Document:

<PAGE>
                                                                    Exhibit 10.1

                                                                        [6/3/03]

                                CREDIT AGREEMENT

                            DATED AS OF JUNE 27, 2003

                                      AMONG

                          MINDSPEED TECHNOLOGIES, INC.,
                                  AS BORROWER,

                     THE SUBSIDIARY GUARANTORS PARTY HERETO,
                                 AS GUARANTORS,

                                       AND

                             CONEXANT SYSTEMS, INC.,
                                    AS LENDER

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page
<S>                                                                                             <C>
ARTICLE I DEFINED TERMS; RULES OF CONSTRUCTION...............................................     1
  SECTION 1.01.  DEFINED TERMS...............................................................     1
  SECTION 1.02.  RULES OF CONSTRUCTION.......................................................     1

ARTICLE II THE LOANS.........................................................................     1
  SECTION 2.01.  COMMITMENT..................................................................     1
  SECTION 2.02.  LOANS.......................................................................     1
  SECTION 2.03.  BORROWING PROCEDURE.........................................................     2
  SECTION 2.04.  REPAYMENT OF LOANS; EVIDENCE OF DEBT........................................     2
  SECTION 2.05.  INTEREST ON LOANS...........................................................     3
  SECTION 2.06.  TERMINATION AND REDUCTION OF COMMITMENT.....................................     4
  SECTION 2.07.  OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS.................................     4
  SECTION 2.08.  PAYMENTS GENERALLY..........................................................     4
  SECTION 2.09.  TAXES.......................................................................     5

ARTICLE III REPRESENTATIONS AND WARRANTIES...................................................     7
  SECTION 3.01.  ORGANIZATION; POWERS........................................................     7
  SECTION 3.02.  AUTHORIZATION; ENFORCEABILITY...............................................     7
  SECTION 3.03.  GOVERNMENTAL APPROVALS; NO CONFLICTS........................................     7
  SECTION 3.04.  FINANCIAL STATEMENTS........................................................     7
  SECTION 3.05.  PROPERTIES..................................................................     8
  SECTION 3.06.  EQUITY INTERESTS AND SUBSIDIARIES; CONSENT..................................     9
  SECTION 3.07.  NO EVENT OF DEFAULT.........................................................     9
  SECTION 3.08.  AGREEMENTS..................................................................     9
  SECTION 3.09.  NO MATERIAL MISSTATEMENTS...................................................    10
  SECTION 3.10.  SOLVENCY....................................................................    10
  SECTION 3.11.  SECURITY DOCUMENTS..........................................................    10
  SECTION 3.12.  REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL........................    11

ARTICLE IV CONDITIONS OF LENDING.............................................................    13
  SECTION 4.01.  ALL LOANS...................................................................    13
  SECTION 4.02.  CLOSING DATE ITEMS..........................................................    13

ARTICLE V AFFIRMATIVE COVENANTS..............................................................    16
  SECTION 5.01.  FINANCIAL STATEMENTS, REPORTS, ETC..........................................    17
  SECTION 5.02.  LITIGATION AND OTHER NOTICES................................................    18
  SECTION 5.03.  EXISTENCE; BUSINESSES AND PROPERTIES........................................    18
  SECTION 5.04.  INSURANCE...................................................................    19
  SECTION 5.05.  TAXES.......................................................................    20
  SECTION 5.06.  MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS...................    20
  SECTION 5.07.  USE OF PROCEEDS.............................................................    20
  SECTION 5.08.  PAYMENT OF OBLIGATIONS......................................................    20
  SECTION 5.09.  COMPLIANCE WITH LAWS........................................................    21
  SECTION 5.10.  ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS................................    21
  SECTION 5.11.  SECURITY INTERESTS; FURTHER ASSURANCES......................................    25
  SECTION 5.12.  POST-CLOSING MATTERS........................................................    26
</TABLE>

                                     - i -
<PAGE>
<TABLE>
<S>                                                                                             <C>
ARTICLE VI NEGATIVE COVENANTS................................................................    26
  SECTION 6.01.  INDEBTEDNESS................................................................    26
  SECTION 6.02.  LIENS.......................................................................    27
  SECTION 6.03.  INVESTMENTS, LOANS AND ADVANCES.............................................    29
  SECTION 6.04.  MERGERS, CONSOLIDATIONS, ASSET SALES AND PURCHASES OF ASSETS................    30
  SECTION 6.05.  DIVIDENDS...................................................................    32
  SECTION 6.06.  TRANSACTIONS WITH AFFILIATES................................................    32
  SECTION 6.07.  LIMITATION ON CAPITAL EXPENDITURES..........................................    32
  SECTION 6.08.  LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS OF CERTIFICATE OF
                 INCORPORATION, OTHER CONSTITUTIVE DOCUMENTS OR BYLAWS AND CERTAIN OTHER
                 AGREEMENTS, ETC.............................................................    32
  SECTION 6.09.  LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES..........................    33
  SECTION 6.10.  LIMITATION ON ISSUANCE OF CAPITAL STOCK.....................................    33
  SECTION 6.11.  LIMITATION ON CREATION OF SUBSIDIARIES......................................    33
  SECTION 6.12.  SALE AND LEASEBACK TRANSACTIONS.............................................    34
  SECTION 6.13.  LIMITATION ON LEASE OBLIGATIONS.............................................    34
  SECTION 6.14.  BUSINESS....................................................................    34
  SECTION 6.15.  LIMITATION ON ACCOUNTING CHANGES............................................    34
  SECTION 6.16.  RESTRICTED PAYMENTS.........................................................    34
  SECTION 6.17.  FISCAL YEAR.................................................................    34
  SECTION 6.18.  FOREIGN SUBSIDIARIES........................................................    34

ARTICLE VII GUARANTEE........................................................................    35
  SECTION 7.01.  THE GUARANTEE...............................................................    35
  SECTION 7.02.  OBLIGATIONS UNCONDITIONAL...................................................    35
  SECTION 7.03.  REINSTATEMENT...............................................................    37
  SECTION 7.04.  SUBROGATION; SUBORDINATION..................................................    37
  SECTION 7.05.  REMEDIES....................................................................    38
  SECTION 7.06.  INSTRUMENT FOR THE PAYMENT OF MONEY.........................................    38
  SECTION 7.07.  GENERAL LIMITATION ON GUARANTEE OBLIGATIONS.................................    38
  SECTION 7.08.  CONTINUING GUARANTEE........................................................    38
  SECTION 7.09.  RELEASE OF GUARANTORS.......................................................    38

ARTICLE VIII EVENTS OF DEFAULT...............................................................    39

ARTICLE IX MISCELLANEOUS.....................................................................    42
  SECTION 9.01.  NOTICES.....................................................................    42
  SECTION 9.02.  WAIVERS; AMENDMENT..........................................................    43
  SECTION 9.03.  EXPENSES; INDEMNITY.........................................................    43
  SECTION 9.04.  SUCCESSORS AND ASSIGNS......................................................    44
  SECTION 9.05.  SURVIVAL OF AGREEMENT.......................................................    45
  SECTION 9.06.  COUNTERPARTS; INTEGRATION; EFFECTIVENESS....................................    45
  SECTION 9.07.  SEVERABILITY................................................................    46
  SECTION 9.08.  RIGHT OF SET-OFF............................................................    46
  SECTION 9.09.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS..................    46
  SECTION 9.10.  WAIVER OF JURY TRIAL........................................................    47
  SECTION 9.11.  CONFIDENTIALITY.............................................................    47

EXHIBIT A        DEFINED TERMS; RULES OF CONSTRUCTION........................................   A-1
</TABLE>

                                     - ii -

<PAGE>

ANNEXES

<TABLE>
<S>            <C>
Annex I        Limitations on Guarantees and Indemnities Under Applicable Foreign Laws
Annex II       Lenders' Notice Information and Commitments
Annex III      Foreign Subsidiary Pledge and Guarantee Documentation
</TABLE>

SCHEDULES

Schedule 1.01(a)       Immaterial Subsidiaries
Schedule 1.01(b)       Subsidiary Guarantors
Schedule 1.1(d)        Certain Foreign Subsidiary Guarantors
Schedule 3.03          Governmental Approvals; Compliance with Laws
Schedule 3.05(b)       Leased Properties
Schedule 3.06(a)       Subsidiaries; Non-Guarantor Subsidiaries
Schedule 3.12(a)       Material Items of Collateral
Schedule 3.12(b)       Location of Certain Collateral
Schedule 3.12(c)       Location of Loan Parties
Schedule 3.18          Insurance
Schedule 4.02(n)       Landlord Lien Waiver and Access Agreement Properties
Schedule 5.10(b)       Section 5.10(b) Listed Subsidiaries
Schedule 5.12          Post-Closing Matters
Schedule 6.01          Existing Liens
Schedule 6.02          Certain Permitted Liens
Schedule 6.03          Existing Investments
Schedule 6.13          Existing Lease Obligations

EXHIBITS

Exhibit A              Defined Terms; Rules of Construction
Exhibit B              Form of Assignment and Acceptance
Exhibit C              Form of Borrowing Request
Exhibit D              Form of Monthly Cash Balance Report
Exhibit E-1            Form of Agreement and Estoppel Certificate
Exhibit E-2            Form of Landlord Lien Waiver and Access Agreement
Exhibit F              Form of U.S. Security Agreement
Exhibit G              Form of Intercompany Note
Exhibit H              Form of Joinder Agreement
Exhibit I-1            Form of Perfection Certificate
Exhibit I-2            Form of Perfection Certificate Supplement
Exhibit J              Form of Note
Exhibit K              Form of Financial Officer's Compliance Certificate

                                    - iii -

<PAGE>

                                CREDIT AGREEMENT

      AGREEMENT, dated as of June 27, 2003 among MINDSPEED TECHNOLOGIES, INC., a
Delaware corporation ("BORROWER"); and EACH OF THE SUBSIDIARY GUARANTORS LISTED
ON THE SIGNATURE PAGES HERETO OR FROM TIME TO TIME BECOMING A PARTY HERETO BY
EXECUTION OF A JOINDER AGREEMENT (together with each other Subsidiary Guarantor
from time to time executing a Guarantee (defined herein) as required hereunder,
"GUARANTORS"); and CONEXANT SYSTEMS, INC. ("CONEXANT" or "LENDER").

                                    ARTICLE I

                      DEFINED TERMS; RULES OF CONSTRUCTION

      SECTION 1.01. DEFINED TERMS. In this Agreement, terms defined in Exhibit A
shall have the meanings set forth therein, terms defined in the preamble or
other sections of this Agreement shall have the meanings set forth therein,
terms defined in the UCC and not otherwise defined in this Agreement or the
Security Documents shall have the meanings set forth in the UCC, and capitalized
terms used but not otherwise defined in this Agreement which are defined in the
Security Documents shall have the meanings set forth in the Security Documents.

      SECTION 1.02. RULES OF CONSTRUCTION. The rules of construction set forth
in Exhibit A shall apply to this Agreement and the other Loan Documents.

                                   ARTICLE II

                                    THE LOANS

      SECTION 2.01. COMMITMENT. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, Lender agrees to make
Loans to Borrower, at any time and from time to time during the Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in Lender's Exposure exceeding its Commitment. Within the limits set
forth above and subject to the terms, conditions and limitations set forth
herein, Borrower may borrow, pay or prepay and reborrow Loans.

      SECTION 2.02. LOANS.

            (a) Each Loan shall be in an aggregate principal amount that is (i)
      an integral multiple of $1.0 million and not less than $2.0 million or
      (ii) equal to the remaining available balance of the Commitment.

            (b) Lender shall make each Loan to be made by it hereunder not later
      than 11:00 a.m., Pacific time on the proposed date thereof by wire
      transfer of immediately available dollars to such bank deposit account in
      the United States as Borrower may designate in the applicable Borrowing
      Request.

<PAGE>

      SECTION 2.03. BORROWING PROCEDURE. To request a Loan, Borrower shall
notify Lender of such request by delivering a duly completed Borrowing Request
not later than 10:30 a.m., Pacific time, three Business Days before the date of
the proposed Loan. Each such Borrowing Request shall specify the following
information in compliance with Section 2.02:

            (a) the amount of such Loan;

            (b) the date of such Loan, which shall be a Business Day; and

            (c) the location and number of Borrower's account to which funds are
      to be disbursed, which shall comply with the requirements of Section
      2.02(b).

      SECTION 2.04. REPAYMENT OF LOANS; EVIDENCE OF DEBT.

            (a) Borrower hereby unconditionally promises to pay to Lender the
      then unpaid principal amount of each Loan on the Final Maturity Date,
      together with all accrued and unpaid interest on such principal amount to
      the date of payment.

