective businesses, operations or assets or any properties
      at
      which such Borrower or any such other Credit Party has transported, stored
      or
      disposed of any Hazardous Materials.

     

    (c)  Except
      as
      set forth on Schedule 8.8 hereto or except as could not reasonably be expected
      to have a Material Adverse Effect, neither any Borrower nor any other Credit
      Party has any material liability (contingent or otherwise) in connection with
      a
      release, spill or discharge, threatened or actual, of any Hazardous Materials
      or
      the generation, use, storage, treatment, transportation, manufacture, handling,
      production or disposal of any Hazardous Materials.

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

     

    (d)  Each
      Borrower and each other Credit Party have all Permits required to be obtained
      or
      filed in connection with the operations of such Borrower and such other Credit
      Parties under any Environmental Law, except to the extent that any failure
      to
      obtain or file such Permits could not reasonably be expected to have a Material
      Adverse Effect, and all of such licenses, certificates, approvals or similar
      authorizations and other Permits are valid and in full force and effect, except
      to the extent that the invalidity, or failure to be in full force and effect,
      thereof could not reasonably be expected to have a Material Adverse
      Effect.

     

    8.9  Employee
      Benefits.

     

    (a)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, (i)
      each
      Plan is in compliance in all material respects with the applicable provisions
      of
      ERISA, the Code and other Federal or State law; (ii)
      each
      Plan which is intended to qualify under Section 401(a) of the Code has received
      a favorable determination letter from the Internal Revenue Service and to the
      best of any Borrower's or Guarantor’s knowledge, nothing has occurred which
      would cause the loss of such qualification; and (iii)
      each
      Borrower and its ERISA Affiliates have made all required contributions to any
      Plan subject to Section 412 of the Code, and no application for a funding waiver
      or an extension of any amortization period pursuant to Section 412 of the Code
      has been made with respect to any Plan.

     

    (b)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, there are
      no
      pending, or to the best of any Borrower's or Guarantor’s knowledge, threatened
      claims, actions or lawsuits, or action by any Governmental Authority, with
      respect to any Plan; and there has been no prohibited transaction or violation
      of the fiduciary responsibility rules with respect to any Plan.

     

    (c)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, (i) no
      ERISA
      Event has occurred or is reasonably expected to occur; (ii) based on the latest
      valuation of each Pension Plan and on the actuarial methods and assumptions
      employed for such valuation (determined in accordance with the assumptions
      used
      for funding such Pension Plan pursuant to Section 412 of the Code), the
      aggregate current value of accumulated benefit liabilities of such Pension
      Plan
      under Section 4001(a)(16) of ERISA does not exceed the aggregate current value
      of the assets of such Pension Plan; (iii) neither any Borrower, Guarantor nor
      any of their ERISA Affiliates have incurred and none of them reasonably expect
      to incur, any liability under Title IV of ERISA with respect to any Plan (other
      than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
      any Borrower, Guarantor nor any of their ERISA Affiliates have incurred and
      none
      of them reasonably expect to incur, any liability (and no event has occurred
      which, with the giving of notice under Section 4219 of ERISA, would result
      in
      such liability) under Section 4201 or 4243 of ERISA with respect to a
      Multiemployer Plan; and (v) neither any Borrower, Guarantor nor any of their
      ERISA Affiliates have engaged in a transaction that would be subject to Section
      4069 or 4212(c) of ERISA.

     

    8.10  Bank
      Accounts.
      As of
      the date hereof, all of the deposit accounts, investment accounts or other
      accounts in the name of or used by any Borrower or Guarantor maintained at
      any
      bank or other financial institution are set forth in Section 27 of the
      Information Certificate, subject to the right of each Borrower and Guarantor
      to
      establish new accounts in accordance with Section 5.2 hereof.

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    8.11  Intellectual
      Property.
      Each
      Borrower and Guarantor owns or licenses or otherwise has the right to use all
      Intellectual Property necessary for the operation of its business as presently
      conducted or proposed to be conducted, except to the extent that failure so
      own,
      license or have the right to use such Intellectual Property could not reasonably
      be expected to have a Material Adverse Effect. As of the date hereof, no
      Borrower or Guarantor has any material Intellectual Property registered, or
      subject to pending applications, in the United States Patent and Trademark
      Office or any similar office or agency in the United States, any State thereof,
      any political subdivision thereof or in any other country, other than those
      described in Section 25 of the Information Certificate and has not granted
      any
      licenses with respect thereto other than as set forth in Section 25 of the
      Information Certificate. Except as could not reasonably be expected to have
      a
      Material Adverse Effect, no event has occurred which permits or would permit
      after notice or passage of time or both, the revocation, suspension or
      termination of such rights. Except as could not reasonably be expected to have
      a
      Material Adverse Effect, to any Borrower's and Guarantor’s knowledge, no slogan
      or other advertising device, product, process, method, substance or other
      Intellectual Property or goods bearing or using any Intellectual Property
      presently contemplated to be sold by or employed by any Borrower or Guarantor
      infringes any patent, trademark, servicemark, tradename, copyright, license
      or
      other Intellectual Property owned by any other Person presently and no claim
      or
      litigation is pending against or affecting any Borrower or Guarantor contesting
      its right to sell or use any such Intellectual Property. Section 25 of the
      Information Certificate sets forth all of the agreements or other arrangements
      of each Borrower and Guarantor pursuant to which such Borrower or Guarantor
      has
      a license or other right to use any trademarks, logos, designs, representations
      or other Intellectual Property owned by another person as in effect on the
      date
      hereof and the dates of the expiration of such agreements or other arrangements
      of such Borrower or Guarantor as in effect on the date hereof (collectively,
      together with such agreements or other arrangements as may be entered into
      by
      any Borrower or Guarantor after the date hereof, collectively, the “License
      Agreements”
and
      individually, a “License
      Agreement”).
      No
      trademark, servicemark, copyright or other Intellectual Property at any time
      used by any Borrower or Guarantor which is owned by another person, or owned
      by
      such Borrower or Guarantor subject to any security interest, lien, collateral
      assignment, pledge or other encumbrance in favor of any person other than Agent,
      is affixed to any material Inventory, except (a) to the extent permitted under
      the term of the license agreements listed in Section 25 of the Information
      Certificate and (b) to the extent the sale of Inventory to which such
      Intellectual Property is affixed is permitted to be sold by such Borrower or
      Guarantor under applicable law (including the United States Copyright Act of
      1976).

     

    8.12  Subsidiaries;
      Capitalization; Solvency.

     

    (a)  As
      of the
      date hereof, no Borrower or Guarantor has any direct or indirect Subsidiaries
      and is not engaged in any joint venture or partnership except as set forth
      in
      Section 17 of the Information Certificate.

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

    (b)  As
      of the
      date hereof, each Borrower and Guarantor is the record and beneficial owner
      of
      all of the issued and outstanding shares of Capital Stock of each of the
      Subsidiaries listed in Section 17 of the Information Certificate as being owned
      by such Borrower or Guarantor and there are no proxies, irrevocable or
      otherwise, with respect to such shares and no equity securities of any of the
      Subsidiaries are or may become required to be issued by reason of any options,
      warrants, rights to subscribe to, calls or commitments of any kind or nature
      and
      there are no contracts, commitments, understandings or arrangements by which
      any
      Subsidiary is or may become bound to issue additional shares of it Capital
      Stock
      or securities convertible into or exchangeable for such shares.

     

    (c)  As
      of the
      date hereof, the issued and outstanding shares of Capital Stock of each Borrower
      and Guarantor are directly and beneficially owned and held by the persons
      indicated in the Information Certificate, and in each case all of such shares
      have been duly authorized and are fully paid and non-assessable, free and clear
      of all claims, liens, pledges and encumbrances of any kind, except as disclosed
      in writing to Agent prior to the date hereof.

     

    (d)  Each
      Borrower and Guarantor is Solvent and will continue to be Solvent after the
      creation of the Obligations, the security interests of Agent and the other
      transaction contemplated hereunder.

     

    8.13  Labor
      Disputes.

     

    (a)  Set
      forth
      on Schedule 8.13 hereto is a list (including dates of termination) of all
      material collective bargaining or similar agreements between or applicable
      to
      each Borrower and Guarantor and any union, labor organization or other
      bargaining agent in respect of the employees of any Borrower or Guarantor on
      the
      date hereof.

     

    (b)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, there is
      (i)
      no significant unfair labor practice complaint pending against any Borrower
      or
      any other Credit Party or, to any Borrower's or any such other Credit Party’s
      knowledge, threatened against it, before the National Labor Relations Board,
      and
      no significant grievance or significant arbitration proceeding arising out
      of or
      under any collective bargaining agreement is pending on the date hereof against
      any Borrower or any such other Credit Party or, to any Borrower's or any such
      other Credit Party’s knowledge, threatened against it, and (ii) no significant
      strike, labor dispute, slowdown or stoppage is pending against any Borrower
      or
      any such other Credit Party or, to any Borrower's or any such other Credit
      Party’s knowledge, threatened against any Borrower or any such other Credit
      Party.

     

    8.14  Restrictions
      on Credit Parties.
      As of
      the date hereof, except as could not reasonably be expected to have a Material
      Adverse Effect and except for restrictions contained in this Agreement or any
      other agreement with respect to Indebtedness of any Borrower or Guarantor
      permitted hereunder as in effect on the date hereof, there are no contractual
      or
      consensual restrictions on any Borrower or any other Credit Party which prohibit
      or otherwise restrict (a) the transfer of cash or other assets (i) between
      any
      Borrower and any other Credit Party (other than another Borrower) or (ii)
      between any Credit Party (other than any Borrower) or (b) the ability of any
      Borrower or any other Credit Party to incur Indebtedness or grant security
      interests to Agent in the Collateral.

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    8.15  Material
      Contracts.
      Schedule 8.15 hereto sets forth all Material Contracts to which any Borrower
      or
      Guarantor is a party or is bound as of the date hereof.

     

    8.16  Payable
      Practices.
      No
      Borrower or Guarantor has made any material change in the historical accounts
      payable practices from those in effect immediately prior to the date
      hereof.

     

    8.17  Accuracy
      and Completeness of Information.
      All
      information furnished by or on behalf of any Borrower or Guarantor in writing
      to
      Agent in connection with this Agreement or any of the other Financing Agreements
      or any transaction contemplated hereby or thereby, including all information
      on
      the Information Certificate is true and correct in all material respects on
      the
      date as of which such information is dated or certified and does not omit any
      material fact necessary in order to make such information not materially
      misleading in light of the circumstances in which such information was
      certified.

     

    8.18  Survival
      of Warranties; Cumulative.
      All
      representations and warranties contained in this Agreement or any of the other
      Financing Agreements shall survive the execution and delivery of this Agreement
      and shall be deemed to have been made again to Agent and Lenders on the date
      of
      each additional borrowing or other credit accommodation hereunder and shall
      be
      conclusively presumed to have been relied on by Agent and Lenders regardless
      of
      any investigation made or information possessed by Agent and Lenders. The
      representations and warranties set forth herein shall be cumulative and in
      addition to any other representations or warranties which any Borrower or
      Guarantor shall now or hereafter give, or cause to be given, to Agent or any
      Lender.

     

    SECTION
      9.  AFFIRMATIVE
      AND NEGATIVE COVENANTS

     

    9.1  Maintenance
      of Existence.

     

    (a)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, each
      Borrower and Guarantor shall at all times preserve, renew and keep in full
      force
      and effect its corporate existence and rights and franchises with respect
      thereto and maintain in full force and effect all material licenses, trademarks,
      tradenames, approvals, authorizations and Permits necessary to carry on the
      business as presently conducted, except as permitted in Section 9.7
      hereto.

     

    (b)  No
      Borrower or Guarantor shall change its name unless each of the following
      conditions is satisfied: (i) Agent shall have received not less than thirty
      (30)
      days prior written notice from Borrowers of such proposed change in its
      corporate or limited liability company name, which notice shall accurately
      set
      forth the new name; and (ii) Agent shall have received a copy of the amendment
      to the certificate of incorporation or certificate of formation, as the case
      may
      be, of such Borrower or Guarantor providing for the name change certified by
      the
      Secretary of State of the jurisdiction of incorporation, formation or
      organization of such Borrower or Guarantor as soon as it is
      available.

     

    (c)  No
      Borrower or Guarantor shall change its chief executive office or its mailing
      address or organizational identification number (or if it does not have one,
      shall not acquire one) unless Agent shall have received not less than ten (10)
      days’ prior written notice from Borrowers of such proposed change, which notice
      shall set forth such information with respect thereto as Agent may reasonably
      require and Agent shall have received such agreements as Agent may reasonably
      require in connection therewith. No Borrower or Guarantor shall change its
      type
      of organization, jurisdiction of organization or other legal
      structure.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    9.2  New
      Collateral Locations.
      Each
      Borrower and Guarantor may only open any new location within the continental
      United States provided that with respect to any such location where such
      Borrower's or Guarantor’s financial books and records are, or Collateral with a
      fair market value in excess of $1,000,000 is, located, stored, fabricated or
      manufactured, (a)
      such
      Borrower or Guarantor gives Agent ten (10) days prior written notice of the
      intended opening of any such new location and (b)
      either
(i)
      prior to
      or concurrently with such opening, such Borrower or Guarantor executes and
      delivers, or causes to be executed and delivered, to Agent a Collateral Access
      Agreement with respect to such location and such agreements, documents, and
      instruments related thereto as Agent may deem reasonably necessary or desirable
      to protect its interests in the Collateral at such location, or (ii)
      Agent
      has established a Reserve in an amount equal to two (2) months rent with respect
      to such location. 

     

    9.3  Compliance
      with Laws, Regulations, Etc.

     

    (a)  Except
      as
      could not reasonably be expected to have a Material Adverse Effect, each
      Borrower and Guarantor shall, and shall cause each other Credit Party (other
      than another Borrower) to, at all times, comply in all material respects with
      all laws, rules, regulations, licenses, approvals, orders and other Permits
      applicable to it and duly observe in all material respects all requirements
      of
      any foreign, Federal, State or local Governmental Authority applicable to
      it.

     

    (b)  Borrowers
      and Guarantors shall give written notice to Agent promptly (but in any event
      within two Business Days) upon receipt by a Responsible Officer of any Borrower
      or Guarantor of any notice of, or upon any Borrower or Guarantor otherwise
      obtaining knowledge of, (i) the occurrence of any event involving the release,
      spill or discharge, threatened or actual, of any Hazardous Material which is
      reasonably likely to have a Material Adverse Effect, or (ii) any investigation,
      proceeding, complaint, order, directive, claims, citation or notice with respect
      to: (A) any non-compliance with or violation of any Environmental Law by any
      Borrower or any other Credit Party or (B) the release, spill or discharge,
      threatened or actual, of any Hazardous Material other than in the ordinary
      course of business and other than as permitted under any applicable
      Environmental Law, in each case which is reasonably likely to have a Material
      Adverse Effect. Copies of all material environmental surveys, audits,
      assessments, feasibility studies and results of remedial investigations shall
      be
      promptly furnished, or caused to be furnished, by such Borrower or Guarantor
      to
      Agent. Each Borrower and Guarantor shall take prompt action to respond to any
      material non-compliance by such Borrower or any other Credit Party (other than
      another Borrower) with any of the Environmental Laws and shall regularly report
      to Agent on such response.

     

    (c)  Without
      limiting the generality of the foregoing, in the event that an Event of Default
      shall have occurred and be continuing, whenever Agent reasonably determines
      that
      there is non-compliance, or any condition which requires any action by or on
      behalf of any Borrower or Guarantor in order to avoid any non-compliance, with
      any Environmental Law, Borrowers shall, at Agent's request and Borrowers’
expense: (i) cause an independent environmental engineer reasonably acceptable
      to Agent to conduct such tests of the site where non-compliance or alleged
      non
      compliance with such Environmental Laws has occurred as to such non-compliance
      and prepare and deliver to Agent a report as to such non-compliance setting
      forth the results of such tests, a proposed plan for responding to any
      environmental problems described therein, and an estimate of the costs thereof,
      and (ii) provide to Agent a supplemental report of such engineer whenever the
      scope of such non-compliance, or such Borrower's or Guarantor’s response thereto
      or the estimated costs thereof, shall change in any material
      respect.

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    (d)  Each
      Borrower and Guarantor shall indemnify and hold harmless Agent and Lenders
      and
      their respective directors, officers, employees, agents, invitees,
      representatives, successors and assigns, from and against any and all losses,
      claims, damages, liabilities, costs, and expenses (including reasonable
      attorneys' fees and expenses) directly or indirectly arising out of or
      attributable to the use, generation, manufacture, reproduction, storage,
      release, threatened release, spill, discharge, disposal or presence of a
      Hazardous Material, including the costs of any required or necessary repair,
      cleanup or other remedial work with respect to any property of any Borrower
      or
      any other Credit Party and the preparation and implementation of any closure,
      remedial or other required plans, other than any losses, costs or expenses
      caused by the gross negligence or willful misconduct of Lender, its directors,
      officers, employees, agents, representative, successors or assigns. All
      representations, warranties, covenants and indemnifications in this Section
      9.3
      shall survive the payment of the Obligations and the termination of this
      Agreement.

     

    9.4  Payment
      of Taxes and Claims.
      Except
      as could not reasonably be expected to have a Material Adverse Effect, each
      Borrower and Guarantor shall, and shall cause each other Credit Party (other
      than another Borrower) to, duly pay and discharge all taxes, assessments,
      contributions and governmental charges upon or against it or its properties
      or
      assets, except for taxes the validity of which are being contested in good
      faith
      by appropriate proceedings diligently pursued and available to such Borrower
      or
      such other Credit Party, as the case may be, and with respect to which adequate
      reserves as required by GAAP have been set aside on its books. Subject to
      Sections 6.4(c), (d), (e), (f) and (g) hereof, each Borrower and Guarantor
      shall
      be liable for any tax or penalties imposed on Agent or any Lender as a result
      of
      the financing arrangements provided for herein and each Borrower and Guarantor
      agrees to indemnify and hold Agent and each Lender harmless with respect to
      the
      foregoing, and to repay to Agent and each Lender on demand the amount thereof,
      and until paid by Borrowers such amount shall be added and deemed part of the
      Loans, provided,
      that,
      nothing
      contained herein shall be construed to require Borrowers or Guarantors to pay
      any income or franchise taxes attributable to the income of Agent or any Lender
      from any amounts charged or paid hereunder to Agent or any Lender. The foregoing
      indemnity shall survive the payment of the Obligations and the termination
      of
      this Agreement

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    9.5  Insurance.
      Each
      Borrower and Guarantor shall, and shall cause each of their respective
      Subsidiaries to, at all times, maintain with financially sound and reputable
      insurers insurance with respect to the Collateral against loss or damage and
      all
      other insurance of the kinds and in the amounts customarily insured against
      or
      carried by corporations of established reputation engaged in the same or similar
      businesses and similarly situated. Said policies of insurance shall be
      reasonably satisfactory to Agent as to form, amount and insurer. Borrowers
      and
      Guarantors shall furnish certificates, policies or endorsements to Agent as
      Agent shall reasonably require as proof of such insurance, and, if any Borrower
      or Guarantor fails to do so, Agent is authorized, but not required, to obtain
      such insurance at the expense of Borrowers. All policies shall provide for
      at
      least thirty (30) days prior written notice to Agent of any cancellation or
      reduction of coverage and that Agent may act as attorney for each Borrower
      and
      Guarantor in obtaining, and at any time an Event of Default exists or has
      occurred and is continuing, adjusting, settling, amending and canceling such
      insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
      payee and an additional insured (but without any liability for any premiums)
      under such insurance policies and Borrowers and Guarantors shall obtain
      non-contributory lender’s loss payable endorsements to all insurance policies in
      form and substance satisfactory to Agent. Such lender’s loss payable
      endorsements shall specify that the proceeds of such insurance shall be payable
      to Agent as its interests may appear and further specify that Agent and Lenders
      shall be paid regardless of any act or omission by any Borrower, Guarantor
      or
      any of its or their Affiliates. Without limiting any other rights of Agent
      or
      Lenders, any insurance proceeds received by Agent at any time may be applied
      to
      payment of the Obligations, whether or not then due, in any order and in such
      manner as Agent may determine. Upon application of such proceeds to the Loans,
      Loans may be available subject and pursuant to the terms hereof to be used
      for
      the costs of repair or replacement of the Collateral lost or damages resulting
      in the payment of such insurance proceeds.

     

    9.6  Financial
      Statements and Other Information.

     

    (a)  Each
      Borrower and Guarantor shall, and shall cause each other Credit Party to, keep
      proper books and records in which complete entries shall be made of all dealings
      or transactions of or in relation to the Collateral and the business of such
      Borrower and each other Credit Party in accordance with GAAP. Borrowers and
      Guarantors shall promptly furnish to Agent and Lenders all such financial and
      other information as Agent shall reasonably request relating to the Collateral
      and the assets, business and operations of Borrowers and Guarantors, and
      Borrowers shall notify the auditors and accountants of Borrowers and Guarantors
      that Agent is authorized to obtain such information directly from them. Without
      limiting the foregoing, Borrowers shall furnish or cause to be furnished to
      Agent, the following:

     

    (i)  within
      forty-five (45) days after the end of each fiscal quarter, quarterly unaudited
      consolidated financial statements (including in each case balance sheets,
      statements of income and loss, statements of cash flow, and statements of
      shareholders' equity), all in reasonable detail, fairly presenting in all
      material respects the financial position and the results of the operations
      of
      Parent Guarantor and its Subsidiaries (showing Excluded Subsidiaries, if any,
      separately) as of the end of and through such fiscal quarter, certified to
      be
      correct by the chief financial officer of Parent Guarantor, subject to normal
      year-end adjustments and the absence of footnote disclosures and accompanied
      by
      a compliance certificate substantially in the form of Exhibit C hereto, along
      with a schedule in a form reasonably satisfactory to Agent of the calculations
      used in determining, as of the end of such quarter, whether Borrowers and
      Guarantors were in compliance with the covenants set forth in Section 9.18
      of
      this Agreement for such quarter, and

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

       

    

    (ii)  within
      one hundred twenty (120) days after the end of each fiscal year, audited
      consolidated financial statements of Parent Guarantor and its Subsidiaries
      (showing Excluded Subsidiaries, if any, separately) (including in each case
      balance sheets, statements of income and loss, statements of cash flow, and
      statements of shareholders' equity), and the accompanying notes thereto, all
      in
      reasonable detail, fairly presenting in all material respects the financial
      position and the results of the operations of Parent Guarantor and its
      Subsidiaries (showing Excluded Subsidiaries, if any, separately) as of the
      end
      of and for such fiscal year, together with the unqualified opinion of
      independent certified public accountants with respect to the audited
      consolidated financial statements, which accountants shall be Ernst & Young
      LLP or an independent accounting firm selected by Parent Guarantor and
      reasonably acceptable to Agent, that such audited consolidated financial
      statements have been prepared in accordance with GAAP, and present fairly in
      all
      material respects the results of operations and financial condition of Parent
      Guarantor and its Subsidiaries as of the end of and for the fiscal year then
      ended, and 

     

    (iii)  at
      such
      time as available, but in no event later than thirty (30) days after the end
      of
      each fiscal year, projected consolidated financial statements (including in
      each
      case, forecasted balance sheets and statements of income and loss, statements
      of
      cash flow, and statements of shareholders’ equity) of Parent Guarantor and its
      Subsidiaries (showing Excluded Subsidiaries, if any, separately) for such fiscal
      year, all in reasonable detail, and in a format consistent with the projections
      delivered by Borrowers to Agent prior to the date hereof, together with such
      supporting information as Agent may reasonably request. Such projected financial
      statements shall be prepared on a quarterly basis for such year. Such
      projections shall represent the reasonable estimate by Borrowers and Guarantors
      of the future financial performance of Parent Guarantor and its Subsidiaries
      (showing Excluded Subsidiaries, if any, separately) for the periods set forth
      therein and shall have been prepared on the basis of the assumptions set forth
      therein which Borrowers and Guarantors believe are fair and reasonable as of
      the
      date of preparation in light of current and reasonably foreseeable business
      conditions (it being understood that actual results may differ from those set
      forth in such projected financial statements).

     

    (b)  Borrowers
      and Guarantors shall promptly notify Agent in writing of the details of (i)
      any
      loss, damage, investigation, action, suit, proceeding or claim relating to
      Collateral having a value of more than $2,500,000 or which if would result
      in
      any material adverse change in any Borrower's or Guarantor’s business,
      properties, assets, goodwill or financial condition, (ii) any Material Contract
      being terminated or amended or any new Material Contract entered into (in which
      event Borrowers and Guarantors shall provide Agent with a copy of such Material
      Contract upon Agent’s request), (iii) any order, judgment or decree in excess of
      $2,500,000 shall have been entered against any Borrower or Guarantor any of
      their properties or assets, (iv) any notification of a material violation of
      laws or regulations received by any Borrower or Guarantor, (v) any ERISA Event,
      and (vi) the occurrence of any Default or Event of Default.

