Document:

x101.htm

    
      

      

    

    EXHIBIT
10.1

     

    Assets
Repay Debt Agreement

    

    The
Debtor:  Yangling Daiying Biotech & Pharmaceutical Group Co.,
Ltd.

    
      	
                         
      The Creditor: Xi`an Jinhao Sci-tech Investment Management Co., Ltd.
      (originally named Xi`an Jinyou Sci-tech Investment Management Co.,
      Ltd.)

            

    

    

    Whereas:

    The
Creditor, Xi`an Jinhao Sci-tech Investment Management Co., Ltd. (originally
named Xi`an Jinyou Sci-tech Investment Management Co., Ltd.) is a company
registered in Xi`an, China, and is one of the stockholders of the Debtor,
Yangling Daiying Biotech & Pharmaceutical Group Co., Ltd. The Creditor has
loaned money to the Debtor as liquid capital many times over the years to
support the development of the Debtor. The debt size is Nineteen Million Seven
Hundred Ten Thousand Two Hundred Thirty Four Point Nineteen Chinese Yuans,
19,710,234.19 (including interests) by Sep 30, 2007.

    

    In order
to reduce the Debtor’s debt and the interest burden, both parties have reached
an agreement that the Debtor uses two house properties to pay part of the debt
owed to the Creditor. One property is Room 1-2-2901 of Granghuayuan, Dongli`er,
Xibahe, Chaoyang District, Beijing City and the other is Room A10-11301 of
Jiezuo Mansion, Maple New City, Hi-tech Industrial Development Zone, Xi`an City.
The two parties have agreed on following items in consideration of the
repayment:

    
      
        	
                1.  

              	
                Details
      of the two house properties:

              

      

    

    
      
        	
                Location

              	
                Original
      Value

              	
                Depreciation

              	
                Net
      Value

              	
                Mortgage
      Loan

              	
                Loan
      Amortized (principal + interest)

              	
                Loan
      Balance

              
	
                Room
      A10-11301, Jiezuo Mansion, Maple New City, Hi-tech Industrial Development
      Zone, Xi`an City

              	
                1,782,663

              	
                259,305.45

              	
                1,523,357.55

              	
                1,060,000

              	
                696,420

              	
                363,580

              
	
                Room
      1-2-2901, Granghuayuan, Dongli`er, Xibahe, Chaoyang District, Beijing
      City

              	
                1,248,044

              	
                187,726.63

              	
                1,060,317.37

              	
                990,000

              	
                266,330

              	
                723,670

              
	
                Total

              	
                3,030,707

              	
                447,032.08

              	
                2,583,674.92

              	
                2,050,000

              	
                962,750

              	
                1,087,250

              

      

       

    

    
      	
              2.  

            	
              Debt
      repayment amount:

            

    

    After
friendly discussion, both parties have agreed that the debt repayment amount is
the original value of the two house properties 3,030,707 minus loan balance
1,087,250, that is, One Million Nine Hundred Forty Three Thousand Four Hundred
Fifty Seven Chinese Yuans (1,943,457).

    
      	
              3.  

            	
              The
      ownership and income of the above mentioned two house properties shall
      belong to the Creditor since Oct 1, 2007. The Creditor shall be
      responsible for the unpaid bank mortgage loan of the two house properties,
      and the Debtor shall no longer be liable for that loan
      repayment.

            

    

    
      	
              4.  

            	
              The
      Creditor must cooperate with the Debtor to do the property transfer and
      the bank mortgage loan transfer. The Creditor shall be responsible for the
      fees incurred in the course of these
transfers.

            

    

    
      	
              5.  

            	
              Other:

            

    

    
      	
              (1)  

            	
              Any
      issue that is not covered in this agreement shall be discussed by both
      parties and then sign an addendum to this
  agreement.

            

    

    
      	
              (2)  

            	
              Any
      argument incurred from the execution of this agreement shall be discussed
      and solved by both parties.

            

    

    
      	
              (3)  

            	
              This
      agreement is in triplicate, each party holds one copy and the third copy
      is for procedural documentation.

            

    

    

    Signatures:

    

    The
Debtor:  Yangling Daiying Biotech & Pharmaceutical Group Co.,
Ltd.

    

    Authorized
person signs here:

    

    
 

    /s/
Wenxia GUO

    

    
      	
              The
      Creditor: Xi`an Jinhao Sci-tech Investment Management Co., Ltd.
      (originally named Xi`an Jinyou Sci-tech Investment Management Co.,
      Ltd.)

            

    

    

    Authorized
person signs here:

    

    
 

    /s/ Qiang
LI

    

    Date: Sep
30, 2007Filed by Bowne Pure Compliance

 

Exhibit
10.71

CREDIT AGREEMENT

Dated as of April 10, 2008

between

QAD INC.

and

BANK OF AMERICA, N.A.

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 
	 	 	 	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	18	 
	1.03 Accounting Terms
	 	 	19	 
	1.04 Rounding
	 	 	20	 
	1.05 Times of Day
	 	 	20	 
	1.06 Letter of Credit Amounts
	 	 	20	 
	 
	 	 	 	 
	ARTICLE II. THE COMMITMENT AND CREDIT EXTENSIONS
	 	 	20	 
	 
	 	 	 	 
	2.01 Loans
	 	 	20	 
	2.02 Borrowings, Conversions and Continuations of Loans
	 	 	20	 
	2.03 Letters of Credit
	 	 	22	 
	2.04 Prepayments
	 	 	26	 
	2.05 Termination or Reduction of Commitment
	 	 	27	 
	2.06 Repayment of Loans
	 	 	27	 
	2.07 Interest
	 	 	27	 
	2.08 Fees
	 	 	28	 
	2.09 Computation of Interest and Fees
	 	 	28	 
	2.10 Evidence of Debt
	 	 	29	 
	2.11 Payments Generally
	 	 	29	 
	 
	 	 	 	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	29	 
	 
	 	 	 	 
	3.01 Taxes
	 	 	29	 
	3.02 Illegality
	 	 	30	 
	3.03 Inability to Determine Eurodollar Rate
	 	 	31	 
	3.04 Increased Costs; Reserves on Eurodollar Rate Loans
	 	 	31	 
	3.05 Compensation for Losses
	 	 	32	 
	3.06 Requests for Compensation
	 	 	33	 
	3.07 Survival
	 	 	33	 
	 
	 	 	 	 
	ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	33	 
	 
	 	 	 	 
	4.01 Conditions of Initial Credit Extension
	 	 	33	 
	4.02 Conditions to all Credit Extensions
	 	 	35	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES
	 	 	35	 
	 
	 	 	 	 
	5.01 Existence, Qualification and Power; Compliance with Laws
	 	 	35	 
	5.02 Authorization; No Contravention
	 	 	35	 
	5.03 Governmental Authorization; Other Consents
	 	 	36	 

 

i 

 

	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	5.04 Binding Effect
	 	 	36	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	36	 
	5.06 Litigation
	 	 	37	 
	5.07 No Default
	 	 	37	 
	5.08 Ownership of Property; Liens
	 	 	37	 
	5.09 Environmental Compliance
	 	 	37	 
	5.10 Insurance
	 	 	37	 
	5.11 Taxes
	 	 	37	 
	5.12 ERISA Compliance
	 	 	38	 
	5.13 Subsidiaries
	 	 	38	 
	5.14 Margin Regulations; Investment Company Act
	 	 	38	 
	5.15 Disclosure
	 	 	39	 
	5.16 Compliance with Laws
	 	 	39	 
	5.17 Intellectual Property; Licenses, Etc
	 	 	39	 
	5.18 Solvency
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	40	 
	 
	 	 	 	 
	6.01 Financial Statements
	 	 	40	 
	6.02 Certificates; Other Information
	 	 	40	 
	6.03 Notices
	 	 	42	 
	6.04 Payment of Obligations
	 	 	42	 
	6.05 Preservation of Existence, Etc
	 	 	42	 
	6.06 Maintenance of Properties
	 	 	43	 
	6.07 Maintenance of Insurance
	 	 	43	 
	6.08 Compliance with Laws
	 	 	43	 
	6.09 Books and Records
	 	 	43	 
	6.10 Inspection Rights
	 	 	43	 
	6.11 Use of Proceeds
	 	 	43	 
	6.12 Additional Guarantors
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS
	 	 	44	 
	 
	 	 	 	 
	7.01 Liens
	 	 	44	 
	7.02 Investments
	 	 	45	 
	7.03 Indebtedness
	 	 	47	 
	7.04 Fundamental Changes
	 	 	48	 
	7.05 Dispositions
	 	 	48	 
	7.06 Restricted Payments
	 	 	49	 
	7.07 Change in Nature of Business
	 	 	49	 
	7.08 Transactions with Affiliates
	 	 	49	 
	7.09 Burdensome Agreements
	 	 	49	 
	7.10 Use of Proceeds
	 	 	50	 
	7.11 Financial Covenants
	 	 	50	 

 

ii 

 

	 	 	 	 	 
	Section	 	Page	 
	 
	 	 	 	 
	ARTICLE
VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	50	 
	 
	 	 	 	 
	8.01 Events of Default
	 	 	50	 
	8.02 Remedies Upon Event of Default
	 	 	53	 
	8.03 Application of Funds
	 	 	53	 
	 
	 	 	 	 
	ARTICLE IX. MISCELLANEOUS
	 	 	53	 
	 
	 	 	 	 
	9.01 Amendments; Etc
	 	 	53	 
	9.02 Notices and Other Communications; Facsimile Copies
	 	 	54	 
	9.03 No Waiver; Cumulative Remedies
	 	 	55	 
	9.04 Expenses; Indemnity; Damage Waiver
	 	 	55	 
	9.05 [Reserved]
	 	 	56	 
	9.06 Payments Set Aside
	 	 	56	 
	9.07 Successors and Assigns
	 	 	56	 
	9.08 Treatment of Certain Information; Confidentiality
	 	 	58	 
	9.09 Right of Setoff
	 	 	59	 
	9.10 Interest Rate Limitation
	 	 	60	 
	9.11 Counterparts; Integration; Effectiveness
	 	 	60	 
	9.12 Survival of Representations and Warranties
	 	 	60	 
	9.13 Severability
	 	 	60	 
	9.14 Governing Law; Jurisdiction; Etc
	 	 	61	 
	9.15 Waiver of Jury Trial
	 	 	62	 
	9.16 USA PATRIOT Act Notice
	 	 	62	 
	9.17 Time of the Essence
	 	 	62	 
	9.18 ENTIRE AGREEMENT
	 	 	62	 
	 
	 	 	 	 
	SIGNATURES
	 	 	S-1	 

 

iii 

 

SCHEDULES

5.05 Supplement to Interim Financial Statements

5.13 Subsidiaries and Other Equity Investments

7.01 Existing Liens

7.02 Existing Investments

7.03 Existing Indebtedness

9.02 Notice Addresses and Lending Office

EXHIBITS

Form of

A Loan Notice

B Note

C Compliance Certificate

D Guaranty

 

iv 

 

CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of April 10, 2008 by and
between QAD INC., a Delaware corporation (the “Borrower”) and Bank of America, N.A. (the
“Lender”).

The Borrower has requested that the Lender provide a revolving credit facility, and the Lender
is willing to do so on the terms and conditions set forth herein.

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

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

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

“Acquired Entity” means (a) any Person that becomes a Subsidiary of the Borrower as a
result of an Acquisition or (b) any business entity or division thereof, all or substantially all
of the assets and business of which are acquired by a Subsidiary of the Borrower pursuant to an
Acquisition.

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

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

“Agreement” means this Credit Agreement.