            (b) Lender shall maintain in accordance with its usual practice an
      account or accounts evidencing the indebtedness of Borrower to Lender
      resulting from each Loan made by Lender from time to time, including the
      amounts of principal and interest payable and paid to Lender from time to
      time under this Agreement, including:

                  (i) the amount and the borrowing date of each Loan made
            hereunder;

                  (ii) the amount of any principal or interest due and payable
            or to become due and payable from Borrower to Lender hereunder;

                  (iii) the amount of any principal paid, pre-paid and repaid
            and the amount of any interest paid by Borrower to Lender or added
            to principal hereunder; and

                  (iv) the amount of any other sum received by Lender.

            (c) The entries made in the accounts maintained pursuant to Section
      2.04(b) shall be prima facie evidence of the existence and amounts of the
      obligations therein recorded (in the absence of manifest error); provided,
      however, that the failure of Lender to maintain such accounts or any error
      therein shall not in any manner affect the obligations of Borrower to
      repay the Loans in accordance with their terms.

            (d) Lender may request that its Loans be evidenced by a Note. In
      such event, Borrower shall prepare, execute and deliver to Lender a Note
      payable to the order of Lender (or, if requested by Lender, to Lender and
      its registered assigns) and substantially in the form of Exhibit J or in a
      form otherwise approved by Lender. Thereafter, the Loans evidenced by such
      Note and interest thereon shall at all times (including after assignment
      pursuant to Section 9.04) be represented by one or more Notes in such form
      payable to the order of the payee named therein (or, if such Note is a
      registered note, to such payee and its registered assigns).

                                       2
<PAGE>

      SECTION 2.05. INTEREST ON LOANS.

            (a) Subject to Section 2.05(b), the principal amount of Loans,
      including the amount of any accrued and unpaid interest which is not paid
      in cash and added to principal as provided in Section 2.05(d), shall bear
      interest at a rate of ten percent (10%) per annum.

            (b) Notwithstanding the foregoing, upon the occurrence and during
      the continuation of any Event of Default, the outstanding principal amount
      of all Loans and, to the extent permitted by applicable law, any interest
      thereon and any fees and other amounts payable hereunder, shall thereafter
      bear interest (including post-petition interest in any proceeding under
      the Bankruptcy Code or other applicable bankruptcy laws) payable upon
      demand at a rate that is 12% per annum. Payment or acceptance of the
      increased rates of interest provided for in this Section 2.05(b) is not a
      permitted alternative to timely payment and shall not constitute a waiver
      of any Event of Default or otherwise prejudice or limit any rights or
      remedies of Lender.

            (c) Accrued interest on each Loan may be paid in arrears on the last
      Business Day of each calendar quarter and all accrued and unpaid interest
      shall be paid on the Final Maturity Date and upon termination of the
      Commitment; provided that, (i) interest accrued pursuant to Section
      2.05(b) shall be payable on demand and, (ii) in the event of any repayment
      or prepayment of any Loan, accrued interest on the principal amount repaid
      or prepaid shall be payable on the date of such repayment or prepayment.

            (d) Accrued interest not paid in cash on the last Business Day of
      each calendar quarter shall be added to the principal amount outstanding
      as of the last Business Day of each calendar quarter and thereafter accrue
      interest (at the applicable interest rate) until paid in cash. Any such
      capitalized interest shall be treated as principal of Loans for all
      purposes of the Loan Documents, except that such capitalized interest
      shall not be deemed Exposure for purposes of determining the amount of
      principal that may be borrowed pursuant to Section 2.01.

            (e) All interest hereunder shall be computed on the basis of a year
      of 365/366 days, and shall be payable for the actual number of days
      elapsed (including the first day but excluding the last day).

            (f) Notwithstanding anything herein to the contrary, if at any time
      the interest rate applicable to any Loan, together with all fees, charges
      and other amounts that are treated as interest on such Loan under
      applicable law (collectively the "CHARGES"), shall exceed the maximum
      lawful rate (the "MAXIMUM RATE") that may be contracted for, charged,
      taken, received or reserved by Lender in accordance with applicable law,
      the rate of interest payable in respect of such Loan hereunder, together
      with all Charges payable in respect thereof, shall be limited to the
      Maximum Rate and, to the extent lawful, the interest and Charges that
      would have been payable in respect of such Loan but were not payable as a
      result of the operation of this Section 2.05(f) shall be cumulated and the
      interest and Charges payable to such Lender in respect of other Loans or
      periods shall be increased (but not above the Maximum Rate therefor) until
      such cumulated amount, together with interest thereon at the Federal Funds
      Effective Rate to the date of repayment, shall have been received by
      Lender.

                                       3
<PAGE>

      SECTION 2.06. TERMINATION AND REDUCTION OF COMMITMENT.

            (a) The Commitments shall automatically terminate on the Final
      Maturity Date.

            (b) Borrower may at any time terminate, or from time to time reduce,
      the Commitments; provided that, (i) each reduction of the Commitments
      shall be in an amount that is an integral multiple of $1.0 million and not
      less than $2.0 million and (ii) the Commitments shall not be terminated or
      reduced if, after giving effect to any concurrent prepayment of the Loans
      in accordance with Section 2.07(b), the Exposure would exceed the
      Commitment.

            (c) Borrower shall notify Lender of any election to terminate or
      reduce its Commitment under Section 2.06(b) at least one Business Day
      prior to the effective date of such termination or reduction, specifying
      such election and the effective date thereof. Each notice delivered by
      Borrower pursuant to this Section 2.06(b) shall be irrevocable. Any
      termination or reduction of the Commitment shall be permanent.

            (d) The Commitment may be terminated at any time an Event of Default
      has occurred pursuant to and in accordance with the terms of Article XIII.

      SECTION 2.07. OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS.

            (a) OPTIONAL PREPAYMENTS. Borrower shall have the right at any time
      and from time to time to prepay any Loan, in whole or in part without
      premium or penalty, subject to the requirements of this Section 2.07;
      provided that, each partial prepayment shall be in an amount that is an
      integral multiple of $1.0 million and not less than $2.0 million.

            (b) COMMITMENT AMOUNT LOAN PREPAYMENTS. In the event of any
      termination of all the Commitments, Borrower shall, on the date of such
      termination, repay or prepay all its outstanding Loans. In the event of
      any partial reduction of the Commitments, if the Exposure would exceed the
      amount of Commitment after giving effect to such reduction, then Borrower
      shall, on the date of such reduction, repay or prepay Loans in an amount
      sufficient to eliminate such excess.

            (c) CASH BALANCE LOAN PREPAYMENT. Borrower must repay Loans
      hereunder to the extent its Cash Balance as shown in the most recent
      Monthly Cash Balance Report exceeds $25,000,000.

      SECTION 2.08. PAYMENTS GENERALLY. Borrower shall make each payment
required to be made by it hereunder or under any other Loan Document (whether of
principal, interest, or of amounts payable under Section 2.09, or otherwise) on
or before the time expressly required hereunder or under such other Loan
Document for such payment (or, if no such time is expressly required, prior to
11:00 a.m., Pacific time), on the date when due, in immediately available
dollars, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to Comerica Bank, Detroit, Michigan, ABA #
072000096, Account No. 1850967629 or such other account as Lender may designate
from time to time in a written notice given to Borrower not later than two
Business Days prior to the date such payment must be made. If any payment under
any Loan

                                       4
<PAGE>

Document shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments under each Loan Document shall be made in dollars.

      SECTION 2.09. TAXES.

            (a) Any and all payments by or on account of any obligation of
      Borrower hereunder or under any other Loan Document shall be made without
      set-off, counterclaim or other defense and free and clear of and without
      deduction or withholding for any and all Indemnified Taxes or Other Taxes;
      provided that, if Borrower shall be required by law to deduct any
      Indemnified Taxes or Other Taxes from such payments, then (i) the sum
      payable shall be increased as necessary so that after making all required
      deductions or withholdings (including deductions or withholdings
      applicable to additional sums payable under this Section 2.09) Lender
      receives an amount equal to the sum it would have received had no such
      deductions or withholdings been made, (ii) Borrower shall make such
      deductions or withholdings and (iii) Borrower shall pay the full amount
      deducted or withheld to the relevant Governmental Authority in accordance
      with applicable law.

            (b) In addition, Borrower shall pay any Other Taxes to the relevant
      Governmental Authority in accordance with applicable law.

            (c) Borrower shall indemnify Lender, within ten Business Days after
      written demand therefor, for the full amount of any Indemnified Taxes or
      Other Taxes paid by Lender on or with respect to any payment by or on
      account of any Obligation of Borrower hereunder or under any other Loan
      Document (including Indemnified Taxes or Other Taxes imposed or asserted
      on or attributable to amounts payable under this Section 2.09) 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. If in the reasonable opinion of Borrower, any amount has been
      paid to, by or on behalf of Lender pursuant to clause (a), (b) or this (c)
      of this Section 2.09 with respect to Taxes or Other Taxes which are not
      correctly or legally asserted, Lender will cooperate with Borrower in
      seeking to obtain a refund for the benefit of Borrower of such amount,
      provided that, the rendering of any such cooperation by Lender would not,
      in the reasonable opinion of Lender (i) cause Lender to incur any expense
      or liability (which is not otherwise paid in full by Borrower prior to or
      at the time that such expense or liability is incurred) or (ii) have any
      adverse effect on Lender. A certificate as to the amount of such payment
      or liability delivered to Borrower by Lender shall be conclusive absent
      manifest error. If Lender receives a written notice of Tax assessment from
      any Governmental Authority regarding any Tax in respect of which
      indemnification may be required pursuant to this Section 2.09(c), Lender
      shall notify Borrower within 120 days following the receipt of such notice
      that such notice has been received; provided, however, that the failure of
      Lender to provide such notice shall not relieve Borrower of its obligation
      to make any indemnification payment under this Agreement.

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

                                       5
<PAGE>

      evidencing such payment, a copy of the return reporting such payment or
      other evidence of such payment reasonably satisfactory to Lender.

            (e) On or before the Closing Date in the case of Lender, or on or
      before the effective date of an Assignment and Acceptance pursuant to
      which it became a Lender in the case of an assignee, and if otherwise
      reasonably requested from time to time by Borrower, within 30 days of such
      request, each Lender which is not a U.S. Person within the meaning of
      Section 7701(a)(30) of the Tax Code shall provide to Borrower two duly
      completed and signed copies of Internal Revenue Service Forms W-8BEN, or
      W-8ECI or successor form(s), as the case may be, certifying as to such
      Lender's status for purposes of determining exemption from United States
      withholding taxes with respect to all payments to be made to Lender under
      this Agreement. Until Borrower and Lender have received such forms and
      indicating that payments under this Agreement are subject to an exemption
      from or reduction of United States withholding tax, Borrower or Lender (if
      not withheld by Borrower) shall withhold taxes from such payments at the
      applicable statutory rate, without any obligation to "gross-up" or make
      Lender whole under clause (a) of this Section. In case Lender is subject
      to a reduction of, rather than exemption from, United States withholding
      tax, the obligation of Borrower to "gross-up" under clause (a) of this
      Section shall not apply in respect of the amount of United States
      withholding tax that Lender is subject to at the time they become a party
      to this Agreement (provided, however, that in the case of an assignee that
      becomes a Lender pursuant to Section 10.04, the obligation of Borrower to
      "gross-up" under clause (a) of this Section, or indemnify for Indemnified
      Taxes under clause (c) of this Section, shall apply in respect of the
      amount of United States withholding tax that is applicable to payments
      made on or after the date upon which the assignee first becomes a Lender
      to the same extent that Borrower would have been obligated to "gross-up"
      under clause (a) of this Section, or indemnify for Indemnified Taxes under
      clause (c) of this Section, had Lender not made such assignment to such
      assignee).