     

    (c)  Promptly
      after the sending or filing thereof, Borrowers shall send to Agent copies of
      (i)
      all reports which Parent Guarantor or any of its Subsidiaries sends to its
      public security holders and debt security holders generally, (ii) all reports
      and registration statements which Parent Guarantor or any of its Subsidiaries
      files with the Securities Exchange Commission, any national or foreign
      securities exchange or the National Association of Securities Dealers, Inc.,
      and
      such other reports as Agent may hereafter specifically identify to Borrowers
      that Agent will reasonably require be provided to Agent, (iii) all press
      releases and (iv) all other statements concerning material changes or
      developments in the business of any Borrower or Guarantor made available by
      any
      Borrower or Guarantor to the public.

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

     

    (d)  Agent
      is
      hereby authorized to deliver a copy of any financial statement or any other
      information relating to the business of any Borrower or Guarantor to any court
      or other Governmental Authority or, subject to the confidentiality provisions
      set forth in Section 13.5 hereof, to any Affiliate of any Lender or to any
      participant or assignee or prospective participant or assignee. Each Borrower
      and Guarantor hereby authorizes and directs all accountants or auditors to
      deliver to Agent during the term of this Agreement, at Borrowers’ expense,
      copies of the financial statements of each Borrower and Guarantor and any
      reports or management letters prepared by such accountants or auditors on behalf
      of such Borrower or Guarantor and to disclose to Agent and Lenders such
      information as they may have regarding the business of any Borrower and
      Guarantor. Any documents, schedules, invoices or other papers delivered to
      Agent
      or any Lender may be destroyed or otherwise disposed of by Agent or such Lender
      one (1) year after the same are delivered to Agent or such Lender, except as
      otherwise designated by Borrowers to Agent or such Lender in
      writing.

     

    Documents
      required to be delivered pursuant to this Section 9.6 (to the extent any such
      documents are included in materials otherwise filed with the SEC) may be
      delivered electronically and if so delivered, shall be deemed to have been
      delivered on the date (i) on which any Borrower or Guarantor posts such
      documents, or provides a link thereto on such Borrower’s or Guarantor’s website
      on the Internet or (ii) on which such documents are posted on such Borrower’s or
      Guarantor’s behalf on an Internet or intranet website, if any, to which each
      Lender and Agent have access (whether a commercial, third-party website or
      whether sponsored by the Agent); provided
      that,
      Borrowers or Guarantors shall notify Agent of the posting of any such documents
      and provide to Agent by electronic mail electronic versions (i.e.,
      soft
      copies) of such documents. 

     

    9.7  Sale
      of Assets, Consolidation, Merger, Dissolution, Etc.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      (other than any Excluded Subsidiary) to, directly or indirectly,

     

    (a)  merge
      into or with or consolidate with any other Person or permit any other Person
      to
      merge into or with or consolidate with it, except that 

     

    (i)  a
      Domestic Subsidiary of any Borrower (other than another Borrower, a Guarantor,
      or an Excluded Subsidiary) may merge with and into such Borrower with such
      Borrower being the surviving entity, provided,
      that
      following the consummation of any such merger, the assets owned by such Domestic
      Subsidiary prior to such merger shall not be deemed (I) Eligible Accounts unless
      the criteria set forth in Sections 9.10(i)(x), (xi) and (xii) hereof shall
      have
      been fully satisfied with respect to such assets and such Credit Party (in
      place
      of any subject Target or New Subsidiary as referred to in such Sections), as
      applicable, and such assets shall meet the criteria set forth in the definition
      of "Eligible Accounts" or (II) Eligible Equipment, unless, with respect to
      such
      assets, Agent shall have completed a field examination and appraisals and other
      examinations similar in scope to those performed on the Collateral prior to
      the
      date thereof by Agent with results reasonably satisfactory to Agent (and Agent
      shall have established additional eligibility criteria, availability reserves
      and percentage advance rates in its commercially reasonable discretion in light
      of the foregoing appraisals and field examination), and such assets shall meet
      the criteria set forth in the definition of "Eligible Equipment";

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

     

    (ii)  a
      Domestic Subsidiary of any Guarantor (other than another Guarantor, a Borrower,
      or an Excluded Subsidiary) may merge with and into such Guarantor with such
      Guarantor being the surviving entity,

     

    (iii)  any
      Domestic Subsidiary of any Borrower or any Guarantor that is not a Guarantor,
      a
      Borrower or an Excluded Subsidiary may merge with or into or consolidate with
      any other Domestic Subsidiary of any Borrower or any Guarantor that is not
      a
      Guarantor, a Borrower or an Excluded Subsidiary, 

     

    (iv)  any
      Borrower may merge with and into another Borrower, 

     

    (v)  any
      Guarantor may merge with and into another Guarantor, so long as Parent Guarantor
      is the surviving entity to the extent Parent Guarantor is a party to such
      merger; 

     

    provided,
      that,
      in connection with any merger or consolidation permitted pursuant to clauses
      (i)
      through (v) of this Section 9.7(a), each of the following conditions is
      satisfied as determined by Agent in good faith: (I) Agent shall have received
      not less than ten (10) Business Days' prior written notice of the intention
      of
      such Persons to so merge or consolidate, which notice shall set forth in
      reasonable detail satisfactory to Agent, the Persons that are merging or
      consolidating, which Person will be the surviving entity, the locations of
      the
      assets of the Persons that are merging or consolidating, and the material
      agreements and documents relating to such merger or consolidation, (II) Agent
      shall have received such other information with respect to such merger or
      consolidation as Agent may reasonably request, (III) as of the effective date
      of
      the merger or consolidation and after giving effect thereto, no Default or
      Event
      of Default shall exist or have occurred and be continuing, (IV) as of the
      effective date of the merger or consolidation and after giving effect thereto,
      Borrowers’ Excess Availability plus
      Qualified Cash shall be equal to or greater than $10,000,000, (V) Agent shall
      have received, true, correct and complete copies of all agreements, documents
      and instruments relating to such merger or consolidation, including, but not
      limited to, the certificate or certificates of merger to be filed with each
      appropriate Secretary of State (with a copy as filed promptly after such
      filing), and (VI) the surviving corporation shall expressly confirm, ratify
      and
      assume the Obligations and the Financing Agreements to which it is a party
      in
      writing, in form and substance reasonably satisfactory to Agent, and Borrowers
      and Guarantors shall execute and deliver such other agreements, documents and
      instruments as Agent may reasonably request in connection
      therewith;

     

    (b)  sell,
      issue, assign, lease, license, transfer title to, abandon or otherwise dispose
      of any Capital Stock to any other Person or any of its assets to any other
      Person, except for

     

    (i)  sales
      of
      Inventory in the ordinary course of business,

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

     

    (ii)  the
      sale
      or other disposition of worn-out, surplus or obsolete Equipment or Equipment
      no
      longer used or useful in the business of any Borrower or any Guarantor so long
      as (A) before and after giving effect to any such sale or disposition, no
      Default or Event of Default has occurred and is continuing, (B) the proceeds
      of
      any such sale or disposition are paid to Agent for application to the
      Obligations as set forth herein, and (C) such Equipment is sold for at least
      the
      appraised value thereof as set forth on the most recent appraisal of Equipment
      then received by Agent in accordance with Section 7.4 hereof,

     

    (iii)  the
      sale
      or other disposition of Equipment (excluding worn-out, surplus and obsolete
      Equipment and Equipment no longer used or useful in the business of any Borrower
      or Guarantor) so long as (A) such sales or other dispositions do not involve
      such Equipment having an aggregate fair market value in excess of $5,000,000
      for
      all such Equipment disposed of by all of the Borrowers and Guarantors in any
      fiscal year of Borrowers or as Agent may otherwise agree, (B) before and after
      giving effect to any such sale or disposition, no Default or Event of Default
      has occurred and is continuing, (C) the proceeds of any such sale or disposition
      are paid to Agent for application to the Obligations as set forth herein, and
      (D) such Equipment is sold for at least the appraised value thereof as set
      forth
      on the most recent appraisal of Equipment then received by Agent in accordance
      with Section 7.4 hereof, and

     

    (iv)  the
      issuance of Capital Stock of any Borrower or Guarantor consisting of common
      stock pursuant to an employee stock option or grant or similar equity plan
      or
      401(k) plans of any Borrower or Guarantor for the benefit of employees,
      directors and consultants of such Borrower or any other Credit Party,
provided,
      that,
      in no
      event shall such Borrower or Guarantor be required to issue, or shall such
      Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or
      401(k) plans which would result in a Change of Control or other Event of
      Default, 

     

    (v)  the
      transfer, sale, lease or licensing of all or part of such Borrower's or
      Guarantor’s Intellectual Property or any items of Equipment (other than Eligible
      Equipment) with a fair market value not to exceed $10,000,000 in the aggregate
      for all such Equipment of the Borrowers or Guarantors to a Domestic Subsidiary
      (other than an Excluded Subsidiary) of such Borrower or Guarantor or to any
      other Borrower or Guarantor; provided,
      that:
(A)
      immediately prior to and as a result of such transfer, sale, lease or licensing,
      no Default or Event of Default shall have occurred and be continuing; and
(B)
      to the
      extent such transfer, sale, lease or licensing is to a Domestic Subsidiary
      which
      is not a Borrower or Guarantor, (1) prior to such transfer, sale, lease or
      licensing to such Domestic Subsidiary, Agent shall have had a reasonable
      opportunity to conduct customary and other business, legal, and collateral
      due
      diligence with respect to such Domestic Subsidiary, including, but not limited
      to, ordering, in form and substance reasonably satisfactory to Agent, and
      reviewing to its satisfaction, UCC, tax lien, litigation, bankruptcy and
      intellectual property searches from all offices that Agent deems reasonably
      appropriate in its sole discretion, certificates of status with respect to
      such
      Domestic Subsidiary, in form and substance satisfactory to Agent, which
      certificates shall be issued by the appropriate officer of the jurisdiction
      of
      organization of such Domestic Subsidiary and by the appropriate officers of
      each
      other jurisdiction in which such Domestic Subsidiary is qualified to do
      business, which certificates shall indicate that such Domestic Subsidiary is
      in
      good standing in such jurisdictions; and (2) such Domestic Subsidiary shall
      have
      executed and delivered a Guaranty, a joinder to this Agreement, and such other
      documents (including but not limited to a non-restrictive license to use) as
      Agent may reasonably request to protect and perfect its interest in such
      Collateral each in form and substance reasonably satisfactory to Agent in its
      sole discretion, 

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

     

    (vi)  the
      transfer, sale, lease or licensing of all or part of such Borrower's or
      Guarantor’s Intellectual Property in the ordinary course of such Borrower's or
      Guarantor’s business to any Person other than a Subsidiary of such Borrower or
      Guarantor,

     

    (vii)  the
      consignment of Inventory by the Credit Parties in the ordinary course of
      business so long as the fair market value of all such consigned Inventory for
      all Credit Parties (other than Excluded Subsidiaries) at any one time does
      not
      exceed $500,000 in the aggregate, 

     

    (viii)  the
      transfer or sale of assets to any Joint Venture, Foreign Subsidiary of any
      Borrower or Guarantor, Excluded Subsidiary or to Jazz WOFE in connection with
      any investment or other transaction permitted by Section 9.10(h); provided,
      that
      all transfers or sales of items of Equipment of any Credit Party (other than
      an
      Excluded Subsidiary) to any Joint Venture, Foreign Subsidiary of any Borrower
      or
      Guarantor, or Excluded Subsidiary shall be limited to Equipment with a fair
      market value not to exceed $2,500,000 in the aggregate for all such Equipment
      of
      the Credit Parties (other than Excluded Subsidiaries) and for all such transfers
      and sales and shall be only permitted to the extent that any such transfer
      or
      sale is in the ordinary course of the applicable Credit Parties’ business; and
further provided,
      that
      immediately prior to and after giving effect to such transfer or sale, no
      Default or Event of Default shall have occurred and be continuing, 

     

    (ix)  the
      issuance of stock options of Parent Guarantor to directors or employees of
      any
      Credit Party, provided that any such issuance does not constitute, cause, or
      otherwise result in a Change of Control or is not otherwise prohibited by this
      Agreement,

     

    (x)  the
      issuance of Capital Stock of Parent Guarantor provided that any such issuance
      does not constitute, cause, or otherwise result in a Change of Control or is
      not
      otherwise prohibited by this Agreement, 

     

    (xi)  in
      order
      to resolve disputes that occur in the ordinary course of business, the discount
      (or other compromise for less than face value thereof) of notes or Accounts,
      provided,
      that no
      Default or Event of Default shall have occurred and be continuing,

     

    (xii)  the
      transfers of condemned property to the respective Governmental Authority or
      agency that has condemned the same (whether by deed in lieu of condemnation
      or
      otherwise), and transfers of properties that have been subject to a casualty
      to
      the respective insurer of such property or its designee as party of an insurance
      settlement,

     

    (xiii)  the
      dispositions of Cash Equivalents, and

     

    (xiv)  other
      dispositions which do not in the aggregate exceed $1,000,000 per fiscal
      year;

     

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

     

    (c)  wind
      up,
      liquidate or dissolve, except as permitted by clause (a) of this Section;
      or

     

    (d)  agree
      to
      do any of the foregoing unless such agreement is conditioned upon Agent's
      consent thereto or if all outstanding Obligations (other than contingent
      indemnification Obligations) shall be indefeasibly paid in full as a result
      of
      the consummation of the transactions contemplated thereby.

     

    9.8  Encumbrances.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      (other than any Excluded Subsidiary) to, create, incur, assume or suffer to
      exist any security interest, mortgage, pledge, lien, charge or other encumbrance
      of any nature whatsoever on any of its assets or properties, including the
      Collateral, or file or permit the filing of, or permit to remain in effect,
      any
      financing statement or other similar notice of any security interest or lien
      with respect to any such assets or properties, except:

     

    (a)  the
      security interests and liens of Agent for itself and the benefit of the Secured
      Parties;

     

    (b)  liens
      securing the payment of taxes, assessments or other governmental charges or
      levies either not yet overdue or the validity of which are being contested
      in
      good faith by appropriate proceedings diligently pursued and available to such
      Borrower or such other Credit Party, as the case may be and with respect to
      which adequate reserves have been set aside on its books;

     

    (c)  non-consensual
      statutory liens (other than liens securing the payment of taxes), landlord
      liens, carriers liens, materialmen liens, laborers liens, suppliers liens,
      mechanics liens or other like liens, in each case, arising in the ordinary
      course of such Credit Party's business to the extent (i) such liens secure
      Indebtedness which is not overdue, or (ii) such liens secure Indebtedness
      relating to claims or liabilities which are fully insured and being defended
      at
      the sole cost and expense and at the sole risk of the insurer or being contested
      in good faith by appropriate proceedings diligently pursued and available to
      such Credit Party, in each case prior to the commencement of foreclosure or
      other similar proceedings and with respect to which adequate reserves as
      required by GAAP have been set aside on its books;

     

    (d)  zoning
      restrictions, easements, licenses, covenants and other restrictions affecting
      the use of Real Property which do not interfere in any material respect with
      the
      use of such Real Property or ordinary conduct of the business of such Credit
      Party as presently conducted thereon or materially impair the value of the
      Real
      Property which may be subject thereto;

     

    (e)  purchase
      money security interests in Equipment (including Capital Leases) to secure
      Indebtedness permitted under Section 9.9(b) hereof;

     

    (f)  pledges
      and deposits of cash by any Credit Party after the date hereof in the ordinary
      course of business in connection with workers' compensation, unemployment
      insurance and other types of social security benefits consistent with the
      current practices of such Credit Party as of the date hereof;

     

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    (g)  pledges
      and deposits of cash by any Credit Party after the date hereof to secure the
      performance of tenders, bids, leases, trade contracts (other than for the
      repayment of Indebtedness), statutory obligations and other similar obligations
      in each case in the ordinary course of business consistent with the current
      practices of such Credit Party as of the date hereof; provided,
      that in
      connection with any performance bonds issued by a surety or other person, the
      issuer of such bond shall have waived in writing any rights in or to, or other
      interest in, any of the Collateral in an agreement, in form and substance
      reasonably satisfactory to Agent;

     

    (h)  liens
      arising from (i) operating leases and the precautionary UCC financing statement
      filings in respect thereof and (ii) equipment or other materials which are
      not
      owned by any Credit Party located on the premises of such Credit Party (but
      not
      in connection with, or as part of, the financing thereof) from time to time
      in
      the ordinary course of business of such Credit Party and the precautionary
      UCC
      financing statement filings in respect thereof;

     

    (i)  judgments
      and other similar liens arising in connection with court proceedings that do
      not
      constitute an Event of Default, provided,
      that,
      (i)
      such liens are being contested in good faith and by appropriate proceedings
      diligently pursued, (ii) adequate reserves or other appropriate provision,
      if
      any, as are required by GAAP have been made therefor, (iii) a stay of
      enforcement of any such liens is in effect and (iv) Agent may establish a
      Reserve with respect thereto; 

     

    (j)  any
      such
      security interest, lien or other encumbrance created or incurred in connection
      with the cash collateralization of such Borrower's Existing Letters of Credit
      or
      any other letter of credit issued as permitted by this Agreement;

     

    (k)  any
      such
      subordinate security interest, lien or other encumbrance created or incurred
      in
      connection with the financing by such Credit Party of any premiums of insurance
      required to be maintained hereunder;

     

    (l)  any
      other
      security interest, lien or other encumbrance (other than any security interest,
      lien or other encumbrance that would encumber any Accounts, Inventory or
      Eligible Equipment) created or incurred in connection with any Indebtedness
      not
      to exceed $1,000,000 in the aggregate at any one time outstanding for all Credit
      Parties (other than Excluded Subsidiaries); 

     

    (m)  security
      interests and liens created or incurred in connection with the incurrence of
      Indebtedness consisting of the financing of insurance premiums permitted by
      Section 9.9(l) hereof;

     

    (n)  liens
      on
      any asset (other than any lien that encumbers any Accounts, Inventory or
      Eligible Equipment) existing at the time of acquisition of such asset by any
      Credit Party so long as (i) the lien shall apply only to the asset so acquired
      and the proceeds thereof, and (ii) the Indebtedness secured by such lien is
      otherwise permitted hereunder; 

     

    (o)  leases,
      sublicenses, leases or subleases, granted in the ordinary course of business
      so
      long as any such lease, sublicense, lease or sublease does not (i) interfere
      with the business of the applicable Credit Party, or (ii) impair Agent’s or any
      Lender’s security interest in the Collateral or any rights and remedies of Agent
      or any Lender appurtenant thereto;

     

    
      
        
        

      

      
        74

        
          

        

      

      
        
        

      

    

     

    (p)  liens
      in
      favor of customs and revenue authorities arising as a matter of law to secure
      payment of custom duties in connection with the imposition of goods provided,
      that,
      Agent
      may establish a Reserve with respect thereto; and

     

    (q)  the
      security interests and liens set forth in Section 23 of the Information
      Certificate.

     

    9.9  Indebtedness.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      (other than any Excluded Subsidiary) to, incur, create, assume, become or be
      liable in any manner with respect to, or permit to exist, any Indebtedness,
      or
      guarantee, assume, endorse, or otherwise become responsible for (directly or
      indirectly), the Indebtedness, performance, obligations or dividends of any
      other Person, except:

     

    (a)  the
      Obligations;

     

    (b)  purchase
      money Indebtedness (including Capital Leases) arising after the date hereof
      to
      the extent secured by purchase money security interests in Equipment (including
      Capital Leases) not to exceed $7,500,000 in the aggregate incurred by all Credit
      Parties (other than Excluded Subsidiaries) at any time outstanding so long
      as
      such security interests and mortgages do not apply to any property of the
      applicable Credit Party other than the Equipment so acquired and proceeds
      thereof, and the Indebtedness secured thereby does not exceed the cost of the
      Equipment so acquired, as the case may be;

     

    (c)  guarantees
      by any Credit Party of the Obligations, or guarantees by any Borrower of the
      Obligations of any other Borrower, in favor of Agent for the benefit of Lenders
      and the other Secured Parties;

     

    (d)  unsecured
      Indebtedness of any Credit Party arising after the date hereof to any third
      person (but not to any other Credit Party), provided,
      that,
      each of
      the following conditions is satisfied: (i) such Indebtedness shall be on terms
      and conditions reasonably acceptable to Agent and shall be subject and
      subordinate in right of payment to the right of Agent and Lenders to receive
      the
      prior indefeasible payment and satisfaction in full payment of all of the
      Obligations pursuant to the terms of an intercreditor agreement between Agent
      and such third party, in form and substance reasonably satisfactory to Agent,
      (ii) Agent shall have received not less than ten (10) days prior written notice
      of the intention of such Credit Party to incur such Indebtedness, which notice
      shall set forth in reasonable detail reasonably satisfactory to Agent the amount
      of such Indebtedness, the person or persons to whom such Indebtedness will
      be
      owed, the interest rate, the schedule of repayments and maturity date with
      respect thereto and such other information as Agent may request with respect
      thereto, (iii) Agent shall have received true, correct and complete copies
      of
      all agreements, documents and instruments evidencing or otherwise related to
      such Indebtedness, (iv) in no event shall the aggregate principal amount of
      such
      Indebtedness incurred during the term of this Agreement exceed $75,000,000
      (inclusive of the aggregate of such Indebtedness incurred, created, or assumed
      by each other Credit Party or for which each other Credit Party shall have
      become liable), (v) as of the date of incurring such Indebtedness and after
      giving effect thereto, no Default or Event of Default shall exist or have
      occurred and be continuing, (vi) such Credit Party shall not, directly or
      indirectly, (A) amend, modify, alter or change the terms of such Indebtedness
      or
      any agreement, document or instrument related thereto in a manner adverse to
      Agent or any Lender in any material respect, except, that, such Credit Party
      may
      amend, modify, alter or change the terms thereof so as to extend the maturity
      thereof, or defer the timing of any payments in respect thereof, or to forgive
      or cancel any portion of such Indebtedness (other than pursuant to payments
      thereof), or to reduce the interest rate or any fees in connection therewith
      or
      otherwise make any covenant less restrictive or waive any Event of Default
      thereunder, or (B) redeem, retire, defease, purchase or otherwise acquire such
      Indebtedness (except pursuant to regularly scheduled payments permitted herein
      or as permitted under the applicable subordination agreement), or set aside
      or
      otherwise deposit or invest any sums for such purpose, and (vii) Borrowers
      and
      Guarantors shall furnish to Agent all notices or demands in connection with
      such
      Indebtedness either received by any Credit Party or on its behalf promptly
      after
      the receipt thereof, or sent by any Credit Party or on its behalf concurrently
      with the sending thereof, as the case may be;

     

    
      
        
        

      

      
        75

        
          

        

      

      
        
        

      

    

     

    (e)  Indebtedness
      with respect to any Hedging Transactions; provided,
      that
      such arrangements are: (i) with any Bank Product Provider and (ii) were entered
      into for the purpose of protecting such Borrower or such other Credit Party
      against fluctuations in interest rates and not for speculative
      purposes;

     

    (f)  the
      Indebtedness set forth on Schedule 9.9 hereto and any refinancings, renewals,
      or
      extensions of such Indebtedness so long as: (i) the terms and conditions of
      such refinancings, renewals, or extensions do not, in Agent’s reasonable
      judgment, materially impair the prospects of repayment of the Obligations by
      Borrowers or materially impair Borrowers’ creditworthiness, (ii) such
      refinancings, renewals, or extensions do not result in an increase in the
      principal amount of the Indebtedness so
      refinanced, renewed, or extended,
      (iii)
      such refinancings, renewals, or extensions do not result in an increase in
      the
      interest rate with respect to the Indebtedness so refinanced, renewed, or
      extended, (iv) such refinancings, renewals, or extensions do not result in
      a
      shortening of the average weighted maturity of the Indebtedness so refinanced,
      renewed, or extended, nor are they on terms or conditions that, taken as a
      whole, are materially more burdensome or restrictive to Borrowers, (v) if the
      Indebtedness that is refinanced, renewed, or extended was subordinated in right
      of payment to the Obligations, then the terms and conditions of the refinancing,
      renewal, or extension must include subordination terms and conditions that
      are
      at least as favorable to Agent and the Lenders as those that were applicable
      to
      the refinanced, renewed, or extended Indebtedness, and (vi) the Indebtedness
      that is refinanced, renewed, or extended is not recourse to any Person that
      is
      liable on account of the Obligations other than those Persons which were
      obligated with respect to the Indebtedness that was refinanced, renewed, or
      extended; 

     

    (g)  Indebtedness
      incurred or created in connection with Existing Letters of Credit or any letter
      of credit (other than any Letter of Credit) issued to any Credit Party in the
      ordinary course of its business by any issuer other than Wachovia Bank, National
      Association or its successors and assigns;

     

    (h)  Guaranties
      by such Borrower or such Credit Party of any obligations of any other Borrower
      or Credit Party to the extent permitted hereunder;

     