 

1

 

“Applicable Rate” means the following percentages per annum, based upon the
Consolidated Total Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Lender pursuant to Section 6.02(a):

APPLICABLE RATE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Eurodollar	 	 	 	 
	 	 	 	 	 	 	 	 	Rate + /	 	 	 	 
	 	 	Consolidated Total	 	Commitment	 	 	Letters of	 	 	Base Rate	 
	Pricing Level	 	Leverage Ratio	 	Fee	 	 	Credit	 	 	+	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1
	 	< 0.75:1	 	 	0.25	%	 	 	0.75	%	 	 	-0.25	%
	2
	 	>0.75:1 but < 1.25:1	 	 	0.375	%	 	 	1.25	%	 	 	0.0	%
	3
	 	>1.25:1	 	 	0.50	%	 	 	1.75	%	 	 	0.25	%

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated
Total Leverage Ratio shall become effective as of the first Business Day immediately following the
date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided,
however, that if a Compliance Certificate is not delivered when due in accordance with such
Section, the next higher Pricing Level shall apply as of the fifth Business Day after the date on
which such Compliance Certificate was required to have been delivered, with the next higher Pricing
Level to apply as of each Business Day thereafter that the Compliance Certificate was not delivered
until the applicable Pricing Level is Pricing Level 3; provided, further, that as
of the first Business Day after the date on which such Compliance Certificate is delivered, the
Pricing Level shall revert to the applicable Pricing Level pursuant to such Compliance Certificate.
The Applicable Rate in effect from the Closing Date through the date the Compliance Certificate in
respect of the fiscal quarter ending January 31, 2008 is delivered or required to be delivered
shall be determined based upon Pricing Level 1.

“Approved Fund” has the meaning specified in Section 9.07(f).

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

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

“Authorized Signatory” has the meaning specified in Section 2.02(a).

“Availability Period” means the period from and including the Closing Date to the
earlier of (a) the Maturity Date and (b) the date of termination of the Commitment.

 

2

 

“Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a)
the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as
publicly announced from time to time by the Lender as its “prime rate.” The “prime rate” is a rate
set by the Lender based upon various factors including the Lender’s costs and desired return,
general economic conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change in such rate
announced by the Lender shall take effect at the opening of business on the day specified in the
public announcement of such change.

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

“Borrower” has the meaning specified in the introductory paragraph hereto.

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

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

“Capital Expenditures” means, in respect of any Person, for any period: (i) any
payment that is made during such period by a Person plus (ii) the aggregate amount of any
Indebtedness incurred by such Person during such period, in each case for (or in connection with)
the rental, lease, purchase, construction or use of any property the value or cost of which, under
GAAP should be capitalized or appear on such Person’s balance sheet, without regard to the manner
in which such payments (or the instrument pursuant to which they are made) are characterized by
such Person or any other Person.

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

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

 

3

 

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

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding (x) any employee benefit plan of such person
or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or
other fiduciary or administrator of any such plan and (y) Ms. Pamela Lopker, Mr. Karl
Lopker, the Lopker Living Trust, the Lopker Family 1997 Charitable Remainder Trust, the
Lopker Family Foundation, and any testamentary or intervivos
trust as to which Pamela Lopker or Karl Lopker are trustees and as to which they, or
any of their children or descendants and their respective spouses are the majority
beneficiaries) (such Persons under this clause (y), collectively, the “Controlling
Shareholders”) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of 35% or more of the equity
securities of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking into account
all such securities that such person or group has the right to acquire pursuant to any
option right);

(b) a majority of the members of the board of directors or other equivalent governing
body of the Borrower cease to be composed of the Controlling Shareholders or individuals
whose election or nomination to that board or equivalent governing body was approved by the
Controlling Shareholders; or

(c) any Person or two or more Persons (other than the Controlling Shareholders or any
of them) acting in concert shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation thereof, will result in its
or their acquisition of the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the Borrower, or control over the equity
securities of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking into account
all such securities that such Person or group has the right to acquire pursuant to any
option right) representing 35% or more of the combined voting power of such securities.

“Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived by the Lender.

“Code” means the Internal Revenue Code of 1986.

“Commitment” means the obligation of the Lender to make Loans and L/C Credit
Extensions hereunder in an aggregate principal amount at any one time not to exceed $20,000,000, as
such amount may be adjusted from time to time in accordance with this Agreement.

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

 

4

 

“Consolidated EBITDA” means, for any Subject Period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period
plus (a) the following to the extent deducted in calculating such Consolidated Net Income,
without duplication: (i) Consolidated Interest Charges for such period, (ii) the provision for
Federal, state, local and foreign income taxes payable by the Borrower and its Subsidiaries for
such period (net of income tax credits for such period), (iii) depreciation and
amortization expense, and (iv) charges incurred during such period under Financial Accounting
Standard 123R which do not represent a cash item in such period or any future period;
provided, however, that if there has occurred an Acquisition during the relevant
period, Consolidated EBITDA shall be calculated, at the option of the Borrower on a pro forma basis
in accordance with the SEC pro forma reporting rules under the Exchange Act, as if such Acquisition
occurred on the first day of the applicable period; provided that once elected in respect
of an Acquisition, such election shall remain in effect at all times thereafter for such
Acquisition.

“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated EBITDA for the Subject Period then ending, less Capital Expenditures made
by the Borrower and its consolidated Subsidiaries during such period, to the sum of (b)
Consolidated Interest Charges for the Subject Period then ending plus scheduled principal and
interest payments in respect of Indebtedness made by the Borrower and its consolidated Subsidiaries
during the Subject Period plus the current portion of long term debt (other than the Obligations)
as of such date.

“Consolidated Funded Indebtedness” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, excluding Indebtedness that is under
applicable law or contract non-recourse (subject to a carve-out for “Non-Recourse Carveout
Obligations” as defined in the Ortega Deed of Trust, in the form existing on the date hereof) to
the Borrower and its Subsidiaries and is secured only by real property of the Borrower or its
Subsidiaries, the sum of (a) the outstanding principal amount of all obligations, whether current
or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by
bonds, debentures, notes, loan agreements or other similar instruments, (b) all purchase money
Indebtedness, (c) all direct obligations arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services (other than trade
accounts payable in the ordinary course of business), (e) Attributable Indebtedness in respect of
capital leases and Synthetic Lease Obligations, (f) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above of
Persons other than the Borrower or any Subsidiary, and (g) all Indebtedness of the types referred
to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which the Borrower or a Subsidiary is
a general partner or joint venturer, unless such Indebtedness is under applicable law or contract
non-recourse to the Borrower or such Subsidiary, as the case may be.

“Consolidated Interest Charges” means, for any Subject Period, for the Borrower and
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt
discount, fees, charges and related expenses of the Borrower and its Subsidiaries in connection
with borrowed money (including capitalized interest) or in connection with the deferred purchase
price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b)
the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under
capital leases that is treated as interest in accordance with GAAP; provided,
however, that if there has occurred an Acquisition during the relevant period, and the
Borrower
has elected to adjust its Consolidated EBITDA on a pro forma basis (in accordance with the
definition of such term) in respect of such Acquisition, Consolidated Interest Charges shall be
calculated in accordance with the SEC pro forma reporting rules under the Exchange Act, as if such
Acquisition occurred (and all Indebtedness acquired or arising in connection therewith was
incurred) on the first day of the applicable period.

 

5

 

“Consolidated Liquidity Ratio” means, as of any date of determination, in respect of
the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) the sum of cash plus
cash equivalents plus trade accounts receivable net of doubtful or uncollectible accounts to (b)
the sum of current liabilities (excluding deferred revenues) plus, without duplication, the Total
Outstandings, as of such date.

“Consolidated Net Income” means, for any period, for the Borrower and its Subsidiaries
on a consolidated basis, the net income of the Borrower and its Subsidiaries for that period.

“Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the Subject
Period most recently ended.

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

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

“Controlled Foreign Corporation” means a Subsidiary of the Borrower which is a
“controlled foreign corporation” as defined in Section 957(a) of the Code or any successor
provision thereto.

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

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

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

 

6

 

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

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

“Dollar” and “$” mean lawful money of the United States.

“Eligible Assignee” has the meaning specified in Section 9.07(f).

“Environmental Laws” means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those
related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

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

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

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

 

7

 

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

“Eurocurrency liabilities” has the meaning specified in Section 3.04(e).

“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source providing quotations of BBA LIBOR
as designated by the Lender from time to time) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery
on the first day of such Interest Period) with a term equivalent to such Interest Period. If such
rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest
Period shall be the rate per annum determined by the Lender to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Rate Loan being made, continued or converted by the Lender and with a term
equivalent to such Interest Period would be offered by Lender’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

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

“Exchange Act” means the Securities Exchange Act of 1934.

“Excluded Taxes” means, with respect to the Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed
on or measured by its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized or in which its principal office is located or, in the
case of the Lender, in which its applicable Lending Office is located, and (b)
any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located.

 

8

 

“Existing Credit Agreement” means that certain Credit Agreement dated as of April 7,
2005 between the Borrower and Comerica Bank, as amended prior to the date hereof.

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

“Foreign Subsidiary” means any Subsidiary, other than one organized and existing under
the laws of the United States or any state thereof.

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

“Fund” has the meaning specified in Section 9.07(f).

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

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

“Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain working capital,

 

9

 

equity capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligee in respect of such Indebtedness or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof (in whole or in
part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation
of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person
(or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such
Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as
a verb has a corresponding meaning.

“Guarantors” means, collectively, each Subsidiary obligated to execute a Guaranty
pursuant to Section 6.12.

“Guaranty” means the Guaranty made by the Guarantors in favor of the Lender, in
substantially the form attached hereto as Exhibit D.

“Hazardous Materials” means any substance or material that is regulated, or referred
to, as a toxic or hazardous substance, waste or material, or as a pollutant, contaminant or
infectious waste, under any applicable Environmental Laws, or chemicals, biological agents, or
compounds that are otherwise subject to regulation, control or remediation under applicable
Environmental Laws, and includes asbestos, lead, petroleum (including crude oil or any fraction or
additive thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel, or any mixture thereof), polychlorinated biphenyls, urea formaldehyde, radon gas, and
radioactive matter. The term “Hazardous Materials” includes any and all “hazardous substances” as
defined by or under Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. § 9601, et seq. (“CERCLA”) and all “hazardous wastes” as defined by or under the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq. (“RCRA”).

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

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

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

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

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

 

10

 

(d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business and, in each
case, not past due for more than 60 days after the date on which such trade account payable
was created);

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

(f) capital leases and Synthetic Lease Obligations;

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

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

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture (other than a joint venture that is itself a corporation
or limited liability company) in which such Person is a general partner or a joint venturer,
unless such Indebtedness is under applicable law or contract non-recourse to such Person.
The amount of any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date. The amount of any capital lease or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 9.04(b).

“Information” has the meaning specified in Section 9.08.

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

 

11

 

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

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

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

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

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

“IP Rights” has the meaning specified in Section 5.17.

“IRS” means the United States Internal Revenue Service.

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

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

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

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

 

12

 

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

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

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means the office or offices of the Lender described as such on
Schedule 9.02, or such other office or offices as the Lender may from time to time notify
the Borrower.

“Letter of Credit” means any standby letter of credit issued hereunder.

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

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

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

“Letter of Credit Sublimit” means an amount equal to $2,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Commitment.

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

“Loan” has the meaning specified in Section 2.01.

“Loan Documents” means this Agreement, any Note, each Issuer Document, and the
Guaranty.

“Loan Notice” means a notice of (a) a borrowing of a Loan, (b) a conversion of a Loan
from one Type to the other, or (c) a continuation of a Eurodollar Rate Loan as the same Type,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A.

 

13

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent), on
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to which it is a
party.

“Material Subsidiary” means, at any time, any Subsidiary that meets either of the
following conditions at such time: (a) such Subsidiary’s consolidated total revenues for the
period of the immediately preceding fiscal year is equal to or greater than 5% of the consolidated
total revenues of the Borrower and its Subsidiaries for such period, determined in accordance with
GAAP, consistently applied, in each case as reflected in the most recent annual financial
statements referenced in Section 5.05(a) or required to be delivered pursuant to
Section 6.01(a), or (b) such Subsidiary’s total consolidated assets, as of the last day of
the immediately preceding fiscal year, are equal to or greater than 5% of the consolidated total
assets of the Borrower and its Subsidiaries as of such date, determined in accordance with GAAP,
consistently applied; in each case as reflected in the most recent annual financial statements of
the Borrower referenced in Section 5.05(a) or required to be delivered pursuant to
Section 6.01(a), provided, however, that if there occurs any Acquisition,
the foregoing tests (a) and (b) shall initially be undertaken, based upon pro forma financial
information for such Acquired Entity, as of the fiscal quarter end immediately following such date
of Acquisition, as though such quarter end date were a fiscal year end date for purposes hereof.

“Maturity Date” means April 10, 2011.