            (f) If (i) Lender receives a cash refund in respect of an
      overpayment of Indemnified Taxes or Other Taxes from a Governmental
      Authority with respect to, and actually resulting from, an amount of
      Indemnified Taxes or Other Taxes actually paid to or on behalf of Lender
      by Borrower (a "TAX REFUND") and (ii) Lender determines in its reasonable
      opinion that such Tax Refund has been correctly paid by such Governmental
      Authority and will not be required to be repaid to such Governmental
      Authority, then Lender shall use its reasonable efforts to notify Borrower
      of such Tax Refund and to forward the proceeds of such Tax Refund (or
      relevant portion thereof) to Borrower as reduced by any expense or
      liability incurred by such Lender in connection with obtaining such Tax
      Refund.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Each of the Loan Parties, as applicable, represents and warrants to
Lender (with references to the Companies being references thereto after giving
effect to the Transactions unless otherwise expressly stated) that:

                                       6
<PAGE>

      SECTION 3.01. ORGANIZATION; POWERS. Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to carry on its business as now conducted, and
(c) is qualified and in good standing (to the extent such concept is applicable
in the applicable jurisdiction) to do business in every jurisdiction where such
qualification is required, except in such jurisdictions where the failure to so
qualify, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

      SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's powers and have
been duly authorized by all necessary action. This Agreement has been duly
executed and delivered by each Loan Party and constitutes, and each other Loan
Document to which any Loan Party is to be a party, when executed and delivered
by such Loan Party, will constitute, a legal, valid and binding obligation of
such Loan Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

      SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as set forth on
Schedule 3.03, the Transactions:

            (a) do not require any consent or approval of, registration or
      filing with, or any other action by, any Governmental Authority, except
      (i) such as have been obtained or made and are in full force and effect,
      (ii) filings necessary to perfect Liens created under the Loan Documents,
      (iii) consents, approvals, registrations, filings or actions the failure
      of which to obtain or perform could not reasonably be expected to result
      in a Material Adverse Effect and (iv) registrations and filings
      contemplated by the Registration Rights Agreement;

            (b) will not violate (i) any applicable law or regulation except for
      violations that could not reasonably be expected to result in a Material
      Adverse Effect, or (ii) the charter, bylaws or other organizational
      documents of any Company or any order of any Governmental Authority;

            (c) will not violate, result in a default or require any consent or
      approval under any indenture, agreement, lease or other instrument binding
      upon any Company or its assets, or give rise to a right thereunder to
      require any payment to be made by any Company, except for violations,
      defaults or the creation of such rights that could not reasonably be
      expected to result in a Material Adverse Effect; and

            (d) will not result in the creation or imposition of any Lien on any
      asset of any Company, except Liens created under the Loan Documents and
      Permitted Liens.

      SECTION 3.04. FINANCIAL STATEMENTS.

            (a) The historical financial statements and the notes thereto
      included in the Form 10 present fairly in all material respects the
      consolidated financial position, income statement, cash flows and changes
      in stockholder's equity of Borrower and its Subsidiaries at the respective
      dates and for the respective periods indicated. All such financial
      statements have been prepared in accordance with GAAP applied on a
      consistent basis throughout the periods presented (except as disclosed
      therein). The

                                       7
<PAGE>

      unaudited pro forma financial statements and the notes thereto included in
      the Form 10 have been prepared on a basis consistent with the historical
      financial statements of Borrower and its Subsidiaries and give effect to
      assumptions used in the preparation thereof on a reasonable basis and in
      good faith and present fairly in all material respects the historical and
      proposed transactions contemplated by the Form 10; and such pro forma
      financial statements comply as to form in all material respects with the
      requirements applicable to pro forma financial statements set forth in
      Regulation S-X under the Securities Act. The other financial and
      statistical information and data included in the Form 10 (other than
      industry and market-related data) are accurately presented in all material
      respects and prepared on a basis consistent with the financial statements
      and the books and records of Borrower and its Subsidiaries.

            (b) Since March 31, 2003, there has been no event, condition or
      circumstance that could reasonably be expected to result in a Material
      Adverse Effect.

            (c) When delivered, each Monthly Cash Balance Report is true and
      correct and presents fairly Borrower's Cash Balance as of the date
      indicated therein.

      SECTION 3.05. PROPERTIES.

            (a) As of the Closing Date, no Loan Party owns any Real Property.
      Each Loan Party has valid leasehold interests in or other valid rights to
      use, all of its Real Property. Each Loan Party has good title, valid
      leasehold interests in or licenses to or other valid rights to use all of
      its personal property material to its business. The property of the
      Companies, taken as a whole, (i) is in good operating order, condition and
      repair (ordinary wear and tear excepted) and (ii) constitutes all the
      properties that are required for the business and operations of the
      Companies as currently conducted.

            (b) Schedule 3.05(b) contains a true and complete list of (1) each
      parcel of Real Property leased, subleased or otherwise occupied or
      utilized by any Loan Party, as lessee or sublessee, as of the Closing Date
      (each, a "COMPANY FACILITY LEASE"), including a description of the type of
      interest therein held by such Loan Party and the name of the Loan Party
      holding such interest; and (2) each lease or license agreement for any
      property other than Real Property which is material to the business,
      operations, condition (financial or other), assets or prospects of the
      Companies, taken as a whole, and in effect as of the Closing Date (each a
      "COMPANY PROPERTY LEASE"), including a description of the type of property
      subject to such lease or license agreement, the lessors or licensors
      parties thereto and the name of the Loan Party that is a party thereto.
      Each Company Lease is a legal, valid and binding agreement, enforceable in
      accordance with its terms, of the Loan Party that is a party thereto, and,
      to the knowledge of Borrower, each of the Lessors or Licensors parties
      thereto. There is no, nor has any Loan Party received notice of any,
      default under any Company Lease (or to the knowledge of any Loan Party,
      any condition or event that, after notice or a lapse of time or both,
      would constitute a default thereunder). No Loan Party, and, to the
      knowledge of each Loan Party, no third party to any Company Lease, has
      assigned any Company Property Lease or sublet any part of the property
      covered thereby or exercised any renewal or purchase option thereunder.
      None of the Loan Parties has granted any options or rights of first
      refusal, or rights of first offer to third parties to purchase or
      otherwise acquire an interest in any of the

                                       8
<PAGE>

      property subject to any Company Property Lease. True and complete copies
      of all Company Leases, together with all modifications, extensions,
      amendments and assignments thereof have heretofore been made available to
      Lender. All improvements required to be made by any Loan Party under any
      Company Facility Lease have been completed and fully paid for.

            (c) Each Company owns, or is licensed to use, all Intellectual
      Property used in the conduct of its business as currently conducted,
      except for those the failure to own or license that, individually or in
      the aggregate, could not reasonably be expected to result in a Material
      Adverse Effect. No claim has been asserted and is pending by any person
      challenging or questioning the use of any such Intellectual Property or
      the validity or effectiveness of any such Intellectual Property, nor does
      any Company know of any valid basis for any such claim. The use of such
      Intellectual Property by each Company does not infringe the rights of any
      person, except for such claims and infringements that, individually or in
      the aggregate, could not reasonably be expected to result in a Material
      Adverse Effect.

      SECTION 3.06. EQUITY INTERESTS AND SUBSIDIARIES; CONSENT.

            (a) Schedule 3.06(a) sets forth a list, as of the Closing Date, of
      (i) all Subsidiaries of Borrower and their jurisdiction of organization;
      (ii) the number of shares of each class of its Equity Interests
      authorized, and the number outstanding, and the number of shares covered
      by all outstanding options, warrants, rights of conversion or purchase and
      similar rights of each such Subsidiary; and (iii) a designation as to
      whether such Subsidiary constitutes a Non-Guarantor Subsidiary. All Equity
      Interests of each Subsidiary of Borrower are duly and validly issued, are
      fully paid and non-assessable and, except as disclosed on Schedule
      3.06(a), are owned directly or indirectly by Borrower. Each Loan Party is
      the record and beneficial owner of, and has good and marketable title to,
      the Equity Interests pledged by it under the applicable Security
      Agreement, free of any and all Liens, rights or claims of other persons,
      except for the security interest created by the Security Agreements.

            (b) No consent of any person including any other general or limited
      partner, any other member of a limited liability company, any other
      shareholder or any trust beneficiary is necessary or desirable in
      connection with the creation, perfection or first priority status of the
      security interest of Lender in any Equity Interests pledged to Lender
      under any Security Agreement or the exercise by Lender of the voting or
      other rights provided for in any Security Agreement or the exercise of
      remedies in respect thereof.

      SECTION 3.07. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.

      SECTION 3.08. AGREEMENTS.

            (a) No Company is a party to any agreement or instrument or subject
      to any corporate or other constitutional restriction that has resulted or
      could reasonably be expected to result in a Material Adverse Effect.

                                       9
<PAGE>

            (b) No Company is in default in any manner under any provision of
      any indenture or other agreement or instrument evidencing Indebtedness, or
      any other agreement, lease or instrument to which it is a party or by
      which it or any of its property are or may be bound, where such default
      could reasonably be expected to result in a Material Adverse Effect.

      SECTION 3.09. NO MATERIAL MISSTATEMENTS. None of any information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Company to Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto (including the Form 10), taken
together with all related information so furnished, contained, contains or will
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading
as of the date such information is dated or certified; provided that, to the
extent any such information, report, financial statement, exhibit or schedule
was based upon or constitutes a forecast, projection or pro forma adjustment,
each Company represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule (it being understood that, with respect
to projected financial information, actual results may vary significantly from
such projected results).

      SECTION 3.10. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Closing Date, (a) the fair value of the assets of
the Loan Parties, taken as a whole, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Loan Parties, taken as a whole, will be greater than the
amount that will be required to pay the probable liability of their collective
debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) the Loan Parties,
taken as a whole, will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) the Loan Parties, taken as a whole, will not have unreasonably
small capital with which to conduct the business in which they are engaged as
such business is now conducted and is proposed to be conducted following the
Closing Date.

      SECTION 3.11. SECURITY DOCUMENTS.

            (a) The Security Agreements are effective to create in favor of
      Lender, a legal, valid and enforceable security interest in and Lien on
      the Security Agreement Collateral and, when (i) financing statements and
      other filings in appropriate form are filed in the offices specified in
      Section III.B of the Perfection Certificate and (ii) the Loan Parties have
      complied with Article III of the U.S. Security Agreement, the U.S.
      Security Agreement shall constitute a fully perfected Lien on, and
      security interest in, all right, title and interest of the grantors
      thereunder in such Collateral (other than (A) the Intellectual Property
      (as defined in the U.S. Security Agreement) and (B) such Collateral in
      which a security interest cannot be perfected under the Uniform Commercial
      Code as in effect at the relevant time in the relevant jurisdiction for
      filing), in each case subject to no Liens other than Permitted Liens.

            (b) When the U.S. Security Agreement is filed in the United States
      Patent and Trademark Office and the United States Copyright Office, the
      U.S. Security Agreement shall constitute a fully perfected Lien on, and
      security interest in, all right, title and interest of the grantors
      thereunder in the Intellectual Property (as defined in the U.S. Security
      Agreement), in each case subject to no Liens other than Permitted

                                       10
<PAGE>

      Liens (it being understood that subsequent recordings in the United States
      Patent and Trademark Office and the United States Copyright Office may be
      necessary to perfect a Lien on registered trademarks, trademark
      applications and copyrights acquired by the grantors after the Closing
      Date).

            (c) Each Security Document delivered pursuant to Section 5.10 will,
      upon execution and delivery thereof, be effective to create in favor of
      Lender a legal, valid and enforceable Lien on all of the Loan Parties'
      right, title and interest in and to the Collateral described therein, and
      when such Security Document is filed or recorded in the appropriate
      offices as may be required under applicable law, such Security Document
      will constitute a fully perfected Lien on, and security interest in, all
      right, title and interest of the Loan Parties in such Security Agreement
      Collateral, in each case subject to no Liens other than the applicable
      Permitted Liens.

      SECTION 3.12. REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL.

            (a) TYPES OF COLLATERAL. Set forth in Schedule 3.12(a) is a complete
      and accurate description of each Material Item of Collateral in which any
      Loan Party has any right, title or interest on the Closing Date that is:

                  (1) Real Property, Fixtures or an interest therein;

                  (2) Deposit Accounts, Security Accounts or similar accounts
            maintained with financial institutions in the United States;

                  (3) Investment Property (other than Security Accounts),
            including Pledged Equity Interests;

                  (4) Letter-of-Credit Rights held by or on behalf of any Loan
            Party in the United States;

                  (5) Instruments held by or on behalf of any Loan Party in the
            United States;

                  (6) Patents;

                  (7) registered Trademarks or applications for registration
            that have been filed in the United States Patent and Trademark
            Office; and

                  (8) registered Copyrights or applications for registration
            that have been filed in the United States Copyright Office.

            (b) LOCATION OF CERTAIN COLLATERAL. Set forth in Schedule 3.12(b) is
      a complete and accurate description for each Material Item of Collateral
      located in the United States in which any Loan Party has any right, title
      or interest on the Closing Date, of:

                  (1) the location of any Real Property or Fixture;

                                       11
<PAGE>

                  (2) the jurisdiction of any bank or other financial
            institution at which each Deposit Account or similar account is
            maintained, determined in accordance with Section 9-304 of the UCC;

                  (3) the jurisdiction in which any certificated security is
            located, the jurisdiction of the issuer of any uncertificated
            security, the jurisdiction of any securities intermediary at which
            any security entitlement or securities account is held, and the
            jurisdiction of any commodity intermediary at which any commodity
            account or commodity contract is held, determined in each case in
            accordance with Section 9-305 of the UCC;

                  (4) the jurisdiction of the issuer or nominated person in
            respect of any Letter-of-Credit Rights, determined in accordance
            with Section 9-306 of the UCC; and

                  (5) the jurisdiction where any Instrument is located.

            (c) LOCATION OF LOAN PARTIES. Set forth in Schedule 3.12(c) is the
      location of each Loan Party, determined in accordance with Section 9-307
      of the UCC.