    (i)  Guaranties
      by such Borrower or such Credit Party of any obligations of any Joint Venture,
      Foreign Subsidiary of any Borrower or Guarantor, or of Jazz WOFE; provided,
      that,
(A)
      such
      Borrower or such Credit Party shall be permitted to make investments in such
      Joint Venture, Foreign Subsidiary or Jazz WOFE pursuant to the terms of Section
      9.10(h) in the amount of such guaranty, and (B)
      immediately prior to and after giving effect to the execution or incurrence
      of
      any such guaranty, no Default or Event of Default shall have occurred and be
      continuing, and Borrowers' Excess Availability plus
      Qualified Cash shall be equal to or greater than $10,000,000;

     

    
      
        
        

      

      
        76

        
          

        

      

      
        
        

      

    

     

    (j)  Indebtedness
      arising from agreements entered into by such Credit Party in the ordinary course
      of business, providing for indemnification, purchase price adjustments,
      non-compete, consulting, deferred compensation, earn-outs or similar
      obligations, provided
      that the
      incurrence or creation thereof would not, or could not reasonably be expected
      to, have a Material Adverse Effect;

     

    (k)  Indebtedness
      incurred by such Credit Party in the ordinary course of business in respect
      to
      netting services and otherwise in connection with deposit accounts, or in
      connection with endorsements for deposit or overdraft accounts; 

     

    (l)  Indebtedness
      consisting of the financing of insurance premiums; 

     

    (m)  Indebtedness
      arising under the Senior Notes, provided,
      that
      (i) the aggregate principal amount of such Indebtedness shall not exceed
      $166,750,000 at any one time outstanding, (ii) Credit Parties shall not,
      directly or indirectly, (A) amend, modify, alter or change the terms of such
      Indebtedness or any agreement, document or instrument related thereto in any
      manner adverse to Agent or any Lender, except, that, the Credit Parties may
      amend, modify, alter or change the terms thereof so as to extend the maturity
      thereof, or defer the timing of any payments in respect thereof, or to forgive
      or cancel any portion of such Indebtedness (other than pursuant to payments
      thereof), or to reduce the interest rate or any fees in connection therewith
      or
      otherwise make any covenant less restrictive or waive any Event of Default
      thereunder, or (B) redeem, retire, defease, purchase or otherwise acquire such
      Indebtedness, or set aside or otherwise deposit or invest any sums for such
      purpose, provided,
      that
      Parent Guarantor may repurchase such Indebtedness to the extent permitted under
      Section 9.11(g) hereof, and (iii) Borrowers and Guarantors shall furnish to
      Agent all material notices or demands in connection with such Indebtedness
      either received by any Credit Party or on its behalf promptly after the receipt
      thereof, or sent by any Credit Party or on its behalf concurrently with the
      sending thereof, as the case may be;

     

    (n)  Guaranties
      by Parent Guarantor’s Domestic Subsidiaries of Parent Guarantor’s obligations
      under the Senior Notes; 

     

    (o)  Indebtedness
      of any Person existing at the time such Person became a Subsidiary of a Credit
      Party so long as (i) such Indebtedness was not created or incurred in
      contemplation of such Person becoming a Subsidiary of a Credit Party, and (ii)
      the amount of all such Indebtedness for all such Persons does not exceed
      $20,000,000 in the aggregate; 

     

    (p)  so
      long
      as the aggregate amount thereof does not exceed $1,000,000 at any time,
      Indebtedness of the Credit Parties (other than Excluded Subsidiaries) in respect
      of performance, bid, surety, indemnity, appeal bonds, completion guarantees
      and
      other obligations of like nature and guarantees and/or obligations as an account
      party in respect of the face amount of letters of credit in respect thereof,
      in
      each case securing obligations not constituting Indebtedness for borrowed money
      (including worker’s compensation claims, environmental remediation and other
      environmental matters and obligations in connection with self-insurance or
      similar requirements) provided in the ordinary course of business;
      and

     

    
      
        
        

      

      
        77

        
          

        

      

      
        
        

      

    

     

    (q)  any
      other
      unsecured Indebtedness of any Credit Party not to exceed $2,500,000 in the
      aggregate for all Credit Parties (other than Excluded
      Subsidiaries).

     

    9.10  Loans,
      Investments, Etc.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      (other than any Excluded Subsidiary) to, directly or indirectly, make any loans
      or advance money or property to any person, or invest in (by capital
      contribution, dividend or otherwise) or purchase or repurchase the Capital
      Stock
      or Indebtedness or all or a substantial part of the assets or property of any
      person, or form or acquire any Subsidiaries, except:

     

    (a)  the
      endorsement of instruments for collection or deposits in the ordinary course
      of
      business;

     

    (b)  investments
      in cash or Cash Equivalents, provided,
      that if
      Agent is exercising control over the Blocked Accounts pursuant to Section 6.3(d)
      hereof, no Loans shall be outstanding and the terms and conditions of Section
      5.2 hereof shall have been satisfied with respect to the deposit account,
      investment account or other account in which such cash or Cash Equivalents
      are
      held;

     

    (c)  the
      existing equity investments of each Credit Party as of the date hereof in its
      Subsidiaries;

     

    (d)  loans
      and
      advances by any Credit Party to its employees not to exceed the principal amount
      of $2,000,000 in the aggregate for all Credit Parties (other than Excluded
      Subsidiaries) at any time outstanding for: (i) reasonably and necessary
      work-related travel or other ordinary business expenses to be incurred by such
      employee in connection with their work for such Credit Party and (ii) reasonable
      and necessary relocation expenses of such employees (including home mortgage
      financing for relocated employees);

     

    (e)  stock
      or
      obligations issued to any Credit Party by any Person (or the representative
      of
      such Person) in respect of Indebtedness of such Person owing to such Credit
      Party in connection with the insolvency, bankruptcy, receivership or
      reorganization of such Person or a composition or readjustment of the debts
      of
      such Person; provided,
      that
      the original of any such stock or instrument evidencing such obligations shall
      be promptly delivered to Agent, upon Agent's request, together with such stock
      power, assignment or endorsement by such Credit Party as Agent may
      request;

     

    (f)  obligations
      of account debtors to any Credit Party arising from Accounts which are past
      due
      evidenced by a promissory note or notes, as the case may be, made by such
      account debtor payable to such Credit Party; provided,
      that
      promptly upon the receipt by such Credit Party of the original of any such
      promissory note or notes, such promissory note or notes shall be endorsed to
      the
      order of Agent by such Credit Party and promptly delivered to Agent;
provided,
      further
      that, so
      long as no Default or Event of Default has occurred and is continuing, Credit
      Parties shall not be required to endorse such notes to the order of Agent or
      deliver such notes to the Agent to the extent the aggregate outstanding amount
      of all such notes for all Credit Parties (other than Excluded Subsidiaries)
      does
      not exceed $1,000,000;

     

    
      
        
        

      

      
        78

        
          

        

      

      
        
        

      

    

     

    (g)  the
      investments, loans and advances set forth on Schedule 9.10 hereto;

     

    (h)  (i)  
      investments
      in the Joint Ventures as in effect on the Effective Date and future investments
      in (A) the Joint Ventures, (B) Foreign Subsidiaries of any Borrower or
      Guarantor, or (C) any Credit Party (other than as permitted in clause (iii)
      of this Section 9.10(h)), including, without limitation, the acquisition of
      Foreign Subsidiaries and Excluded Subsidiaries and the formation of, and
      investment in, Foreign Subsidiaries and Excluded Subsidiaries, and (ii)
      investments in Jazz WOFE pursuant to Operating Company’s equity ownership in
      such entity as in effect on the Effective Date and future investments in Jazz
      WOFE during the term of this Agreement, and (iii)
      investments by any Borrower or any Guarantor in any other Borrower or Guarantor;
      provided,
      that,
      after giving effect to any such future investments permitted in clauses (i)
      and
      (ii) of this Section 9.10(h), no Default or Event of Default shall have occurred
      and be continuing and Borrowers’ Excess Availability plus
      Qualified Cash shall be equal to or greater than $10,000,000; and further provided,
      that
      the aggregate amount of all such investments permitted by clauses (i) and (ii)
      of this Section 9.10(h) shall not exceed $15,000,000; and further provided,
      that
      with respect to any investment by such Borrower or such Guarantor (as permitted
      in clause (i) of this Section 9.10(h)) in any Credit Party that is a Subsidiary
      of such Borrower or such Guarantor (other than a Foreign Subsidiary of any
      Borrower or Guarantor, a Joint Venture or an Excluded Subsidiary), such
      Subsidiary shall have executed and delivered a Guaranty, a joinder to this
      Agreement, and such other documents as Agent may reasonably request, each in
      form and substance satisfactory to Agent in its sole discretion;

     

    (i)  without
      otherwise limiting any of the foregoing, any Credit Party may acquire all of
      the
      issued and outstanding capital stock of another Person, or all or substantially
      all of the assets of another Person or of a division of another Person (each,
      a
“Target”)
      and
      may form a new wholly-owned Domestic Subsidiary (a “New
      Subsidiary”)
      and
      make investments in such New Subsidiary (“Subsidiary
      Investments”),
      subject to the satisfaction in full of the following conditions precedent,
      as
      applicable:

     

    (i)  the
      subject Target shall be incorporated or organized under the laws of any
      jurisdiction of any state of the United States or the District of Columbia
      and
      the subject Target and subject New Subsidiary, as applicable, shall (A) be
      in
      the same, substantially related or complimentary type of business as any Credit
      Party (including any reasonable extension, development or expansion), and (B)
      not be deemed an Excluded Subsidiary;

     

    (ii)  the
      aggregate cash portion of the purchase price for the subject Target and any
      related Targets (excluding any earn-outs and similar contingent payments, any
      obligations or indebtedness of the Targets that are assumed (as permitted by
      Section 9.9 hereof), or any other non-cash consideration) shall not exceed
      $25,000,000;

     

    
      
        
        

      

      
        79

        
          

        

      

      
        
        

      

    

     

    (iii)  as
      of the
      date of the Subsidiary Investment or acquisition of the subject Target and
      any
      related Targets, as applicable, and after giving effect thereto, Borrowers’
Excess Availability plus
      Qualified Cash shall not be less than $30,000,000 and Borrowers’ Excess
      Availability plus Qualified Cash shall be projected, to the Agent’s reasonable
      satisfaction, to be $30,000,000 or more for 90 consecutive days following the
      consummation of such Subsidiary Investment or such acquisition, as
      applicable;

     

    (iv)  the
      subject Target shall be acquired in accordance with applicable laws free and
      clear of any security interest, mortgage, pledge, lien, charge or other
      encumbrance except as permitted in Section 9.8 hereof, and free and clear of
      any
      obligations or indebtedness except as permitted in Section 9.9
      hereof;

     

    (v)  the
      subject Target and the Person acquiring the subject Target or the subject New
      Subsidiary, as applicable, shall guaranty the Obligations, and the assets of
      the
      subject Target and such Person or the subject New Subsidiary, as applicable,
      shall be pledged to Agent, all pursuant to a Guaranty and joinder to this
      Agreement executed by such Target, Person or New Subsidiary, as applicable,
      and
      such other documents as Agent may reasonably request, each in form and substance
      reasonably satisfactory to Agent;

     

    (vi)  no
      Default or Event of Default shall have occurred and be continuing or would
      result from the acquisition of the subject Target or the making of the subject
      Subsidiary Investments (as applicable);

     

    (vii)  Borrowers
      shall give prior written notice to Agent of the acquisition of the subject
      Target or the making of the subject Subsidiary Investments as soon as reasonably
      practicable, but in no event less than ten (10) calendar days prior to the
      closing thereof;

     

    (viii)  Agent
      shall have received true, correct and complete copies of the acquisition
      agreement(s) for the subject Target and all exhibits, schedules, documents
      and
      other agreements relating thereto, together with such financial and other
      reasonably available information concerning the subject Target as Agent may
      reasonably request; and

     

    (ix)  Agent
      shall have received such further agreements, documents and instruments, and
      such
      further acts shall have been completed, with respect to the subject Target
      or
      New Subsidiary (as applicable), as required by Section 9.23 hereof;

     

    at
      Borrowers’ request, the subject Target or the Person acquiring the subject
      Target or the subject New Subsidiary (as applicable) may be added as a borrower
      hereunder, but only at the election of Agent; regardless of whether the subject
      Target or the Person acquiring the subject Target or the subject New Subsidiary
      (as applicable) is or becomes a Borrower hereunder, and regardless of whether
      the Accounts (which term shall mean Accounts as applied to the subject Target
      or
      New Subsidiary for the purposes of this Section) of the subject Target or New
      Subsidiary qualify under the definition of “Eligible Accounts”, or whether the
      Equipment (which term shall mean Equipment as applied to the subject Target
      or
      New Subsidiary for the purposes of this Section) of the subject Target or New
      Subsidiary qualify under the definition of “Eligible Equipment”, the inclusion
      of such Accounts in Eligible Accounts or Equipment in Eligible Equipment shall
      be subject to:

     

    
      
        
        

      

      
        80

        
          

        

      

      
        
        

      

    

     

    (x)  the
      completion of a field examination and appraisals and other examinations similar
      in scope to those performed on the Collateral prior to the date thereof by
      Agent
      of the subject Target or New Subsidiary with results reasonably satisfactory
      to
      Agent;

     

    (xi)  such
      additional eligibility criteria, availability reserves and percentage advance
      rates as Agent shall establish in its commercially reasonable discretion in
      light of the foregoing appraisals and field examination; and

     

    (xii)  the
      chief
      executive office of the subject Target or New Subsidiary (as applicable) shall
      be in the United States, and in any event, only those Accounts generated and
      invoiced from the United States or in Canada may be deemed Eligible
      Accounts.

     

    (j)  loans
      by
      a Borrower to any other Borrower or Guarantor after the date hereof,
provided,
      that,
      as to
      all of such loans, (i)
      within
      thirty (30) days after the end of each fiscal year, Borrowers shall provide
      to
      Agent a report in form and substance reasonably satisfactory to Agent of the
      outstanding amount of such loans as of the last day of the immediately preceding
      year and indicating any loans made and payments received during the immediately
      preceding year, (ii)
      the
      Indebtedness arising pursuant to any such loan shall not be evidenced by a
      promissory note or other instrument, unless the single original of such note
      or
      other instrument is promptly delivered to Agent upon its request to hold as
      part
      of the Collateral, with such endorsement and/or assignment by the payee of
      such
      note or other instrument as Agent may reasonably require, (iii)
      as of
      the date of any such loan and after giving effect thereto, the Borrower making
      such loan shall be Solvent, and (iv)
      as of
      the date of any such loan and after giving effect thereto, no Default or Event
      of Default shall exist or have occurred and be continuing;

     

    (k)  loans
      by
      a Guarantor to a Borrower or another Guarantor, provided, that, as to all of
      such loans, (i) the Indebtedness arising pursuant to such loan shall be subject
      to, and subordinate in right of payment to, the right of Agent and Lenders
      to
      receive the prior final payment and satisfaction in full of all of the
      Obligations on terms and conditions acceptable to Agent, (ii) promptly upon
      Agent’s request, Agent shall have received a subordination agreement, in form
      and substance satisfactory to Agent, providing for the terms of the
      subordination in right of payment of such Indebtedness of such Borrower or
      Guarantor to the prior final payment and satisfaction in full of all of the
      Obligations, duly authorized, executed and delivered by such Guarantor and
      such
      Borrower or Guarantor, and (iii) such Borrower or Guarantor shall not, directly
      or indirectly make, or be required to make, any payments in respect of such
      Indebtedness prior to the end of the then current term of this Agreement;

     

    (l)  investments
      made prior to the consummation of any acquisition permitted hereunder consisting
      of reasonable earnest money deposits, working fees or other similar prepaid
      consideration or similar amounts that would be applied toward consideration
      upon
      consummation of such acquisition;

     

    (m)  investments
      consisting of capital expenditures; and

     

    
      
        
        

      

      
        81

        
          

        

      

      
        
        

      

    

     

    (n)  investments
      consisting of the conversion of any of any Borrower’s or Parent Guarantor’s
      convertible securities into other securities not constituting Indebtedness
      pursuant to the terms of such convertible securities or otherwise in exchange
      therefor (including the Senior Notes).

     

    9.11  Dividends
      and Redemptions.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      (other than any Excluded Subsidiary) to, directly or indirectly, declare or
      pay
      any dividends on account of any shares of any class of any Capital Stock of
      such
      Credit Party now or hereafter outstanding, or set aside or otherwise deposit
      or
      invest any sums for such purpose, or redeem, retire, defease, purchase or
      otherwise acquire any shares of any class of Capital Stock (or set aside or
      otherwise deposit or invest any sums for such purpose) for any consideration
      or
      apply or set apart any sum, or make any other distribution (by reduction of
      capital or otherwise) in respect of any such shares or agree to do any of the
      foregoing, except that:

     

    (a)  any
      Credit Party may declare and pay such dividends or redeem, retire, defease,
      purchase or otherwise acquire any shares of any class of Capital Stock for
      consideration in the form of shares of common stock (so long as after giving
      effect thereto no Change of Control or other Default or Event of Default shall
      exist or occur and be continuing);

     

    (b)  any
      Credit Party may pay dividends to the extent permitted in Section 9.12
      below;

     

    (c)  any
      Credit Party may repurchase Capital Stock consisting of common stock held by
      employees pursuant to any employee stock ownership plan, restricted stock or
      incentive stock plan or other similar plan thereof upon the termination,
      retirement or death of any such employee in accordance with the provisions
      of
      such plan, provided,
      that,
      as to
      any such repurchase, each of the following conditions is satisfied: (i) as
      of
      the date of the payment for such repurchase and after giving effect thereto,
      no
      Default or Event of Default shall exist or have occurred and be continuing,
      (ii)
      such repurchase shall be paid with funds legally available therefor, (iii)
      such
      repurchase shall not violate any law or regulation or the terms of any
      indenture, agreement or undertaking to which any Credit Party is a party or
      by
      which any Credit Party or its property is bound, and (iv) the aggregate amount
      of all payments for such repurchases in any calendar year shall not exceed
      $5,000,000;

     

    (d)  any
      Credit Party may make any redemption of securities with the proceeds received
      from a substantially concurrent issue of new shares of Capital
      Stock;

     

    (e)  any
      Credit Party may repurchase Capital Stock deemed to occur upon the exercise
      of
      options or warrants if such Capital Stock represents all of the exercise price
      thereof;

     

    (f)  any
      Credit Party may make payments of cash in lieu of issuance of fractional shares
      upon the exercise of warrants or upon the conversion or exchange of, or issuance
      of Capital Stock in lieu of cash dividends on any Capital Stock;
      and

     

    (g)  Parent
      Guarantor may (i) pay cash dividends or distributions to its shareholders,
      (ii)
      repurchase or buyback any of its Capital Stock and/or warrants and (iii)
      repurchase any of its Indebtedness; provided, that at the time of such dividend,
      distribution or repurchase and after giving effect thereto, (A) no Default
      or
      Event of Default shall have occurred and be continuing, (B) Borrowers’ Excess
      Availability plus
      Qualified Cash shall not be less than $30,000,000; (C) Borrowers’ Excess
      Availability plus Qualified Cash shall be projected, to the Agent’s reasonable
      satisfaction, to be $30,000,000 or more for 90 consecutive days following the
      consummation of such dividend, distribution or repurchase, and (D) the aggregate
      amount of all such dividends, distributions and repurchases permitted by this
      Section 9.11(g) shall not exceed $50,000,000.

     

    
      
        
        

      

      
        82

        
          

        

      

      
        
        

      

    

     

    9.12  Transactions
      with Affiliates.
      Each
      Borrower and Guarantor shall not, and shall not permit any other Credit Party
      to, directly or indirectly:

     

    (a)  purchase,
      acquire or lease any property from, or sell, transfer or lease any property
      to,
      any Affiliate of such Borrower or Guarantor, except as otherwise permitted
      in
      this Agreement (including without limitation clauses (b) and (c) of this Section
      9.12) and except in the ordinary course of and pursuant to the reasonable
      requirements of such Borrower 's or Guarantor’s business and upon fair and
      reasonable terms no less favorable to such Borrower or Guarantor than such
      Borrower or Guarantor would obtain in a comparable arm's length transaction
      with
      an unaffiliated person; 

     

    (b)  make
      any
      payments (whether by dividend, loan or otherwise) of management, consulting
      or
      other fees for management or similar services to any Affiliate of such Borrower
      or Guarantor, except as otherwise permitted in this Agreement (including without
      limitation clauses (a) and (c) of this Section 9.12) and except (i) reasonable
      compensation to officers, employees and directors and indemnification
      arrangements, (ii) tax sharing arrangements to discharge consolidated tax
      liabilities of Parent Guarantor and its Subsidiaries or payments pursuant
      thereto and (iii) payments (whether by dividend, loan or otherwise) of
      management, consulting or other fees for management or similar services to
      any
      Affiliate of such Borrower or Guarantor in an aggregate amount not to exceed
      $2,000,000 for the term of this Agreement; 

     

    (c)  enter
      into or permit to exist any transaction with any Affiliate of such Borrower,
      except as permitted by clauses (a) and (b) of this Section 9.12 and except
      for
      such transactions that are in connection with investments, asset transfers
      and
      guaranties with respect to the Joint Ventures, Foreign Subsidiaries of any
      Credit Party, Excluded Subsidiaries, Credit Parties or Jazz WOFE that are
      permitted under this Agreement. 

     

    9.13  Compliance
      with ERISA.
      Except
      as could not reasonably be expected to have a Material Adverse Effect, each
      Borrower and Guarantor shall, and shall cause each other Credit Party to: (a)
      maintain each Plan in compliance in all material respects with the applicable
      provisions of ERISA, the Code and other Federal and State law; (b) cause each
      Plan which is qualified under Section 401(a) of the Code to maintain such
      qualification; (c) not terminate any Pension Plan so as to incur any material
      liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer
      to exist any prohibited transaction involving any Plan or any trust created
      thereunder which would subject such Borrower or such Credit Party to a material
      tax or other liability on prohibited transactions imposed under Section 4975
      of
      the Code or ERISA; (e) make all required contributions to any Plan which it
      is
      obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
      terms of such Plan; (f) not allow or suffer to exist any accumulated funding
      deficiency, whether or not waived, with respect to any such Pension Plan; (g)
      not engage in a transaction that could be subject to Section 4069 or 4212(c)
      of
      ERISA; or (h) not allow or suffer to exist any occurrence of a reportable event
      or any other event or condition which presents a material risk of termination
      by
      the Pension Benefit Guaranty Corporation of any Plan that is a single employer
      plan, which termination could result in any material liability to the Pension
      Benefit Guaranty Corporation.

     

    
      
        
        

      

      
        83

        
          

        

      

      
        
        

      

    

     

    9.14  End
      of
      Fiscal Years; Fiscal Quarters.
      Each
      Borrower and Guarantor shall, for financial reporting purposes, cause its,
      and
      each of its Subsidiaries’ (other than Excluded Subsidiaries), (a) fiscal years
      to end on the Friday immediately prior to December 31 of each year and (b)
      fiscal quarters to end on the last Friday in March, June, September, and
      December of each year.

     

    9.15  Change
      in Business.
      Each
      Borrower and Guarantor shall not, and shall not permit any of their respective
      Subsidiaries to, engage in any business other than the business of such
      Borrower, Guarantor or Subsidiary on the date hereof and any business reasonably
      related, ancillary or complimentary to the business in which such Borrower,
      Guarantor or Subsidiary is engaged on the date hereof (including any reasonable
      extension, development or expansion of such business).

     

    9.16  Limitation
      of Restrictions Affecting Subsidiaries.
      Each
      Borrower and Guarantor shall not, directly, or indirectly, create or otherwise
      cause or suffer to exist any encumbrance or restriction which prohibits or
      limits the ability of any Subsidiary of such Borrower or Guarantor (other than
      any Excluded Subsidiaries) to (a) pay dividends or make other distributions
      or
      pay any Indebtedness owed to such Borrower or Guarantor or any Subsidiary of
      such Borrower or Guarantor; (b) make loans or advances to such Borrower or
      Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any
      of
      its properties or assets to such Borrower or Guarantor or any Subsidiary of
      such
      Borrower or Guarantor, or (d) create, incur, assume or suffer to exist any
      lien
      upon any of its property, assets or revenues, whether now owned or hereafter
      acquired, other than encumbrances and restrictions arising under (i) applicable
      law, (ii) this Agreement, (iii) customary provisions restricting subletting
      or
      assignment of any lease governing a leasehold interest of such Borrower or
      Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) customary
      restrictions on dispositions of real property interests found in reciprocal
      easement agreements of such Borrower or Guarantor or any Subsidiary of such
      Borrower or Guarantor, (v) any agreement relating to permitted Indebtedness
      incurred by a Subsidiary of such Borrower or Guarantor prior to the date on
      which such Subsidiary was acquired by such Borrower or such Guarantor and
      outstanding on such acquisition date, (vi) customary restrictions and conditions
      contained in agreements relating to the sale of a Subsidiary pending such sale,
      (vii) customary restrictions imposed on the transfer of copyrighted or patented
      materials or other intellectual property and customary provisions in agreements
      that restrict the assignment of such agreements or any rights thereunder, (viii)
      restrictions contained in the organizational documents of any joint venture
      applicable to the interest of any Subsidiary in such joint venture or the assets
      of such joint venture, (ix) the extension or continuation of contractual
      obligations in existence on the date hereof, and (x) restrictions or conditions
      imposed by any agreement relating to secured Indebtedness permitted by this
      Agreement; provided,
      that
      any such encumbrances or restrictions contained in such extension or
      continuation are no less favorable to Agent and Lenders than those encumbrances
      and restrictions under or pursuant to the contractual obligations so extended
      or
      continued.