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

“Note” means a promissory note made by the Borrower in favor of the Lender evidencing
Loans made by the Lender, substantially in the form of Exhibit B. 

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

 

14

 

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

“Ortega Deed of Trust” has the meaning specified in Schedule 7.01.

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

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

“Participant” has the meaning specified in Section 9.07(c).

“PBGC” means the Pension Benefit Guaranty Corporation.

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

“Permitted Acquisitions” has the meaning specified in Section 7.02(f).

“Permitted Lien” has the meaning specified in Section 7.01.

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

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

“Registered Public Accounting Firm” has the meaning specified in the Securities Laws
and shall be independent of the Borrower as prescribed by the Securities Laws.

 

15

 

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

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30-day notice period has been waived.

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

“Responsible Officer” means the chief executive officer, president, chief financial
officer or treasurer of the Borrower. Any document delivered hereunder that is signed on behalf of
a Loan Party by (x) two or more Responsible Officers or (y) a Responsible Officer and one other
officer of the Borrower shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and such Responsible
Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to the Borrower’s stockholders, partners or members (or the
equivalent Person thereof).

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

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

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

“Solvent” means, with respect to any Person as of a particular date, that on such date
(a) such Person is able to pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (b) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a
business or transaction, and is not about to engage in a business or a transaction, for which such
Person’s assets would constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair
value of the assets of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person, and

 

16

 

 (e) the aggregate fair saleable value
(i.e., the amount that may be realized within a reasonable time, considered to be six months to one
year, either through collection or sale at the regular market value, conceiving the latter as the
amount that could be obtained for the assets in question within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase under ordinary selling
conditions) of the assets of such Person will exceed its debts and other liabilities (including
contingent, subordinated, unmatured and unliquidated debts and liabilities). For purposes of this
definition, “debt” means any liability on a claim, and “claim” means (i) a right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (ii) a right
to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or
not such right is an equitable remedy, is reduced judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

“Subject Period” means, as of any date of determination for any Person, the period of
four consecutive fiscal quarters of such Person ending on such date.

“Subordinated Debt” means unsecured indebtedness having a maturity date not earlier
than six months after the Maturity Date, providing for no optional or mandatory amortization or
prepayment, and containing subordination terms reasonably satisfactory to the Lender in its sole
discretion.

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

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

 

17

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include
the Lender or any Affiliate of the Lender).

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

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

“Threshold Amount” means $2,000,000.

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

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

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

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

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

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

(a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,

 

18

 

supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein or in any other Loan Document), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the
words “herein,” “hereof” and “hereunder,” and words of similar import when
used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to
any law shall include all statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless otherwise specified,
refer to such law or regulation as amended, modified or supplemented from time to time, and (vi)
the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including;” the words “to” and “until”
each mean “to but excluding;” and the word “through” means “to and
including.”

(c) Section headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.

1.03 Accounting Terms.

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

(b) Changes in GAAP. If at any time any change in GAAP would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or
the Lender shall so request, the Lender and the Borrower shall negotiate in good faith to amend
such ratio or requirement to preserve the original intent thereof in light of such change in GAAP
(subject to the approval of the Lender not to be unreasonably withheld), provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (ii) the Borrower shall provide to the Lender financial statements and
other documents required under this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.

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

 

19

 

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

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

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

ARTICLE II.

THE COMMITMENT AND CREDIT EXTENSIONS

2.01 Loans. Subject to the terms and conditions set forth herein, the Lender agrees to make
loans (each such loan, a “Loan”) to the Borrower from time to time, on any Business Day
during the Availability Period, in an aggregate amount not to exceed at any time outstanding the
amount of the Commitment; provided, however, that after giving effect to any
borrowing, the Total Outstandings shall not exceed the Commitment. Within the limits of the
Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under
this Section 2.01, prepay under Section 2.04, and reborrow under this Section
2.01. A Loan may be a Base Rate Loan or a Eurodollar Rate Loan, as further provided herein.

2.02 Borrowings, Conversions and Continuations of Loans.

(a) Each borrowing, each conversion of Loans from one Type to the other, and each continuation
of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Lender, which
may be given by telephone. Each such notice must be received by the Lender not later than 3:00
p.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to a Base Rate
Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans. Each telephonic notice
by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to
the Lender of a written Loan Notice, appropriately completed and signed by two officers, at least
one of whom shall be a Responsible Officer, and the other(s) who may be another Responsible
Officer, or an assistant treasurer, or the controller of the Borrower (each such officer of
Borrower, an “Authorized Signatory” and, collectively, the “Authorized
Signatories”). Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall

 

20

 

 be in a minimum principal amount of $1,000,000. Except as provided in
Section 2.03(c), each Borrowing of or conversion to Base Rate Loans shall be in a minimum
principal amount of $100,000. Each Loan Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other,
or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of the
Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which
existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the
Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable
Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base
Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect
to the applicable Eurodollar Rate Loan. If the Borrower requests a borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.

(b) Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the Lender shall make the
proceeds of each Loan available to the Borrower either by (i) crediting the account of the Borrower
on the books of the Lender with the amount of such proceeds or (ii) wire transfer of such proceeds,
in each case in accordance with instructions provided to (and reasonably acceptable to) the Lender
by the Borrower; provided, however, that if, on the date of the Loan Notice given
with respect to such Borrowing, there are L/C Borrowings outstanding, then the proceeds of such
Borrowing, first, shall be applied to the payment in full of any such unreimbursed drawings, and
second, to the Borrower as provided above.

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

(d) The Lender shall promptly notify the Borrower of the interest rate applicable to any
Interest Period for Eurodollar Rate Loans upon determination of such interest rate. At any time
that Base Rate Loans are outstanding, the Lender shall notify the Borrower of any change in the
Lender’s prime rate used in determining the Base Rate promptly following the public announcement of
such change.

 

21

 

2.03 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, the Lender agrees (A) from
time to time on any Business Day during the period from the Closing Date until the Letter of
Credit Expiration Date, to issue Letters of Credit for the account of the Borrower, and to
amend Letters of Credit previously issued by it, in accordance with subsection (b) below,
and (B) to honor drawings under the Letters of Credit;
provided that the Lender shall not be obligated to make any L/C Credit
Extension with respect to any Letter of Credit if as of the date of such L/C Credit
Extension, (y) the Total Outstandings would exceed the Commitment or (z) the Outstanding
Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Each request by
the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence. Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired or that have
been drawn upon and reimbursed.

(ii) The Lender shall not issue any Letter of Credit if:

(A) the expiry date of such requested Letter of Credit would occur more than
twelve months after the date of issuance, unless the Lender has approved such expiry
date; or

(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless the Lender has approved such expiry date.

(iii) The Lender shall not be under any obligation to issue any Letter of Credit if:

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

(B) the issuance of such Letter of Credit would violate one or more policies of
the Lender;

(C) except as otherwise agreed by the Lender, such Letter of Credit is in an
initial stated amount less than $500,000;

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

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

 

22

 

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

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

(b) Procedures for Issuance and Amendment of Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the Lender in the form of a Letter of Credit
Application, appropriately completed and signed by two Authorized Signatories. Such Letter
of Credit Application must be received by the Lender not later than 3:00 p.m., at least two
Business Days (or such later date and time as the Lender may agree in a particular instance
in its sole discretion) prior to the proposed issuance date or date of amendment, as the
case may be. In the case of a request for an initial issuance of a Letter of Credit, such
Letter of Credit Application shall specify in form and detail satisfactory to the Lender:
(A) the proposed issuance date of the requested Letter of Credit (which shall be a Business
Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary
in case of any drawing thereunder; and (G) such other matters as the Lender may require. In
the case of a request for an amendment of any outstanding Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the Lender (A) the
Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a
Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the
Lender may require. Additionally, the Borrower shall furnish to the Lender such other
documents and information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the Lender may require.

(ii) Upon the Lender’s determination that the requested issuance or amendment is
permitted in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the Lender shall, on the requested date, issue a Letter of Credit for the account of
the Borrower or enter into the applicable amendment, as the case may be, in each case in
accordance with the Lender’s usual and customary business practices.

(iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter
of Credit to an advising bank with respect thereto or to the
beneficiary thereof, the Lender will also deliver to the Borrower a true and complete
copy of such Letter of Credit or amendment.

 

23

 

(c) Drawings and Reimbursements.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Lender shall notify the Borrower thereof. Not
later than 3:00 p.m. on the date of any payment by the Lender under a Letter of Credit (each
such date, an “Honor Date”), the Borrower shall reimburse the Lender in an amount
equal to the amount of such drawing. If the Borrower fails to so reimburse the Lender (any
such unreimbursed amount, an “Unreimbursed Amount”), the Borrower shall be deemed to
have requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to such Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount
of the unutilized portion of the Commitment and the conditions set forth in Section
4.02 (other than the delivery of a Loan Notice).

(ii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot
be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the
Lender an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced,
which L/C Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate.

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

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

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

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

 

24

 

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

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

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

(e) Role of Lender. The Borrower agrees that, in paying any drawing under a Letter of
Credit, the Lender shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of the Person
executing or delivering any such document. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not, preclude
the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the Lender, any of its Affiliates, any of
the respective officers, directors, employees, agents or attorneys-in-fact of the Lender and its
Affiliates, nor any of the respective correspondents, participants or assignees of the Lender shall
be liable or responsible for any of the matters described in clauses (i) through (v) of Section
2.03(d); provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the Lender, and the Lender may be liable to
the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower which the Borrower proves were caused by the Lender’s
willful misconduct or gross negligence or the Lender’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to
the contrary, and the Lender shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

 

25

 

(f) Cash Collateral. Upon the request of the Lender, (i) if the Lender has honored
any full or partial drawing request under any Letter of Credit and such drawing has resulted in an
L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C
Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately
Cash Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.05 and
8.02(c) set forth additional requirements to deliver Cash Collateral hereunder. For
purposes of this Section 2.03 and Sections 2.04 and 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the Lender, as collateral for the
L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance
satisfactory to the Lender. Derivatives of such term have corresponding meanings. The Borrower
hereby grants to the Lender a security interest in all such cash, deposit accounts and all balances
therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked,
non-interest bearing deposit accounts at the Lender.

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

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

(i) Documentary and Processing Charges Payable to Lender. The Borrower shall pay
directly to the Lender for its own account the customary issuance, presentation, amendment and
other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters
of credit as from time to time in effect. Such customary fees and standard costs and charges are
due and payable on demand and are nonrefundable.

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

2.04 Prepayments. (a) The Borrower may, upon notice to the Lender, at any time or from time
to time voluntarily prepay any Loan in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Lender not later than 8:00 a.m. (A)
three Business Days prior to any date of prepayment of Eurodollar Rate Loans, and (B) on the date
of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of $100,000 or a whole multiple of
$100,000 in excess thereof or, in each case, if less, the entire principal amount
thereof then outstanding. Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Loans to be prepaid. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such notice shall be due
and payable on the date specified therein. Any prepayment of Eurodollar Rate Loans shall be
accompanied by all accrued interest on the amount repaid, together with any additional amounts
required pursuant to Section 3.05.

 

26

 

(b) If for any reason the Total Outstandings at any time exceed the Commitment then in effect,
the Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such excess; provided, however, that the Borrower shall
not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.04(b)
unless after the prepayment in full of the Loans the Total Outstandings exceed the Commitment then
in effect.

2.05 Termination or Reduction of Commitment. The Borrower may, upon notice to the Lender,
terminate the Commitment, or from time to time permanently reduce the Commitment; provided
that (i) any such notice shall be received by the Lender not later than 8:00 a.m., five Business
Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an
aggregate minimum amount of $1,000,000, (iii) the Borrower shall not terminate or reduce the
Commitment if, after giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Commitment, and (iv) if, after giving effect to any reduction of the
Commitment, the Letter of Credit Sublimit exceeds the amount of the Commitment, such Sublimit shall
be automatically reduced by the amount of such excess. All commitment fees accrued until the
effective date of any termination of the Commitment shall be paid on the effective date of such
termination.

2.06 Repayment of Loans. The Borrower shall repay to the Lender on the Maturity Date the
aggregate principal amount of Loans outstanding on such date.