            (d) NO LIENS. None of the Collateral is subject to any Lien of any
      kind, other than Permitted Liens. As of the Closing Date, there is no
      financing statement (or similar statement or instrument under the laws of
      any jurisdiction in the United States) covering or purporting to cover any
      interest of any kind in the Collateral, other than financing statements
      filed pursuant to this Agreement or the other Security Documents or in
      respect of (i) Permitted Liens or financing statements for which proper
      termination statements have been delivered to Lender for filing or (ii)
      other obligations which in the aggregate do not exceed $10,000.

            (e) PLEDGED EQUITY INTERESTS. So long as Lender has possession of
      the Pledged Equity Interests, it will have a fully perfected, first
      priority security interest in the Pledged Equity Interests of the Domestic
      Subsidiaries. No filings or recordings are required to perfect (or
      maintain the perfection or priority of) the security interests created in
      the Pledged Equity Interests of the Domestic Subsidiaries. Lender will
      have a fully perfected pledge of the Pledged Equity Interests of the
      Foreign Subsidiaries upon compliance by Borrower and such Foreign
      Subsidiaries with Section 4.02(h)(ix).

            (f) INVESTMENT PROPERTY. Upon execution and delivery of the Control
      Agreements by each of the parties thereto, and assuming compliance by each
      securities intermediary or commodity intermediary which is a party
      thereto, Lender will have (x) "control" within the meaning of Section
      9-106 of the UCC of each account referred to in such agreements and all
      security entitlements or commodity contracts carried in such accounts and
      (y) a fully perfected, first priority security interest in each account
      referred to therein and all Investment Property credited to any such
      account subject to such Control Agreement.

            (g) DEPOSIT ACCOUNTS; BANK ACCOUNTS. Upon execution and delivery of
      the Control Agreements by each of the parties thereto, and assuming
      compliance by each

                                       12
<PAGE>

      bank or depositary which is a party thereto, Lender will have (x)
      "control" within the meaning of Section 9-104 of the UCC with respect to
      each Deposit Account subject to such Control Agreement, (y) exclusive
      dominion and control with respect to each bank or depositary account
      subject to such Control Agreement which is not a Deposit Account or
      Securities Account, and (z) a fully perfected, first priority security
      interest in all funds held in each account subject to such Control
      Agreement.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

      The obligation of Lender to make Loans hereunder is subject to the
satisfaction of the following conditions:

      SECTION 4.01. ALL LOANS. On the date of each Loan:

            (a) Lender shall have received a Borrowing Request in accordance
      with Section 2.03.

            (b) Borrower and each other Loan Party shall be in compliance with
      all the terms and provisions set forth herein and in each other Loan
      Document on its part to be observed or performed, including its obligation
      to deliver Monthly Cash Balance Reports pursuant to Section 5.01(d).

            (c) At the time of and immediately after such Loan, no Default or
      Event of Default shall have occurred and be continuing.

            (d) Each of the representations and warranties set forth in Article
      III hereof or in any other Loan Document shall be true and correct in all
      material respects (except that any representation and warranty that is
      qualified as to "materiality" or "Material Adverse Effect" shall be true
      and correct in all respects) on and as of the date of such Loan with the
      same effect as though made on and as of such date, except to the extent
      such representations and warranties expressly relate to an earlier date
      (in which case shall have been true and correct in all material respects
      (except that those that are qualified as to "materiality" or "Material
      Adverse Effect" shall be true and correct in all respects) on and as of
      such earlier date).

            (e) After giving effect to the Loan, Borrower's Cash Balance shall
      not exceed $25,000,000.

Each Loan shall be deemed to constitute a representation and warranty by
Borrower and each other Loan Party on the date of such Loan as to the matters
specified in paragraphs (b) through (e) above.

      SECTION 4.02. CLOSING DATE ITEMS. On the Closing Date:

            (a) LOAN DOCUMENTS. All legal matters incident to this Agreement,
      the Loans hereunder and the other Loan Documents shall be satisfactory to
      Lender and there shall have been delivered to Lender an executed
      counterpart of each of the Loan

                                       13
<PAGE>

      Documents, including this Agreement, each Security Agreement, the
      Perfection Certificate and each other applicable Loan Document and each of
      such agreements shall be in full force and effect.

            (b) CORPORATE DOCUMENTS. Lender shall have received:

                  (i) a certificate of the Secretary or Assistant Secretary of
            each Loan Party dated the Closing Date and certifying (A) that
            attached thereto is a true and complete copy of the certificate or
            articles of incorporation or other constitutive documents, including
            all amendments thereto certified as of a recent date by the
            Secretary of State (or like official) of the jurisdiction of its
            organization (if such document is of a type that may be so
            certified), (B) that attached thereto is a true and complete copy of
            the bylaws or other organizational documents of each Loan Party as
            in effect on the Closing Date and at all times since a date prior to
            the date of the resolutions described in clause (C) below, (C) that
            attached thereto is a true and complete copy of resolutions duly
            adopted by the Board of Directors or other governing body of such
            person authorizing the execution, delivery and performance of the
            Loan Documents to which such person is a party and, in the case of
            Borrower, the borrowings hereunder, and that such resolutions have
            not been modified, rescinded or amended and are in full force and
            effect, and (D) as to the incumbency and specimen signature of each
            officer executing any Loan Document or any other document delivered
            in connection herewith on behalf of such person (together with a
            certificate of another officer as to the incumbency and specimen
            signature of the Secretary or Assistant Secretary executing the
            certificate in this clause (i));

                  (ii) a long form certificate as to the good standing of each
            Loan Party as of a recent date, from the Secretary of State (or like
            official) of the jurisdiction of its organization, to the extent
            such certificates or their equivalent are issued by such
            jurisdiction; and

                  (iii) such other documents as Lender may reasonably request.

            (c) OFFICER'S CERTIFICATE. Lender shall have received a certificate,
      dated the Closing Date and signed by a Financial Officer or the Chief
      Executive Officer of Borrower, confirming compliance with the conditions
      precedent set forth in paragraphs (b), (c) and (d) of Section 4.01.

            (d) INDEBTEDNESS. After giving effect to the Transactions and the
      other transactions contemplated hereby, no Company shall have outstanding
      any Indebtedness, preferred stock or minority interests other than (i) the
      Loans hereunder and (ii) the minority interests described on Schedule
      3.06(a) attached hereto.

            (e) REQUIREMENTS OF LAW. Lender shall be satisfied that the
      Transactions shall be in full compliance with all material Requirements of
      Law.

            (f) CONSENTS. Lender shall be satisfied that all material consents
      and approvals required from Governmental Authorities and third parties in
      connection with the Transactions have been obtained and remain in effect,
      and there shall be no

                                       14
<PAGE>

      governmental or judicial action (or any adverse development therein),
      actual or threatened, that Lender shall reasonably determine has or could
      have, singly or in the aggregate, a material adverse effect on the
      Transactions.

            (g) LITIGATION. There shall be no litigation, public or private, or
      administrative proceedings, governmental investigation or other legal or
      regulatory developments that, singly or in the aggregate, could reasonably
      be expected to result in a Material Adverse Effect, or could materially
      and adversely affect the ability of any Company to fully and timely
      perform its respective obligations under the Transaction Documents, or the
      ability of the parties to consummate the financings contemplated hereby or
      the other Transactions.

            (h) PERSONAL PROPERTY REQUIREMENTS. Lender shall have received from
      each Loan Party (other than any Non-Guarantor Subsidiary):

                  (i) all certificates, agreements or instruments representing
            or evidencing the Pledged Equity Interests and the Pledged
            Intercompany Debt accompanied by instruments of transfer and stock
            powers endorsed in blank shall have been delivered to Lender;

                  (ii) all other certificates, agreements, including Control
            Agreements, or instruments necessary to perfect security interests
            in all Chattel Paper, all Instruments, all Deposit Accounts and all
            Investment Property of each Loan Party (as each such term is defined
            in the U.S. Security Agreement and to the extent required by the
            terms of the U.S. Security Agreement);

                  (iii) UCC financing statements in appropriate form for filing
            under the UCC and such other documents under applicable Requirements
            of Law in each jurisdiction as may be necessary or appropriate to
            perfect the Liens created, or purported to be created, by the
            Security Documents;

                  (iv) certified copies of Requests for Information (Form
            UCC-11), tax lien, judgment lien, bankruptcy and pending lawsuit
            searches or equivalent reports or lien search reports, each of a
            recent date listing all effective financing statements, lien notices
            or comparable documents that name (A) any domestic Loan Party as
            debtor and that are filed in those state and county jurisdictions in
            which any of the property of such domestic Loan Party is located and
            the state and county jurisdictions in which such domestic Loan
            Party's principal place of business is located, and (B) any foreign
            Loan Party, to the extent obtainable from the District of Columbia,
            none of which encumber the Collateral covered or intended to be
            covered by the Security Documents (other than those relating to
            Liens acceptable to Lender);

                  (v) evidence of the completion of all recordings and filings
            of, or with respect to, each Security Agreement, including filings
            with the United States Patent, Trademark and Copyright Offices, and
            the execution and/or delivery of such other security and other
            documents, and the taking of all actions as may be necessary or, in
            the reasonable opinion of Lender, desirable, to perfect the Liens
            created, or purported to

                                       15
<PAGE>

            be created, by the Security Agreements, except for any of the
            foregoing to be provided after the Closing Date pursuant to Section
            5.12 hereof;

                  (vi) any documents required to be submitted to Lender by the
            Loan Parties as may be necessary or desirable to perfect the
            security interest of Lender pursuant to each Foreign Security
            Agreement, except for any of the foregoing to be provided after the
            Closing Date pursuant to Section 5.12 hereof;

                  (vii) with respect to each Real Property located in the United
            States in which a Loan Party holds the tenant's interest thereunder
            set forth on Schedule 4.02(n) where the Loan Parties maintain
            Collateral having a value in excess of $1.0 million (other than the
            MacArthur Sublease) or which Real Property is operationally
            significant to such Loan Party's business, as reasonably determined
            by Lender, a Landlord Lien Waiver and Access Agreement and a
            Collateral Assignment of Lease, except for any of the foregoing to
            be provided after the Closing Date pursuant to Section 5.12 hereof;

                  (viii) evidence acceptable to Lender of payment by the Loan
            Parties of all applicable recording taxes, fees, charges, costs and
            expenses required for the recording of the Security Documents,
            except for any of the foregoing to be provided after the Closing
            Date pursuant to Section 5.12 hereof; and

                  (ix) with respect to Pledged Equity Interests issued by
            Foreign Subsidiaries, the documentation specified in Annex III.

            (i) INSURANCE. Lender shall have received a copy of, or a
      certificate as to coverage under, the insurance policies required by
      Section 5.04 and the applicable provisions of the Security Documents, each
      of which (other than directors' and officers' liability insurance
      policies) shall be endorsed or otherwise amended to include a "standard"
      or "New York" lender's loss payable endorsement and to name Lender as
      additional insured, in form and substance satisfactory to Lender.