     

    
      
        
        

      

      
        84

        
          

        

      

      
        
        

      

    

     

    9.17  Intentionally
      Omitted.
      

     

    9.18  Minimum
      Consolidated EBITDA.
      If the
      sum of Excess Availability plus
      Qualified Cash is at any time during any fiscal quarter less than $10,000,000
      (each such fiscal quarter, a “Subject
      Fiscal Quarter”),
      Parent Guarantor and its Subsidiaries (other than any Excluded Subsidiaries)
      shall earn, on a consolidated basis, Consolidated EBITDA of not less than the
      applicable amounts set forth below when measured: (a) as of the end of the
      fiscal quarter immediately preceding such Subject Fiscal Quarter, and (b) as
      of
      the end of such Subject Fiscal Quarter; in each case, on a rolling four fiscal
      quarter basis.

     

    
      	
              Minimum
                Consolidated EBITDA

            	 	
              Applicable
                Period

            
	
              $20,000,000

            	 	
              Fiscal
                quarter ending March 31, 2007

            
	
              $20,000,000

            	 	
              Fiscal
                quarter ending June 30, 2007

            
	
              $20,000,000

            	 	
              Fiscal
                quarter ending September 30, 2007

            
	
              $20,000,000

            	 	
              Fiscal
                quarter ending December 31, 2007

            
	
              $21,500,000

            	 	
              Fiscal
                quarter ending March 31, 2008

            
	
              $23,000,000

            	 	
              Fiscal
                quarter ending June 30, 2008

            
	
              $24,500,000

            	 	
              Fiscal
                quarter ending September 30, 2008

            
	
              $25,000,000

            	 	
              Fiscal
                quarter ending December 31, 2008,

               and
                each fiscal quarter ending
                thereafter

            

    

     

    9.19  License
      Agreements.

     

    (a)  To
      the
      extent necessary to avoid the occurrence of a Material Adverse Effect, each
      Borrower and Guarantor shall (i) promptly and faithfully observe and perform
      all
      of the material terms, covenants, conditions and provisions of the material
      License Agreements to which it is a party to be observed and performed by it,
      at
      the times set forth therein, if any, (ii) not do, permit, suffer or refrain
      from
      doing anything that could reasonably be expected to result in a default under
      or
      breach of any of the terms of any material License Agreement, (iii) not cancel,
      surrender, modify, amend, waive or release any material License Agreement in
      any
      material respect or any term, provision or right of the licensee thereunder
      in
      any material respect, or consent to or permit to occur any of the foregoing;
      except, that, subject to Section 9.19(b) below, such Borrower or Guarantor
      may
      cancel, surrender or release any material License Agreement in the ordinary
      course of the business of such Borrower or such Guarantor.

     

    
      
        
        

      

      
        85

        
          

        

      

      
        
        

      

    

     

    (b)  To
      the
      extent necessary to avoid the occurrence of a Material Adverse Effect, each
      Borrower and Guarantor will either exercise any option to renew or extend the
      term of each material License Agreement to which it is a party in such manner
      as
      will cause the term of such material License Agreement to be effectively renewed
      or extended for the period provided by such option.

     

    9.20  Foreign
      Assets Control Regulations, Etc.
      None of
      the requesting or borrowing of the Loans or the requesting or issuance,
      extension or renewal of any Letter of Credit or the use of the proceeds of
      any
      thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as
      amended) (the “Trading
      With the Enemy Act”)
      or any
      of the foreign assets control regulations of the United States Treasury
      Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign
      Assets Control Regulations”)
      or any
      enabling legislation or executive order relating thereto (including, but not
      limited to (a) Executive order 13224 of September 21, 2001 Blocking Property
      and
      Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
      Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive
      Order”)
      and
      (b) the Uniting and Strengthening America by Providing Appropriate Tools
      Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56).
      None of the Borrowers or any of their Subsidiaries or other Affiliates is or
      will become a “blocked person” as described in the Executive Order, the Trading
      with the Enemy Act or the Foreign Assets Control Regulations or engages or
      will
      engage in any dealings or transactions, or be otherwise associated, with any
      such “blocked person”.

     

    9.21  After
      Acquired Real Property.
      If any
      Borrower or Guarantor hereafter acquires any owned Real Property, fixtures
      or
      any other property and such Real Property, fixtures or other property is
      adjacent to, contiguous with or necessary or related to or used in connection
      with any Real Property then subject to a mortgage, deed of trust or deed to
      secure debt, in favor of Lender pursuant to the terms hereof, or if such Real
      Property is not adjacent to, contiguous with or related to or used in connection
      with such Real Property, then if such owned Real Property, fixtures or other
      property at any location (or series of adjacent, contiguous or related
      locations, and regardless of the number of parcels) has a fair market value
      in
      an amount equal to or greater than $5,000,000 (or if an Event of Default exists
      and Agent so requests, then regardless of the fair market value of such assets),
      without limiting any other rights of Agent or any Lender, or duties or
      obligations of any Borrower or Guarantor, promptly upon Agent’s request, such
      Borrower or Guarantor shall execute and deliver to Agent a mortgage, deed of
      trust or deed to secure debt, as Agent may determine, in form and substance,
      and
      as to any provisions relating to specific state laws, reasonably satisfactory
      to
      Agent and in form appropriate for recording in the real estate records of the
      jurisdiction in which such Real Property or other property is located granting
      to Agent a first and only lien and mortgage on and security interest in such
      Real Property, fixtures or other property (except as such Borrower or Guarantor
      would otherwise be permitted to incur hereunder or as otherwise consented to
      in
      writing by Agent) and such other agreements, documents and instruments as Agent
      may reasonably require in connection therewith.

     

    
      
        
        

      

      
        86

        
          

        

      

      
        
        

      

    

     

    9.22  Costs
      and Expenses.
      Borrowers and Guarantors shall pay to Agent on demand (except as limited by
      clause (g) of this Section 9.22) all reasonable out-of-pocket costs, expenses,
      filing fees and taxes paid or payable in connection with the preparation,
      negotiation, execution, delivery, recording, syndication, administration,
      collection, liquidation, enforcement and defense of the Obligations, Agent's
      rights in the Collateral, this Agreement, the other Financing Agreements and
      all
      other documents related hereto or thereto, including any amendments, supplements
      or consents which may hereafter be contemplated (whether or not executed) or
      entered into in respect hereof and thereof, including: (a) all reasonable
      out-of-pocket costs and expenses of filing or recording (including Uniform
      Commercial Code financing statement filing taxes and fees, documentary taxes,
      intangibles taxes and mortgage recording taxes and fees, if applicable); (b)
      reasonable, out-of-pocket costs and expenses and fees for (i) insurance
      premiums, environmental audits, title insurance premiums, surveys, assessments,
      engineering reports and inspections if an Event of Default shall have occurred
      and be continuing, and (ii) appraisal fees and search fees, background checks,
      reasonable, out-of-pocket costs and expenses of remitting loan proceeds,
      collecting checks and other items of payment, and establishing and maintaining
      the Blocked Accounts, together with Agent's customary charges and fees with
      respect thereto; (c) charges, fees or expenses charged by any bank or issuer
      in
      connection with any Letter of Credit; (d) if an Event of Default has occurred
      and is continuing, reasonable, out-of-pocket costs and expenses of preserving
      and protecting the Collateral; (e) out-of-pocket costs and expenses paid or
      incurred in connection with obtaining payment of the Obligations, enforcing
      the
      security interests and liens of Agent, selling or otherwise realizing upon
      the
      Collateral, and otherwise enforcing the provisions of this Agreement and the
      other Financing Agreements or defending any claims made or threatened against
      Agent or any Lender arising out of the transactions contemplated hereby and
      thereby (including preparations for and consultations concerning any such
      matters); (f) (i)
      all
      out-of-pocket expenses and costs heretofore and from time to time hereafter
      incurred by Agent during the course of periodic field examinations of the
      Collateral and each Borrower's or Guarantor’s operations, which field
      examinations shall be conducted no more than two (2) times in any twelve (12)
      month period, except that, if the aggregate outstanding amount of Loans and
      Letter of Credit Obligations shall be equal to or greater than $50,000,000
      at
      any time, then such field examinations shall be conducted no more than three
      (3)
      times in any twelve (12) month period, and except that, on or after the
      occurrence and continuation of an Event of Default, such field examinations
      shall be conducted at any time or times as Agent may require, plus
      (ii) a
      per diem charge at Agent’s then standard rate for Agent's examiners in the field
      and office (which rate as of the date hereof is $850.00 per person per day);
      and
      (g)
      the reasonable, out-of-pocket fees and disbursements of counsel (including
      legal
      assistants) to Agent in connection with any of the foregoing, which fees and
      disbursements of counsel (i) shall be payable by Borrowers within thirty (30)
      days after receipt of an invoice therefor, and (ii) if not paid within such
      period or if Agent shall not have received within such period a written notice
      from Borrowers of any specific exceptions thereto and such exceptions are not
      resolved within thirty (30) days thereafter, shall be charged directly to the
      loan account(s) of any Borrower pursuant to Section 6.4(b) hereof. 

     

    9.23  Further
      Assurances.
      At the
      request of Agent at any time and from time to time, each Borrower and Guarantor
      shall, at its expense, duly execute and deliver, or cause to be duly executed
      and delivered, such further agreements, documents and instruments, and do or
      cause to be done such further acts as may be necessary or proper to evidence,
      perfect, maintain and enforce the security interests and the priority thereof
      in
      the Collateral and to otherwise effectuate the provisions or purposes of this
      Agreement or any of the other Financing Agreements. Agent may at any time and
      from time to time request a certificate from an officer of each Borrower and
      Guarantor representing that all conditions precedent to the making of Loans
      and
      providing Letters of Credit contained in Section 4.2 hereof are satisfied.
      In
      the event of such request by Agent, Agent and Lenders may, at Agent’s option,
      cease to make any further Loans or provide any further Letters of Credit until
      Agent has received such certificate and, in addition, Agent has determined
      that
      such conditions are satisfied.

     

    
      
        
        

      

      
        87

        
          

        

      

      
        
        

      

    

     

    SECTION
      10. 
EVENTS
      OF DEFAULT AND REMEDIES

     

    10.1  Events
      of Default.
      The
      occurrence or existence of any one or more of the following events are referred
      to herein individually as an “Event
      of Default”,
      and
      collectively as “Events
      of Default”:

     

    (a)  (i)
      any
      Borrower fails to pay any of the Obligations when due and such failure shall
      continue for two (2) Business Days, or (ii) any Borrower or Guarantor fails
      to
      perform any of the covenants contained in Sections 7.2, 7.3, 7.4, 9.1(b),
      9.1(c), 9.2, 9.3, 9.4, 9.6, 9.13, 9.14, 9.15, 9.16, 9.19 and 9.21 of this
      Agreement or in any other Financing Agreement and such failure shall continue
      for thirty (30) days; provided,
      that
      such thirty (30) day period shall not apply in the case of: (A) any failure
      to
      observe any such covenant which is not capable of being cured at all or within
      such thirty (30) day period or which has been the subject of two (2) prior
      failures within a twelve (12) month period or (B) a willful breach by any
      Borrower or Guarantor of Section 7.2 hereof, or (iii) any Borrower or Guarantor
      fails to perform any of the terms, covenants, conditions or provisions contained
      in this Agreement other than those described in Sections 10.1(a)(i) and
      10.1(a)(ii) above;

     

    (b)  any
      representation, warranty or statement of fact made by any Borrower or any
      Guarantor to Agent in this Agreement, the other Financing Agreements or any
      other written agreement, schedule, Borrowing Base Certificate or otherwise
      shall
      when made or deemed made be false or misleading in any material
      respect;

     

    (c)  any
      Guarantor revokes or terminates, or purports to revoke or terminate, or fails
      to
      perform any of the terms, covenants, conditions or provisions of, any guarantee
      of the Obligations, endorsement or other agreement of such party in favor of
      Agent or any Lender

     

    (d)  any
      judgment for the payment of money is rendered against any Borrower or any
      Guarantor in excess of $2,500,000 in any one case or in excess of $5,000,000
      in
      the aggregate (to the extent not covered by insurance) and shall remain
      undischarged or unvacated for a period in excess of thirty (30) days or
      execution shall at any time not be effectively stayed, or any judgment other
      than for the payment of money, or injunction, attachment, garnishment or
      execution is rendered against any Borrower, any Guarantor or any of the
      Collateral having a value in excess of $2,500,000;

     

    (e)  Operating
      Company dissolves or suspends or discontinues doing business such that such
      dissolution, suspension or discontinuation would, or would reasonably be likely
      to, have a Material Adverse Effect;

     

    (f)  any
      Borrower or any Guarantor makes an assignment for the benefit of creditors,
      makes or sends notice of a bulk transfer or calls a meeting of its creditors
      or
      principal creditors in connection with a moratorium or adjustment of the
      Indebtedness due to them;

     

    
      
        
        

      

      
        88

        
          

        

      

      
        
        

      

    

     

    (g)  a
      case or
      proceeding under the bankruptcy laws of the United States of America now or
      hereafter in effect or under any insolvency, reorganization, receivership,
      readjustment of debt, dissolution or liquidation law or statute of any
      jurisdiction now or hereafter in effect (whether at law or in equity) is filed
      against any Borrower, any Guarantor or all or a substantial part of its
      properties and such petition or application is not dismissed within sixty (60)
      days after the date of its filing or any Borrower or any Guarantor shall file
      any answer admitting or not contesting such petition or application or indicates
      its consent to, acquiescence in or approval of, any such action or proceeding
      or
      the relief requested is granted sooner;

     

    (h)  a
      case or
      proceeding under the bankruptcy laws of the United States of America now or
      hereafter in effect or under any insolvency, reorganization, receivership,
      readjustment of debt, dissolution or liquidation law or statute of any
      jurisdiction now or hereafter in effect (whether at a law or equity) is filed
      (i) by any Borrower or any Guarantor seeking to adjudicate it bankrupt or
      insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
      liquidation, dissolution, composition or other relief with respect to its debts,
      or (ii) against all or any part of the Collateral constituting Accounts,
      Equipment, deposit accounts and proceeds thereof; provided
      that,
      notwithstanding anything to the contrary in this clause (h), any such case
      or
      proceeding filed by any Borrower or Guarantor as set forth in subclause (i)
      above shall constitute an Event of Default; 

     

    (i)  any
      default in respect of any Indebtedness for borrowed money of any Borrower or
      any
      Guarantor (other than Indebtedness owing to Agent and Lenders hereunder), in
      any
      case in an amount in excess of $10,000,000, which default continues for more
      than the applicable cure period, if any, with respect thereto and/or is not
      waived in writing by the other parties thereto;

     

    (j)  any
      material provision hereof or of any of the other Financing Agreements shall
      for
      any reason cease to be valid, binding and enforceable with respect to any party
      hereto or thereto (other than Agent) in accordance with its terms, or any
      Borrower or other Credit Party shall challenge the enforceability hereof or
      thereof, or shall assert in writing, or take any action or fail to take any
      action based on the assertion that any material provision hereof or of any
      of
      the other Financing Agreements has ceased to be or is otherwise not valid,
      binding or enforceable in accordance with its terms, or any security interest
      provided for herein or in any of the other Financing Agreements shall cease
      to
      be a valid and perfected first priority security interest in any of the
      Collateral purported to be subject thereto (except as otherwise permitted herein
      or therein);

     

    (k)  an
      ERISA
      Event shall occur which results in or could reasonably be expected to result
      in
      a Material Adverse Effect;

     

    (l)  any
      Change of Control;

     

    (m)  the
      indictment by any Governmental Authority of any Borrower or any Guarantor of
      which any Borrower, any Guarantor or Agent receives notice, as to which there
      is
      a reasonable possibility of an adverse determination under any criminal statute
      or commencement of criminal or civil proceedings against such Borrower, pursuant
      to which statute or proceedings the penalties or remedies sought or available
      include forfeiture of (i) any of the Collateral having a value in excess of
      $1,000,000 or (ii) any other property of any Borrower which is necessary or
      material to the conduct of its business; or

     

    
      
        
        

      

      
        89

        
          

        

      

      
        
        

      

    

     

    (n)  there
      shall be an event of default under any of the other Financing
      Agreements.

     

    10.2  Remedies.

     

    (a)  At
      any
      time an Event of Default exists or has occurred and is continuing, Agent and
      Lenders shall have all rights and remedies provided in this Agreement, the
      other
      Financing Agreements, the UCC and other applicable law, all of which rights
      and
      remedies may be exercised without notice to or consent by any Borrower or any
      Guarantor, except as such notice or consent is expressly provided for hereunder
      or required by applicable law. All rights, remedies and powers granted to Agent
      and Lenders hereunder, under any of the other Financing Agreements, the UCC
      or
      other applicable law, are cumulative, not exclusive and enforceable, in Agent's
      discretion, alternatively, successively, or concurrently on any one or more
      occasions, and shall include, without limitation, the right to apply to a court
      of equity for an injunction to restrain a breach or threatened breach by any
      Borrower or Guarantor of this Agreement or any of the other Financing
      Agreements. Agent may, at any time or times, proceed directly against any
      Borrower or any Guarantor to collect the Obligations without prior recourse
      to
      any Guarantor or any of the Collateral.

     

    (b)  Without
      limiting the generality of the foregoing, at any time an Event of Default exists
      or has occurred and is continuing, Agent may upon notice to Borrowers,
      accelerate the payment of all Obligations and demand immediate payment thereof
      to Agent for itself and the benefit of Lenders (provided,
      that,
      upon
      the occurrence and continuation of any Event of Default described in Sections
      10.1(g) and 10.1(h), all Obligations shall automatically become immediately
      due
      and payable).

     

    (c)  Without
      limiting the foregoing, at any time an Event of Default exists or has occurred
      and is continuing, Agent may (i) with or without judicial process or the aid
      or
      assistance of others, enter upon any premises on or in which any of the
      Collateral may be located and take possession of the Collateral or complete
      processing, manufacturing and repair of all or any portion of the Collateral,
      (ii) require any Borrower or Guarantor, at Borrowers’ expense, to assemble and
      make available to Agent any part or all of the Collateral at any place and
      time
      designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff
      and
      realize upon any and all Collateral, (iv) remove any or all of the Collateral
      from any premises on or in which the same may be located for the purpose of
      effecting the sale, foreclosure or other disposition thereof or for any other
      purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of
      any
      and all Collateral (including entering into contracts with respect thereto,
      public or private sales at any exchange, broker's board, at any office of Agent
      or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
      upon credit or for future delivery, with Agent having the right to purchase
      the
      whole or any part of the Collateral at any such public sale, all of the
      foregoing being free from any right or equity of redemption of any Borrower
      or
      Guarantor, which right or equity of redemption is hereby expressly waived and
      released by each Borrower and Guarantor and/or (vi) terminate this Agreement.
      If
      any of the Collateral is sold or leased by Agent upon credit terms or for future
      delivery, the Obligations shall not be reduced as a result thereof until payment
      therefor is finally collected by Agent. If notice of disposition of Collateral
      is required by law, ten (10) days prior notice by Agent to Borrowers designating
      the time and place of any public sale or the time after which any private sale
      or other intended disposition of Collateral is to be made, shall be deemed
      to be
      reasonable notice thereof and each Borrower and Guarantor waives any other
      notice. In the event Agent institutes an action to recover any Collateral or
      seeks recovery of any Collateral by way of prejudgment remedy, each Borrower
      and
      Guarantor waives the posting of any bond which might otherwise be required.
      At
      any time an Event of Default exists or has occurred and is continuing, upon
      Agent’s request, Borrowers shall furnish cash collateral to Agent for the Letter
      of Credit Obligations. Such cash collateral shall be in the amount equal to
      one
      hundred two percent (102%) of the amount of the Letter of Credit Obligations
      plus
      the
      amount of any fees and expenses payable in connection therewith through the
      end
      of the latest expiration date of the Letters of Credit giving rise to such
      Letter of Credit Obligations.

     

    
      
        
        

      

      
        90

        
          

        

      

      
        
        

      

    

     

    (d)  At
      any
      time or times that an Event of Default exists or has occurred and is continuing,
      Agent may enforce the rights of any Borrower or Guarantor against any account
      debtor, secondary obligor or other obligor in respect of any of the Accounts
      or
      other Receivables. Without limiting the generality of the foregoing, Agent
      may,
      in its discretion, at such time or times (i) notify any or all account debtors,
      secondary obligors or other obligors in respect thereof that the Receivables
      have been assigned to Agent and that Agent has a security interest therein
      and
      Agent may direct any or all account debtors, secondary obligors and other
      obligors to make payment of Receivables directly to Agent, (ii) extend the
      time
      of payment of, compromise, settle or adjust for cash, credit, return of
      merchandise or otherwise, and upon any terms or conditions, any and all
      Receivables or other obligations included in the Collateral and thereby
      discharge or release the account debtor or any secondary obligors or other
      obligors in respect thereof without affecting any of the Obligations, (iii)
      demand, collect or enforce payment of any Receivables or such other obligations,
      but without any duty to do so, and Agent and Lenders shall not be liable for
      any
      failure to collect or enforce the payment thereof nor for the negligence of
      its
      agents or attorneys with respect thereto (other than gross negligence or willful
      misconduct) and (iv) take whatever other action Agent may deem necessary or
      desirable for the protection of its interests and the interests of Lenders.
      At
      any time that an Event of Default exists or has occurred and is continuing,
      at
      Agent’s request, all invoices and statements sent to any account debtor shall
      state that the Accounts and such other obligations have been assigned to Agent
      and are payable directly and only to Agent and Borrowers and Guarantors shall
      deliver to Agent such originals of documents evidencing the sale and delivery
      of
      goods or the performance of services giving rise to any Accounts as Agent may
      require. In the event any account debtor returns Inventory when an Event of
      Default exists or has occurred and is continuing, Borrowers shall, upon Agent’s
      request, hold the returned Inventory in trust for Agent, segregate all returned
      Inventory from all of its other property, dispose of the returned Inventory
      solely according to Agent’s instructions, and not issue any credits, discounts
      or allowances with respect thereto without Agent’s prior written
      consent.

     

    
      
        
        

      

      
        91

        
          

        

      

      
        
        

      

    

     

    (e)  To
      the
      extent that applicable law imposes duties on Agent or any Lender to exercise
      remedies in a commercially reasonable manner (which duties cannot be waived
      under such law), each Borrower and Guarantor acknowledges and agrees that it
      is
      not commercially unreasonable for Agent or any Lender (i) to fail to incur
      expenses reasonably deemed significant by Agent or any Lender to prepare
      Collateral for disposition or otherwise to complete raw material or work in
      process into finished goods or other finished products for disposition, (ii)
      to
      fail to obtain third party consents for access to Collateral to be disposed
      of,
      or to obtain or, if not required by other law, to fail to obtain consents of
      any
      Governmental Authority or other third party for the collection or disposition
      of
      Collateral to be collected or disposed of, (iii) to fail to exercise collection
      remedies against account debtors, secondary obligors or other persons obligated
      on Collateral or to remove liens or encumbrances on or any adverse claims
      against Collateral, (iv) to exercise collection remedies against account debtors
      and other persons obligated on Collateral directly or through the use of
      collection agencies and other collection specialists, (v) to advertise
      dispositions of Collateral through publications or media of general circulation,
      whether or not the Collateral is of a specialized nature, (vi) to contact other
      persons, whether or not in the same business as any Borrower or Guarantor,
      for
      expressions of interest in acquiring all or any portion of the Collateral,
      (vii)
      to hire one or more professional auctioneers to assist in the disposition of
      Collateral, whether or not the collateral is of a specialized nature, (viii)
      to
      dispose of Collateral by utilizing Internet sites that provide for the auction
      of assets of the types included in the Collateral or that have the reasonable
      capability of doing so, or that match buyers and sellers of assets, (ix) to
      dispose of assets in wholesale rather than retail markets, (x) to disclaim
      disposition warranties, (xi) to purchase insurance or credit enhancements to
      insure Agent or Lenders against risks of loss, collection or disposition of
      Collateral or to provide to Agent or Lenders a guaranteed return from the
      collection or disposition of Collateral, or (xii) to the extent deemed
      appropriate by Agent, to obtain the services of other brokers, investment
      bankers, consultants and other professionals to assist Agent in the collection
      or disposition of any of the Collateral. Each Borrower and Guarantor
      acknowledges that the purpose of this Section is to provide non-exhaustive
      indications of what actions or omissions by Agent or any Lender would not be
      commercially unreasonable in the exercise by Agent or any Lender of remedies
      against the Collateral and that other actions or omissions by Agent or any
      Lender shall not be deemed commercially unreasonable solely on account of not
      being indicated in this Section. Without limitation of the foregoing, nothing
      contained in this Section shall be construed to grant any rights to any Borrower
      or Guarantor or to impose any duties on Agent or Lenders that would not have
      been granted or imposed by this Agreement or by applicable law in the absence
      of
      this Section.