2.07 Interest.

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

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

(ii) If any amount (other than principal of any Loan) payable by the Borrower under any
Loan Document is not paid when due (without regard to any applicable grace periods), whether
at stated maturity, by acceleration or otherwise, then
such amount shall thereafter bear interest at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

27

 

(iii) While any Event of Default exists, the Borrower shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by applicable
Laws.

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

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

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

(a) Commitment Fee. The Borrower shall pay to the Lender a commitment fee equal to
the Applicable Rate times the actual daily amount by which the Commitment exceeds the Total
Outstandings. The commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV is not met,
and shall be due and payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the Closing Date, and on
the Maturity Date. The commitment fee shall be calculated quarterly in arrears.

(b) Other Fees. The Borrower shall pay to the Lender such further fees as separately
agreed in any fee letter or other agreement pertaining hereto.

2.09 Computation of Interest and Fees. All computations of interest for Base Rate Loans when
the Base Rate is determined by the Lender’s “prime rate” shall be made on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).
Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a
Loan, or any portion thereof, for the day on which the Loan or such portion is paid,
provided that any Loan that is repaid on the same day on which it is made shall, subject to
Section 2.11(a), bear interest for one day. Each determination by the Lender of an
interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.

 

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2.10 Evidence of Debt. The Credit Extensions made by the Lender shall be evidenced by one or
more accounts or records maintained by the Lender in the ordinary course of business. The accounts
or records maintained by the Lender shall be conclusive absent
manifest error of the amount of the Credit Extensions made by the Lender to the Borrower and
the interest and payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing
with respect to the Obligations. Upon the request of the Lender, the Borrower shall execute and
deliver to the Lender a Note, which shall evidence the Lender’s Loans in addition to such accounts
or records. The Lender may attach schedules to the Note and endorse thereon the date, Type (if
applicable), amount and maturity of Loans and payments with respect thereto.

2.11 Payments Generally.

(a) All payments to be made by the Borrower shall be made without condition or deduction for
any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein,
all payments by the Borrower hereunder shall be made to the Lender at the applicable Lending Office
in Dollars and in immediately available funds not later than 2:30 p.m. on the date specified
herein. All payments received by the Lender after 2:30 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to accrue.

(b) If any payment to be made by the Borrower shall come due on a day other than a Business
Day, payment shall be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

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

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

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

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

 

29

 

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

(d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Lender the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Lender.

(e) Treatment of Certain Refunds. If the Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this
Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this Section with
respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses
of the Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Borrower, upon the request of the
Lender, agrees to repay the amount so paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Lender in the event the Lender
is required to repay such refund to such Governmental Authority. This subsection shall not be
construed to require the Lender to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other Person.

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

 

30

 

3.03 Inability to Determine Eurodollar Rate. If the Lender determines that for any reason in
connection with any request for Eurodollar Rate Loans or a conversion to or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market
for the applicable amount and Interest Period of such Eurodollar Rate Loans, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly
reflect the cost to the Lender of funding such Loan, the Lender will promptly so notify the
Borrower. Thereafter, the obligation of the Lender to make or maintain Eurodollar Rate Loans shall
be suspended until the Lender revokes such notice. Upon receipt of such notice, the Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate
Loans or, failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.

3.04 Increased Costs; Reserves on Eurodollar Rate Loans.

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

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

(ii) subject the Lender to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis
of taxation of payments to the Lender in respect thereof (except for Indemnified Taxes or
Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate
of, any Excluded Tax payable by the Lender); or

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

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

 

31

 

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

(c) Certificates for Reimbursement. A certificate of the Lender setting forth the
amount or amounts necessary to compensate the Lender or its holding company, as the case may be, as
specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay the Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.

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

(e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to the Lender, as long
as the Lender shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by
the Lender in good faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan, provided the Borrower shall have
received at least 10 days’ prior notice of such additional interest from the Lender. If the Lender
fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest
shall be due and payable 10 days from receipt of such notice.

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

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base
Rate Loan on a day other than the last day of the Interest Period for such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise) or, in the case of
interest payments, other than an Interest Payment Date relating thereto; or

 

32

 

(b) any failure by the Borrower (for a reason other than the failure of the Lender to
make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on
the date or in the amount notified by the Borrower,
including any loss of anticipated profits and any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. The Borrower shall also pay any customary
administrative fees charged by the Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lender under this Section
3.05, the Lender shall be deemed to have funded each Eurodollar Rate Loan at the Eurodollar
base rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

3.06 Requests for Compensation. A certificate of the Lender claiming compensation under this
Article III and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such amount, the Lender may
use any reasonable averaging and attribution methods.

3.07 Survival. All of the Borrower’s obligations under this Article III shall survive
termination of the Commitment and repayment of all other Obligations hereunder.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Initial Credit Extension. The obligation of the Lender to make its initial
Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

(a) The Lender’s receipt of the following, each of which shall be originals or telecopies
(followed promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date) and each in form and
substance satisfactory to the Lender and its legal counsel:

(i) executed counterparts of this Agreement, sufficient in number for distribution to
the Lender and the Borrower;

(ii) if requested by the Lender, a Note executed by the Borrower in favor of the
Lender;

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

 

33

 

(iv) such documents and certifications as the Lender may reasonably require to evidence
that the Borrower is duly organized or formed, and is validly existing, in good standing and
qualified to engage in business in the States of California and Delaware;

(v) a certificate of a Responsible Officer of the Borrower either (A) attaching copies
of all consents, licenses and approvals required in connection with the execution, delivery
and performance by such Loan Party and the validity against the Borrower of the Loan
Documents to which it is a party, and such consents, licenses and approvals shall be in full
force and effect, or (B) stating that no such consents, licenses or approvals are so
required;

(vi) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 4.02(a) and (b) have been satisfied,
and (B) that there has been no event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have, either individually or in
the aggregate, a Material Adverse Effect;

(vii) a duly completed Compliance Certificate as of the last day of the fiscal quarter
of the Borrower ended on October 31, 2007, signed by a Responsible Officer of the Borrower;

(viii) evidence satisfactory to the Lender that the Existing Credit Agreement has been
terminated or cancelled, with all amounts owing thereunder paid, all letter of credit
thereunder cancelled and returned, and all Liens, if any, securing such facility terminated
and released; and

(ix) such other assurances, certificates, documents, or consents as the Lender
reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have been paid.

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

 

34

 

4.02 Conditions to all Credit Extensions. The obligation of the Lender to honor any Request
for Credit Extension (other than a Loan Notice requesting only a conversion of Loans to the other
Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent:

(a) The representations and warranties of the Borrower and each other Loan Party contained in
Article V or any other Loan Document, or which are contained in any
document furnished at any time under or in connection herewith or therewith, shall be true and
correct in all material respects on and as of the date of such Credit Extension, except to the
extent that such representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier date, and except
that for purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

(b) No Default shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.

(c) The Lender shall have received a Request for Credit Extension in accordance with the
requirements hereof.

Each Request for Credit Extension (other than a Loan Notice requesting only a conversion of
Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall
be deemed to be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit
Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender that:

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

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

 

35

 

5.03 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, any Loan Party of this Agreement or any other Loan Document.

5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, and similar laws generally affecting creditors’
rights and to general principles of equity.

5.05 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof
and their results of operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other material liabilities, direct or contingent, of the
Borrower and its Subsidiaries as of the date thereof, including material liabilities for taxes,
material commitments and Indebtedness.

(b) The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated
October 31, 2007, and the related consolidated statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries
as of the date thereof and their results of operations for the period covered thereby, subject, in
the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments. Schedule 5.05 sets forth all material indebtedness and other material
liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of the date
of such financial statements not set forth on such financial statements (including footnotes
thereto), including material liabilities for taxes, material commitments and Indebtedness.

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

 

36

 

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the actual knowledge of any Responsible Officer of the Borrower (on the basis of
Borrower’s ordinary course monitoring of such matters, consistent with its obligations under
the Securities Laws), threatened in writing (other than threats as to which there exists no
reasonable likelihood of further action or reasonable likelihood of a meritorious claim), at law,
in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any
of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably
be expected to have a Material Adverse Effect.

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

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

5.09 Environmental Compliance. The Borrower and its Subsidiaries are in compliance with all
applicable Environmental Laws and do not have knowledge of any Environmental Liability, except to
the extent that such liability could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

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

5.11 Taxes. The Borrower and its Subsidiaries have filed all U.S. Federal, U.S. state and
other material tax returns and reports required to be filed, and have paid all U.S. Federal, U.S.
state and other material taxes, assessments, fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment
against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.

 

37

 

5.12 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination or (in the case
of any standardized prototype plans) opinion letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the best knowledge of
the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.
The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be
reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

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

5.13 Subsidiaries. As of the Closing Date, (i) the Borrower has no Subsidiaries other than
those specifically disclosed in Part (a) of Schedule 5.13, (ii) all of the outstanding
Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable
and except as noted in Part (a) of Schedule 5.13 are wholly-owned, directly or indirectly,
by the Borrower, free and clear of all Liens, (iii) all Material Subsidiaries existing as of the
Closing Date are disclosed in Part (b) of Schedule 5.13, (iv) the Borrower has no equity
investments in any other corporation or entity other than those specifically disclosed in Part (c)
of Schedule 5.13, and (v) all of the outstanding Equity Interests in the Borrower have been
validly issued, and are fully paid and nonassessable. QAD Ortega LLC is engaged solely in the
business of owning and operating real property used or usable by the Borrower and its Subsidiaries.

5.14 Margin Regulations; Investment Company Act.

(a) The Borrower is not engaged and will not engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock. Following the application of the proceeds of each Borrowing or drawing under each
Letter of Credit, not more than 25% of the value of the assets (either of the Borrower only or of
the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section
7.01 or Section 7.05 or subject to any restriction contained in any
agreement or instrument between the Borrower and the Lender or any Affiliate of the Lender
relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.

 

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

5.15 Disclosure. The Borrower has disclosed to the Lender all agreements, instruments and
corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. No report, financial statement, certificate or other information
furnished (whether in writing or orally) by or on behalf of any Loan Party to the Lender in
connection with the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to make the statements
therein, in the light of the totality of the circumstances under which they were made, not
misleading; provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

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

5.17 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, or possess
the right to use, all of the material trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person, in each case, except to the extent that such
absence of ownership or possession, or such conflict could not reasonably be expected to have a
Material Adverse Effect.

5.18 Solvency. Each Loan Party is Solvent.

 

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ARTICLE VI.

AFFIRMATIVE COVENANTS

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

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

(a) as soon as available, but in any event within 90 days after the end of each fiscal
year of the Borrower, commencing with the fiscal year ended January 31, 2008, a consolidated
and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such
fiscal year, and the related consolidated and consolidating statements of income or
operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in reasonable detail
and prepared in accordance with GAAP, audited (in the case of the consolidated statements)
and accompanied by a report and opinion of a Registered Public Accounting Firm of nationally
recognized standing reasonably acceptable to the Lender, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and applicable Securities
Laws and shall not be subject to any “going concern” or like qualification or exception or
any qualification or exception as to the scope of such audit; and

(b) as soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal
quarter ending April 30, 2008), a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, shareholders’ equity and
cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then
ended, setting forth in each case in comparative form the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the previous
fiscal year, all in reasonable detail, such consolidated statements to be certified by an
Authorized Signatory of the Borrower as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes and such consolidating statements to be certified by a Responsible Officer of the
Borrower to the effect that such statements are fairly stated in all material respects when
considered in relation to the consolidated financial statements of the Borrower and its
Subsidiaries.

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

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

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

 

40

 

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

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

(d) promptly after the furnishing thereof, copies of any statement or report furnished
to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the
terms of any indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Lender pursuant to Section 6.01 or any other clause of this
Section 6.02;

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

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

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (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 the Borrower posts such documents, or provides a link thereto on
the Borrower’s website on the Internet at the website address listed on Schedule 9.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which the Lender has access (whether a commercial, third-party website);
provided that the Borrower shall notify the Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Lender by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every
instance the Borrower shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(a) to the Lender. Except for such Compliance Certificates, the
Lender shall have no obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and the Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.

 

41

 

6.03 Notices. Promptly notify the Lender:

(a) of the occurrence of any Default;

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

(c) of the occurrence of any ERISA Event; and

(d) of any material change in accounting policies or financial reporting practices by
the Borrower or any Subsidiary.