            (j) SUBSIDIARY GUARANTORS. Each Subsidiary Guarantor listed on
      Schedule 1.01(d) that is a Foreign Subsidiary and is not a signatory to
      this Agreement shall have executed and delivered a Guarantee in form and
      substance satisfactory to Lender.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

      Each Loan Party covenants and agrees with Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan and all other expenses or amounts
payable under any Loan Document shall have been paid in full, unless Lender
shall otherwise consent in writing, each Loan Party will, and will cause each of
its Subsidiaries to:

                                       16
<PAGE>

      SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, ETC. In the case of Borrower,
furnish to Lender:

            (a) ANNUAL REPORTS. Within 90 days after the end of each fiscal
      year, or such other period in which the Borrower must file its Form 10-K
      with the Securities and Exchange Commission, the consolidated balance
      sheet of Borrower as of the end of such fiscal year and related
      consolidated statements of income, cash flows and stockholders' equity for
      such fiscal year, and notes thereto, all prepared in accordance with
      Regulation S-X under the Securities Act and in a manner acceptable to the
      Securities and Exchange Commission and accompanied by an opinion of
      Deloitte & Touche or other independent public accountants of recognized
      national standing satisfactory to Lender (which opinion shall not be
      qualified as to scope or contain any going concern or other
      qualification), stating that such financial statements fairly present, in
      all material respects, the consolidated financial condition, results of
      operations, cash flows and changes in stockholders' equity of the
      Consolidated Companies as of the end of and for such fiscal year in
      accordance with GAAP;

            (b) QUARTERLY REPORTS. Commencing with the filing of Borrower's Form
      10-Q for the fiscal quarter ending June 30, 2003, within 45 days after the
      end of each of the first three fiscal quarters of each fiscal year, or
      such other period in which the Borrower must file its Form 10-Q with the
      Securities and Exchange Commission, the consolidated balance sheet of
      Borrower as of the end of such fiscal quarter and related consolidated
      statements of income and cash flows for such fiscal quarter and for the
      then elapsed portion of the fiscal year, in comparative form with the
      consolidated statements of income and cash flows for the comparable
      periods in the previous fiscal year, and notes thereto, all prepared in
      accordance with Regulation S-X under the Securities Act and in a manner
      acceptable to the Securities and Exchange Commission and accompanied by a
      certificate of a Financial Officer stating that such financial statements
      fairly present, in all material respects, the consolidated financial
      condition, results of operations and cash flows of the Consolidated
      Companies as of the date and for the periods specified in accordance with
      GAAP and on a basis consistent with the audited financial statements
      referred to in Section 5.01(a), subject to normal year-end audit
      adjustments and the absence of footnotes;

            (c) FINANCIAL OFFICER'S COMPLIANCE CERTIFICATE. (i) Concurrently
      with any delivery of financial statements under Sections 5.01(a) and (b),
      a certificate of a Financial Officer, substantially in the form of Exhibit
      K attached hereto, certifying that no Default has occurred or, if such a
      Default has occurred, specifying the nature and extent thereof and any
      corrective action taken or proposed to be taken with respect thereto;

            (d) MONTHLY CASH BALANCE REPORT. Within ten (10) Business Days of
      the end of each fiscal month, a report signed by a Financial Officer of
      Borrower setting forth Borrower's Cash Balance as of the last Business Day
      of such month substantially in the form of Exhibit D hereto, appropriately
      completed and signed by a Financial Officer of the Borrower (the "MONTHLY
      CASH BALANCE REPORT");

            (e) PERFECTION CERTIFICATE SUPPLEMENT. Concurrently with any
      delivery of financial statements under Sections 5.01(a) and (b), a
      Perfection Certificate Supplement;

                                       17
<PAGE>

            (f) PUBLIC REPORTS. Promptly after the same become publicly
      available, copies of all periodic and other reports, proxy statements and
      other materials filed by any Company with the Securities and Exchange
      Commission, or any Governmental Authority succeeding to any or all of the
      functions of said Commission, or with any national securities exchange, or
      distributed to holders of its Indebtedness pursuant to the terms of the
      documentation governing such Indebtedness (or any trustee, agent or other
      representative therefor), as the case may be;

            (g) MANAGEMENT LETTERS. Promptly after the receipt thereof by any
      Company, a copy of any "management letter" received by any such person
      from its certified public accountants and management's responses thereto;
      and

            (h) OTHER INFORMATION. Promptly, from time to time, such other
      information regarding the operations, property, business affairs and
      financial condition of any Company, or any Collateral, or compliance with
      the terms of any Loan Document, as Lender may reasonably request.

      SECTION 5.02. LITIGATION AND OTHER NOTICES. Furnish to Lender prompt
written notice upon any Responsible Officer of a Loan Party becoming aware of
the following:

            (a) the filing or commencement of, or any threat or notice of
      intention of any person to file or commence, any action, suit or
      proceeding, whether at law or in equity by or before any Governmental
      Authority (i) against any Company (or any Affiliate thereof) that could
      reasonably be expected to result in a Material Adverse Effect or (ii) with
      respect to any Loan Document;

            (b) any Default, specifying the nature and extent thereof and the
      corrective action (if any) taken or proposed to be taken with respect
      thereto;

            (c) any development that has resulted in, or could reasonably be
      expected to result in, a Material Adverse Effect;

            (d) the occurrence of a Casualty Event in excess of $500,000; and

            (e) the incurrence of any Lien (other than Permitted Liens) on, or
      claim asserted against, any Material Item of Collateral.

      SECTION 5.03. EXISTENCE; BUSINESSES AND PROPERTIES.

            (a) Do or cause to be done all things necessary to preserve, renew
      and keep in full force and effect its legal existence, except as otherwise
      expressly permitted under Section 6.05 or, in the case of any Subsidiary,
      where the failure to perform such obligations, individually or in the
      aggregate, could not reasonably be expected to result in a Material
      Adverse Effect.

            (b) Do or cause to be done all things necessary to obtain, preserve,
      renew, extend and keep in full force and effect the rights, licenses,
      permits, franchises, authorizations, patents, copyrights, trademarks and
      trade names material to the conduct of its business;

                                       18
<PAGE>

            (c) Maintain and operate its business in substantially the manner in
      which it is presently conducted and operated;

            (d) Pay and perform its obligations under all Company Leases; and

            (e) Maintain and preserve all property material to the conduct of
      such business and keep such property in good repair, working order and
      condition and from time to time make, or cause to be made, all needful and
      proper repairs, renewals, additions, improvements and replacements thereto
      necessary in order that the business carried on in connection therewith
      may be properly conducted at all times;

      provided, however, that nothing in this Section 5.03 shall prevent (i)
      sales of assets, consolidations or mergers by or involving any Company in
      accordance with Section 6.04; (ii) the withdrawal by any Company of its
      qualification as a foreign corporation, partnership or company in any
      jurisdiction where such withdrawal, individually or in the aggregate,
      could not reasonably be expected to result in a Material Adverse Effect;
      or (iii) the abandonment by any Company of any property, rights,
      franchises, licenses, trademarks, tradenames, copyrights or patents that
      such person reasonably determines are not useful to its business.

      SECTION 5.04. INSURANCE.

            (a) Keep its insurable property adequately insured at all times by
      financially sound and reputable insurers; maintain such other insurance,
      to such extent and against such risks, including fire and other risks
      insured against by extended coverage, as is customary with companies in
      the same or similar businesses operating in the same or similar locations,
      including public liability insurance against claims for personal injury or
      death or property damage occurring upon, in, about or in connection with
      the use of any property owned, occupied or controlled by it, to the extent
      obtainable on commercially reasonable terms; and maintain such other
      insurance as may be required by law; and, with respect to any Mortgaged
      Real Property, otherwise maintain all insurance coverage required under
      the applicable Mortgage, such policies to be in such form and amounts and
      having such coverage as may be reasonably satisfactory to Lender;
      provided, that, unless a Default has occurred and is continuing, any
      proceeds of insurance policies (x) insuring the Collateral may be applied
      by the Borrower to promptly replace, rebuild or restore such Collateral
      and (y) insuring liabilities to third parties may be applied by the
      Borrower to promptly pay, discharge or bond such liabilities, in each case
      on commercially reasonable terms.

            (b) Assure that all such insurance shall (i) provide that no
      cancellation, material reduction in amount or material change in coverage
      thereof shall be effective until at least 30 days after receipt by Lender
      of written notice thereof; (ii) name Lender as insured party or loss
      payee; (iii) if reasonably requested by Lender, include a
      breach-of-warranty clause; and (iv) be reasonably satisfactory in all
      other respects to Lender.

            (c) Notify Lender immediately whenever any separate insurance
      concurrent in form or contributing in the event of loss with that required
      to be maintained under this Section 5.04 is taken out by any Company; and
      promptly deliver to Lender a

                                       19
<PAGE>

      duplicate original copy of, or a certificate as to coverage under, such
      policy or policies.

            (d) Deliver to Lender a report of a reputable insurance broker
      annually with respect to such insurance and such supplemental reports with
      respect thereto as Lender may from time to time reasonably request.

      SECTION 5.05. TAXES. File or cause to be filed all federal Tax Returns and
all material state, local and foreign Tax Returns or materials required to have
been filed by it and pay and discharge promptly when due all Taxes before the
same shall become delinquent or in default; provided, however, that such payment
and discharge shall not be required with respect to any such Taxes so long as
the validity or amount thereof shall be contested in good faith by appropriate
proceedings and the applicable Company shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such
proceedings (or orders entered in connection with such proceedings) operate to
prevent the forfeiture or sale of the property or assets subject to any such
Lien and suspend collection of the contested Tax and enforcement of a Lien and,
in the case of Collateral, the applicable Company shall have otherwise complied
with the provisions of the applicable Security Document in connection with such
nonpayment.

      SECTION 5.06. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Keep proper books of record and account (i) in which full, true and correct
entries are made in conformity with GAAP and all Requirements of Law, and (ii)
in which all material dealings and transactions in relation to its business and
activities are recorded. Each Company will permit any representatives designated
by Lender to visit and inspect the financial records and the property of such
Company at reasonable times during normal business hours and upon reasonable
advance notice and to make extracts from and copies of such financial records,
and permit any representatives designated by Lender to discuss the affairs,
finances and condition of any Company with and be advised as to the same by the
officers thereof and the independent accountants therefor.

      SECTION 5.07. USE OF PROCEEDS. Use the proceeds of the Loans only to
maintain Cash Balances, subject to the limitations on the amount of such Cash
Balances set forth in this Agreement. No part of the proceeds of any Loan will
be used in any manner, whether directly or indirectly, for any purpose that
violates, or that is inconsistent with, the provisions of Regulation T, U or X.

      SECTION 5.08. PAYMENT OF OBLIGATIONS. Pay and discharge at or before
maturity, all its respective material obligations and liabilities (including,
without limitation, claims of materialmen, warehousemen and the like or for
labor, materials or supplies or other obligations which if unpaid would
reasonably be expected to give rise to a Lien), except where the same may be
contested in good faith by appropriate proceedings (including administrative
proceedings), and appropriate reserves are maintained for the accrual of any of
the same.

                                       20
<PAGE>

      SECTION 5.09. COMPLIANCE WITH LAWS. Comply with all applicable
Requirements of Law and decrees and orders of Governmental Authorities, now or
hereafter in effect, except where the failure to so comply, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

      SECTION 5.10. ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS.

            (a) Subject to this Section 5.10 and except to the extent Lender, in
      its sole discretion, otherwise determines, with respect to any assets
      acquired after the Closing Date by Borrower or any other Loan Party that
      are intended to be subject to the Lien created by any of the Security
      Documents but that are not so subject, and with respect to any assets held
      by Borrower or any other Loan Party on the Closing Date not made subject
      to a Lien created by any of the Security Documents but of a type intended
      to be subject to the Lien created by the applicable Security Documents,
      promptly (and in any event within 30 days after the acquisition thereof or
      upon Lender's request): (i) execute and deliver to Lender such amendments
      or supplements to the relevant Security Documents or such other documents
      (including, without limitation, a Mortgage or Collateral Assignment of
      Lease) as Lender shall deem necessary or advisable to grant to Lender, for
      its benefit, a Lien on such properties or assets (including using its
      reasonable efforts to deliver a Landlord Lien Waiver and Access Agreement
      with respect to each Real Property located in the United States in which a
      Loan Party holds the tenant's interest thereunder and where the Loan
      Parties maintain Collateral having a value in excess of $1.0 million
      (other than with respect to the MacArthur Sublease) or which Real Property
      is operationally significant to such Loan Party's business as reasonably
      determined by Lender), subject to no Liens other than Permitted Liens, and
      (ii) take all actions necessary to cause such Lien to be duly perfected to
      the extent required by such Security Document in accordance with all
      applicable Requirements of Law, including the filing of a Mortgage or
      Collateral Assignment of Lease and financing statements in such
      jurisdictions as may be reasonably requested by Lender. Borrower shall
      otherwise take such actions and execute and/or deliver to Lender such
      documents as Lender shall require to confirm the validity, perfection and
      priority of the Lien of Security Documents against such after-acquired
      properties or assets, and such assets held on the Closing Date not made
      subject to a Lien created by any of the Security Documents. For purposes
      of this Section 5.10(a), Lender and Borrower agree that the Lien referred
      to in this Section 5.10(a) is intended to cover all assets and properties
      of Borrower and all other Loan Parties whether now owned or hereafter
      acquired, except for such properties or assets which are expressly
      excluded pursuant to the terms of this Agreement.

            (b) For any person that is a Wholly Owned Subsidiary of Parent or
      any of its Subsidiaries that are listed on Schedule 5.10(b) (a "SECTION
      5.10(b) LISTED SUBSIDIARY"), and any person that becomes a Wholly Owned
      Subsidiary of Borrower or any of its Subsidiaries after the Closing Date
      (a "NEW WHOLLY OWNED SUBSIDIARY"), promptly (and in any event (x) in the
      case of a New Wholly Owned Subsidiary, no later than 30 days after each
      such person becomes a New Wholly Owned Subsidiary, and (y) in the case of
      each Section 5.10(b) Listed Subsidiary or a New Wholly Owned Subsidiary
      that is required to become a Guarantor, or the stock or assets of which
      are required to be pledged, pursuant to clauses (i) and (ii) immediately
      below, no later than 30 days following the Closing Date), cause such
      Subsidiary (i) to become a Guarantor and deliver to Lender the
      certificates representing the Equity Interests of such Subsidiary
      (provided that, in no event shall

                                       21
<PAGE>

      the stock of any such Subsidiary be required to be pledged if such pledge
      is illegal under applicable law and no reasonable alternative structure
      can be devised having substantially the same effect as such pledge that
      would not be illegal under applicable law), together with undated stock
      powers executed and delivered in blank by a duly authorized officer of
      such Subsidiary's parent, as the case may be, and all Intercompany Notes
      owing from such Subsidiary to any Loan Party; and (ii) (A) to execute a
      Joinder Agreement or such comparable documentation, in form and substance
      reasonably satisfactory to Lender, and (B) to take all actions reasonably
      necessary or advisable to cause the Lien created by each Security
      Agreement to be duly perfected to the extent required by such agreement in
      accordance with all applicable Requirements of Law, including the filing
      of financing statements in such jurisdictions as may be reasonably
      requested by Lender (provided that any such Subsidiary shall not be
      required to comply with clause (ii)(A) and (B) above if satisfying such
      requirements is illegal under applicable law and no reasonable alternative
      structure can be devised having substantially the same effect as such
      pledge that would not be illegal under applicable law).