     

    (f)  For
      the
      purpose of enabling Agent to exercise the rights and remedies hereunder, each
      Borrower and Guarantor hereby grants to Agent, to the extent assignable, an
      irrevocable, non-exclusive license (exercisable at any time an Event of Default
      shall exist or have occurred and for so long as the same is continuing) without
      payment of royalty or other compensation to any Borrower or Guarantor, to use,
      assign, license or sublicense any of the trademarks, service-marks, trade names,
      business names, trade styles, designs, logos and other source of business
      identifiers and other Intellectual Property and general intangibles now owned
      or
      hereafter acquired by any Borrower or Guarantor, wherever the same maybe
      located, including in such license reasonable access to all media in which
      any
      of the licensed items may be recorded or stored and to all computer programs
      used for the compilation or printout thereof.

     

    (g)  At
      any
      time an Event of Default exists or has occurred and is continuing, Agent may
      apply the cash proceeds of Collateral actually received by Agent from any sale,
      lease, foreclosure or other disposition of the Collateral to payment of the
      Obligations, in whole or in part and in accordance with the terms hereof,
      whether or not then due or may hold such proceeds as cash collateral for the
      Obligations. Each Borrower and each Guarantor shall remain liable to Agent
      and
      Lenders for the payment of any deficiency with interest at the highest rate
      provided for herein and all costs and expenses of collection or enforcement,
      including attorneys' fees and expenses.

     

    
      
        
        

      

      
        92

        
          

        

      

      
        
        

      

    

     

    (h)  Without
      limiting the foregoing, upon the occurrence and continuation of a Default or
      an
      Event of Default, (i) Agent and Lenders may without notice, (A) cease making
      Loans or arranging for Letters of Credit or reduce the lending formulas or
      amounts of Loans and Letters of Credit available to Borrowers and/or (B)
      terminate any provision of this Agreement providing for any future Loans or
      Letters of Credit to be made by Agent and Lenders to Borrowers and (ii) Agent
      may, at its option, establish such Reserves as Agent determines, without
      limitation or restriction, notwithstanding anything to the contrary contained
      herein.

     

    
      
        	SECTION
                11.	
                JURY
                  TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING
                  LAW

              

      

    

     

    11.1  Governing
      Law; Choice of Forum; Service of Process; Jury Trial Waiver; California Judicial
      Reference.

     

    (a)  The
      validity, interpretation and enforcement of this Agreement and the other
      Financing Agreements (except as otherwise provided therein) and any dispute
      arising out of the relationship between the parties hereto, whether in contract,
      tort, equity or otherwise, shall be governed by the internal laws of the State
      of California but excluding any principles of conflicts of law or other rule
      of
      law that would cause the application of the law of any jurisdiction other than
      the laws of the State of California.

     

    (b)  Borrowers,
      Guarantors, Lenders and Agent irrevocably consent and submit to the
      non-exclusive jurisdiction of the state and federal courts located in Los
      Angeles County, California, whichever Agent may elect, and waive any objection
      based on venue or forum non conveniens with respect to any action instituted
      therein arising under this Agreement or any of the other Financing Agreements
      or
      in any way connected with or related or incidental to the dealings of the
      parties hereto in respect of this Agreement or any of the other Financing
      Agreements or the transactions related hereto or thereto, in each case whether
      now existing or hereafter arising, and whether in contract, tort, equity or
      otherwise, and agree that any dispute with respect to any such matters shall
      be
      heard only in the courts described above (except that Agent and Lenders shall
      have the right to bring any action or proceeding against any Borrower or
      Guarantor or its or their property in the courts of any other jurisdiction
      which
      Agent deems necessary or appropriate in order to realize on the Collateral
      or to
      otherwise enforce its rights against any Borrower or Guarantor or its or their
      property).

     

    (c)  Each
      Borrower and Guarantor hereby waives personal service of any and all process
      upon it and consents that all such service of process may be made by certified
      mail (return receipt requested) directed to its address set forth herein and
      service so made shall be deemed to be completed five (5) days after the same
      shall have been so deposited in the U.S. mails, or, at Agent’s option, by
      service upon any Borrower or Guarantor in any other manner provided under the
      rules of any such courts. Within thirty (30) days after such service, such
      Borrower or Guarantor shall appear in answer to such process, failing which
      such
      Borrower or Guarantor shall be deemed in default and judgment may be entered
      by
      Agent against such Borrower or Guarantor for the amount of the claim and other
      relief requested.

     

    
      
        
        

      

      
        93

        
          

        

      

      
        
        

      

    

     

    (d)  BORROWERS,
      GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
      OF
      ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR
      ANY
      OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR
      INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT
      OR
      ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
      THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
      IN
      CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS
      EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
      OF
      ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER,
      ANY
      GUARANTOR, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
      THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
      HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     

    (e)  IF
      ANY
      ACTION OR PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA BY OR
      AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY OF THE TRANSACTIONS CONTEMPLATED
      BY THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO (INCLUDING WITHOUT LIMITATION
      ANY OTHER FINANCING AGREEMENT), (i)
      THE
      COURT SHALL, AND IS HEREBY DIRECTED TO, MAKE A GENERAL REFERENCE PURSUANT TO
      CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638 TO A REFEREE OR REFEREES TO
      HEAR
      AND DETERMINE ALL OF THE ISSUES IN SUCH ACTION OR PROCEEDING (WHETHER OF FACT
      OR
      OF LAW) AND TO REPORT A STATEMENT OF DECISION, PROVIDED THAT AT THE OPTION
      OF
      AGENT ANY SUCH ISSUES PERTAINING TO A “PROVISIONAL REMEDY” AS DEFINED IN
      CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1281.8 SHALL BE HEARD AND DETERMINED
      BY THE COURT, AND (ii)
      BORROWERS SHALL BE JOINTLY AND SEVERALLY RESPONSIBLE TO PAY ALL FEES AND
      EXPENSES OF ANY REFEREE APPOINTED IN SUCH ACTION OR PROCEEDING.

     

    (f)  Agent
      and
      Lenders shall not have any liability to any Borrower or Guarantor (whether
      in
      tort, contract, equity or otherwise) for losses suffered by such Borrower or
      Guarantor in connection with, arising out of, or in any way related to the
      transactions or relationships contemplated by this Agreement, or any act,
      omission or event occurring in connection herewith, unless it is determined
      that
      the losses were the result of acts or omissions constituting gross negligence
      or
      willful misconduct of Agent or any Lender. In any such litigation, Agent and
      Lenders shall be entitled to the benefit of the rebuttable presumption that
      it
      acted in good faith and with the exercise of ordinary care in the performance
      by
      it of the terms of this Agreement. Each Borrower and Guarantor: (i) certifies
      that neither Agent, any Lender nor any representative, agent or attorney acting
      for or on behalf of Agent or any Lender has represented, expressly or otherwise,
      that Agent and Lenders would not, in the event of litigation, seek to enforce
      any of the waivers provided for in this Agreement or any of the other Financing
      Agreements and (ii) acknowledges that in entering into this Agreement and the
      other Financing Agreements, Agent and Lenders are relying upon, among other
      things, the waivers and certifications set forth in this Section 11.1 and
      elsewhere herein and therein. 

     

    
      
        
        

      

      
        94

        
          

        

      

      
        
        

      

    

     

    11.2  Amendments
      and Waivers.
      

     

    (a)  Neither
      this Agreement nor any other Financing Agreement nor any terms hereof or thereof
      may be amended, waived, discharged or terminated unless such amendment, waiver,
      discharge or termination is in writing signed by Agent and the Required Lenders
      or at Agent’s option, by Agent with the authorization or consent of the Required
      Lenders, and as to amendments to any of the Financing Agreements (other than
      with respect to any provision of Section 12 hereof), by any Borrower and such
      amendment, waiver, discharger or termination shall be effective and binding
      as
      to all Lenders only in the specific instance and for the specific purpose for
      which given; except, that, no such amendment, waiver, discharge or termination
      shall:

     

    (i)  reduce
      the interest rate or any fees or extend the time of payment of principal,
      interest or any fees or reduce the principal amount of any Loan or Letters
      of
      Credit, in each case without the consent of each Lender directly affected
      thereby,

     

    (ii)  increase
      the Commitment of any Lender over the amount thereof then in effect or provided
      hereunder, in each case without the consent of the Lender directly affected
      thereby,

     

    (iii)  release
      any Collateral (except as expressly required hereunder or under any of the
      other
      Financing Agreements or applicable law and except as permitted under Section
      12.21(b) hereof), without the consent of Agent and all of Lenders,

     

    (iv)  reduce
      any percentage specified in the definition of Required Lenders, without the
      consent of Agent and all of Lenders,

     

    (v)  consent
      to the assignment or transfer by any Borrower or Guarantor of any of their
      rights and obligations under this Agreement, without the consent of Agent and
      all of Lenders, 

     

    (vi)  amend
      the
      priority of payment of Obligations as set forth in Section 6.4(a) hereof,
      without the consent of Agent and all of Lenders, or

     

    (vii)  amend,
      modify or waive any terms of this Section 11.2 hereof, without the consent
      of
      Agent and all of Lenders.

     

    (b)  Agent
      and
      Lenders shall not, by any act, delay, omission or otherwise be deemed to have
      expressly or impliedly waived any of its or their rights, powers and/or remedies
      unless such waiver shall be in writing and signed as provided herein. Any such
      waiver shall be enforceable only to the extent specifically set forth therein.
      A
      waiver by Agent or any Lender of any right, power and/or remedy on any one
      occasion shall not be construed as a bar to or waiver of any such right, power
      and/or remedy which Agent or any Lender would otherwise have on any future
      occasion, whether similar in kind or otherwise.

     

    
      
        
        

      

      
        95

        
          

        

      

      
        
        

      

    

     

    (c)  Notwithstanding
      anything to the contrary contained in Section 11.2(a) above, in connection
      with
      any amendment, waiver, discharge or termination, in the event that any Lender
      whose consent thereto is required shall fail to consent or fail to consent
      in a
      timely manner (such Lender being referred to herein as a “Non-Consenting
      Lender”),
      but
      the consent of any other Lenders to such amendment, waiver, discharge or
      termination that is required are obtained, if any, then Wachovia or, with the
      prior written consent of Wachovia, Borrowers shall have the right, but not
      the
      obligation, at any time thereafter, and upon the exercise by Wachovia of such
      right, such Non-Consenting Lender shall have the obligation, to sell, assign
      and
      transfer to Wachovia or such Eligible Transferee as Wachovia or, with the prior
      written consent of Wachovia, Borrowers may specify, the Commitment of such
      Non-Consenting Lender and all rights and interests of such Non-Consenting Lender
      pursuant thereto. Wachovia shall provide the Non-Consenting Lender with prior
      written notice of its intent to exercise its right under this Section, which
      notice shall specify on date on which such purchase and sale shall occur. Such
      purchase and sale shall be pursuant to the terms of an Assignment and Acceptance
      (whether or not executed by the Non-Consenting Lender), except that on the
      date
      of such purchase and sale, Wachovia, or such Eligible Transferee specified
      by
      Wachovia or Borrowers, as applicable, shall pay to the Non-Consenting Lender
      (except as Wachovia and such Non-Consenting Lender may otherwise agree) the
      amount equal to: (i) the principal balance of the Loans held by the
      Non-Consenting Lender outstanding as of the close of business on the business
      day immediately preceding the effective date of such purchase and sale, plus
      (ii) amounts accrued and unpaid in respect of interest and fees payable to
      the
      Non-Consenting Lender to the effective date of the purchase (but in no event
      shall the Non-Consenting Lender be deemed entitled to any early termination
      fee), minus (iii) the amount of the closing fee received by the Non-Consenting
      Lender pursuant to the terms hereof or of any of the other Financing Agreements
      multiplied by the fraction, the numerator of which is the number of months
      remaining in the then current term of the Credit Facility and the denominator
      of
      which is the number of months in the then current term thereof. Such purchase
      and sale shall be effective on the date of the payment of such amount to the
      Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
      terminate on such date.

     

    (d)  The
      consent of Agent shall be required for any amendment, waiver or consent
      affecting the rights or duties of Agent hereunder or under any of the other
      Financing Agreements, in addition to the consent of the Lenders otherwise
      required by this Section and the exercise by Agent of any of its rights
      hereunder with respect to Reserves or Eligible Accounts or Eligible Equipment
      shall not be deemed an amendment to the advance rates provided for in this
      Section 11.2. Notwithstanding anything to the contrary contained in Section
      11.2(a) above, (i) in the event that Agent shall agree that any items otherwise
      required to be delivered to Agent as a condition of the initial Loans and
      Letters of Credit hereunder may be delivered after the date hereof, Agent may,
      in its discretion, agree to extend the date for delivery of such items or take
      such other action as Agent may deem appropriate as a result of the failure
      to
      receive such items as Agent may determine or may waive any Event of Default
      as a
      result of the failure to receive such items, in each case without the consent
      of
      any Lender and (ii) Agent may consent to any change in the type of organization,
      jurisdiction of organization or other legal structure of any Borrower, Guarantor
      or any of their Subsidiaries and amend the terms hereof or of any of the other
      Financing Agreements as may be necessary or desirable to reflect any such
      change, in each case without the approval of any Lender.

     

    
      
        
        

      

      
        96

        
          

        

      

      
        
        

      

    

     

    11.3  Waiver
      of Counterclaims.
      Each
      Borrower and Guarantor waives all rights to interpose any claims, deductions,
      setoffs or counterclaims of any nature (other then compulsory counterclaims)
      in
      any action or proceeding with respect to this Agreement, the Obligations, the
      Collateral or any matter arising therefrom or relating hereto or
      thereto.

     

    11.4  Indemnification.
      Each
      Borrower and Guarantor shall, jointly and severally, indemnify and hold Agent
      and each Lender, and their respective officers, directors, agents, employees,
      advisors and counsel and their respective Affiliates (each such person being
      an
“Indemnitee”),
      harmless from and against any and all losses, claims, damages, liabilities,
      costs or expenses (including attorneys’ fees and expenses) imposed on, incurred
      by or asserted against any of them in connection with any litigation,
      investigation, claim or proceeding commenced or threatened related to the
      negotiation, preparation, execution, delivery, enforcement, performance or
      administration of this Agreement, any other Financing Agreements, or any
      undertaking or proceeding related to any of the transactions contemplated hereby
      or any act, omission, event or transaction related or attendant thereto,
      including amounts paid in settlement, court costs, and the reasonable,
      out-of-pocket fees and expenses of counsel except that Borrowers and Guarantors
      shall not have any obligation under this Section 11.4 to indemnify an Indemnitee
      with respect to a matter covered hereby resulting from the gross negligence
      or
      willful misconduct of such Indemnitee or such Indemnitee's officers, directors,
      agents, employees, advisors, counsel or Affiliates (but without limiting the
      obligations of Borrowers or Guarantors as to any other Indemnitee). To the
      extent that the undertaking to indemnify, pay and hold harmless set forth in
      this Section may be unenforceable because it violates any law or public policy,
      Borrowers and Guarantors shall pay the maximum portion which it is permitted
      to
      pay under applicable law to Agent and Lenders in satisfaction of indemnified
      matters under this Section. To the extent permitted by applicable law, no
      Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby
      waives, any claim against any Indemnitee, on any theory of liability, for
      special, indirect, consequential or punitive damages (as opposed to direct
      or
      actual damages) arising out of, in connection with, or as a result of, this
      Agreement, any of the other Financing Agreements or any undertaking or
      transaction contemplated hereby. No Indemnitee referred to above shall be liable
      for any damages arising from the use by unintended recipients of any information
      or other materials distributed by it through telecommunications, electronic
      or
      other information transmission systems in connection with this Agreement or
      any
      of the other Financing Agreements or the transaction contemplated hereby or
      thereby. All amounts due under this Section shall be payable upon demand. The
      foregoing indemnity shall survive the payment of the Obligations and the
      termination of this Agreement.

     

    SECTION
      12.  JOINT
      AND SEVERAL LIABILITY; SURETYSHIP WAIVERS; THE AGENT;
      ETC.

     

    12.1  Independent
      Obligations; Subrogation.
      The
      Obligations of each Borrower hereunder are joint and several. To the maximum
      extent permitted by law, each Borrower hereby waives any claim, right or remedy
      which such Borrower now has or hereafter acquires against any other Borrower
      that arises hereunder including, without limitation, any claim, remedy or right
      of subrogation, reimbursement, exoneration, contribution, indemnification,
      or
      participation in any claim, right or remedy of Agent or any Lender against
      any
      Borrower or any Collateral which Agent now has or hereafter acquires, whether
      or
      not such claim, right or remedy arises in equity, under contract, by statute,
      under common law or otherwise until the Obligations are fully paid and finally
      discharged. In addition, each Borrower hereby waives any right to proceed
      against the other Borrowers, now or hereafter, for contribution, indemnity,
      reimbursement, and any other suretyship rights and claims, whether direct or
      indirect, liquidated or contingent, whether arising under express or implied
      contract or by operation of law, which any Borrower may now have or hereafter
      have as against the other Borrowers with respect to the Obligations until the
      Obligations are fully paid and finally discharged. Each Borrower also hereby
      waives any rights of recourse to or with respect to any asset of the other
      Borrowers until the Obligations are fully paid and finally
      discharged.

     

    
      
        
        

      

      
        97

        
          

        

      

      
        
        

      

    

     

    12.2  Authority
      to Modify Obligations and Security.
      Each
      Borrower authorizes Agent, without notice or demand and without affecting any
      Borrowers’ liability hereunder, from time to time, whether before or after any
      notice of termination hereof or before or after any default in respect of the
      Obligations, to: (a) renew, extend, accelerate, or otherwise change the time
      for
      payment of, or otherwise change any other term or condition of, any document
      or
      agreement evidencing or relating to any Obligations as such Obligations relate
      solely to the other Borrowers, including, without limitation, to increase or
      decrease the rate of interest thereon; (b) accept, substitute, waive, defease,
      increase, release, exchange or otherwise alter any Collateral, in whole or
      in
      part, securing the other Borrowers’ Obligations; (c) apply any and all such
      Collateral of the other Borrowers and direct the order or manner of sale thereof
      as Agent, in its sole discretion, may determine; (d) deal with the other
      Borrowers as Agent may elect; (e) in Agent’s sole discretion, settle, release on
      terms satisfactory to them, or by operation of law or otherwise, compound,
      compromise, collect or otherwise liquidate any of the other Borrowers’
Obligations and/or any of the Collateral in any manner, and bid and purchase
      any
      of the collateral at any sale thereof; (vi) apply any and all payments or
      recoveries from the other Borrowers as Agent, in its sole discretion, may
      determine, whether or not such indebtedness relates to the Obligations; all
      whether such Obligations are secured or unsecured or guaranteed or not
      guaranteed by others; and (vii) apply any sums realized from Collateral
      furnished by the other Borrowers upon any of its indebtedness or obligations
      to
      Agent as Agent, in its sole discretion, may determine, whether or not such
      indebtedness relates to the Obligations; all without in any way diminishing,
      releasing or discharging the liability of any Borrower hereunder.

     

    12.3  Waiver
      of Defenses.
      Upon
      and during the continuation of an Event of Default by any Borrower in respect
      of
      any Obligations, Agent may, at its option and without notice to any Borrower,
      proceed directly against any Borrower to collect and recover the full amount
      of
      the liability hereunder, or any portion thereof, and each Borrower waives any
      right to require Agent to: (a) proceed against the other Borrowers or any other
      person whomsoever; (b) proceed against or exhaust any Collateral given to or
      held by Agent in connection with the Obligations; (c) give notice of the terms,
      time and place of any public or private sale of any of the Collateral except
      as
      otherwise provided herein; or (d) pursue any other remedy in Agent’s power
      whatsoever. A separate action or actions may be brought and prosecuted against
      any Borrower whether or not action is brought against the other Borrowers and
      whether the other Borrowers be joined in any such action or actions; and each
      Borrower waives the benefit of any statute of limitations affecting the
      liability hereunder or the enforcement hereof, and agrees that any payment
      of
      any Obligations or other act which shall toll any statute of limitations
      applicable thereto shall similarly operate to toll such statute of limitations
      applicable to the liability hereunder.

     

    
      
        
        

      

      
        98

        
          

        

      

      
        
        

      

    

     

    12.4  Exercise
      of Lender’s Rights.
      Each
      Borrower hereby authorizes and empowers Agent in its sole discretion, without
      any notice or demand to such Borrower whatsoever and without affecting the
      liability of such Borrower hereunder, to exercise any right or remedy which
      Agent may have available to it against the other Borrowers.

     

    12.5  Additional
      Waivers.
      Each
      Borrower waives any defense arising by reason of any disability or other defense
      of the other Borrowers or by reason of the cessation from any cause whatsoever
      of the liability of the other Borrowers or by reason of any act or omission
      of
      Agent or others which directly or indirectly results in or aids the discharge
      or
      release of the other Borrowers or any Obligations or any Collateral by operation
      of law or otherwise. The Obligations shall be enforceable against each Borrower
      without regard to the validity, regularity or enforceability of any of the
      Obligations with respect to any of the other Borrowers or any of the documents
      related thereto or any collateral security documents securing any of the
      Obligations. No exercise by Agent of, and no omission of Agent to exercise,
      any
      power or authority recognized herein and no impairment or suspension of any
      right or remedy of Agent against any Borrower or any Collateral shall in any
      way
      suspend, discharge, release, exonerate or otherwise affect any of the
      Obligations or any Collateral furnished by the Borrowers or give to the
      Borrowers any right of recourse against Agent. Each Borrower specifically agrees
      that the failure of Agent: (a) to perfect any lien on or security interest
      in
      any property heretofore or hereafter given any Borrower to secure payment of
      the
      Obligations, or to record or file any document relating thereto or (b) to file
      or enforce a claim against the estate (either in administration, bankruptcy
      or
      other proceeding) of any Borrower shall not in any manner whatsoever terminate,
      diminish, exonerate or otherwise affect the liability of any Borrower
      hereunder.

     

    12.6  Additional
      Indebtedness.
      Additional Obligations may be created from time to time at the request of any
      Borrower and without further authorization from or notice to any other Borrower
      even though the borrowing Borrower’s financial condition may deteriorate since
      the date hereof. Each Borrower waives the right, if any, to require Agent to
      disclose to such Borrower any information it may now have or hereafter acquire
      concerning the other Borrowers’ character, credit, Collateral, financial
      condition or other matters. Each Borrower has established adequate means to
      obtain from the other Borrowers, on a continuing basis, financial and other
      information pertaining to such Borrower’s business and affairs, and assumes the
      responsibility for being and keeping informed of the financial and other
      conditions of the other Borrowers and of all circumstances bearing upon the
      risk
      of nonpayment of the Obligations which diligent inquiry would reveal. Agent
      shall not need to inquire into the powers of any Borrower or the authority
      of
      any of their respective officers, directors, partners or agents acting or
      purporting to act in their behalf, and any Obligations created in reliance
      upon
      the purported exercise of such power or authority is hereby guaranteed. All
      Obligations of each Borrower to Agent heretofore, now or hereafter created
      shall
      be deemed to have been granted at each Borrower’s special insistence and request
      and in consideration of and in reliance upon this Agreement.

     

    12.7  Waiver
      of Notices.
      Each
      Borrower and each Guarantor hereby expressly waives diligence, all rights of
      setoff and counterclaim against Agent and Lenders, and all demand, presentment,
      protest and notice of protest and notice of dishonor with respect to any and
      all
      instruments and chattel paper, included in or evidencing any of the Obligations
      or the Collateral, and any and all other demands and notices of any kind or
      nature whatsoever with respect to the Obligations, the Collateral and this
      Agreement, including notice of the existence, creation or incurring of any
      new
      or additional Obligations, except such as are expressly provided for herein.
      No
      notice to or demand on any Borrower which Agent may elect to give shall entitle
      such Borrower to any other or further notice or demand in the same, similar
      or
      other circumstances. 