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

6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all
its material obligations and liabilities, including (a) all material tax liabilities, assessments
and governmental charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful
material claims which, if unpaid, would by law become a Lien upon its property (other than a
Permitted Lien); and (c) all material Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence (i) and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05, and, (ii)
good standing in each jurisdiction in which its ownership, lease or operation of properties or the
conduct of its business requires it to be so qualified, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect; (b) take all commercially
reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or
desirable in the normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) take all commercially
reasonable actions to preserve or renew all of its registered patents, trademarks, trade names
and service marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

 

42

 

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

6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance
companies not Affiliates of the Borrower, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.

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

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

6.10 Inspection Rights. Permit representatives and independent contractors of the Lender to
visit and inspect any of its properties, to examine its corporate, financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts
with its directors, officers, and independent public accountants, all at such reasonable times
during normal business hours and as often as may be reasonably desired, upon reasonable advance
notice to the Borrower; provided, however, that (i) when an Event of Default exists
the Lender (or any of its representatives or independent contractors) may do any of the foregoing
at the expense of the Borrower at any time during normal business hours and without advance notice,
and (ii) the Lender shall comply with Section 9.08 in connection with any such visit and
inspection.

6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for working capital, capital
expenditures and other general corporate purposes not in contravention of any Loan Document and not
for any illegal use.

 

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6.12 Additional Guarantors. Notify the Lender at the time that any Person (other than QAD
Ortega Hill, LLC, provided QAD Ortega Hill, LLC does not acquire any significant
assets other than real property used or usable by the Borrower and its Subsidiaries) becomes a
Material Subsidiary, and promptly thereafter (and in any event within 30 days after (x) the date
the Borrower’s financial statements are required to be delivered under Section 6.01(a) and
(y) in the case of any Material Subsidiary resulting from an Acquisition, the date the Borrower’s
financial statements are first required to be delivered under Section 6.01(a) or
6.01(b) after the date of such Acquisition), unless the Borrower certifies that such
Subsidiary is a Controlled Foreign Corporation, cause such Person to (a) become a Guarantor by
executing and delivering to the Lender a counterpart of the Guaranty or such other document as the
Lender shall deem appropriate for such purpose, and (b) deliver to the Lender documents of the
types referred to in clauses (iii) and (iv) of Section 4.01(a) (substituting for this
purpose the term “Guarantor” for “Borrower”), all in form, content and scope reasonably
satisfactory to the Lender.

ARTICLE VII.

NEGATIVE COVENANTS

So long as the Commitment shall be in effect, any Loan or other Obligation hereunder shall
remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall
not, nor shall it permit any Subsidiary to, directly or indirectly:

7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the following (each, a
“Permitted Lien”):

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof that are (x) listed on Schedule 7.01, (y)
in favor of the Lender, or (z) encumber only assets of Foreign Subsidiaries and do not
secure, individually or in the aggregate Indebtedness exceeding the Threshold Amount;
together with any renewals or extensions of any of the foregoing, provided that (i)
the property covered thereby is not changed, (ii) the amount secured or benefited thereby is
not increased, (iii) the direct or any contingent obligor with respect thereto is not
changed, and (iv) any renewal or extension of the obligations secured or benefited thereby
is permitted by Section 7.03(b);

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

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business which are not overdue for a period of more
than 60 days or which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;

 

44

 

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

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

(g) easements, rights-of-way, restrictions and other similar encumbrances affecting
real property which, in the aggregate, are not substantial in amount, and which do not in
any case materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;

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

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

(j) banker’s liens and similar Liens (including rights of set off) in respect of bank
deposits and financial instruments, arising in connection with the Borrower’s or any
Subsidiary’s deposit, cash management or securities account relationships maintained with
any bank or financial institution, and not securing Indebtedness.

7.02 Investments. Make any Investments, except:

(a) Investments held by the Borrower or any Subsidiary (i) in the form of cash
equivalents, or short-term marketable securities, or (ii) as set forth on Schedule
7.02 hereto;

(b) advances to officers, directors and employees of the Borrower and Subsidiaries for
travel, entertainment, relocation and analogous ordinary business purposes;

(c) Investments of the Borrower or any Subsidiary in any direct or indirect
wholly-owned Subsidiary and Investments of any direct or indirect wholly-owned Subsidiary in
the Borrower or in another direct or indirect wholly-owned Subsidiary, other than for
purposes of undertaking Acquisitions;

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

 

45

 

(e) Guarantees permitted by Section 7.03;

(f) Acquisitions by the Borrower or any of its direct or indirect wholly-owned
Subsidiaries, provided that (i) the total consideration paid or agreed to be paid by
the Borrower and its Subsidiaries in connection with any such Acquisition, other than
consideration consisting of common stock of the Borrower (“total non-equity consideration”),
including for this purpose any debt (contingent or otherwise) assumed or acquired directly
in connection with any such Acquisition (or series of related transactions constituting, in
the reasonable opinion of the Lender, an Acquisition) and including any payments in
connection therewith that are contingent upon future performance or revenues and regardless
of whether the entire amount of such cash consideration is actually paid at the time of any
such Acquisition, shall not (x) exceed $5,000,000 for any such Acquisition or (y) together
with the amount of total non-equity consideration in respect of all other Acquisitions
consummated during any fiscal year, exceed $10,000,000; (ii) the Acquired Entity related to
any such Acquisition is not engaged in any material lines of business substantially
different from those lines of business conducted by the Borrower and its Subsidiaries on the
date such Acquisition is consummated and businesses incidental thereto (together,
“Non-Complying Businesses”), provided that the Borrower and its Subsidiaries may
acquire Acquired Entities having Non-Complying Businesses that are not their principal line
of business so long as such Non-Complying Businesses are disposed of no later than 12 months
after such date of Acquisition; (iii) the Borrower shall cause all Acquired Entities to
comply with Section 6.12, as applicable; (iv) no Default would result from the
consummation of such Acquisition; (v) prior to the commencement of any such Acquisition, or
attempted Acquisition, the board of directors or other governing body of the Person being
acquired shall have approved the terms of the Acquisition; and (vi) the Borrower has
provided to the Lender such financial and other information regarding the Person who is
being so acquired, including historical financial statements and a description of such
Person, as the Lender shall reasonably request (such acquisitions, “Permitted
Acquisitions”);

(g) joint venture Investments and other Investments (not comprising Acquisitions) by
the Borrower or any direct or indirect Subsidiary not exceeding $2,000,000 in the aggregate
for all such Persons together in any fiscal year of the Borrower; and

(h) other Investments (other than Investments comprising Acquisitions) not exceeding
$2,000,000 in the aggregate for all such Investments together in any fiscal year of the
Borrower.

 

46

 

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

(a) Indebtedness under the Loan Documents;

(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that the
amount of such Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such refinancing
and by an amount equal to any existing commitments unutilized thereunder;

(c) Guarantees of the Borrower or any Guarantor in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any other Guarantor;

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

(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase
money obligations for fixed or capital assets within the limitations set forth in
Section 7.01(i); provided, however, that the aggregate amount of all
such Indebtedness at any one time outstanding shall not exceed $2,000,000;

(f) unsecured Indebtedness owing by the Borrower or any Subsidiary in favor of the
Borrower or any wholly-owned Subsidiary, incurred in the ordinary course of business;

(g) Indebtedness constituting trade accounts payable incurred by the Borrower or its
Subsidiaries in the ordinary course of business;

(h) Indebtedness constituting Subordinated Debt; and

(i) other unsecured Indebtedness in an aggregate principal amount not exceeding at any
one time outstanding $2,000,000.

 

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

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

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

(c) in order to consummate a Permitted Acquisition, the Borrower and any Guarantor may
merge with any Person, provided that the Borrower and any such Guarantor shall be the
continuing or surviving Person in connection therewith.

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

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

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

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

(d) Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned
Subsidiary; provided that if the transferor of such property is a Guarantor, the
transferee thereof must either be the Borrower or a Guarantor;

(e) Dispositions permitted by Section 7.04;

(f) licenses of IP Rights in the ordinary course of business; and

(g) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under
this Section 7.05; provided that (i) at the time of such Disposition, no
Default shall exist or would result from such Disposition and (ii) the aggregate book value
of all property Disposed of in reliance on this clause (h) in any fiscal year shall not
exceed $2,000,000;

provided, however, that any Disposition pursuant to clauses (a) through (g) shall
be for fair market value.

 

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

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

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

(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of
new shares of its common stock or other common Equity Interests; and

(d) the Borrower may declare or pay cash dividends to its stockholders pursuant to
plans approved by the Borrower’s board of directors in an amount not to exceed 5 cents
($0.05) per share per fiscal quarter; and the Borrower may repurchase its equity stock in an
aggregate amount not exceeding, for any Subject Period (or portion thereof, commencing from
the Closing Date), $30,000,000.

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

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

7.09 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement,
any other Loan Document or any Contractual Obligation in favor of the Lender or any of its Related
Parties) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the
Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, (ii)
of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (iii) shall not prohibit any negative pledge
(x) incurred or provided in favor of any holder of Indebtedness permitted under Section
7.03(e) solely to the extent any such negative pledge relates to the property financed by or
the subject of such Indebtedness, or (y) incurred or provided prior to the Closing
Date in favor of any holder of Indebtedness permitted under Section 7.03(b); or (b)
requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure
another obligation of such Person.

 

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

7.11 Financial Covenants.

(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total Leverage Ratio
as of the last day of any fiscal quarter of the Borrower (commencing with the fiscal quarter ended
January 31, 2008) to be greater than 1.50:1.00.

(b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio as of the last day of any fiscal quarter of the Borrower (commencing with the fiscal
quarter ended January 31, 2008) to be less than 2.00:1.00.

(c) Consolidated Liquidity Ratio. Permit the Consolidated Liquidity Ratio at any time
(commencing with the fiscal quarter ended January 31, 2008) to be less than 1.30:1.00.

(d) Consolidated EBITDA. Permit as of the last day of any fiscal quarter of the
Borrower (commencing with the fiscal quarter ended January 31, 2008) Consolidated EBITDA for the
Subject Period then ending to be less than $10,000,000.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

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

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

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02(a) and
(b), 6.03(a), 6.05 (solely as to legal existence of a Loan Party),
6.10, 6.11 or 6.12 or Article VII; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained in
any Loan Document on its part to be performed or observed and such failure continues
for 30 days; or

 

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

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

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor
Relief Law relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; provided no
Event of Default shall exist under this subsection if relating solely to one or more
Subsidiaries other than Guarantors or Material Subsidiaries unless such event or
circumstance would have, or reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect; or

 

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(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its debts as
they become due, or (ii) any writ or warrant of attachment or execution or similar process
is issued or levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 30 days after its issue or levy;
provided no Event of Default shall exist under this subsection if relating solely to
one or more Subsidiaries other than Guarantors or Material Subsidiaries unless such event or
circumstance would have, or reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect; or

(h) Judgments. There is entered against the Borrower or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount exceeding the
Threshold Amount (to the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments
that have, or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by
any creditor upon such judgment or order, or (B) there is a period of 20 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; provided no Event of Default shall exist under this
subsection if relating solely to one or more Subsidiaries other than Guarantors or Material
Subsidiaries unless such event or circumstance would have, or reasonably be expected to
have, singly or in the aggregate, a Material Adverse Effect; or

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

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

 

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(k) Change of Control. There occurs any Change of Control with respect to the
Borrower.

8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the
Lender may take any or all of the following actions:

(a) declare the Commitment to be terminated, whereupon the Commitment shall be
terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;

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

(d) exercise all rights and remedies available to it under the Loan Documents or
applicable law;

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

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

ARTICLE IX.