            (c) Notwithstanding anything to the contrary contained herein:

                  (i) in the case of any (x) Section 5.10(b) Listed Subsidiary
            and New Wholly Owned Subsidiary that has not previously become a
            Guarantor and (y) other Non-Guarantor Subsidiary, 65% of the Equity
            Interests of any such Subsidiary (and 100% of the Equity Interests
            of any Domesticated Foreign Subsidiary) shall be subject to a Lien
            or be required to be pledged under the applicable Loan Document
            except to the extent Lender, in its sole discretion, otherwise
            determines; and

                  (ii) notwithstanding clause (c)(i) immediately above and as of
            the end of any fiscal quarter of Borrower:

                        (1) if the aggregate consolidated revenues of the
                  Non-Guarantor Subsidiaries exceeds 10.0% of Borrower's
                  consolidated revenues, then within 60 days of such date
                  Borrower shall cause a sufficient number of the Non-Guarantor
                  Subsidiaries to become Guarantors hereunder so that, after
                  giving pro forma effect to such action, the aggregate
                  consolidated revenues of the Subsidiaries remaining as
                  Non-Guarantor Subsidiaries is less than 10.0% of Borrower's
                  consolidated revenues; or

                        (2) if the aggregate consolidated sum of the
                  Non-Guarantor Subsidiaries' fixed assets, receivables and
                  inventories exceeds 10.0% of the aggregate consolidated sum of
                  Borrower's fixed assets, receivables and inventories (which
                  fixed assets, receivables and inventories shall be computed
                  after eliminating intercompany profit), then within 60 days of
                  such date Borrower shall cause a sufficient number of the
                  Non-Guarantor Subsidiaries to become Guarantors hereunder so
                  that, after giving pro forma effect to such action, the
                  aggregate consolidated sum of fixed assets, receivables and
                  inventories of the Subsidiaries remaining as Non-Guarantor
                  Subsidiaries is less

                                       22
<PAGE>

                  than 10.0% of the aggregate consolidated sum of Borrower's
                  fixed assets, receivables and inventories.

      If the condition set forth in clause (ii)(1) or (ii)(2) above is
established, Borrower shall, or shall cause the applicable Foreign Subsidiaries
to, take all such further action and execute and deliver all such further
agreements or documents as Lender deems necessary or advisable to receive the
full benefits of the Guarantees and Security Documents to be entered into by
such Foreign Subsidiaries to the extent necessary to preclude the 10.0%
thresholds set forth in the immediately preceding clauses (ii)(1) and (ii)(2)
from being exceeded, except to the extent such actions, executions, or,
deliveries are illegal under applicable law, and no reasonable alternative
structure can be devised having substantially the same effect as such actions,
executions, or deliveries that would not be illegal under applicable law.

            (d) Upon the written request of Lender, each Loan Party will
      promptly grant to Lender, within 30 days of such request, security
      interests and Mortgages in such owned or leased Real Property of such Loan
      Party located in the United States as is acquired or leased by such Loan
      Party after the Closing Date by Borrower or such Subsidiary and has a
      value as determined in good faith by Lender in excess of $1.0 million or
      is otherwise material to the business operations of Borrower or such
      Subsidiary, as additional security for the Secured Obligations (unless (i)
      the subject property is already mortgaged to a third party to the extent
      permitted by Section 6.02 or (ii) if the encumbrancing of such leased Real
      Property requires the consent of any applicable lessor, where Borrower and
      its Subsidiaries have attempted in good faith, but are unable, to obtain
      such lessor's consent). Such Mortgages shall be granted pursuant to
      documentation reasonably satisfactory in form and substance to Lender and
      shall constitute valid and enforceable perfected Liens subject only to
      Permitted Liens and such other Liens reasonably acceptable to Lender. The
      Mortgages or instruments related thereto shall be duly recorded or filed
      in such manner and in such places as are required by law to establish,
      perfect, preserve and protect the Liens in favor of Lender required to be
      granted pursuant to the Mortgages and all taxes, fees and other charges
      payable in connection therewith shall be paid in full by such Loan Party.
      Such Loan Party shall otherwise take such actions and execute and/or
      deliver to Lender such documents as Lender shall require to confirm the
      validity, perfection and priority of the Lien of any existing Mortgage or
      new Mortgage against such after-acquired Real Property within 30 days of
      the written request of Lender, including the following:

                  (i) Mortgages encumbering each Mortgaged Real Property in
            favor of Lender, duly executed and acknowledged by the Loan Party
            that is the owner of or holder of an interest in such Mortgaged Real
            Property, and otherwise in form for recording in the recording
            office of each political subdivision where each such Mortgaged Real
            Property is situated, and such certificates, affidavits,
            questionnaires or returns as shall be required in connection with
            the recording or filing thereof to create a Lien under applicable
            law, and such UCC financing statements and fixture filings, all of
            which shall be in form and substance reasonably satisfactory to
            Lender, and any other instruments necessary to grant a mortgage lien
            under the laws of any applicable jurisdiction;

                                       23
<PAGE>

                  (ii) with respect to each Mortgaged Real Property for which a
            Mortgage is obtained in accordance with clause (i) above, an
            Agreement and Estoppel Certificate executed by the applicable Loan
            Party and fee interest holder, and such other consents, approvals,
            amendments, supplements, memoranda of lease estoppels, tenant
            non-disturbance or subordination agreements or other instruments as
            shall reasonably be deemed necessary by Lender in order for the
            owner or holder of the fee or leasehold interest constituting such
            Mortgaged Real Property to grant the Lien contemplated by the
            Mortgage with respect to such Mortgaged Real Property;

                  (iii) with respect to each Mortgage, a policy of title
            insurance insuring the Lien of such Mortgage as a valid first
            mortgage Lien on the Real Property and fixtures described therein in
            an amount equal to 115% of the fair market value of the fee or
            leasehold interest, as applicable, of such Real Property which
            policies (each, a "TITLE POLICY") shall (A) be issued by the Title
            Company, (B) to the extent necessary, include such reinsurance
            arrangements (with provisions for direct access, if necessary) as
            shall be reasonably acceptable to Lender, (C) contain a "tie-in" or
            "cluster" endorsement (if available under applicable law) (i.e.,
            policies that insure against losses regardless of location or
            allocated value of the insured property up to a stated maximum
            coverage amount), (D) have been supplemented by such endorsements
            (or where such endorsements are not available, opinions of special
            counsel, architects or other professionals reasonably acceptable to
            Lender to the extent that such opinions can be obtained at a cost
            that is reasonable with respect to the value of the Real Property
            subject to such Mortgage) as shall be requested by Lender, to the
            extent such endorsements are available in the applicable
            jurisdiction (including endorsements on matters relating to usury,
            first loss, last dollar, zoning, contiguity, revolving credit, doing
            business, non-imputation, public road access, survey, variable rate,
            environmental lien and so-called comprehensive coverage over
            covenants and restrictions), and (E) contain no exceptions to title
            other than exceptions for the Permitted Liens applicable to such
            Mortgaged Real Property and otherwise acceptable to Lender;

                  (iv) with respect to each Mortgaged Real Property for which a
            Mortgage is obtained in accordance with clause (i) above, such
            affidavits, certificates, information (including financial data) and
            instruments of indemnification (including a so-called "gap,"
            "mechanics lien," and "owner's" indemnifications and affidavits) as
            shall be required to induce the Title Company to issue the Title
            Policy/ies and endorsements contemplated in clause (iii) above;

                  (v) evidence reasonably acceptable to Lender of payment by
            Borrower of all Title Policy premiums, escrow, search and
            examination charges, and related charges, mortgage recording taxes,
            fees, charges, costs and expenses required for the recording of the
            Mortgages and issuance of the Title Policies referred to in clause
            (iii) above;

                                       24
<PAGE>
                  (vi) with respect to each Real Property or Mortgaged Real
            Property, copies of all Leases in which Borrower or any Subsidiary
            holds the lessor's interest or other agreements relating to
            possessory interests, if any. To the extent any of the foregoing
            affect any Mortgaged Real Property for which a Mortgage is obtained
            in accordance with clause (i) above, such agreement shall be
            subordinate to the Lien of the Mortgage to be recorded against such
            Mortgaged Real Property, either expressly by its terms or pursuant
            to a subordination, non-disturbance and attornment agreement, and
            shall otherwise be acceptable to Lender;

                  (vii) with respect to each Mortgaged Real Property for which a
            Mortgage is obtained in accordance with clause (i) above, Borrower
            and each Subsidiary shall have made all notification, registrations
            and filings, to the extent required by, and in accordance with, all
            Requirements of Law; and

                  (viii)with respect to each Mortgaged Real Property for which a
            Mortgage is obtained in accordance with clause (i) above, an
            Officers' Certificate or other evidence reasonably satisfactory to
            Lender that as of the date thereof (A) there is no outstanding
            citation, violation or similar notice indicating that the Mortgaged
            Real Property contains conditions that are not in compliance in any
            material respect with local codes or ordinances relating to building
            or fire safety or structural soundness, (B) there has not occurred
            any taking or destruction of any Mortgaged Real Property and (C)
            there are no material disputes regarding boundary lines, location,
            encroachment or possession of such Mortgaged Real Property, and to
            the best knowledge of Borrower or any Subsidiary that is the owner
            of or holder of an interest in such Mortgaged Real Property, no
            state of facts exist that could give rise to any such claim.

      SECTION 5.11. SECURITY INTERESTS; FURTHER ASSURANCES. Each Loan Party
shall, at its own cost and expense, take any and all actions necessary to defend
title to the Collateral against all persons and to defend the security interest
of Lender in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02. Promptly, upon the reasonable
request of Lender, at Borrower's expense, execute, acknowledge and deliver, or
cause the execution, acknowledgment and delivery of, and thereafter register,
file or record, or cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of the Security Documents or otherwise deemed by Lender reasonably necessary or
desirable for the continued validity, perfection and priority of the Liens on
the Collateral covered thereby superior and prior to the rights of all third
persons other than the holders of Permitted Liens and subject to no other Liens
except as permitted by the Security Documents, or obtain any consents, including
landlord or similar Lien waivers and consents, as may be necessary or
appropriate in connection therewith, to the extent contemplated hereby. Each
Loan Party shall, at its own cost and expense, deliver or cause to be delivered
to Lender from time to time such other documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to Lender as
Lender shall deem necessary to perfect or maintain the Liens on the Collateral
pursuant to the Security Documents. Upon the exercise by Lender of any power,
right, privilege or remedy pursuant to any Loan Document that requires any
consent, approval, registration, qualification or authorization of any
Governmental Authority or any other person, execute and deliver and/or obtain
all applications, certifications, instruments and other documents and papers
that Lender may be so required to obtain.

                                       25
<PAGE>
Notwithstanding anything to the contrary contained herein, if an Event of
Default has occurred and is continuing, Lender shall have the right to require
any Loan Party to execute and deliver documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to Lender as
Lender shall deem necessary to grant to Lender, for its benefit, a valid and
perfected Lien subject to no Liens other than Permitted Liens on such assets and
properties not otherwise required hereunder, except to the extent such
requirements are illegal under applicable law, and no reasonable alternative
structure can be devised having substantially the same effect as such actions
that would not be illegal under applicable law. If Lender determines that it is
required by law or regulation to have appraisals prepared in respect of the Real
Property of any Loan Party constituting Collateral, Borrower shall provide to
Lender appraisals that satisfy the applicable requirements of the Real Estate
Appraisal Reform Amendments of the Federal Institutions Reform, Recovery and
Enforcement Act of 1989 and are in form and substance satisfactory to Lender.