     

    
      
        
        

      

      
        99

        
          

        

      

      
        
        

      

    

     

    12.8  Subordination.
      Except
      as otherwise provided in this Section 12.8, and except for expenses paid by
      one
      Borrower for the other Borrower’s benefit, any indebtedness of any Borrower now
      or hereafter owing to any other Borrower is hereby subordinated to the
      Obligations, whether heretofore, now or hereafter created, and whether before
      or
      after notice of termination hereof, and, following the occurrence and during
      the
      continuation of an Event of Default, no Borrower shall, without the prior
      consent of Agent, pay in whole or in part any of such indebtedness nor will
      any
      such Borrower accept any payment of or on account of any such indebtedness
      at
      any time while such Borrower remains liable hereunder. At the request of Agent,
      after the occurrence and during the continuance of an Event of Default, each
      Borrower shall pay to Agent all or any part of such subordinated indebtedness
      and any amount so paid to Agent at its request shall be applied to payment
      of
      the Obligations. Each payment on the indebtedness of any Borrower to the other
      Borrowers received in violation of any of the provisions hereof shall be deemed
      to have been received by any other Borrower as trustee for Agent and Lenders
      and
      shall be paid over to Agent immediately on account of the Obligations, but
      without otherwise affecting in any manner any such Borrower’s liability under
      any of the provisions of this Agreement. Each Borrower agrees to file all claims
      against the other Borrowers in any bankruptcy or other proceeding in which
      the
      filing of claims is required by law in respect of any indebtedness of the other
      Borrowers to such Borrower, and Agent shall be entitled to all of any such
      Borrower’s rights thereunder. If for any reason, after Agent's request
      pertaining to any such filing, any such Borrower fails to file such claim at
      least thirty (30) days prior to the last date on which such claim should be
      filed, Agent, as such Borrower’s attorney-in-fact, is hereby authorized to do so
      in Borrowers’ name or, in Agent’s discretion, to assign such claim to, and cause
      a proof of claim to be filed in the name of, Agent’s nominee. In all such cases,
      whether in administration, bankruptcy or otherwise, the person or persons
      authorized to pay such claim shall pay to Agent the full amount payable on
      the
      claim in the proceeding, and to the full extent necessary for that purpose
      any
      such Borrower hereby assigns to Agent all such Borrower’s rights to any payments
      or distributions to which such Borrower otherwise would be entitled. If the
      amount so paid is greater than any such Borrower’s liability hereunder, Agent
      will pay the excess amount to the person legally entitled thereto.

     

    12.9  Revival.
      If any
      payments of money or transfers of property made to Agent and Lenders by any
      Borrower should for any reason subsequently be declared to be fraudulent (within
      the meaning of any state or federal law relating to fraudulent conveyances),
      preferential or otherwise voidable or recoverable in whole or in part for any
      reason (hereinafter collectively called “voidable
      transfers”)
      under
      the Bankruptcy Code or any other federal or state law and Agent or any Lender
      is
      required to repay or restore any such voidable transfer, or the amount or any
      portion thereof, then as to any such voidable transfer or the amount repaid
      or
      restored and all reasonable costs and expenses (including reasonable attorneys’
fees) of Agent or such Lender related thereto, such Borrower’s liability
      hereunder shall automatically be revived, reinstated and restored and shall
      exist as though such voidable transfer had never been made to Agent or such
      Lender.

     

    
      
        
        

      

      
        100

        
          

        

      

      
        
        

      

    

     

    12.10  Understanding
      of Waivers.
      Each
      Borrower warrants and agrees that the waivers set forth in this Section 12
      are
      made with full knowledge of their significance and consequences. If any of
      such
      waivers are determined to be contrary to any applicable law or public policy,
      such waivers shall be effective only to the maximum extent permitted by
      law.

     

    12.11  Appointment,
      Powers and Immunities.
      Each
      Lender irrevocably designates, appoints and authorizes Wachovia to act as Agent
      hereunder and under the other Financing Agreements with such powers as are
      specifically delegated to Agent by the terms of this Agreement and of the other
      Financing Agreements, together with such other powers as are reasonably
      incidental thereto. Agent (a) shall have no duties or responsibilities except
      those expressly set forth in this Agreement and in the other Financing
      Agreements, and shall not by reason of this Agreement or any other Financing
      Agreement be a trustee or fiduciary for any Lender; (b) shall not be responsible
      to Lenders for any recitals, statements, representations or warranties contained
      in this Agreement or in any of the other Financing Agreements, or in any
      certificate or other document referred to or provided for in, or received by
      any
      of them under, this Agreement or any other Financing Agreement, or for the
      value, validity, effectiveness, genuineness, enforceability or sufficiency
      of
      this Agreement or any other Financing Agreement or any other document referred
      to or provided for herein or therein or for any failure by any Borrower or
      any
      Guarantor or any other Person to perform any of its obligations hereunder or
      thereunder; and (c) shall not be responsible to Lenders for any action taken
      or
      omitted to be taken by it hereunder or under any other Financing Agreement
      or
      under any other document or instrument referred to or provided for herein or
      therein or in connection herewith or therewith, except for its own gross
      negligence or willful misconduct as determined by a final non-appealable
      judgment of a court of competent jurisdiction. Agent may employ agents and
      attorneys in fact and shall not be responsible for the negligence or misconduct
      of any such agents or attorneys in fact selected by it in good faith. Agent
      may
      deem and treat the payee of any note as the holder thereof for all purposes
      hereof unless and until the assignment thereof pursuant to an agreement (if
      and
      to the extent permitted herein) in form and substance satisfactory to Agent
      shall have been delivered to and acknowledged by Agent.

     

    12.12  Reliance
      by Agent.
      Agent
      shall be entitled to rely upon any certification, notice or other communication
      (including any thereof by telephone, telecopy, telex, telegram or cable)
      believed by it to be genuine and correct and to have been signed or sent by
      or
      on behalf of the proper Person or Persons, and upon advice and statements of
      legal counsel, independent accountants and other experts selected by Agent.
      As
      to any matters not expressly provided for by this Agreement or any other
      Financing Agreement, Agent shall in all cases be fully protected in acting,
      or
      in refraining from acting, hereunder or thereunder in accordance with
      instructions given by the Required Lenders or all of Lenders as is required
      in
      such circumstance, and such instructions of such Agents and any action taken
      or
      failure to act pursuant thereto shall be binding on all Lenders.

     

    12.13  Events
      of Default.

     

    (a)  Agent
      shall not be deemed to have knowledge or notice of the occurrence of a Default
      or an Event of Default or other failure of a condition precedent to the Loans
      and Letters of Credit hereunder, unless and until Agent has received written
      notice from a Lender, or Borrower specifying such Event of Default or any
      unfulfilled condition precedent, and stating that such notice is a “Notice of
      Default or Failure of Condition”. In the event that Agent receives such a Notice
      of Default or Failure of Condition, Agent shall give prompt notice thereof
      to
      the Lenders. Agent shall (subject to Section 12.17) take such action with
      respect to any such Event of Default or failure of condition precedent as shall
      be directed by the Required Lenders to the extent provided for herein;
provided,
      that,
      unless
      and until Agent shall have received such directions, Agent may (but shall not
      be
      obligated to) take such action, or refrain from taking such action, with respect
      to or by reason of such Event of Default or failure of condition precedent,
      as
      it shall deem advisable in the best interest of Lenders. Without limiting the
      foregoing, and notwithstanding the existence or occurrence and continuance
      of an
      Event of Default or any other failure to satisfy any of the conditions precedent
      set forth in Section 4 of this Agreement to the contrary, unless and until
      otherwise directed by the Required Lenders, Agent may, but shall have no
      obligation to, continue to make Loans and issue or cause to be issued any Letter
      of Credit for the ratable account and risk of Lenders from time to time if
      Agent
      believes making such Loans or issuing or causing to be issued such Letter of
      Credit is in the best interests of Lenders.

     

    
      
        
        

      

      
        101

        
          

        

      

      
        
        

      

    

     

    (b)  Except
      with the prior written consent of Agent, no Lender may assert or exercise any
      enforcement right or remedy in respect of the Loans, Letter of Credit
      Obligations or other Obligations, as against any Borrower or Guarantor or any
      of
      the Collateral or other property of any Borrower or Guarantor.

     

    12.14  Wachovia
      in its Individual Capacity.
      With
      respect to its Commitment and the Loans made and Letters of Credit issued or
      caused to be issued by it (and any successor acting as Agent), so long as
      Wachovia shall be a Lender hereunder, it shall have the same rights and powers
      hereunder as any other Lender and may exercise the same as though it were not
      acting as Agent, and the term “Lender” or “Lenders” shall, unless the context
      otherwise indicates, include Wachovia in its individual capacity as Lender
      hereunder. Wachovia (and any successor acting as Agent) and its Affiliates
      may
      (without having to account therefor to any Lender) lend money to, make
      investments in and generally engage in any kind of business with Borrowers
      (and
      any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
      Wachovia and its Affiliates may accept fees and other consideration from any
      Borrower or Guarantor and any of its Subsidiaries and Affiliates for services
      in
      connection with this Agreement or otherwise without having to account for the
      same to Lenders.

     

    12.15  Indemnification.
      Lenders
      agree to indemnify Agent (to the extent not reimbursed by Borrowers hereunder
      and without limiting any obligations of Borrowers hereunder) ratably, in
      accordance with their Pro Rata Shares, for any and all claims of any kind and
      nature whatsoever that may be imposed on, incurred by or asserted against Agent
      (including by any Lender) arising out of or by reason of any investigation
      in or
      in any way relating to or arising out of this Agreement or any other Financing
      Agreement or any other documents contemplated by or referred to herein or
      therein or the transactions contemplated hereby or thereby (including the costs
      and expenses that Agent is obligated to pay hereunder) or the enforcement of
      any
      of the terms hereof or thereof or of any such other documents, provided,
      that,
      no
      Lender shall be liable for any of the foregoing to the extent it arises from
      the
      gross negligence or willful misconduct of the party to be indemnified as
      determined by a final non-appealable judgment of a court of competent
      jurisdiction. The foregoing indemnity shall survive the payment of the
      Obligations and the termination of this Agreement.

     

    
      
        
        

      

      
        102

        
          

        

      

      
        
        

      

    

     

    12.16  Non-Reliance
      on Agent and Other Lenders.
      Each
      Lender agrees that it has, independently and without reliance on Agent or other
      Lender, and based on such documents and information as it has deemed
      appropriate, made its own credit analysis of Borrowers and Guarantors and has
      made its own decision to enter into this Agreement and that it will,
      independently and without reliance upon Agent or any other Lender, and based
      on
      such documents and information as it shall deem appropriate at the time,
      continue to make its own analysis and decisions in taking or not taking action
      under this Agreement or any of the other Financing Agreements. Agent shall
      not
      be required to keep itself informed as to the performance or observance by
      any
      Borrower or Guarantor of any term or provision of this Agreement or any of
      the
      other Financing Agreements or any other document referred to or provided for
      herein or therein or to inspect the properties or books of any Borrower or
      Guarantor. Agent will use reasonable efforts to provide Lenders with any
      information received by Agent from any Borrower or Guarantor which is required
      to be provided to Lenders or deemed to be requested by Lenders hereunder and
      with a copy of any Notice of Default or Failure of Condition received by Agent
      from any Borrower or any Lender; provided,
      that,
      Agent
      shall not be liable to any Lender for any failure to do so, except to the extent
      that such failure is attributable to Agent's own gross negligence or willful
      misconduct. Except for notices, reports and other documents expressly required
      to be furnished to Lenders by Agent or deemed requested by Lenders hereunder,
      Agent shall not have any duty or responsibility to provide any Lender with
      any
      other credit or other information concerning the affairs, financial condition
      or
      business of any Borrower or Guarantor that may come into the possession of
      Agent.

     

    12.17  Failure
      to Act.
      Except
      for action expressly required of Agent hereunder and under the other Financing
      Agreements, Agent shall in all cases be fully justified in failing or refusing
      to act hereunder and thereunder unless it shall receive further assurances
      to
      its satisfaction from Lenders of their indemnification obligations under Section
      12.15 hereof against any and all liability and expense that may be incurred
      by
      it by reason of taking or continuing to take any such action.

     

    12.18  Additional
      Loans.
      Agent
      shall not make any Loans or provide any Letter of Credit to any Borrower on
      behalf of Lenders intentionally and with actual knowledge that such Loans or
      Letter of Credit would cause the aggregate amount of the total outstanding
      Loans
      and Letters of Credit to Borrowers to exceed the Borrowing Base, without the
      prior consent of all Lenders, except, that, Agent may make such additional
      Loans
      or provide such additional Letter of Credit on behalf of Lenders, intentionally
      and with actual knowledge that such Loans or Letter of Credit will cause the
      total outstanding Loans and Letters of Credit to Borrowers to exceed the
      Borrowing Base, as Agent may deem necessary or advisable in its discretion,
      provided,
      that:
      (a) the
      total principal amount of the additional Loans or additional Letters of Credit
      to any Borrower which Agent may make or provide after obtaining such actual
      knowledge that the aggregate principal amount of the Loans equal or exceed
      the
      Borrowing Bases of Borrowers, plus the amount of Special Agent Advances made
      pursuant to Section 12.21(a)(ii) hereof then outstanding, shall not exceed
      the
      aggregate amount equal to ten percent (10%) of the Maximum Credit and shall
      not
      cause the total principal amount of the Loans and Letters of Credit to exceed
      the Maximum Credit and (b) no such additional Loan or Letter of Credit shall
      be
      outstanding more than ninety (90) days after the date such additional Loan
      or
      Letter of Credit is made or issued (as the case may be), except as the Required
      Lenders may otherwise agree. Each Lender shall be obligated to pay Agent the
      amount of its Pro Rata Share of any such additional Loans or Letters of
      Credit.

     

    
      
        
        

      

      
        103

        
          

        

      

      
        
        

      

    

     

    12.19  Concerning
      the Collateral and the Related Financing Agreements.
      Each
      Lender authorizes and directs Agent to enter into this Agreement and the other
      Financing Agreements. Each Lender agrees that any action taken by Agent or
      Required Lenders in accordance with the terms of this Agreement or the other
      Financing Agreements and the exercise by Agent or Required Lenders of their
      respective powers set forth therein or herein, together with such other powers
      that are reasonably incidental thereto, shall be binding upon all of the
      Lenders.

     

    12.20  Field
      Audit, Examination Reports and other Information; Disclaimer by
      Lenders.
      By
      signing this Agreement, each Lender:

     

    (a)  is
      deemed
      to have requested that Agent furnish such Lender, promptly after it becomes
      available, a copy of each field audit or examination report and report with
      respect to the Borrowing Base prepared or received by Agent (each field audit
      or
      examination report and report with respect to the Borrowing Base being referred
      to herein as a “Report” and collectively, “Reports”), appraisals with respect to
      the Collateral and financial statements with respect Parent Guarantor and its
      Subsidiaries received by Agent;

     

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

     

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

     

    (d)  agrees
      to
      keep all Reports confidential and strictly for its internal use in accordance
      with the terms of Section 13.5 hereof, and not to distribute or use any Report
      in any other manner.

     

    12.21  Collateral
      Matters.

     

    (a)  Agent
      may, at its option, from time to time, at any time on or after an Event of
      Default and for so long as the same is continuing or upon any other failure
      of a
      condition precedent to the Loans and Letters of Credit hereunder, make such
      disbursements and advances (“Special
      Agent Advances”)
      which
      Agent, in its sole discretion, (i) deems necessary or desirable either to
      preserve or protect the Collateral or any portion thereof or (ii) to enhance
      the
      likelihood or maximize the amount of repayment by Borrowers and Guarantors
      of
      the Loans and other Obligations, provided,
      that,
      (A) the
      aggregate principal amount of the Special Agent Advances pursuant to this clause
      (ii) outstanding at any time, plus the then outstanding principal amount of
      the
      additional Loans and Letters of Credit which Agent may make or provide as set
      forth in Section 12.18 hereof, shall not exceed the amount equal to ten percent
      (10%) percent of the Maximum Credit and (B) the aggregate principal amount
      of
      the Special Agent Advances pursuant to this clause (ii) outstanding at any
      time,
      plus the then outstanding principal amount of the Loans, shall not exceed the
      Maximum Credit, except at Agent’s option, provided, that, to the extent that the
      aggregate principal amount of Special Agent Advances plus the then outstanding
      principal amount of the Loans exceed the Maximum Credit the Special Agent
      Advances that are in excess of the Maximum Credit shall be for the sole account
      and risk of Agent and notwithstanding anything to the contrary set forth below,
      no Lender shall have any obligation to provide its share of such Special Agent
      Advances in excess of the Maximum Credit, or (iii) to pay any other amount
      chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement
      or any of the other Financing Agreements consisting of (A) costs, fees and
      expenses and (B) payments to issuing bank in respect of any Letter of Credit
      Obligations. The Special Agent Advances shall be repayable on demand and
      together with all interest thereon shall constitute Obligations secured by
      the
      Collateral. Special Agent Advances shall not constitute Loans but shall
      otherwise constitute Obligations hereunder. Interest on Special Agent Advances
      shall be payable at the Interest Rate then applicable to Prime Rate Loans and
      shall be payable on demand. Without limitation of its obligations pursuant
      to
      Section 6.9, each Lender agrees that it shall make available to Agent, upon
      Agent's demand, in immediately available funds, the amount equal to such
      Lender's Pro Rata Share of each such Special Agent Advance. If such funds are
      not made available to Agent by such Lender, such Lender shall be deemed a
      Defaulting Lender and Agent shall be entitled to recover such funds, on demand
      from such Lender together with interest thereon for each day from the date
      such
      payment was due until the date such amount is paid to Agent at the Federal
      Funds
      Rate for each day during such period (as published by the Federal Reserve Bank
      of New York or at Agent’s option based on the arithmetic mean determined by
      Agent of the rates for the last transaction in overnight Federal funds arranged
      prior to 9:00 a.m. (New York City time) on that day by each of the three leading
      brokers of Federal funds transactions in New York City selected by Agent) and
      if
      such amounts are not paid within three (3) days of Agent’s demand, at the
      highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
      Rate Loans.

     

    
      
        
        

      

      
        104

        
          

        

      

      
        
        

      

    

     

    (b)  Lenders
      hereby irrevocably authorize Agent, at its option and in its discretion to
      release any security interest in, mortgage or lien upon, any of the Collateral
      (i) upon termination of the Commitments and payment and satisfaction of all
      of
      the Obligations and delivery of cash collateral to the extent required under
      Section 13.1 below, or (ii) constituting property being sold or disposed of
      if
      any Borrower or Guarantor certifies to Agent that the sale or disposition is
      made in compliance with Section 9.7 hereof (and Agent may rely conclusively
      on
      any such certificate, without further inquiry), or (iii) constituting property
      in which any Borrower or Guarantor did not own an interest at the time the
      security interest, mortgage or lien was granted or at any time thereafter,
      or
      (iv) having a value in the aggregate in any twelve (12) month period of less
      than $6,500,000, and to the extent Agent may release its security interest
      in
      and lien upon any such Collateral pursuant to the sale or other disposition
      thereof, such sale or other disposition shall be deemed consented to by Lenders,
      or (v) if required or permitted under the terms of any of the other Financing
      Agreements, including any intercreditor agreement, or (vi) approved, authorized
      or ratified in writing by all of Lenders. Except as provided above, Agent will
      not release any security interest in, mortgage or lien upon, any of the
      Collateral without the prior written authorization of all of Lenders. Upon
      request by Agent at any time, Lenders will promptly confirm in writing Agent's
      authority to release particular types or items of Collateral pursuant to this
      Section.

     

    
      
        
        

      

      
        105

        
          

        

      

      
        
        

      

       

    

    (c)  Without
      any manner limiting Agent's authority to act without any specific or further
      authorization or consent by the Required Lenders, each Lender agrees to confirm
      in writing, upon request by Agent, the authority to release Collateral conferred
      upon Agent under this Section. Agent shall (and is hereby irrevocably authorized
      by Lenders to) execute such documents as may be necessary to evidence the
      release of the security interest, mortgage or liens granted to Agent upon any
      Collateral to the extent set forth above; provided,
      that,
      (i)
      Agent shall not be required to execute any such document on terms which, in
      Agent's opinion, would expose Agent to liability or create any obligations
      or
      entail any consequence other than the release of such security interest,
      mortgage or liens without recourse or warranty and (ii) such release shall
      not
      in any manner discharge, affect or impair the Obligations or any security
      interest, mortgage or lien upon (or obligations of any Borrower or Guarantor
      in
      respect of) the Collateral retained by such Borrower or Guarantor.

     

    (d)  Agent
      shall have no obligation whatsoever to any Lender or any other Person to
      investigate, confirm or assure that the Collateral exists or is owned by any
      Borrower or Guarantor or is cared for, protected or insured or has been
      encumbered, or that any particular items of Collateral meet the eligibility
      criteria applicable in respect of the Loans or Letters of Credit hereunder,
      or
      whether any particular reserves are appropriate, or that the liens and security
      interests granted to Agent pursuant hereto or any of the Financing Agreements
      or
      otherwise have been properly or sufficiently or lawfully created, perfected,
      protected or enforced or are entitled to any particular priority, or to exercise
      at all or in any particular manner or under any duty of care, disclosure or
      fidelity, or to continue exercising, any of the rights, authorities and powers
      granted or available to Agent in this Agreement or in any of the other Financing
      Agreements, it being understood and agreed that in respect of the Collateral,
      or
      any act, omission or event related thereto, subject to the other terms and
      conditions contained herein, Agent may act in any manner it may deem
      appropriate, in its discretion, given Agent's own interest in the Collateral
      as
      a Lender and that Agent shall have no duty or liability whatsoever to any other
      Lender.

     

    12.22  Agency
      for Perfection.
      Each
      Lender hereby appoints Agent and each other Lender as agent and bailee for
      the
      purpose of perfecting the security interests in and liens upon the Collateral
      of
      Agent in assets which, in accordance with Article 9 of the UCC can be perfected
      only by possession (or where the security interest of a secured party with
      possession has priority over the security interest of another secured party)
      and
      Agent and each Lender hereby acknowledges that it holds possession of any such
      Collateral for the benefit of Agent as secured party. Should any Lender obtain
      possession of any such Collateral, such Lender shall notify Agent thereof,
      and,
      promptly upon Agent's request therefor shall deliver such Collateral to Agent
      or
      in accordance with Agent's instructions.

     

    12.23  Successor
      Agent.
      Agent
      may resign as Agent upon thirty (30) days’ notice to Lenders and Parent
      Guarantor. If Agent resigns under this Agreement, the Required Lenders shall
      appoint from among the Lenders a successor agent for Lenders. If no successor
      agent is appointed prior to the effective date of the resignation of Agent,
      Agent may appoint, after consulting with Lenders and Parent Guarantor, a
      successor agent from among Lenders. Upon the acceptance by the Lender so
      selected of its appointment as successor agent hereunder, such successor agent
      shall succeed to all of the rights, powers and duties of the retiring Agent
      and
      the term “Agent” as used herein and in the other Financing Agreements shall mean
      such successor agent and the retiring Agent’s appointment, powers and duties as
      Agent shall be terminated. After any retiring Agent’s resignation hereunder as
      Agent, the provisions of this Section 12 shall inure to its benefit as to any
      actions taken or omitted by it while it was Agent under this Agreement. If
      no
      successor agent has accepted appointment as Agent by the date which is thirty
      (30) days after the date of a retiring Agent’s notice of resignation, the
      retiring Agent’s resignation shall nonetheless thereupon become effective and
      Lenders shall perform all of the duties of Agent hereunder until such time,
      if
      any, as the Required Lenders appoint a successor agent as provided for
      above.

     

    
      
        
        

      

      
        106

        
          

        

      

      
        
        

      

    

     

    12.24  Other
      Agent Designations.
      Agent
      may at any time and from time to time determine that a Lender may, in addition,
      be a “Co-Agent”, “Syndication Agent”, “Documentation Agent” or similar
      designation hereunder and enter into an agreement with such Lender to have
      it so
      identified for purposes of this Agreement. Any such designation shall be
      effective upon written notice by Agent to Borrowers of any such designation.
      Any
      Lender that is so designated as a Co-Agent, Syndication Agent, Documentation
      Agent or such similar designation by Agent shall have no right, power,
      obligation, liability, responsibility or duty under this Agreement or any of
      the
      other Financing Agreements other than those applicable to all Lenders as such.
      Without limiting the foregoing, the Lenders so identified shall not have or
      be
      deemed to have any fiduciary relationship with any Lender and no Lender shall
      be
      deemed to have relied, nor shall any Lender rely, on a Lender so identified
      as a
      Co-Agent, Syndication Agent, Documentation Agent or such similar designation
      in
      deciding to enter into this Agreement or in taking or not taking action
      hereunder.