MISCELLANEOUS

9.01 Amendments; Etc. No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom,
shall be effective unless in writing signed by the Lender and the Borrower or the applicable Loan
Party, as the case may be, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

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9.02 Notices and Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by facsimile transmission).
All such written notices shall be mailed, faxed or delivered to the address, facsimile number or
(subject to subsection (c) below) electronic mail address specified for notices to the applicable
party on Schedule 9.02; or to such other address, facsimile number or electronic mail
address as shall be designated by such party in a notice to the other party. All notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the
telephone number specified for notices to the applicable party on Schedule 9.02, or to such
other telephone number as shall be designated by such party in a notice to the other party. All
such notices and other communications shall be deemed to be given or made upon the earlier to occur
of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier,
when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four
Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of
delivery is subject to the provisions of subsection (c) below), when delivered; provided,
however, that notices and other communications to the Lender pursuant to Article II
shall not be effective until actually received by the Lender. In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures
shall, subject to applicable Law, have the same force and effect as manually-signed originals and
shall be binding on all Loan Parties and the Lender. The Lender may also require that any such
documents and signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the effectiveness
of any facsimile document or signature.

(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as financial statements and
other information as provided in Section 6.02, and to distribute Loan Documents for
execution by the parties thereto, and may not be used for any other purpose.

(d) Reliance by Lender. The Lender shall be entitled to rely and act upon any notices
(including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i)
such notices were not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by
the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Lender, its
Affiliates, and their respective officers, directors, employees, agents and attorneys-in-fact from
all losses, costs, expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other
communications with the Lender may be recorded by the Lender, and the Borrower hereby consents to
such recording.

 

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9.03 No Waiver; Cumulative Remedies. No failure by the Lender to exercise, and no delay by
the Lender in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

9.04 Expenses; Indemnity; Damage Waiver.

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

(b) Indemnification by the Borrower. The Borrower shall indemnify the Lender and each
Related Party of Lender (each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the fees, charges and disbursements of any counsel for any Indemnitee),
incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower
or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective obligations hereunder
or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case
of the Lender and its Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related
expenses (x) are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y)
result from a claim
brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith
of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or
such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

 

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(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.
No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

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

(e) Survival. The agreements in this Section shall survive the termination of the
Commitment and the repayment, satisfaction or discharge of all the other Obligations.

9.05 [Reserved]

9.06 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is
made to the Lender, or the Lender exercises its right of set-off, and such payment or the proceeds
of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement entered into by the
Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection
with any proceeding under any Debtor Relief Law or otherwise, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such set-off had not occurred.

9.07 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Lender and the Lender may not assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the
provisions of subsection (c) of this Section, or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of subsection (e) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (c) of this Section and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

 

56

 

(b) Subject to subsection (f) of this Section, the Lender may at any time, with the written
consent of the Borrower in its sole discretion (provided that such consent shall not be required if
there exists at such time an Event of Default), assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a portion of the
Commitment, the Loans and L/C Obligations at the time owing to it) pursuant to documentation
acceptable to the Lender and the assignee, it being understood and agreed that with respect to any
Letters of Credit outstanding at the time of any such assignment, the Lender may sell to the
assignee a ratable participation in such Letters of Credit. From and after the effective date
specified in such documentation, such Eligible Assignee shall be a party to this Agreement and, to
the extent of the interest assigned by the Lender, have the rights and obligations of the Lender
under this Agreement, and the Lender shall, to the extent of the interest so assigned, be released
from its obligations under this Agreement (and, in the case of an assignment of all of the Lender’s
rights and obligations under this Agreement, shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 3.01, 3.04, 3.05, 9.04 and
9.05 with respect to facts and circumstances occurring prior to the effective date of such
assignment, and shall continue to have all of the rights provided hereunder to the Lender in its
capacity as issuer of any Letters of Credit outstanding at the time of such assignment). Upon
request, the Borrower (at its expense) shall execute and deliver new or replacement Notes to the
Lender and the assignee, and shall execute and deliver any other documents reasonably necessary or
appropriate to give effect to such assignment and to provide for the administration of this
Agreement after giving effect thereto.

(c) Subject to subsection (f) of this Section, the Lender may at any time, without the consent
of, or notice to, the Borrower, sell participations to any Person (other than a natural person or
the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of the Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the outstanding Letters of Credit and/or the Loans and/or the
reimbursement obligations in respect of Letters of Credit); provided that (i) the Lender’s
obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible to the Borrower for the performance of such obligations and (iii) the Borrower shall
continue to deal solely and directly with the Lender in connection with the Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which the Lender sells
such a participation shall provide that the Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that the Lender will not, without
the consent of the Participant, agree to any amendment, waiver or other modification that would (A)
postpone any date upon which any payment of money is scheduled to be made to such Participant, or
(B) reduce the principal, interest, fees or other amounts payable to such Participant. Subject to
subsection (d) of this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were
the Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 9.09 as though it were the Lender.

 

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(d) A Participant shall not be entitled to receive any greater payment under Section
3.01 or 3.04 than the Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant that is not a “United States person”
within the meaning of Section 7701(a)(30) of the Code shall not be entitled to the benefits of
Section 3.01 unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to provide to the Lender such tax
forms prescribed by the IRS as are necessary or desirable to establish an exemption from, or
reduction of, U.S. withholding tax.

(e) The Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement (including under the Note, if any) to secure obligations of the
Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release the Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for the Lender as a party hereto.

(f) Notwithstanding the foregoing, the Lender shall at all times retain Loans and/or a
Commitment, not subject to any assignment or participation, in an amount not less than 50.1% of the
outstanding Loans and/or Commitment.

(g) As used herein, the following terms have the following meanings:

“Eligible Assignee” means (a) an Affiliate of the Lender; (b) an Approved
Fund; and (c) any other Person (other than a natural person) approved by the Borrower in its
sole discretion; provided that no such approval shall be required if an Event of
Default has occurred and is continuing.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

“Approved Fund” means any Fund that is administered or managed by (a) the
Lender or (b) an Affiliate of the Lender, and as to which the Lender or such Affiliate (as
the case may be) does not intend to transfer or cease such administration or management
relationship during the term of this Agreement.

9.08 Treatment of Certain Information; Confidentiality. The Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information may be disclosed (a)
to its Affiliates and to its and its Affiliates’ respective partners, directors, officers,
employees, agents, advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance Commissioners), (c)
to the extent

 

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 required by applicable laws or regulations or by any subpoena or similar legal
process (provided that the Lender shall exercise commercially reasonable efforts, to the extent
practicable and not contrary to any request or order of any Governmental Authority or to applicable
Law, to provide prompt prior written notice thereof to the Borrower to enable the Borrower to seek
a protective order or otherwise prevent or condition such disclosure), (d) to any other party
hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Lender or any of its Affiliates on a nonconfidential basis
from a source other than the Borrower.

For purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to the Lender on a nonconfidential
basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.

The Lender acknowledges that (a) the Information may include material non-public information
concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including Federal and state
securities Laws.

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

 

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

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

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

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

 

60

 

9.14 Governing Law; Jurisdiction; Etc.

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

(b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK CITY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY
OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

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

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

61

 

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

9.16 USA PATRIOT Act Notice. The Lender hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower and other information
that will allow the Lender to identify the Borrower in accordance with the Act.

9.17 Time of the Essence. Time is of the essence of the Loan Documents.

9.18 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

[Remainder of page intentionally left blank]

 

62

 

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

	 	 	 	 	 
	 	QAD INC.

 	 
	 	By:  	/s/ DANIEL LENDER
 	 
	 	 	Name:  	Daniel Lender  	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	 	 
	 	By:  	
/s/ JOHN NEALE
 	 
	 	 	Name:  	John Neale  	 
	 	 	Title:  	Vice President & Treasurer 	 

 

S-1

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ KEVIN MCMAHON
 	 
	 	 	Name:  	Kevin McMahon  	 
	 	 	Title:  	Senior Vice President 	 

 

S-2

 

	 	 	 	 	 

SCHEDULE 5.05

SUPPLEMENT TO INTERIM FINANCIAL STATEMENTS

[None]

Schedule 5.05

 

1

 

SCHEDULE 5.13

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

Part (a): Subsidiaries.

	 	 	 	 	 
	 	 	Percentage Owned, Directly	 	Country/Jurisdiction
	Name of Subsidiary	 	or
Indirectly, by Borrower	 	of Organization
	 
	QAD Australia Pty. Ltd.
	 	100%	 	Australia
	QAD Europe NV/SA
	 	100%	 	Belgium
	QAD Brasil Ltda.
	 	100%	 	Brazil
	QAD Bermuda Ltd.
	 	100%	 	Bermuda
	QAD Canada ULC
	 	100%	 	Canada
	QAD China Ltd.
	 	100%	 	China
	QAD Europe s.r.o.
	 	100%	 	Czech Republic
	QAD Europe SAS
	 	100%	 	France
	QAD Europe GmbH
	 	100%	 	Germany
	QAD Asia Limited
	 	100%	 	Hong Kong
	QAD India Private Limited
	 	100%	 	India
	Columbus Software Systems
Limited
	 	100%	 	Ireland
	Precision Software Limited
	 	100%	 	Ireland
	QAD Ireland Limited
	 	100%	 	Ireland
	QAD Italy S.r.l.
	 	100%	 	Italy
	QAD Japan k.k.
	 	100%	 	Japan
	QAD Korea Limited
	 	100%	 	Korea
	QAD Mexicana, S.A. de C.V.
	 	100%	 	Mexico
	QAD Sistemas Integrados
Servicios de Consultoria,
S.A. de C.V.
	 	100%	 	Mexico
	QAD EMEA Holdings B.V.
	 	100%	 	Netherlands
	QAD Europe B.V.
	 	100%	 	Netherlands
	QAD Holland Holdings B.V.
	 	100%	 	Netherlands
	QAD Netherlands B.V.
	 	100%	 	Netherlands
	QAD NZ Limited
	 	100%	 	New Zealand
	QAD Polska Sp. zo.o.
	 	100%	 	Poland
	QAD Lusitana Lda.
	 	100%	 	Portugal
	QAD Singapore Private Limited
	 	100%	 	Singapore
	QAD Software South Africa
(Pty) Ltd.
	 	100%	 	South Africa
	QAD Europe S.L.
	 	100%	 	Spain
	QAD Europe A.G.
	 	100%	 	Switzerland
	QAD I&I Company Limited
	 	100%	 	Thailand
	QAD Bilgisayar Yazilim Ltd.
Sirketi
	 	100%	 	Turkey
	Bisgen Ltd.
	 	100%	 	United Kingdom
	Precision Distribution
Systems Limited
	 	100%	 	United Kingdom
	Precision Solutions Limited
	 	100%	 	United Kingdom
	QAD EMEA Limited
	 	100%	 	United Kingdom

 

Schedule 5.13

1

 

	 	 	 	 	 
	 	 	Percentage Owned, Directly	 	Country/Jurisdiction
	Name of Subsidiary	 	or
Indirectly, by Borrower	 	of Organization
	 
	QAD Europe Limited
	 	100%	 	United Kingdom
	QAD Holding Limited
	 	100%	 	United Kingdom
	QAD Ltd.
	 	100%	 	United Kingdom
	QAD United Kingdom Ltd.
	 	100%	 	United Kingdom
	Enterprise Engines, Inc.
	 	100%	 	California
	FBO Systems, Inc.
	 	100%	 	Georgia
	QAD Brazil Inc.
	 	100%	 	Delaware
	QAD Holdings Inc.
	 	100%	 	Delaware
	QAD Japan Inc.
	 	100%	 	Delaware
	QAD Ortega Hill, LLC
	 	100%	 	Delaware

Part (b): Material Subsidiaries.

	 	 	 	 	 
	 	 	Percentage Owned, Directly	 	Country/Jurisdiction
	Name of Subsidiary	 	or
Indirectly, by Borrower	 	of Organization
	 
	QAD Netherlands B.V.
	 	100%	 	Netherlands
	QAD Europe Limited
	 	100%	 	United Kingdom
	QAD Ireland Limited
	 	100%	 	Ireland
	QAD Australia Pty. Ltd.
	 	100%	 	Australia
	QAD Europe B.V.
	 	100%	 	Netherlands
	QAD EMEA Limited
	 	100%	 	United Kingdom
	QAD Ortega Hill, LLC
	 	100%	 	Delaware

Part (c): Other Equity Investments of Borrower.

None

Schedule 5.13

 

2

 

SCHEDULE 7.01

EXISTING LIENS

Deed of Trust dated July 28, 2004 among QAD Ortega Hill, LLC, as Trustor, Mid-State Bank & Trust
(now Rabobank, N.A.), as Beneficiary, and MSB Properties, Inc., as Trustee (the “Ortega Deed of
Trust”), encumbering the real property commonly known as 211 Ortega Hill Road, Summerland, CA
93067, as more particularly described in Exhibit “One” thereto, owned by QAD Ortega Hill, LLC.