      SECTION 5.12. POST-CLOSING MATTERS. Execute and deliver the documents and
complete the tasks set forth on Schedule 5.12, in each case within the time
limits specified on such schedule.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

      Each Loan Party covenants and agrees with Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan and all other expenses or amounts
payable under any Loan Document have been paid in full, unless Lender shall
otherwise consent in writing, no Loan Party will, nor will any Loan Party cause
or permit any of its Subsidiaries to:

      SECTION 6.01. INDEBTEDNESS. Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except:

            (a) Indebtedness incurred pursuant to this Agreement and the other
      Loan Documents;

            (b) Indebtedness under Hedging Agreements entered into from time to
      time by any Company in accordance with Section 6.03(c);

            (c) intercompany Indebtedness of the Companies outstanding to the
      extent permitted by Sections 6.03(d), (g) and (k) and Section 6.18;

            (d) Indebtedness in respect of workers' compensation claims,
      self-insurance obligations, performance bonds, surety, appeal or similar
      bonds and completion guarantees provided by a Company in the ordinary
      course of its business consistent with past practices;

            (e) (i) Indebtedness actually outstanding on the Closing Date and
      listed on Schedule 6.01, provided that, any such scheduled Indebtedness
      that constitutes intercompany Indebtedness (A) must be subordinated to the
      Obligations of the Loan Parties in accordance with a subordination
      agreement in form and substance

                                       26
<PAGE>
      reasonably satisfactory to Lender, and (B) except for any intercompany
      Indebtedness of the Companies permitted by Section 6.01(c), shall not be
      repaid, prepaid, refinanced or renewed unless the repayment, prepayment,
      refinancing or renewal thereof is treated as an Investment and permitted
      under Section 6.03; and (ii) refinancings or renewals thereof, provided
      that, (A) any such refinancing Indebtedness is in an aggregate principal
      amount not greater than the aggregate principal amount of the Indebtedness
      being renewed or refinanced, plus the amount of any premiums required to
      be paid thereon and fees and expenses associated therewith, (B) such
      refinancing Indebtedness has a later or equal final maturity and longer or
      equal weighted average life than the Indebtedness being renewed or
      refinanced and (C) the covenants, events of default, subordination and
      other provisions thereof (including any guarantees thereof) shall be, in
      the aggregate, no less favorable to the Loan Parties than those contained
      in the Indebtedness being renewed or refinanced; and

            (f) other Indebtedness, including Purchase Money Obligations and
      Capital Lease Obligations, of Borrower and its Subsidiaries not to exceed
      $10 million in aggregate principal amount at any time outstanding.

      SECTION 6.02. LIENS. Create, incur, assume or permit to exist, directly or
indirectly, any Lien on any property now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except (each of the
following being the "PERMITTED LIENS"):

            (a) inchoate Liens for Taxes not yet due and payable or delinquent
      and Liens for Taxes that (i) are being contested in good faith by
      appropriate proceedings for which adequate reserves have been established
      in accordance with GAAP, which proceedings (or orders entered in
      connection with such proceedings) have the effect of preventing the
      forfeiture or sale of the property or assets subject to any such Lien, or
      (ii) in the case of any such charge or claim that has or may become a Lien
      against any of the Collateral, such Lien and the contest thereof shall
      satisfy the Contested Collateral Lien Conditions;

            (b) Liens imposed by law that were incurred in the ordinary course
      of business consistent with past practices of the Companies and do not
      secure Indebtedness for borrowed money, such as carriers', warehousemen's,
      materialmen's, landlords', workmen's, suppliers', repairmen's and
      mechanics' Liens and other similar Liens arising in the ordinary course of
      business consistent with past practices of the Companies (i) for amounts
      not yet overdue or (ii) for amounts that are overdue and that are being
      contested in good faith by appropriate proceedings, so long as (A)
      adequate reserves have been established in accordance with GAAP, and (B)
      in the case of any such Lien that has or may become a Lien against any of
      the Collateral, such Lien and the contest thereof shall satisfy the
      Contested Collateral Lien Conditions;

            (c) easements, rights-of-way, restrictions (including zoning
      restrictions), covenants, encroachments, protrusions and other similar
      charges or encumbrances, and minor title deficiencies on or with respect
      to any Real Property, in each case whether now or hereafter in existence,
      not (i) securing Indebtedness and (ii) individually or in the aggregate
      materially interfering with the conduct of the business of the Companies
      at such Real Property;

                                       27
<PAGE>
            (d) Liens arising out of judgments or awards not resulting in an
      Event of Default and in respect of which such Company shall in good faith
      be prosecuting an appeal or proceedings for review in respect of which
      there shall be secured a subsisting stay of execution pending such appeal
      or proceedings;

            (e) Liens (other than any Lien imposed by ERISA or Section
      401(a)(29) or 412(n) or the Tax Code) (i) imposed by law or deposits made
      in connection therewith in the ordinary course of business consistent with
      past practices in connection with workers' compensation, unemployment
      insurance and other types of social security; (ii) incurred in the
      ordinary course of business consistent with past practices to secure the
      performance of tenders, statutory obligations (other than excise taxes),
      surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
      government contracts, trade contracts, performance and return of money
      bonds and other similar obligations (including obligations imposed by the
      applicable laws of foreign jurisdictions and exclusive of obligations for
      the payment of borrowed money); or (iii) arising by virtue of deposits
      made in the ordinary course of business consistent with past practices to
      secure liability for premiums to insurance carriers; provided that, (x)
      with respect to clauses (i), (ii) and (iii) above such Liens are set
      amounts not yet due and payable or delinquent or, to the extent such
      amounts are so due and payable, such amounts are being contested in good
      faith by appropriate proceedings for which adequate reserves have been
      established in accordance with GAAP, which proceedings for orders entered
      in connection with such proceedings have the effect of preventing the
      forfeiture or sale of the property or assets subject to any such Lien, (y)
      to the extent such Liens are not imposed by Law, such Liens shall in no
      event encumber any property other than cash and cash equivalents, and (z)
      in the case of any such Lien against any of the Collateral, such Lien and
      the contest thereof shall satisfy the Contested Collateral Lien
      Conditions;

            (f) Liens arising out of conditional sale, title retention,
      consignment or similar arrangements for the sale of goods entered into by
      any of the Companies in the ordinary course of business in accordance with
      the past practices of the Companies;

            (g) Liens arising pursuant to Purchase Money Obligations or Capital
      Lease Obligations incurred pursuant to Section 6.01(f); provided that, (i)
      the Indebtedness secured by any such Lien (including refinancings thereof)
      does not exceed 100% of the cost (including financing cost) of the
      property being acquired or leased at the time of the incurrence of such
      Indebtedness and (ii) any such Liens attach only to the property being
      financed pursuant to such Purchase Money Obligations or Capital Lease
      Obligations and directly related assets, such as proceeds (including
      insurance proceeds), products, accessions and substitutions, and do not
      encumber any other property of any Company;

            (h) bankers' Liens, rights of set-off and other similar Liens
      existing solely with respect to cash and cash equivalents on deposit in
      one or more accounts maintained by any of the Companies, in each case
      granted in the ordinary course of business consistent with past practices
      in favor of the bank or banks with which such accounts are maintained,
      securing amounts owing to such bank with respect to cash management and
      operating account arrangements, including those involving pooled accounts
      and netting arrangements; provided that, in no case shall any such Liens
      secure (either directly or indirectly) the repayment of any Indebtedness;

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<PAGE>
            (i) Liens on assets of a person existing at the time such person is
      acquired or merged with or into or consolidated with Borrower or any of
      its Subsidiaries (and not created in anticipation or contemplation
      thereof); provided that, such Liens do not extend to assets not subject to
      such Liens at the time of acquisition (other than improvements thereon)
      and are no more favorable to the lienholders than the existing Lien;

            (j) Liens pursuant to the Security Documents;

            (k) Liens in existence on the Closing Date and set forth on Schedule
      6.02; provided that, (i) the aggregate principal amount of the
      Indebtedness, if any, secured by such Liens does not increase; and (ii)
      such Liens do not encumber any property other than the property subject
      thereto on the Closing Date;

            (l) Licenses of Intellectual Property granted by any of the
      Companies in the ordinary course of business and not interfering in any
      material respect with the ordinary conduct of the business consistent with
      past practices of the Companies; and

            (m) restrictions on transfers of securities imposed by applicable
      securities laws;

provided, however, that no Liens shall be permitted to exist, directly or
indirectly, on any Securities Collateral (as defined in the U.S. Security
Agreement) except to the extent permitted under Section 6.02(m) above).

      SECTION 6.03. INVESTMENTS, LOANS AND ADVANCES. Directly or indirectly,
lend money or credit or make advances to any person, or purchase or acquire
(using money, securities, obligations or property of any kind) any stock,
obligations or securities of, or any Equity Interests or other interest in, or
make any capital contribution to, any other person, or purchase or own a futures
or forward contract or otherwise become liable for the purchase or sale of
commodities at a future date in the nature of a futures or forward contract (all
of the foregoing, collectively, "INVESTMENTS"), except that the following shall
be permitted:

            (a) the Companies may consummate the Transactions in accordance with
      the provisions of the Transaction Documents;

            (b) any Company may (i) acquire and hold accounts receivables owing
      to any of them if created or acquired in the ordinary course of business
      consistent with past practices and payable or dischargeable in accordance
      with customary terms, (ii) acquire and hold cash and cash equivalents,
      (iii) endorse negotiable instruments for collection in the ordinary course
      of business consistent with past practices, or (iv) make lease, utility
      and other similar deposits in the ordinary course of business consistent
      with past practices;

            (c) any Company may enter into and perform its obligations under
      Hedging Agreements entered into in the ordinary course of business
      consistent with past practices and so long as any such Hedging Agreement
      is not speculative in nature and is (i) related to income related to
      foreign currency exposure of any Company or otherwise related to purchases
      permitted hereunder from foreign suppliers or (ii) entered into to protect
      such Companies against fluctuations in the prices of raw materials used in
      their businesses or changes in interest rates on Indebtedness that

                                       29
<PAGE>
      (x) is permitted under Section 6.01 and (y) bears interest at a
      fluctuating rate per annum;

            (d) any Company may make intercompany loans and advances to any Loan
      Party and any Loan Party may make intercompany loans and advances to any
      other Loan Party, and any Subsidiary that is not a Loan Party may make
      intercompany loans and advances to any other Subsidiary that is not a Loan
      Party; provided that, (i) no Loan Party may make loans to any Foreign
      Subsidiary or Non-Guarantor Subsidiary pursuant to this Section 6.03(d)
      unless otherwise permitted under this Section 6.03 or Section 6.18, and
      (ii) any loan or loans made by any Foreign Subsidiary or Non-Guarantor
      Subsidiary to any Loan Party pursuant to this Section 6.03(d) shall be
      subordinated to the obligations of the Loan Parties pursuant to an
      Intercompany Note if any such loan or loans, individually or in the
      aggregate to any one Loan Party, has an outstanding principal amount in
      excess of $1.0 million;

            (e) any Company may make Investments in the form of advances to
      employees for travel, relocation and like expenses, in each case, in the
      ordinary course of business and consistent with such Company's past
      practices;

            (f) any Company may sell or transfer amounts to the extent permitted
      by Section 6.04;

            (g) Investments (other than as described in Section 6.03(d)) (i) by
      Borrower in any existing Subsidiary Guarantor, (ii) by any Company in
      Borrower or any existing Subsidiary Guarantor, and (iii) by a Subsidiary
      Guarantor in another existing Subsidiary Guarantor (in each case only for
      so long as a Subsidiary Guarantor remains a Guarantor);

            (h) Investments in securities of trade creditors or customers in the
      ordinary course of business and consistent with such Company's past
      practices that are received in the settlement of bona fide disputes or
      pursuant to any plan of reorganization or liquidation or similar
      arrangement upon the bankruptcy or insolvency of such trade creditors or
      customers;

            (i) Investments made by any Company as a result of consideration
      received in connection with an Asset Sale or other transaction effected in
      compliance with Section 6.04;

            (j) Investments outstanding on the Closing Date and identified on
      Schedule 6.03;

            (k) any Company may make loans, advances or capital contributions to
      any Wholly Owned Foreign Subsidiary in accordance with Section 6.18;

            (l) any Company may make Permitted Acquisitions.