     

    SECTION
      13.  TERM
      OF AGREEMENT; MISCELLANEOUS

     

    13.1  Term.

     

    (a)  This
      Agreement and the other Financing Agreements shall continue in full force and
      effect for a term ending on the date three (3) years from the date hereof (the
      “Maturity
      Date”),
      unless sooner terminated pursuant to the terms hereof. Borrowers may terminate
      this Agreement at any time upon ten (10) Business Days' prior written notice
      to
      Agent (which notice shall be irrevocable); provided,
      that
      this Agreement and all other Financing Agreements must be terminated
      simultaneously. In addition, Agent may terminate this Agreement at any time
      that
      an Event of Default has occurred and is continuing. Upon the Maturity Date
      or
      any other effective date of termination of the Financing Agreements, Borrowers
      shall pay to Agent all outstanding and unpaid Obligations and shall furnish
      cash
      collateral to Agent (or at Agent’s option, a letter of credit issued for the
      account of Borrowers and at Borrowers’ expense, in form and substance
      satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent
      as
      beneficiary) in such amounts as Agent determines are reasonably necessary to
      secure Agent and Lenders from loss, cost, damage or expense, including
      reasonable attorneys' fees and expenses, in connection with any contingent
      Obligations that are known or ascertainable or that are likely to ripen,
      including issued and outstanding Letter of Credit Obligations and checks or
      other payments provisionally credited to the Obligations and/or as to which
      Agent or any Lender has not yet received final and indefeasible payment and
      any
      continuing obligations of Agent or any Lender pursuant to any Deposit Account
      Control Agreement. The amount of such cash collateral (or letter of credit,
      as
      Agent may determine) as to any Letter of Credit Obligations shall be in the
      amount equal to one hundred two percent (102%) of the amount of the Letter
      of
      Credit Obligations plus
      the
      amount of any fees and expenses payable in connection therewith through the
      end
      of the latest expiration date of the Letters of Credit giving rise to such
      Letter of Credit Obligations. Such payments in respect of the Obligations and
      cash collateral shall be remitted by wire transfer in Federal funds to the
      Agent
      Payment Account or such other bank account of Agent, as Agent may, in its
      discretion, designate in writing to Borrowers for such purpose. Interest shall
      be due until and including the next Business Day, if the amounts so paid by
      Borrowers to the Agent Payment Account or other bank account designated by
      Agent
      are received in such bank account later than 12:00 noon, Pasadena, California
      time.

     

    
      
        
        

      

      
        107

        
          

        

      

      
        
        

      

    

     

    (b)  No
      termination of this Agreement or any of the other Financing Agreements shall
      relieve or discharge any Borrower or Guarantor of its respective duties,
      obligations and covenants under this Agreement or any of the other Financing
      Agreements until all Obligations (other than contingent indemnification
      Obligations) have been fully discharged and paid, and Agent's continuing
      security interest in the Collateral and the rights and remedies of Agent and
      Lenders hereunder, under the other Financing Agreements and applicable law,
      shall remain in effect until all such Obligations (other than contingent
      indemnification Obligations) have been fully discharged and paid. Accordingly,
      each Borrower and Guarantor waives any rights it may have under the UCC to
      demand the filing of termination statements with respect to the Collateral
      and
      Agent shall not be required to send such termination statements to Borrowers
      or
      Guarantors, or to file them with any filing office, (i)
      unless
      and until this Agreement shall have been terminated in accordance with its
      terms
      and all Obligations paid and satisfied in full in immediately available funds,
      and (ii)
      except
      in the case of any sale or other disposition of such Collateral permitted
      pursuant to Section 9.7 hereof. 

     

    13.2  Interpretative
      Provisions.

     

    (a)  All
      terms
      used herein which are defined in Article 1, Article 8 or Article 9 of the UCC
      shall have the meanings given therein unless otherwise defined in this
      Agreement.

     

    (b)  All
      references to the plural herein shall also mean the singular and to the singular
      shall also mean the plural unless the context otherwise requires.

     

    (c)  All
      references to any Borrower, Guarantor, Agent and Lenders pursuant to the
      definitions set forth in the recitals hereto, or to any other person herein,
      shall include their respective successors and assigns.

     

    (d)  The
      words
“hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
      when used in this Agreement shall refer to this Agreement as a whole and not
      any
      particular provision of this Agreement and as this Agreement now exists or
      may
      hereafter be amended, modified, supplemented, extended, renewed, restated or
      replaced.

     

    (e)  The
      word
“including” when used in this Agreement shall mean “including, without
      limitation” and the word “will” when used in this Agreement shall be construed
      to have the same meaning and effect as the word “shall”.

     

    (f)  An
      Event
      of Default shall exist or continue or be continuing until such Event of Default
      is waived in accordance with Section 11.2 or is cured in a manner satisfactory
      to Agent, if such Event of Default is capable of being cured as determined
      by
      Agent.

     

    
      
        
        

      

      
        108

        
          

        

      

      
        
        

      

    

     

    (g)  All
      references to the term “good faith” used herein when applicable to Agent or any
      Lender shall mean, notwithstanding anything to the contrary contained herein
      or
      in the UCC, honesty in fact in the conduct or transaction concerned. Borrowers
      and Guarantors shall have the burden of proving any lack of good faith on the
      part of Agent or any Lender alleged by any Borrower or Guarantor at any
      time.

     

    (h)  Any
      accounting term used in this Agreement shall have, unless otherwise specifically
      provided herein, the meaning customarily given in accordance with GAAP, and
      all
      financial computations hereunder shall be computed unless otherwise specifically
      provided herein, in accordance with GAAP as consistently applied and using
      the
      same method for inventory valuation as used in the preparation of the financial
      statements of Borrowers most recently received by Agent prior to the date
      hereof. Notwithstanding anything to the contrary contained in GAAP or any
      interpretations or other pronouncements by the Financial Accounting Standards
      Board or otherwise, the term “unqualified opinion” as used herein to refer to
      opinions or reports provided by accountants shall mean an opinion or report
      that
      is unqualified and also does not include any explanation, supplemental comment
      or other comment concerning the ability of the applicable person to continue
      as
      a going concern or the scope of the audit.

     

    (i)  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”.

     

    (j)  Unless
      otherwise expressly provided herein, (i) references herein to any agreement,
      document or instrument shall be deemed to include all subsequent amendments,
      modifications, supplements, extensions, renewals, restatements or replacements
      with respect thereto, but only to the extent the same are not prohibited by
      the
      terms hereof or of any other Financing Agreement, and (ii) references to any
      statute or regulation are to be construed as including all statutory and
      regulatory provisions consolidating, amending, replacing, recodifying,
      supplementing or interpreting the statute or regulation.

     

    (k)  The
      captions and headings of this Agreement are for convenience of reference only
      and shall not affect the interpretation of this Agreement.

     

    (l)  This
      Agreement and other Financing Agreements may use several different limitations,
      tests or measurements to regulate the same or similar matters. All such
      limitations, tests and measurements are cumulative and shall each be performed
      in accordance with their terms.

     

    (m)  This
      Agreement and the other Financing Agreements are the result of negotiations
      among and have been reviewed by counsel to Borrowers and counsel to Agent,
      and
      are the products of all parties. Accordingly, this Agreement and the other
      Financing Agreements shall not be construed against Agent or Lenders merely
      because of Agent’s or any Lender’s involvement in their
      preparation.

     

    (n)  Unless
      otherwise expressly provided in this Agreement or in the other Financing
      Agreements, Article,
      Section,
      Exhibit and Schedule references herein and therein are to the Financing
      Agreement in which such reference appears.

     

    
      
        
        

      

      
        109

        
          

        

      

      
        
        

      

    

     

    13.3  Notices.

     

    (a)  All
      notices, requests and demands hereunder shall be in writing and deemed to have
      been given or made: if delivered in person, immediately upon delivery; if by
      telex, telegram or facsimile transmission, immediately upon sending and upon
      confirmation of receipt; if by nationally recognized overnight courier service
      with instructions to deliver the next Business Day, one (1) Business Day after
      sending; and if by certified mail, return receipt requested, five (5) days
      after
      mailing. Notices delivered through electronic communications shall be effective
      to the extent set forth in Section 13.3(b) below. All notices, requests and
      demands upon the parties are to be given to the following addresses (or to
      such
      other address as any party may designate by notice in accordance with this
      Section):

     

    
      	
              If
                to any Borrower:

            	 	
              Jazz
                Semiconductor, Inc.

              4321
                Jamboree Road

              Newport
                Beach, California 92660

              Attention:
                Chief Financial Officer

              Telephone
                No.: (949) 435-8304

              Telecopy
                No.: (949) 435-8200

            
	 	 	 
	
              If
                to Parent Guarantor:

            	 	
              Jazz
                Technologies, Inc.

              4910
                Birch Street, Suite 102

              Irvine,
                California 92660

              Attention:
                Gilbert F. Amelio

              Telephone
                No.: 

              Telecopy
                No.: 

            
	 	 	 
	
              with
                a copy to:

            	 	
              Cooley
                Godward LLP

              101
                California Street, 5th
                Floor

              San
                Francisco, CA 94111-5800

              Attention:
                Mischi a Marca

              Telephone
                No.: (415) 693-2148

              Telecopy
                No.: (415) 693-2222

            
	 	 	 
	
              If
                to Agent:

            	 	
              Wachovia
                Capital Finance Corporation (Western)

              251
                South Lake Avenue, Suite 900

              Pasadena,
                California 91101

              Attention:
                Portfolio Manager

              Telephone
                No.: (626) 304-4900 

              Telecopy
                No.: (626) 304-4969

            
	 	 	 
	
              with
                a copy to:

            	 	
              Mayer,
                Brown, Rowe & Maw LLP

              350
                South Grand Avenue, 25th
                Floor

              Los
                Angeles, California 90071

              Attention:
                Marshall Stoddard

              Telephone
                No.: (213) 229-9500 

              Telecopy
                No.: (213) 625-0248

            

    

    

    (b)  Notices
      and other communications to Agent hereunder may be delivered or furnished by
      electronic communication (including e-mail and Internet or intranet websites)
      pursuant to procedures approved by Agent or as otherwise determined by Agent.
      Unless Agent otherwise requires, (i) notices and other communications sent
      to an
      e-mail address shall be deemed received upon the sender’s receipt of an
      acknowledgement from the intended recipient (such as by the “return receipt
      requested” function, as available, return e-mail or other written
      acknowledgement), provided, that, if such notice or other communication is
      not
      given during the normal business hours of the recipient, such notice shall
      be
      deemed to have been sent at the opening of business on the next Business Day
      for
      the recipient, and (ii) notices or communications posted to an Internet or
      intranet website shall be deemed received upon the deemed receipt by the
      intended recipient at its e-mail address as described in the foregoing clause
      (i) of notification that such notice or communications is available and
      identifying the website address therefor.

     

    
      
        
        

      

      
        110

        
          

        

      

      
        
        

      

    

     

    13.4  Partial
      Invalidity.
      If any
      provision of this Agreement is held to be invalid or unenforceable, such
      invalidity or unenforceability shall not invalidate this Agreement as a whole,
      but this Agreement shall be construed as though it did not contain the
      particular provision held to be invalid or unenforceable and the rights and
      obligations of the parties shall be construed and enforced only to such extent
      as shall be permitted by applicable law.

     

    13.5  Confidentiality.
      

     

    (a)  Agent
      and
      each Lender shall use all reasonable efforts to keep confidential, in accordance
      with its customary procedures for handling confidential information and safe
      and
      sound lending practices, any non-public information supplied to it by any
      Borrower or any Guarantor pursuant to this Agreement, provided,
      that,
      nothing
      contained herein shall limit the disclosure of any such information:
(i)
      to the
      extent required by statute, rule, regulation, subpoena or court order,
(ii)
      to bank
      examiners and other regulators, auditors and/or accountants, in connection
      with
      any litigation to which Agent or such Lender is a party, (iii)
      to any
      Lender or Participant (or prospective Lender or Participant) or to any Affiliate
      of any Lender so long as such Lender or Participant (or prospective Lender
      or
      Participant) or Affiliate shall have been instructed to treat such information
      as confidential in accordance with this Section 13.5, or (iv)
      subject
      to this Section 13.5, to counsel for Agent or any Lender, any Affiliate of
      Lender or any Participant (or prospective Lender or Participant).

     

    (b)  In
      the
      event that Agent or any Lender receives a request or demand to disclose any
      confidential information pursuant to any subpoena or court order, Agent or
      such
      Lender, as the case may be, agrees (i)
      to the
      extent permitted by applicable law or if permitted by applicable law, to the
      extent Agent or such Lender determines in good faith that it will not create
      any
      risk of liability to Agent or such Lender, Agent or such Lender will promptly
      notify Borrowers of such request so that Borrowers may seek a protective order
      or other appropriate relief or remedy and (ii)
      if
      disclosure of such information is required, disclose such information and,
      subject to reimbursement by Borrowers of Agent’s or such Lender’s expenses,
      cooperate with Borrowers in the reasonable efforts to obtain an order or other
      reliable assurance that confidential treatment will be accorded to such portion
      of the disclosed information which Borrowers so designates, to the extent
      permitted by applicable law or if permitted by applicable law, to the extent
      Agent or such Lender determines in good faith that it will not create any risk
      of liability to Agent or such Lender.

     

    
      
        
        

      

      
        111

        
          

        

      

      
        
        

      

    

     

    (c)  In
      no
      event shall this Section 13.5 or any other provision of this Agreement, any
      of
      the other Financing Agreements or applicable law be deemed: (i)
      to apply
      to or restrict disclosure of information that has been or is made public by
      any
      Borrower, any Guarantor or any third party or otherwise becomes generally
      available to the public other than as a result of a disclosure in violation
      hereof, (ii)
      to apply
      to or restrict disclosure of information that was or becomes available to Agent
      or any Lender (or any Affiliate of any Lender) on a non-confidential basis
      from
      a person other than a Borrower or a Guarantor, (iii)
      to
      require Agent or any Lender to return any materials furnished by a Borrower
      or a
      Guarantor to Agent or a Lender or prevent Agent or a Lender from responding
      to
      routine informational requests in accordance with the Code of Ethics for the
      Exchange of Credit Information promulgated by The Robert Morris Associates
      or
      other applicable industry standards relating to the exchange of credit
      information. The obligations of Agent and Lenders under this Section 13.5 shall
      supersede and replace the obligations of Agent and Lenders under any
      confidentiality letter signed prior to the date hereof or any other arrangements
      concerning the confidentiality of information provided by any Borrower or any
      Guarantor to Agent or any Lender. In addition, Agent and Lenders may disclose
      information relating to this Agreement to Gold Sheets and other similar bank
      trade publications, with such information to consist of deal terms and other
      information customarily found in such publications and the use of the name,
      logos and other insignia of each Borrower and Guarantor in any “tombstone” or
      comparable advertising, on its website or in other marketing materials of Agent
      or its Affiliates.

     

    13.6  Successors.
      This
      Agreement, the other Financing Agreements and any other document referred to
      herein or therein shall be binding upon and inure to the benefit of and be
      enforceable by Agent, Lenders, Borrowers, Guarantors and their respective
      permitted successors and assigns, provided
      that,
      except as otherwise permitted hereunder, no Borrower may assign its rights
      under
      this Agreement, the other Financing Agreements and any other document referred
      to herein or therein without the prior written consent of Agent and Lenders.
      Any
      such purported assignment without such express prior written consent shall
      be
      void. Agent may, with the prior written consent of Borrowers (which consent
      shall not be unreasonably withheld or delayed), assign its rights and delegate
      its obligations under this Agreement and the other Financing Agreements and
      further may assign, or sell participations in, all or any part of the Loans,
      the
      Letters of Credit or any other interest herein to another financial institution
      or other person on terms and conditions acceptable to Agent, provided,
      that,
      (a)
      in the
      event of any such assignment of rights, delegation of obligations or sale of
      participations or other interest by Agent to any Affiliate or Affiliates of
      Agent, (b)
      in the
      event of any such sale or assignment in connection with the merger,
      consolidation, sale, transfer or other disposition of all or any substantial
      portion of Agent's business, loan portfolio or other assets or (c)
      after
      the occurrence and during the continuation of an Event of Default, no such
      consent from Borrowers shall be required. 

     

    13.7  Assignments;
      Participations.

     

    (a)  Each
      Lender may, with the prior written consent of Agent, assign all or, if less
      than
      all, a portion equal to at least $5,000,000 in the aggregate for the assigning
      Lender, of such rights and obligations under this Agreement to one or more
      Eligible Transferees (but not including for this purpose any assignments in
      the
      form of a participation), each of which assignees shall become a party to this
      Agreement as a Lender by execution of an Assignment and Acceptance; provided,
      that,
      (i)
      such transfer or assignment will not be effective until recorded by Agent on
      the
      Register and (ii) Agent shall have received for its sole account payment of
      a
      processing fee from the assigning Lender or the assignee in the amount of
      $5,000.

     

    
      
        
        

      

      
        112

        
          

        

      

      
        
        

      

    

     

    (b)  Agent
      shall maintain a register of the names and addresses of Lenders, their
      Commitments and the principal amount of their Loans (the “Register”). Agent
      shall also maintain a copy of each Assignment and Acceptance delivered to and
      accepted by it and shall modify the Register to give effect to each Assignment
      and Acceptance. The entries in the Register shall be conclusive and binding
      for
      all purposes, absent manifest error, and any Borrowers, Guarantors, Agent and
      Lenders may treat each Person whose name is recorded in the Register as a Lender
      hereunder for all purposes of this Agreement. The Register shall be available
      for inspection by the Borrowers and any Lender at any reasonable time and from
      time to time upon reasonable prior notice.

     

    (c)  Upon
      such
      execution, delivery, acceptance and recording, from and after the effective
      date
      specified in each Assignment and Acceptance, the assignee thereunder shall
      be a
      party hereto and to the other Financing Agreements and, to the extent that
      rights and obligations hereunder have been assigned to it pursuant to such
      Assignment and Acceptance, have the rights and obligations (including, without
      limitation, the obligation to participate in Letter of Credit Obligations)
      of a
      Lender hereunder and thereunder and the assigning Lender shall, to the extent
      that rights and obligations hereunder have been assigned by it pursuant to
      such
      Assignment and Acceptance, relinquish its rights and be released from its
      obligations under this Agreement.

     

    (d)  By
      execution and delivery of an Assignment and Acceptance, the assignor and
      assignee thereunder confirm to and agree with each other and the other parties
      hereto as follows: (i) other than as provided in such Assignment and Acceptance,
      the assigning Lender makes no representation or warranty and assumes no
      responsibility with respect to any statements, warranties or representations
      made in or in connection with this Agreement or any of the other Financing
      Agreements or the execution, legality, enforceability, genuineness, sufficiency
      or value of this Agreement or any of the other Financing Agreements furnished
      pursuant hereto, (ii) the assigning Lender makes no representation or warranty
      and assumes no responsibility with respect to the financial condition of any
      Borrower, Guarantor or any of their Subsidiaries or the performance or
      observance by any Borrower or Guarantor of any of the Obligations; (iii) such
      assignee confirms that it has received a copy of this Agreement and the other
      Financing Agreements, together with such other documents and information it
      has
      deemed appropriate to make its own credit analysis and decision to enter into
      such Assignment and Acceptance, (iv) such assignee will, independently and
      without reliance upon the assigning Lender, Agent and based on such documents
      and information as it shall deem appropriate at the time, continue to make
      its
      own credit decisions in taking or not taking action under this Agreement and
      the
      other Financing Agreements, (v) such assignee appoints and authorizes Agent
      to
      take such action as agent on its behalf and to exercise such powers under this
      Agreement and the other Financing Agreements as are delegated to Agent by the
      terms hereof and thereof, together with such powers as are reasonably incidental
      thereto, and (vi) such assignee agrees that it will perform in accordance with
      their terms all of the obligations which by the terms of this Agreement and
      the
      other Financing Agreements are required to be performed by it as a Lender.
      Agent
      and Lenders may furnish any information concerning any Borrower or Guarantor
      in
      the possession of Agent or any Lender from time to time to assignees and
      Participants.

     

    
      
        
        

      

      
        113

        
          

        

      

      
        
        

      

    

     

    (e)  Each
      Lender may sell participations to one or more banks or other entities in or
      to
      all or a portion of its rights and obligations under this Agreement and the
      other Financing Agreements (including, without limitation, all or a portion
      of
      its Commitments and the Loans owing to it and its participation in the Letter
      of
      Credit Obligations, without the consent of Agent or the other Lenders);
provided,
      that,
      (i)
      such Lender's obligations under this Agreement (including, without limitation,
      its Commitment hereunder) and the other Financing Agreements shall remain
      unchanged, (ii) such Lender shall remain solely responsible to the other parties
      hereto for the performance of such obligations, and Borrowers, Guarantors,
      the
      other Lenders and Agent shall continue to deal solely and directly with such
      Lender in connection with such Lender's rights and obligations under this
      Agreement and the other Financing Agreements, and (iii) the Participant shall
      not have any rights under this Agreement or any of the other Financing
      Agreements (the Participant's rights against such Lender in respect of such
      participation to be those set forth in the agreement executed by such Lender
      in
      favor of the Participant relating thereto) and all amounts payable by any
      Borrower or Guarantor hereunder shall be determined as if such Lender had not
      sold such participation.

     

    (f)  Nothing
      in this Agreement shall prevent or prohibit any Lender from pledging its Loans
      hereunder to a Federal Reserve Bank in support of borrowings made by such
      Lenders from such Federal Reserve Bank; provided,
      that,
      no such
      pledge shall release such Lender from any of its obligations hereunder or
      substitute any such pledgee for such Lender as a party hereto.

     

    (g)  Borrowers
      and Guarantors shall assist Agent or any Lender permitted to sell assignments
      or
      participations under this Section 13.7 in whatever manner reasonably necessary
      in order to enable or effect any such assignment or participation, including
      (but not limited to) the execution and delivery of any and all agreements,
      notes
      and other documents and instruments as shall be requested and the delivery
      of
      informational materials, appraisals or other documents for, and the
      participation of relevant management in meetings and conference calls with,
      potential Lenders or Participants. Borrowers shall certify the correctness,
      completeness and accuracy, in all material respects, of all descriptions of
      Borrowers and Guarantors and their affairs provided, prepared or reviewed by
      any
      Borrower or Guarantor that are contained in any selling materials and all other
      information provided by it and included in such materials.

     

    13.8  Entire
      Agreement.
      This
      Agreement, the other Financing Agreements, any supplements hereto or thereto,
      and any instruments or documents delivered or to be delivered in connection
      herewith or therewith represents the entire agreement and understanding
      concerning the subject matter hereof and thereof between the parties hereto,
      and
      supersede all other prior agreements, understandings, negotiations and
      discussions, representations, warranties, commitments, proposals, offers and
      contracts concerning the subject matter hereof, whether oral or written. In
      the
      event of any inconsistency between the terms of this Agreement and any schedule
      or exhibit hereto, the terms of this Agreement shall govern.

     

    13.9  USA
      Patriot Act.
      Each
      Lender hereby notifies each Borrower that pursuant to the requirements of the
      USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)
      (the “Act”),
      it is
      required to obtain, verify and record information that identifies each person
      or
      corporation who opens an account and/or enters into a business relationship
      with
      it, which information includes the name and address of each Borrower and each
      Guarantor and other information that will allow such Lender to identify each
      Borrower and each Guarantor in accordance with the Act and any other applicable
      law. Each Borrower and each Guarantor is hereby advised that any Loans or
      Letters of Credit hereunder are subject to satisfactory results of such
      verification.

     

    
      
        
        

      

      
        114

        
          

        

      

      
        
        

      

    

     

    13.10  Counterparts,
      Etc.
      This
      Agreement or any of the other Financing Agreements may be executed in any number
      of counterparts, each of which shall be an original, but all of which taken
      together shall constitute one and the same agreement. Delivery of an executed
      counterpart of this Agreement or any of the other Financing Agreements by
      telefacsimile or other electronic method of transmission shall have the same
      force and effect as the delivery of an original executed counterpart of this
      Agreement or any of such other Financing Agreements. Any party delivering an
      executed counterpart of any such agreement by telefacsimile or other electronic
      method of transmission shall also deliver an original executed counterpart,
      but
      the failure to do so shall not affect the validity, enforceability or binding
      effect of such agreement.

     

    [Remainder
      of Page Intentionally Blank]

     

    
      
        
        

      

      
        115

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
      duly
      executed and delivered by its officers thereunto duly authorized as of the
      date
      first above written.

    
      	 	 	 
	 	
              JAZZ
                SEMICONDUCTOR, INC.,

              as
                a Borrower

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Shu
              Li
	 	
              

              Name:
                Shu Li

            
	 	
              Title:
                President and Chief Executive
                Officer

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	 
	 	
                
                  NEWPORT
                    FAB, LLC,

                  as
                    a Borrower

                

              
	 
 	 
 	 
 
	
              	By:  	/s/
                Shu
                Li
	 	
                

                
                  Name:
                    Shu Li

                  
                    Title:
                      President and Chief Executive Officer

                  

                

              
	 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 	 	 
	 	
                
                  JAZZ
                    TECHNOLOGIES, INC.,

                  as
                    Parent Guarantor

                

              
	 
 	 
 	 
 
	
              	By:  	/s/
                Gilbert F. Amelio
	 	
                

                
                  Name:
                    Gilbert F. Amelio

                

              
	 	
                
                  Title:
                    Chairman and Chief Executive
                    Officer

                

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      
        
          	 	 	 
	 	
                  
                    WACHOVIA
                      CAPITAL FINANCE CORPORATION   (WESTERN),

                    as
                      Agent and a Lender

                  

                
	 
 	 
 	 
 
	
                	By:  	/s/
                  Kate W.
                  Cook
	 	
                  

                  
                    Name:
                      Kate W. Cook

                  

                
	 	
                  
                    Title:
                      Managing Director

                  

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    EXHIBIT
      A

    to

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    ASSIGNMENT
      AND ACCEPTANCE AGREEMENT

     

    This
      ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as
      of _____________, 200_ is made between ________________________ (the “Assignor”)
      and ____________________ (the “Assignee”).