Schedule 7.01

 

1

 

SCHEDULE 7.02

EXISTING INVESTMENTS

	 	 	 	 	 
	Money Market Funds as of 03-31-08	 	Principal	 
	 
	Monarch Funds – Cash Institutional Shares
	 	$	640,423.17	 
	Western Asset Institutional Money Market Fund Class A
	 	$	697,321.06	 
	Citi Institutional Liquid Reserves Class A
	 	$	21,069,236.05	 
	Bank of America Global Liquidity U.S. Dollar Fund
	 	$	6,028,407.29	 
	Bank of America Global Liquidity Euro Fund
	 	€	975,000.00	 
	 
	 	 	 	 
	Employee Loans principal amount as of 3-31-08 — $288,000
	 	 	 	 

Schedule 7.02

 

1

 

SCHEDULE 7.03

EXISTING INDEBTEDNESS

	 	 	 
	Description of Indebtedness	 	Outstanding Amount as of 03/31/08
	 
	Document: Business Loan Agreement dated July 28, 2004 between 
Mid-State Bank & Trust (now Rabobank, N.A.) and QAD Ortega Hill, LLC
	 	$17,201,799.56
	Loan Number: 9417427988
	 	 
	Principal: $18,000,000
	 	 
	Maturity: 07/28/2014
	 	 
	 
	 	 
	Document: Lease Agreement dated October 13, 2003 between 

BSL Leasing Company Limited, as Lessor, and QAD I&I Co., LTD, 

as Leasee (Agreement No. LE03/576)
	 	681,895.65 Thai Baht
	Leased Property: New passenger car
(Jaguar XJ63.0 Executive)
	 	 
	Payments: 60 (monthly basis)
	 	 
	Amount of Each Payment: 93,850.00 Thai
Baht
	 	 
	Expiration Date: 10/13/2008
	 	 

Schedule 7.03

 

1

 

SCHEDULE 9.02

NOTICE ADDRESSES AND LENDING OFFICE

QAD INC.:

100 Innovation Place

Santa Barbara, CA 93108

Attention: John Curl

Telephone: (805) 566-6118

Facsimile: (805) 565-4202

Electronic Mail: ujc@qad.com

Website Address: www.qad.com

LENDER

Lending Office for Loans, payments with
respect thereto and payments of fees other than
Letter of Credit fees:

BANK OF AMERICA, N.A.

2001 Clayton Rd. 2nd Floor

Mail Code: CA4-702-02-25

Concord, CA 94520

Attn: Adam Stoner

Telephone: (925) 675-8825

Facsimile: (888) 206-6220

Electronic Mail: adam.j.stoner@bankofamerica.com

Account No. 003750836479

Ref: QAD, Inc.

ABA# 026009593

Lending Office for Letters of Credit and
payments with respect thereto, including
Letter of Credit fees:

BANK OF AMERICA, N.A.

Trade Operations-Los Angeles #22621

333 S. Beaudry Avenue, 19th Floor

Mail Code: CA9-703-19-23

Los Angeles, CA 90017-1466

Notices (other than Requests for Credit Extensions):

BANK OF AMERICA, N.A.

315 Montgomery Street, 6th Floor

Mail Code: CA5-704-06-37

San Francisco, CA 94104

Attn: Kevin M. McMahon

Telephone: (415) 622-8088

Facsimile: (415) 622-4057

Electronic Mail: kevin.mcmahon@bankofamerica.com

Schedule 9.02

 

1

 

EXHIBIT A

FORM OF LOAN NOTICE

Date:                     ,

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of April 10, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), between QAD
INC., a Delaware corporation, and Bank of America, N.A..

The undersigned hereby requests (select one):

	 	 	 	 	 
	 

	 	o A Loan
	 	o A Conversion or Continuation of a Loan

	 	1.	 	On                  
          
                      
                      
           
                (a Business Day).
	 
	 	2.	 	In the amount of $                  
                      
                       
             .
	 
	 	3.	 	Comprised of                                                               
                       .

[Type of Loan requested]

	 	4.	 	For a Eurodollar Rate Loan: with an Interest Period of                      months.

[The borrowing requested herein complies with the proviso to the first sentence of
Section 2.01 of the Agreement.]

	 	 	 	 	 
	 	

QAD INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

A-1

 

EXHIBIT B

FORM OF NOTE

	 	 	 
	$20,000,000	 	April 10, 2008

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to the
order of Bank of America, N.A. or registered assigns (the “Lender”), on the Maturity Date
(as defined in the Credit Agreement referred to below) the principal amount of Twenty Million
Dollars ($20,000,000), or such lesser principal amount of Loans (as defined in such Credit
Agreement) due and payable by the Borrower to the Lender on the Maturity Date under that certain
Credit Agreement, dated as of April 10, 2008 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms defined therein
being used herein as therein defined), between the Borrower and the Lender.

The Borrower promises to pay interest on the unpaid principal amount of each Loan from the
date of such Loan until such principal amount is paid in full, at such interest rates, and at such
times as are specified in the Agreement. All payments of principal and interest shall be made to
the Lender in Dollars in immediately available funds at the Lender’s Lending Office. If any amount
is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon
demand, from the due date thereof until the date of actual payment (and before as well as after
judgment) computed at the per annum rate set forth in the Agreement.

This Note is the Note referred to in the Agreement, is entitled to the benefits thereof and is
subject to prepayment in whole or in part as provided therein. This Note is also entitled to the
benefits of the Guaranty. Upon the occurrence and continuation of one or more of the Events of
Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or
may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by
the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in
the ordinary course of business. The Lender may also attach schedules to this Note and endorse
thereon the date, amount and maturity of the Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

 

B-1

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

	 	 	 	 	 
	 	

QAD INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

B-2

 

	 	 	 	 	 

LOANS AND PAYMENTS WITH RESPECT THERETO

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Amount of	 	Outstanding	 	 
	 	 	 	 	 	 	End of	 	Principal or	 	Principal	 	 
	 	 	Type of	 	Amount of	 	Interest	 	Interest Paid	 	Balance	 	Notation
	Date	 	Loan Made	 	Loan Made	 	Period	 	This Date	 	This Date	 	Made By
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

 

B-3

 

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                     ,

To: Bank of America, N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of April 10, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined), between
QAD INC., a Delaware corporation, (the “Borrower”) and Bank of America, N.A. (the
“Lender”).

The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the
                     of the Borrower, and that, as such, he/she is authorized to execute
and deliver this Certificate to the Lender on the behalf of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as
of the above date, together with the report and opinion of an independent certified public
accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the
above date. Such financial statements fairly present the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such
date and for such period, subject only to normal year-end audit adjustments and the absence of
footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made,
or has caused to be made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of the Borrower during the accounting period covered by the
attached financial statements.

3. A review of the activities of the Borrower during such fiscal period has been made under
the supervision of the undersigned with a view to determining whether during such fiscal period the
Borrower performed and observed all its Obligations under the Loan Documents, and

 

C-1

 

[select one:]

[to the best knowledge of the undersigned during such fiscal period, the Borrower performed
and observed each covenant and condition of the Loan Documents applicable to it and no Default has
occurred and is continuing.]

—or—

[the following covenants or conditions have not been performed or observed and the following
is a list of each such Default and its nature and status:]

4. The representations and warranties of the Borrower contained in Article V of the
Agreement and any representations and warranties of any Loan Party that are contained in any
document furnished at any time under or in connection with the Loan Documents, are true and correct
on and as of the date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct as of such earlier
date, and except that for purposes of this Compliance Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 5.05 of the Agreement shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.01 of the Agreement, including the statements in connection with
which this Compliance Certificate is delivered.

5. The financial covenant analyses and information set forth on Schedule 2 and
Schedule 3 attached hereto are true and accurate on and as of the date of this Certificate.

6. Attached hereto as Schedule 4 is a true and complete listing of all Material
Subsidiaries.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                     ,                     .

	 	 	 	 	 
	 	

QAD INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

C-2

 

For the Quarter/Year ended                     (“Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

	 	 	 	 	 
	I. Section 7.11 (a) — Consolidated Total Leverage Ratio.
	 	 	 	 
	 
	 	 	 	 
	A. Consolidated Funded Indebtedness at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	B. Consolidated EBITDA for four consecutive fiscal quarters ending
on above date (“Subject Period”):
	 	$	                    	 
	 
	 	 	 	 
	1. Consolidated Net Income for Subject Period:
	 	$	                    	 
	2. Consolidated Interest Charges for Subject Period
	 	$	                    	 
	3. Provision for income taxes (net of credits) for
Subject Period:
	 	$	                    	 
	4. Depreciation expenses for Subject Period:
	 	$	                    	 
	5. Amortization expenses for Subject Period:
	 	$	                    	 
	6. Financial Accounting Standard 123R charges incurred
for Subject Period not representing cash items in
Subject Period or future period (“FAS 123R
Charges”):
	 	$	                    	 
	7. Consolidated EBITDA (Lines I.B.1 + 2 + 3 + 4 +5 + 6):
	 	$	                    	 
	 
	 	 	 	 
	C. Consolidated Total Leverage Ratio (Line I.A ÷ Line I.B.7):
	 	 	                    	to 1
	 
	 	 	 	 
	Maximum Permitted: 
	 	1.50:1.00	 
	 
	 	 	 	 
	II. Section 7.11 (b) — Consolidated Fixed Charge Coverage Ratio.
	 	 	 	 
	 
	 	 	 	 
	A. Consolidated EBITDA for Subject Period (Line I.B.7):
	 	$	                    	 
	 
	 	 	 	 
	B. Capital Expenditures for Subject Period:
	 	$	                    	 
	 
	 	 	 	 
	C. Consolidated Interest Charges for Subject Period:
	 	$	                    	 
	 
	 	 	 	 
	D. Scheduled principal and interest payments for Indebtedness for Subject Period:
	 	$	                    	 
	 
	 	 	 	 
	E. Current portion of long term debt (excluding Obligations) at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	F. Consolidated Fixed Charge Coverage Ratio ((Lines II.A – B) ÷ (Lines II.C + D + E)):
	 	 	                    	to 1
	 
	 	 	 	 
	Minimum Permitted:
	 	 	2.00:1.00	 

 

C-3

 

	 	 	 	 	 
	III. Section 7.11 (c) — Consolidated Liquidity Ratio.
	 	 	 	 
	 
	 	 	 	 
	A. Cash and cash equivalents at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	B. Trade accounts receivable net of doubtful or uncollectible accounts at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	C. Current liabilities (excluding deferred revenues) at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	D. Total Outstandings (excluding current liabilities) at Statement Date:
	 	$	                    	 
	 
	 	 	 	 
	E.
Consolidated Liquidity Ratio
((Lines III.A + B) ÷ (Lines III.C + D)):
	 	 	                    	to 1
	 
	 	 	 	 
	Minimum Permitted:
	 	 	1.30:1.00	 
	 
	 	 	 	 
	IV. Section 7.11 (d) — Minimum Consolidated EBITDA.
	 	 	 	 
	 
	 	 	 	 
	A. Consolidated EBITDA for Subject Period (Line I.B.7):
	 	$	                    	 
	 
	 	 	 	 
	Minimum Permitted::
	 	$	10,000,000.	 

 

C-4

 

For the
Quarter/Year ended                      (“Statement Date”)

SCHEDULE 3

to the Compliance Certificate

($ in 000’s)

Consolidated EBITDA

(in accordance with the definition of Consolidated EBITDA as set forth in the Agreement)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Twelve	 
	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Months	 
	Consolidated EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated
Net Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ Consolidated
Interest Charges
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ income taxes (net of
credits)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ depreciation expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ amortization expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ Financial Accounting
Standard 123R
charges (non-cash
items)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	= Consolidated EBITDA
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

C-5

 

SCHEDULE 4

to the Compliance Certificate

Material Subsidiaries

 

C-6

 

EXHIBIT D

FORM OF GUARANTY

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in consideration of
credit and/or financial accommodation heretofore or hereafter from time to time made or granted to
QAD INC., a Delaware corporation, (the “Borrower”) by Bank Of America,
N.A. and any other subsidiaries or affiliates of Bank of America Corporation and its
successors and assigns (collectively the “Lender”), the undersigned Guarantor (whether one
or more the “Guarantor”, and if more than one jointly and severally) hereby furnishes its
guaranty (this “Guaranty”) of the Guaranteed Obligations (as hereinafter defined) as
follows:

1. Guaranty. The Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of
payment and performance and not merely as a guaranty of collection, prompt payment when due,
whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at
all times thereafter, of any and all existing and future indebtedness and liabilities of every
kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated,
voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages,
costs, expenses or otherwise, of the Borrower to the Lender arising (a) under that certain Credit
Agreement dated April 10, 2008 between the Borrower and the Lender (the “Credit Agreement”)
and any instruments, agreements or other documents of any kind or nature now or hereafter executed
in connection with the Credit Agreement (including all renewals, extensions, amendments,
refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred
by the Lender in connection with the collection or enforcement thereof); (b) out of the Lender
providing treasury management services to, for the benefit of or otherwise in respect of the
Borrower, including, without limitation, intraday credit, Automated Clearing House (ACH) services,
foreign exchange services, daylights overdrafts and zero balance arrangements; or (c) under any
rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond option, interest rate option, spot or forward foreign
exchange transaction, cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option, credit swap or default
transaction, or any other similar transaction (including an option to enter into any of the
foregoing) (each, a “Transaction” and collectively, the “Transactions”) with the
Borrower (including any renewals, extensions or modifications thereof) arising out of or relating
to any and all Transactions, including, without limitation, under any master agreement relating
thereto or governing any such Transaction, entered into between the Lender and the Borrower; and in
any case whether recovery upon such indebtedness and liabilities may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by
or against the Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States Code),
any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or
similar debtor relief laws of the United States or other applicable jurisdictions from time to time
in effect and affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and including interest that accrues after the commencement by or against the Borrower
of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed
Obligations”).

 

D-1

 

The Lender’s books and records showing the amount of the Guaranteed Obligations shall be
admissible in evidence in any action or proceeding, and shall be binding upon the Guarantor and
conclusive for the purpose of establishing the amount of the Guaranteed Obligations. This Guaranty
shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed
Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the
existence, validity, enforceability, perfection, non-perfection or extent of any collateral
therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might
otherwise constitute a defense to the obligations of the Guarantor under this Guaranty, and the
Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way
relating to any or all of the foregoing. Anything contained herein to the contrary
notwithstanding, the obligations of the Guarantor hereunder at any time shall be limited to an
aggregate amount equal to the largest amount that would not render its obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy
Code (Title 11, United States Code) or any comparable provisions of any similar federal or state
law.

2. No Setoff or Deductions; Taxes; Payments. The Guarantor shall make all payments hereunder
without setoff or counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Guarantor is compelled by law
to make such deduction or withholding. If any such obligation (other than Excluded Taxes, as
defined in the Credit Agreement) is imposed upon the Guarantor with respect to any amount payable
by it hereunder, the Guarantor will pay to the Lender, on the date on which such amount is due and
payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the
Lender to receive the same net amount which the Lender would have received on such due date had no
such obligation been imposed upon the Guarantor. The Guarantor will deliver promptly to the Lender
certificates or other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Guarantor hereunder. The obligations of the Guarantor under this
paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this
Guaranty.

3. Rights of Lender. The Guarantor consents and agrees that the Lender may, at any time and
from time to time, without notice or demand, and without affecting the enforceability or continuing
effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise
change the time for payment or the terms of the Guaranteed Obligations or any part thereof; (b)
take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security
and direct the order or manner of sale thereof as the Lender in its sole discretion may determine;
and (d) release or substitute one or more of any endorsers or other guarantors of any of the
Guaranteed Obligations. Without limiting the generality of the foregoing, the Guarantor consents to
the taking of, or failure to take, any action which might in any manner or to any extent vary the
risks of the Guarantor under this Guaranty or which, but for this provision, might operate as a
discharge of the Guarantor.

 

D-2

 

4. Certain Waivers. The Guarantor waives (a) any defense arising by reason of any disability
or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever
(including any act or omission of the Lender) of the liability of the Borrower; (b) any defense
based on any claim that the Guarantor’s obligations exceed or are more burdensome than those of the
Borrower; (c) the benefit of any statute of limitations affecting the Guarantor’s liability
hereunder; (d) any right to proceed against the Borrower, proceed against or exhaust any security
for the Indebtedness, or pursue any other remedy in the Lender’s power whatsoever; (e) any benefit
of and any right to participate in any security now or hereafter held by the Lender; and (f) to the
fullest extent permitted by law, any and all other defenses or benefits that may be derived from or
afforded by applicable law limiting the liability of or exonerating guarantors or sureties. The
Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment
or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence,
creation or incurrence of new or additional Guaranteed Obligations.

5. Obligations Independent. The obligations of the Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the
obligations of any other guarantor, and a separate action may be brought against the Guarantor to
enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a
party.

6. Subrogation. The Guarantor shall not exercise any right of subrogation, contribution,
indemnity, reimbursement or similar rights with respect to any payments it makes under this
Guaranty until all of the Guaranteed Obligations and any amounts payable under this Guaranty have
been indefeasibly paid and performed in full and any commitments of the Lender or facilities
provided by the Lender with respect to the Guaranteed Obligations are terminated. If any amounts
are paid to the Guarantor in violation of the foregoing limitation, then such amounts shall be held
in trust for the benefit of the Lender and shall forthwith be paid to the Lender to reduce the
amount of the Guaranteed Obligations, whether matured or unmatured.

7. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all
Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until
all Guaranteed Obligations and any other amounts payable under this Guaranty are indefeasibly paid
in full in cash and any commitments of the Lender or facilities provided by the Lender with respect
to the Guaranteed Obligations are terminated. Notwithstanding the foregoing, this Guaranty shall
continue in full force and effect or be revived, as the case may be, if any payment by or on behalf
of the Borrower or the Guarantor is made, or the Lender exercises its right of setoff, in respect
of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief
Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and
whether or not the Lender is in possession of or has released this Guaranty and regardless of any
prior revocation, rescission, termination or
reduction. The obligations of the Guarantor under this paragraph shall survive termination of
this Guaranty.

 

D-3

 

8. Subordination. The Guarantor hereby subordinates the payment of all obligations and
indebtedness of the Borrower owing to the Guarantor, whether now existing or hereafter arising,
including but not limited to any obligation of the Borrower to the Guarantor as subrogee of the
Lender or resulting from the Guarantor’s performance under this Guaranty, to the indefeasible
payment in full in cash of all Guaranteed Obligations. If the Lender so requests, any such
obligation or indebtedness of the Borrower to the Guarantor shall be enforced and performance
received by the Guarantor as trustee for the Lender and the proceeds thereof shall be paid over to
the Lender on account of the Guaranteed Obligations, but without reducing or affecting in any
manner the liability of the Guarantor under this Guaranty.

9. Stay of Acceleration. In the event that acceleration of the time for payment of any of the
Guaranteed Obligations is stayed, in connection with any case commenced by or against the Guarantor
or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be
payable by the Guarantor immediately upon demand by the Lender.

10. Expenses. The Guarantor shall pay on demand all out-of-pocket expenses (including
attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) in
any way relating to the enforcement or protection of the Lender’s rights under this Guaranty or in
respect of the Guaranteed Obligations, including any incurred during any “workout” or restructuring
in respect of the Guaranteed Obligations and any incurred in the preservation, protection or
enforcement of any rights of the Lender in any proceeding any Debtor Relief Laws. The obligations
of the Guarantor under this paragraph shall survive the payment in full of the Guaranteed
Obligations and termination of this Guaranty.

11. Miscellaneous. No provision of this Guaranty may be waived, amended, supplemented or
modified, except by a written instrument executed by the Lender and the Guarantor. No failure by
the Lender to exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided
by law or in equity. The unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein. Unless otherwise agreed by the
Lender and the Guarantor in writing, this Guaranty is not intended to supersede or otherwise affect
any other guaranty now or hereafter given by the Guarantor for the benefit of the Lender or any
term or provision thereof.

12. Condition of Borrower. The Guarantor acknowledges and agrees that it has the sole
responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor
such information concerning the financial condition, business and operations of the Borrower and
any such other guarantor as the Guarantor requires, and that the Lender has no duty, and the
Guarantor is not relying on the Lender at any time, to disclose to the Guarantor any information
relating to the business, operations or financial condition of the Borrower or any other guarantor
(the guarantor waiving any duty on the part of the Lender to disclose such information and any
defense relating to the failure to provide the same).

 

D-4

 

13. Setoff. If and to the extent any payment is not made when due hereunder, the Lender may
setoff and charge from time to time any amount so due against any or all of the Guarantor’s
accounts or deposits with the Lender.

14. Indemnification and Survival. Without limitation on any other obligations of the
Guarantor or remedies of the Lender under this Guaranty, the Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless the Lender from and against, and
shall pay on demand, any and all damages, losses, liabilities and expenses (including attorneys’
fees and expenses) that may be suffered or incurred by the Lender in connection with or as a result
of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms. The obligations of the
Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and
termination of this Guaranty.

15. Assignment; Notices. This Guaranty shall (a) bind the Guarantor and its successors and
assigns, provided that the Guarantor may not assign its rights or obligations under this Guaranty
without the prior written consent of the Lender (and any attempted assignment without such consent
shall be void), and (b) inure to the benefit of the Lender and its successors and assigns and the
Lender may, without notice to the Guarantor and without affecting the Guarantor’s obligations
hereunder, assign, sell or grant participations in the Guaranteed Obligations and this Guaranty, in
whole or in part. To the extent permitted under the Credit Agreement, the Guarantor agrees that
the Lender may disclose to any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations of all or part of the Guaranteed Obligations any
and all information in the Lender’s possession concerning the Guarantor, this Guaranty and any
security for this Guaranty. All notices and other communications to the Guarantor under this
Guaranty shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier to the Guarantor at its address set forth below
or at such other address in the United States as may be specified by the Guarantor in a written
notice delivered to the Lender at such office as the Lender may designate for such purpose from
time to time in a written notice to the Guarantor.

16. Governing Law; Jurisdiction; Etc.

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

(b) SUBMISSION TO JURISDICTION. THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, NEW YORK CITY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,

 

D-5

 

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

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

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02 OF THE CREDIT AGREEMENT. NOTHING IN
THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW.

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

 

D-6

 

18. USA PATRIOT Act Notice. The Lender hereby notifies the Guarantor that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Guarantor, which information includes the name and address of the Guarantor and
other information that will allow the Lender to identify the Guarantor in accordance with the Act.

19. Judgment Currency. If, for the purposes of obtaining any arbitration award or judgment in
any court, it is necessary to convert a sum due hereunder in one currency into another currency,
the rate of exchange used shall be that at which in accordance with normal banking procedures the
Lender could purchase the first currency with such other currency on the Business Day preceding
that on which the arbitration award or final judgment, as applicable, is given. The obligation of
the Guarantor in respect of any such sum due from it to the Lender hereunder shall, notwithstanding
any arbitration award or judgment in a currency (the “Judgment Currency”) other than that
in which such sum is denominated in accordance with the applicable provisions of the Credit
Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business
Day following receipt by the Lender of any sum deemed to be so due in the Judgment Currency, the
Lender may in accordance with normal banking procedures purchase the Agreement Currency with the
Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum
originally due to the Lender from the Guarantor in the Agreement Currency, the Guarantor agrees, as
a separate obligation and notwithstanding any such arbitration award or judgment, to indemnify the
Lender or the Person to whom such obligation was owing against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the Lender in such
currency, the Lender (by its acceptance hereof) agrees to return the amount of any excess to the
Guarantor (or to any other Person who may be entitled thereto under applicable law). The
agreements in this Section 19 shall survive the termination of the Commitments and
repayment of all Guaranteed Obligations.

[Remainder of this page intentionally left blank]

 

D-7

 

Executed as of the
 _____ 

day of                     ,
 _____.

	 	 	 	 	 
	 	[NAME OF GUARANTOR(S)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Address:	 	 
	 	 	 

[Signature
Page to Guaranty]

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