     

    WITNESSETH:

     

    WHEREAS,
      Wachovia Capital Finance Corporation (Western), in its capacity as agent
      pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
      of the financial institutions which are parties thereto as lenders (in such
      capacity, “Agent”),
      and
      the financial institutions which are parties to the Loan Agreement as lenders
      (individually, each a “Lender”
and
      collectively, “Lenders”)
      have
      entered or are about to enter into financing arrangements pursuant to which
      Agent and Lenders may make loans and advances and provide other financial
      accommodations to Jazz Semiconductor, Inc. and Newport Fab, LLC (collectively,
      “Borrowers”)
      as set
      forth in the Amended and Restated Loan and Security Agreement, dated February
      28, 2007, by and among Borrowers, certain of their affiliates, Jazz
      Technologies, Inc., as parent guarantor, Agent and Lenders (as the same now
      exists or may hereafter be amended, modified, supplemented, extended, renewed,
      restated or replaced, the “Loan
      Agreement”),
      and
      the other agreements, documents and instruments referred to therein or at any
      time executed and/or delivered in connection therewith or related thereto (all
      of the foregoing, together with the Loan Agreement, as the same now exist or
      may
      hereafter be amended, modified, supplemented, extended, renewed, restated or
      replaced, being collectively referred to herein as the “Financing
      Agreements”);

     

    WHEREAS,
      as provided under the Loan Agreement, Assignor committed to making Loans (the
      “Committed
      Loans”)
      to
      Borrowers in an aggregate amount not to exceed $___________ (the “Commitment”);

     

    WHEREAS,
      Assignor wishes to assign to Assignee [part of the] [all] rights and obligations
      of Assignor under the Loan Agreement in respect of its Commitment in an amount
      equal to $______________ (the “Assigned
      Commitment Amount”)
      on the
      terms and subject to the conditions set forth herein and Assignee wishes to
      accept assignment of such rights and to assume such obligations from Assignor
      on
      such terms and subject to such conditions;

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual agreements contained
      herein, the parties hereto agree as follows:

     

    1.  Assignment
      and Acceptance.

     

    (a)  Subject
      to the terms and conditions of this Assignment and Acceptance, Assignor hereby
      sells, transfers and assigns to Assignee, and Assignee hereby purchases, assumes
      and undertakes from Assignor, without recourse and without representation or
      warranty (except as provided in this Assignment and Acceptance) an interest
      in
      (i) the Commitment and each of the Committed Loans of Assignor and (ii) all
      related rights, benefits, obligations, liabilities and indemnities of the
      Assignor under and in connection with the Loan Agreement and the other Financing
      Agreements, so that after giving effect thereto, the Commitment of Assignee
      shall be as set forth below and the Pro Rata Share of Assignee shall be _______
      (__%) percent.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    (b)  With
      effect on and after the Effective Date (as defined in Section 5 hereof),
      Assignee shall be a party to the Loan Agreement and succeed to all of the rights
      and be obligated to perform all of the obligations of a Lender under the Loan
      Agreement, including the requirements concerning confidentiality and the payment
      of indemnification, with a Commitment in an amount equal to the Assigned
      Commitment Amount. Assignee agrees that it will perform in accordance with
      their
      terms all of the obligations which by the terms of the Loan Agreement are
      required to be performed by it as a Lender. It is the intent of the parties
      hereto that the Commitment of Assignor shall, as of the Effective Date, be
      reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
      relinquish its rights and be released from its obligations under the Loan
      Agreement to the extent such obligations have been assumed by Assignee;
provided,
      that,
      Assignor shall not relinquish its rights under Sections 2.2, 6.4, 6.9, 11.5
      and
      12.5 of the Loan Agreement to the extent such rights relate to the time prior
      to
      the Effective Date.

     

    (c)  After
      giving effect to the assignment and assumption set forth herein, on the
      Effective Date Assignee's Commitment will be $_____________.

     

    (d)  After
      giving effect to the assignment and assumption set forth herein, on the
      Effective Date Assignor's Commitment will be $______________ (as such amount
      may
      be further reduced by any other assignments by Assignor on or after the date
      hereof).

     

    2.  Payments.

     

    (a)  As
      consideration for the sale, assignment and transfer contemplated in Section
      1
      hereof, Assignee shall pay to Assignor on the Effective Date in immediately
      available funds an amount equal to $____________, representing Assignee's Pro
      Rata Share of the principal amount of all Committed Loans.

     

    (b)  Assignee
      shall pay to Agent the processing fee in the amount specified in Section 13.7(a)
      of the Loan Agreement.

     

    3.  Reallocation
      of Payments.
      Any
      interest, fees and other payments accrued to the Effective Date with respect
      to
      the Commitment, Committed Loans and outstanding Letters of Credit shall be
      for
      the account of Assignor. Any interest, fees and other payments accrued on and
      after the Effective Date with respect to the Assigned Commitment Amount shall
      be
      for the account of Assignee. Each of Assignor and Assignee agrees that it will
      hold in trust for the other party any interest, fees and other amounts which
      it
      may receive to which the other party is entitled pursuant to the preceding
      sentence and pay to the other party any such amounts which it may receive
      promptly upon receipt.

     

    4.  Independent
      Credit Decision.
      Assignee acknowledges that it has received a copy of the Loan Agreement and
      the
      Schedules and Exhibits thereto, together with copies of the most recent
      financial statements of _____________ and its Subsidiaries, and such other
      documents and information as it has deemed appropriate to make its own credit
      and legal analysis and decision to enter into this Assignment and Acceptance
      and
      agrees that it will, independently and without reliance upon Assignor, Agent
      or
      any Lender and based on such documents and information as it shall deem
      appropriate at the time, continue to make its own credit and legal decisions
      in
      taking or not taking action under the Loan Agreement.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    5.  Effective
      Date; Notices.

     

    (a)  As
      between Assignor and Assignee, the effective date for this Assignment and
      Acceptance shall be _______________, 200_ (the “Effective
      Date”);
      provided,
      that,
      the
      following conditions precedent have been satisfied on or before the Effective
      Date:

     

    (i)  this
      Assignment and Acceptance shall be executed and delivered by Assignor and
      Assignee;

     

    (ii)  the
      consent of Agent as required for an effective assignment of the Assigned
      Commitment Amount by Assignor to Assignee shall have been duly obtained and
      shall be in full force and effect as of the Effective Date;

     

    (iii)  written
      notice of such assignment, together with payment instructions, addresses and
      related information with respect to Assignee, shall have been given to Borrowers
      and Agent;

     

    (iv)  Assignee
      shall pay to Assignor all amounts due to Assignor under this Assignment and
      Acceptance; and

     

    (v)  the
      processing fee referred to in Section 2(b) hereof shall have been paid to
      Agent.

     

    (b)  the
      execution of this Assignment and Acceptance, Assignor shall deliver to Borrowers
      and Agent for acknowledgment by Agent, a Notice of Assignment in the form
      attached hereto as Schedule 1.

     

    6.  Agent.
      [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]

     

    (a)  Assignee
      hereby appoints and authorizes Assignor in its capacity as Agent to take such
      action as agent on its behalf to exercise such powers under the Loan Agreement
      as are delegated to Agent by Lenders pursuant to the terms of the Loan
      Agreement.

     

    (b)  Assignee
      shall assume no duties or obligations held by Assignor in its capacity as Agent
      under the Loan Agreement.]

     

    7.  Withholding
      Tax.
      Assignee (a) represents and warrants to Assignor, Agent and Borrowers that
      under
      applicable law and treaties no tax will be required to be withheld by Assignee,
      Agent or Borrowers with respect to any payments to be made to Assignee hereunder
      or under any of the Financing Agreements, (b) agrees to furnish (if it is
      organized under the laws of any jurisdiction other than the United States or
      any
      State thereof) to Agent and Borrowers prior to the time that Agent or Borrowers
      are required to make any payment of principal, interest or fees hereunder,
      duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN
      or W-8ECI, as applicable (wherein Assignee claims entitlement to the benefits
      of
      a tax treaty that provides for a complete exemption from U.S. federal income
      withholding tax on all payments hereunder) and agrees to provide new such forms
      upon the expiration of any previously delivered form or comparable statements
      in
      accordance with applicable U.S. law and regulations and amendments thereto,
      duly
      executed and completed by Assignee, and (c) agrees to comply with all applicable
      U.S. laws and regulations with regard to such withholding tax
      exemption.

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    8.  Representations
      and Warranties.

     

    (a)  Assignor
      represents and warrants that (i) it is the legal and beneficial owner of the
      interest being assigned by it hereunder and that such interest is free and
      clear
      of any security interest, lien, encumbrance or other adverse claim, (ii) it
      is
      duly organized and existing and it has the full power and authority to take,
      and
      has taken, all action necessary to execute and deliver this Assignment and
      Acceptance and any other documents required or permitted to be executed or
      delivered by it in connection with this Assignment and Acceptance and to fulfill
      its obligations hereunder, (iii) no notices to, or consents, authorizations
      or
      approvals of, any Person are required (other than any already given or obtained)
      for its due execution, delivery and performance of this Assignment and
      Acceptance, and apart from any agreements or undertakings or filings required
      by
      the Loan Agreement, no further action by, or notice to, or filing with, any
      Person is required of it for such execution, delivery or performance, and (iv)
      this Assignment and Acceptance has been duly executed and delivered by it and
      constitutes the legal, valid and binding obligation of Assignor, enforceable
      against Assignor in accordance with the terms hereof, subject, as to
      enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
      laws of general application relating to or affecting creditors' rights and
      to
      general equitable principles.

     

    (b)  Assignor
      makes no representation or warranty and assumes no responsibility with respect
      to any statements, warranties or representations made in or in connection with
      the Loan Agreement or any of the other Financing Agreements or the execution,
      legality, validity, enforceability, genuineness, sufficiency or value of the
      Loan Agreement or any other instrument or document furnished pursuant thereto.
      Assignor makes no representation or warranty in connection with, and assumes
      no
      responsibility with respect to, the solvency, financial condition or statements
      of Borrowers, Guarantors or any of their respective Affiliates, or the
      performance or observance by Borrowers, Guarantors or any other Person, of
      any
      of its respective obligations under the Loan Agreement or any other instrument
      or document furnished in connection therewith.

     

    (c)  Assignee
      represents and warrants that (i) it is duly organized and existing and it has
      full power and authority to take, and has taken, all action necessary to execute
      and deliver this Assignment and Acceptance and any other documents required
      or
      permitted to be executed or delivered by it in connection with this Assignment
      and Acceptance, and to fulfill its obligations hereunder, (ii) no notices to,
      or
      consents, authorizations or approvals of, any Person are required (other than
      any already given or obtained) for its due execution, delivery and performance
      of this Assignment and Acceptance, and apart from any agreements or undertakings
      or filings required by the Loan Agreement, no further action by, or notice
      to,
      or filing with, any Person is required of it for such execution, delivery or
      performance; and (iii) this Assignment and Acceptance has been duly executed
      and
      delivered by it and constitutes the legal, valid and binding obligation of
      Assignee, enforceable against Assignee in accordance with the terms hereof,
      subject, as to enforcement, to bankruptcy, insolvency, moratorium,
      reorganization and other laws of general application relating to or affecting
      creditors' rights to general equitable principles.

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    9.  Further
      Assurances.
      Assignor and Assignee each hereby agree to execute and deliver such other
      instruments, and take such other action, as either party may reasonably request
      in connection with the transactions contemplated by this Assignment and
      Acceptance, including the delivery of any notices or other documents or
      instruments to Borrowers or Agent, which may be required in connection with
      the
      assignment and assumption contemplated hereby.

     

    10.  Miscellaneous.

     

    (a)  Any
      amendment or waiver of any provision of this Assignment and Acceptance shall
      be
      in writing and signed by the parties hereto. No failure or delay by either
      party
      hereto in exercising any right, power or privilege hereunder shall operate
      as a
      waiver thereof and any waiver of any breach of the provisions of this Assignment
      and Acceptance shall be without prejudice to any rights with respect to any
      other for further breach thereof.

     

    (b)  All
      payments made hereunder shall be made without any set-off or
      counterclaim.

     

    (c)  Assignor
      and Assignee shall each pay its own costs and expenses incurred in connection
      with the negotiation, preparation, execution and performance of this Assignment
      and Acceptance.

     

    (d)  This
      Assignment and Acceptance may be executed in any number of counterparts and
      all
      of such counterparts taken together shall be deemed to constitute one and the
      same instrument.

     

    (e)  THIS
      ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
      WITH
      THE LAW OF THE STATE OF CALIFORNIA. Assignor and Assignee each irrevocably
      submits to the non-exclusive jurisdiction of any State or Federal court sitting
      in Los Angeles County, California over any suit, action or proceeding arising
      out of or relating to this Assignment and Acceptance and irrevocably agrees
      that
      all claims in respect of such action or proceeding may be heard and determined
      in such California State or Federal court. Each party to this Assignment and
      Acceptance hereby irrevocably waives, to the fullest extent it may effectively
      do so, the defense of an inconvenient forum to the maintenance of such action
      or
      proceeding.

     

    (f)  ASSIGNOR
      AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
      RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
      HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND
      ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY
      RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
      OR
      STATEMENTS (WHETHER ORAL OR WRITTEN).

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
      Acceptance to be executed and delivered by their duly authorized officers as
      of
      the date first above written.

    
      	 	 	 
	 	
            
	 	
              [ASSIGNOR]

               

              By:

              
                

              

              Title:

              
                

              

               

            
	 	 
	 	
              [ASSIGNEE]

               

              By:

              
                

              

              Title:

              
                
 

            

    

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1

     

    NOTICE
      OF
      ASSIGNMENT AND ACCEPTANCE

     

    ______________,
      20__

     

    ___________________________

    ___________________________

    ___________________________

    Attn.:
      ______________________

     

    Re:
      __________________________________________________

     

    Ladies
      and Gentlemen:

     

    Wachovia
      Capital Finance Corporation (Western), in its capacity as agent pursuant to
      the
      Loan Agreement (as hereinafter defined) acting for and on behalf of the
      financial institutions which are parties thereto as lenders (in such capacity,
      “Agent”),
      and
      the financial institutions which are parties to the Loan Agreement as lenders
      (individually, each a “Lender”
and
      collectively, “Lenders”)
      have
      entered or are about to enter into financing arrangements pursuant to which
      Agent and Lenders may make loans and advances and provide other financial
      accommodations to Jazz Semiconductor, Inc. and Newport Fab, LLC (collectively,
      “Borrowers”)
      as set
      forth in the Amended and Restated Loan and Security Agreement, dated February
      28, 2007, by and among Borrowers, certain of their affiliates, Jazz
      Technologies, Inc., as parent guarantor, Agent and Lenders (as the same now
      exists or may hereafter be amended, modified, supplemented, extended, renewed,
      restated or replaced, the “Loan
      Agreement”),
      and
      the other agreements, documents and instruments referred to therein or at any
      time executed and/or delivered in connection therewith or related thereto (all
      of the foregoing, together with the Loan Agreement, as the same now exist or
      may
      hereafter be amended, modified, supplemented, extended, renewed, restated or
      replaced, being collectively referred to herein as the “Financing
      Agreements”).
      Capitalized terms not otherwise defined herein shall have the respective
      meanings ascribed thereto in the Loan Agreement.

     

    1.  We
      hereby
      give you notice of, and request your consent to, the assignment by
      __________________________ (the “Assignor”)
      to
      ___________________________ (the “Assignee”) such that after giving effect to
      the assignment Assignee shall have an interest equal to ________ (__%) percent
      of the total Commitments pursuant to the Assignment and Acceptance Agreement
      attached hereto (the “Assignment
      and Acceptance”).
      We
      understand that the Assignor's Commitment shall be reduced by $_____________,
      as
      the same may be further reduced by other assignments on or after the date
      hereof.

     

    2.  Assignee
      agrees that, upon receiving the consent of Agent to such assignment, Assignee
      will be bound by the terms of the Loan Agreement as fully and to the same extent
      as if the Assignee were the Lender originally holding such interest under the
      Loan Agreement.

     

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

     

    3.  The
      following administrative details apply to Assignee:

     

    (A) Notice
      address:

     

    
      	Assignee name:	 	
              ___________________________

            
	Address:	 	
              ___________________________

            
	Attention:	 	
              ___________________________

            
	Telephone:	 	
              ___________________________

            
	Telecopier:	 	
              ___________________________

            

    

     

    (B) Payment
      instructions:

    
       

      
        	Account No.:	 	
                ___________________________

              
	At:	 	
                ___________________________

              
	Reference:	 	
                ___________________________

              
	Attention:	 	
                ___________________________

              

      

       

    

    4.  You
      are
      entitled to rely upon the representations, warranties and covenants of each
      of
      Assignor and Assignee contained in the Assignment and
      Acceptance.

    
      
        
        

      

      
        A-8

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment
      and
      Acceptance to be executed by their respective duly authorized officials,
      officers or agents as of the date first above mentioned.

    
      	 	 	 	 
	 	 	 	
              Very
                truly yours,

               

              [NAME
                OF ASSIGNOR]

            
	 	 	 	 
	
            	 	 	By:
	
            	 	 	
              
                

              
Title:
	
            	 	 	
              
                
 

            
	 	 	 	 
	 	 	 	[NAME
              OF ASSIGNEE]
	 	 	 	 
	 	 	 	By:
	 	 	 	
              
                

              

              Title: 

            
	 	 	 	
              
                

              

            

    

     

    ACKNOWLEDGED
      AND ASSIGNMENT

    CONSENTED
      TO:

     

    WACHOVIA
      CAPITAL FINANCE CORPORATION

    (WESTERN),
      as Agent

     

    By: 

    
      

    

    Title:     

    
      

    

    
      
        
        

      

      
        A-9

        
          

        

      

       

    

    EXHIBIT
      B

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Information
      Certificate

     

    [See
      Attached]

    

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Compliance
      Certificate

     

    
      	
              To:

            	
              Wachovia
                Capital Finance Corporation (Western), as Agent

              
                251
                  South Lake Avenue, Suite 900

                Pasadena,
                  California 91101

                Attention:
                  Portfolio Manager

              

            

    

    
       

      Ladies
        and Gentlemen:

    

     

    I
      hereby
      certify to you on behalf of the Borrowers pursuant to Section 9.6 of the Loan
      Agreement (as defined below) as follows:

     

    1.  I
      am the
      duly elected Chief Financial Officer of Jazz Semiconductor, Inc., a Delaware
      corporation, and Newport Fab, LLC, a Delaware limited liability company
      (collectively, “Borrowers”).
      Capitalized terms used herein without definition shall have the meanings given
      to such terms in the Amended and Restated Loan and Security Agreement, dated
      as
      of February 28, 2007, by and among Wachovia Capital Finance Corporation
      (Western), a California corporation (“Agent”),
      Wachovia Capital Markets, LLC, as lead arranger, bookrunner and syndication
      agent, the parties thereto from time to time as lenders (the “Lenders”),
      Jazz
      Technologies, Inc., a Delaware corporation (“Parent
      Guarantor”)
      and
      Borrowers (as the same may be amended, modified or supplemented, from time
      to
      time, the “Loan
      Agreement”).

     

    2.  I
      have
      reviewed the terms of the Loan Agreement, and have made, or have caused to
      be
      made under my supervision, a review in reasonable detail of the transactions
      and
      the financial condition of Borrowers and each of their Subsidiaries, during
      the
      immediately preceding fiscal quarter.

     

    3.  The
      review described in Section 2 above did not disclose the existence at the end
      of
      such fiscal quarter, and I have no knowledge of the existence and continuance
      on
      the date hereof, of any condition or event which constitutes a Default or an
      Event of Default, except as set forth on Schedule I attached hereto. Described
      on Schedule I attached hereto are the exceptions, if any, to this Section 3
      listing, in detail, the nature of the condition or event, the period during
      which it has existed and the action which any Borrower, any Guarantor or any
      other Credit Party has taken, is taking, or proposes to take with respect to
      such condition or event.

     

    4.  I
      further
      certify that, based on the review described in Section 2 above, no Borrower,
      Guarantor or other Credit Party has at any time during or at the end of such
      fiscal quarter, except as specifically described on Schedule II attached hereto
      or as permitted by the Loan Agreement, done any of the following:

     

    (a)  Changed
      its corporate name (other than as previously disclosed to you pursuant to
      Section 9.1(b) of the Loan Agreement) since the Effective Date.

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

    (b)  Changed
      the location of its chief executive office, changed its jurisdiction of
      incorporation or formation, changed its type of organization or changed the
      location of or disposed of any of its properties or assets with a fair market
      value in excess of $1,000,000 in the aggregate (other than pursuant to the
      sale
      of Inventory in the ordinary course of its business or as otherwise permitted
      by
      Section 9.2 of the Loan Agreement), or established any new asset
      locations.

     

    5.  I
      further
      certify that, based on the review described in Section 2 above, Schedule III
      attached hereto lists all trade names or styles under which each Borrower and
      Guarantor transacts business that have not been disclosed to you prior to the
      date hereof.

     

    6.  [Attached
      hereto as Schedule IV are the calculations used in determining, as of the end
      of
      such fiscal quarter whether Parent Guarantor and Borrowers are in compliance
      with the covenant set forth in Section 9.18 of the Loan Agreement for such
      fiscal quarter.]

     

    The
      foregoing certifications are made and delivered this day of ___________,
      20__.

    
      	 	 	 	 
	
            	 	 	
              Very
                truly yours,

            
	 	 	 	 
	 	 	 	 
	
            	 	 	
              
Name:
	
            	 	 	
              Title:
                Chief Financial Officer

            

    

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      D

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Borrowing
      Base Certificate

     

    [See
      Attached]

    

    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Non-U.S.
      Lender Statement

     

    [See
      Attached]

    

    
      
        
        

      

      
        E-1

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.30

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Consolidated
      EBITDA

     

    
      	
              Fiscal
                Quarter Ending

            	 	
              Consolidated
                EBITDA

            	 
	
              March
                31, 2006

            	 	
              $

            	
              5,600,000

            	 
	
              June
                30, 2006

            	 	
              $

            	
              8,100,000

            	 
	
              September
                30, 2006

            	 	
              $

            	
              8,700,000

            	 
	
              December
                31, 2006

            	 	
              $

            	
              8,500,000

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      1.46

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Equipment
      Sublimit

     

    
      	 	 	
              Equipment
                Sublimit

            	 	
              Period

            	 
	
              1.

            	 	
              $

            	
              48,214,286.00

            	 	February
              1, 2007 to April 30, 2007	 
	
              2.

            	 	
              $

            	
              46,428,572.00

            	 	May
              1, 2007 to July 31, 2007	 
	
              3.

            	 	
              $

            	
              44,642,858.00

            	 	August
              1, 2007 to October 31, 2007	 
	
              4.

            	 	
              $

            	
              42,857,144.00

            	 	November
              1, 2007 to January 31, 2008	 
	
              5.

            	 	
              $

            	
              40,773,811.00

            	 	February
              1, 2008 to April 30, 2008	 
	
              6.

            	 	
              $

            	
              38,690,478.00

            	 	May
              1, 2008 to July 31, 2008	 
	
              7.

            	 	
              $

            	
              36,607,145.00

            	 	August
              1, 2008 to October 31, 2008	 
	
              8.

            	 	
              $

            	
              34,523,812.00

            	 	November
              1, 2008 to January 31, 2009	 
	
              9.

            	 	
              $

            	
              32,023,812.00

            	 	February
              1, 2009 to April 30, 2009	 
	
              10.

            	 	
              $

            	
              29,523,812.00

            	 	May
              1, 2009 to July 31, 2009	 
	
              11.

            	 	
              $

            	
              27,023,812.00

            	 	August
              1, 2009 to October 31, 2009	 
	
              12.

            	 	
              $

            	
              24,523,812.00

            	 	November
              1, 2009 to Maturity Date	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      1.57

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Existing
      Letters of Credit

    

    [Borrowers
      to Provide]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      1.104

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Permitted
      Holders

    

    [Borrowers
      to Provide]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      1.110

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Qualified
      Cash Accounts

    

    [Borrowers
      to Provide]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      8.8

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Environmental
      Compliance

    

    None.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      8.13

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Labor
      Disputes

    

    Jazz
      Semiconductor maintains one material collective bargaining agreement. The Labor
      Agreement is between Jazz Semiconductor and Local Union No. 2295 of the
      International Brotherhood of Electrical Workers (IBEW). The agreement was
      effective on May 2, 2003 and will expire midnight on May 1,
      2008.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      8.15

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Material
      Contracts

    

    [Borrowers
      to Provide]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      9.9

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Permitted
      Indebtedness

    

    [Borrowers
      to Provide]

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      9.10

    TO

    AMENDED
      AND RESTATED LOAN AND SECURITY AGREEMENT

     

    Existing
      Loans and Advances

    

    [Borrowers
      to Provide]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]