      SECTION 6.04. MERGERS, CONSOLIDATIONS, ASSET SALES AND PURCHASES OF
ASSETS. Wind up, liquidate or dissolve its affairs or enter into any transaction
of merger or consolidation, or make any Asset Sale or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, equipment or
other assets used or useful in the Companies' business, but not

                                       30
<PAGE>
(x) Investments or (y) all or any material part of a person's assets) of any
person (or agree to do any of the foregoing at any future time), except that:

            (a) Capital Expenditures by any Company shall be permitted to the
      extent permitted by Section 6.07;

            (b) (i) Asset Sales of used, worn out, obsolete or surplus property
      by any Company in the ordinary course of business consistent with past
      practices and the abandonment or other Asset Sale of Intellectual Property
      that is, in the reasonable judgment of Borrower, no longer economically
      practicable to maintain or useful in the conduct of the business of the
      Companies taken as a whole shall be permitted; and (ii) any other Asset
      Sale shall be permitted if (1) the aggregate consideration received or
      value of property disposed of (based on the value thereof shown on the
      Borrower's balance sheet prepared in accordance with GAAP) in respect of
      all Asset Sales pursuant to this clause (ii) does not exceed $5.0 million
      in any four consecutive fiscal quarters of Borrower (excluding for
      purposes of this amount, any property sold by a Non-Guarantor Subsidiary
      the proceeds of which are promptly distributed to the Borrower or another
      Loan Party), (2) such property is sold for cash or cash equivalents, (3)
      such property is sold for at least eighty percent (80%) of its Fair Market
      Value, and (4) such property is not a Business Unit;

            (c) Investments shall be permitted to the extent permitted by
      Section 6.03;

            (d) any Company may sell cash equivalents in the ordinary course of
      business consistent with past practices;

            (e) any Company may lease (as lessee or lessor) real or personal
      property to the extent permitted by Section 6.12 and Section 6.13;

            (f) the Transactions shall be permitted;

            (g) any Subsidiary may be merged into Borrower (as long as Borrower
      is the surviving corporation of such merger) or any other Wholly Owned
      Subsidiary Guarantor; provided, however, that the Lien on and security
      interest in such property granted in favor of Lender under the Security
      Documents shall be maintained in accordance with the provisions of Section
      5.10;

            (h) any Subsidiary may convey, sell, transfer, assign or otherwise
      dispose of assets to Borrower or any other Loan Party;

            (i) Permitted Acquisitions shall be permitted;

            (j) Permitted Business Dispositions shall be permitted;

            (k) any Company may settle or release tort or other litigation
      claims in the ordinary course of business consistent with past practices;
      and

            (l) any Immaterial Subsidiary may voluntarily dissolve, liquidate or
      wind up.

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<PAGE>
To the extent Lender waives the provisions of this Section 6.04 with respect to
the sale of any Collateral, or any Collateral is sold as permitted by this
Section 6.04, such Collateral (unless sold to a Company) shall be sold free and
clear of the Liens created by the Security Documents, and Lender shall take all
actions deemed appropriate to release such Liens.

      SECTION 6.05. DIVIDENDS. Authorize, declare or pay, directly or
indirectly, any Dividends with respect to any Company, except that any
Subsidiary of Borrower may pay cash Dividends to Borrower or any Wholly Owned
Subsidiary of Borrower.

      SECTION 6.06. TRANSACTIONS WITH AFFILIATES. Enter into, directly or
indirectly, any transaction or series of related transactions with any Affiliate
of any Company, other than in the ordinary course of business consistent with
past practices and on terms and conditions substantially as favorable to such
Company as would reasonably be obtained by such Company at that time in a
comparable arm's-length transaction with a person other than an Affiliate,
except that:

            (a) Dividends may be paid to the extent provided in Section 6.05;

            (b) loans may be made and other transactions may be entered into
      between and among any Company and its Affiliates to the extent permitted
      by Sections 6.01, 6.03 and 6.18;

            (c) customary fees may be paid to non-officer directors of the Loan
      Parties, and customary indemnities may be provided to all directors of the
      Loan Parties;

            (d) the Transactions may be effected; and

            (e) payments may be made between Loan Parties pursuant to the Tax
      Sharing Agreement.

      SECTION 6.07. LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make
any Capital Expenditures, other than Capital Expenditures made or committed to
be made by Borrower and its Consolidated Subsidiaries which in the aggregate do
not exceed during any fiscal year of the Borrower $25 million multiplied by the
Pro Rata Percentage for such fiscal year, reduced dollar for dollar by the
Purchase Price for any Permitted Acquisitions made during such period.
Notwithstanding anything to the contrary contained in the prior sentence, to the
extent that the Capital Expenditures made by Borrower and its Consolidated
Subsidiaries in any fiscal year are less than the amount permitted to be made in
such period (without giving effect to any additional amount available as a
result of this sentence), the amount of such difference may be carried forward
and used to make Capital Expenditures in the next succeeding fiscal year of
Borrower.

      SECTION 6.08. LIMITATION ON MODIFICATIONS OF INDEBTEDNESS; MODIFICATIONS
OF CERTIFICATE OF INCORPORATION, OTHER CONSTITUTIVE DOCUMENTS OR BYLAWS AND
CERTAIN OTHER AGREEMENTS, ETC. (i) Amend or modify, or permit the amendment or
modification of, any provision of any existing Indebtedness, any Transaction
Document, or of Borrower's corporate policy on cash management and short-term
investments (as in effect on the Closing Date), other than any amendments or
modifications to any Indebtedness, any Transaction Document, or such corporate
policy that do not in any way adversely affect the interests of Lender; (ii)
amend, modify or change its articles of incorporation or other constitutive
documents (including by the filing or modification of any certificate of
designation) or bylaws, or any agreement entered into

                                       32
<PAGE>
by it, with respect to its capital stock (including any shareholders'
agreement), or enter into any new agreement with respect to its capital stock,
other than any amendments, modifications, agreements or changes pursuant to this
clause (ii) or any such new agreements pursuant to this clause (ii) that do not
in any way adversely affect the interests of Lender; or (iii) amend or terminate
any Company Lease relating to any Mortgaged Property other than any amendments
or terminations that do not in any way adversely affect the interests of Lender
or take any action or fail to take any action that, with or without either
notice or lapse of time, would constitute a default under any Company Lease
relating to any Mortgaged Real Property.

      SECTION 6.09. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to:

            (a) pay dividends or make any other distributions on its capital
      stock or any other interest or participation in its profits owned by
      Borrower or any Subsidiary of Borrower, or pay any Indebtedness owed to
      Borrower or a Subsidiary of Borrower;

            (b) make loans or advances to Borrower or any of Borrower's
      Subsidiaries; or

            (c) transfer any of its properties to Borrower or any of Borrower's
      Subsidiaries, except for such encumbrances or restrictions existing under
      or by reason of (i) applicable law, (ii) this Agreement and the other Loan
      Documents, (iii) customary provisions restricting subletting or assignment
      of any lease governing a leasehold interest of Borrower or a Subsidiary of
      Borrower, or (iv) customary provisions with respect to the disposition or
      distribution of assets in joint venture agreements and other similar
      agreements (to the extent otherwise permitted by this Agreement) relating
      solely to the assets subject to such agreement.

      SECTION 6.10. LIMITATION ON ISSUANCE OF CAPITAL STOCK. Borrower will not
permit any of its Subsidiaries to issue any Equity Interest (including by way of
sales of treasury stock) or any options or warrants to purchase, or securities
convertible into, Equity Interests, except (i) for stock splits, stock dividends
and additional Equity Interest issuances that do not decrease the percentage
ownership of Borrower or any Subsidiary in any class of the Equity Interest of
such Subsidiary; (ii) Borrower Common Stock may be issued, at then Fair Market
Value, to pay (in whole or in part) the purchase price for any Permitted
Acquisition; (iii) Subsidiaries of Borrower formed after the Closing Date
pursuant to Section 6.11 may issue Equity Interests to Borrower or the
Subsidiary of Borrower that is to own such stock; and (iv) only to the extent
required in accordance with applicable law, any Foreign Subsidiary may issue
directors' qualifying shares. All Equity Interests issued in accordance with
this Section 6.10 shall, to the extent required by Section 5.10 or the
applicable Security Agreement, be delivered to Lender for pledge pursuant to the
applicable Security Agreement.

      SECTION 6.11. LIMITATION ON CREATION OF SUBSIDIARIES. Establish, create or
acquire any additional Subsidiaries without the prior written consent of Lender,
except that (i) Borrower may acquire one or more Wholly Owned Subsidiaries in
any Permitted Acquisition and (ii) Borrower may establish or create one or more
Wholly Owned Subsidiaries of Borrower or one of its Wholly Owned Subsidiaries
without such consent so long as (except to the extent any of the following is
expressly exempted or otherwise limited pursuant to Section 5.10(b), but
subject, in any event, to the requirements of Section 5.10(c)): (a) 100% of the
Equity Interest of any new Subsidiary is upon the acquisition, creation or
establishment of any such new Subsidiary

                                       33
<PAGE>
pledged and delivered to Lender for its benefit under the applicable Security
Agreement; and (b) upon the acquisition, creation or establishment of any such
new Subsidiary, such Subsidiary becomes a party to the applicable Security
Documents and shall become a Subsidiary Guarantor hereunder and execute a
Joinder Agreement and other applicable Loan Documents all in accordance with
Section 5.10(b); and (c) any Investment made in any such Subsidiary is permitted
under Section 6.03.

      SECTION 6.12. SALE AND LEASEBACK TRANSACTIONS. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, except such transactions among Loan Parties,
unless (i) the sale of such property is permitted by Section 6.04 and (ii) any
Liens arising in connection with its use of such property are permitted by
Section 6.02.

      SECTION 6.13. LIMITATION ON LEASE OBLIGATIONS. Incur, create, assume or
permit to exist, directly or indirectly, any obligation as a lessee in an amount
exceeding, during any fiscal year of Borrower, $2 million multiplied by the Pro
Rata Percentage for such fiscal year in respect of any lease obligation other
than (i) a Capital Lease Obligation, (ii) obligations under the MacArthur
Sublease, and (iii) lease obligations under leases in effect on the Closing Date
and set forth on Schedule 6.13.

      SECTION 6.14. BUSINESS. Unless otherwise expressly provided herein, engage
(directly or indirectly) in any business other than those businesses in which
Borrower and its Subsidiaries are engaged on the Closing Date (or that are
complementary or substantially related thereto or are reasonable extensions
thereof).

      SECTION 6.15. LIMITATION ON ACCOUNTING CHANGES. Make or permit any change
in accounting policies or reporting practices without the consent of Lender
except changes that are required by GAAP.

      SECTION 6.16. RESTRICTED PAYMENTS. Redeem, retire, purchase or otherwise
acquire, directly or indirectly, for any consideration, any shares of any class
of its capital stock or interest of any of its shareholders, in each case now or
hereafter outstanding (or any options or warrants issued by Borrower or any of
its Subsidiaries with respect to Borrower or any of its Subsidiaries' capital
stock); except that Borrower and its Subsidiaries may redeem, retire, purchase
or otherwise acquire any of Borrower's Subsidiaries' capital stock.

      SECTION 6.17. FISCAL YEAR

      Change its fiscal year-end from that in effect on the Closing Date.

      SECTION 6.18. FOREIGN SUBSIDIARIES

      Sell, lease, contribute, loan, advance, assign or otherwise transfer any
property that is Collateral to any Foreign Subsidiary, except that:

            (a) Borrower or any of its Subsidiaries may make loans, capital
      contributions or advances to any Wholly Owned Foreign Subsidiary, in the
      ordinary course of business consistent with past practice, to fund working
      capital, operating expenses and, to the extent permitted by this
      Agreement, Capital Expenditures, of any such Wholly Owned Foreign
      Subsidiary, required in the ordinary course of

                                       34
<PAGE>
      business consistent with past practice, in no event to exceed $8 million
      in the aggregate for any fiscal quarter (excluding any amounts invested in
      any Wholly Owned Foreign Subsidiary that is as of the Closing Date or
      subsequently becomes a Guarantor (effective only upon such person being or
      becoming a Guarantor and only for so long as such person remains a
      Guarantor)); and provided further that, any such investment in excess of
      $1.0 million must be in the form of an intercompany loan to such Wholly
      Owned Foreign Subsidiary and shall be evidenced by an Intercompany Note
      pledged (and delivered) by the Loan Party that is the lender of such
      intercompany loan as Collateral pursuant to the applicable Security
      Agreement.

            (b) Borrower or any of its Subsidiaries may sell for cash (but not
      otherwise transfer) any property that is Collateral to any Foreign
      Subsidiary to the extent that any such sale would be a sale of assets
      permitted by Section 6.04(b)(ii).

                                   ARTICLE VII

                                    GUARANTEE

      SECTION 7.01. THE GUARANTEE. The Guarantors hereby irrevocably and
unconditionally, jointly and severally guarantee as primary obligors and not as
sureties to Lender and its successors and assigns the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest on (including any interest, fees, costs or charges
that would accrue but for the provisions of Title 11 of the United States Code
after any bankruptcy or insolvency petition under Title 11 of the United States
Code) the Loans made by Lender to, and the Notes held by Lender of, Borrower,
and all other Obligations from time to time owing to Lender by any Loan Party
under any Loan Document strictly in accordance with the terms thereof (such
obligations being herein collectively called the "GUARANTEED OBLIGATIONS"). The
Guarantors hereby irrevocably and unconditionally, jointly and severally agree
that if Borrower or other Guarantor(s) shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Guarantors will promptly pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in
full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

      SECTION 7.02. OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors
under Section 7.01 shall constitute a guaranty of payment (and not of
collection) and are absolute, irrevocable and unconditional, joint and several
(except to the extent otherwise limited in accordance with applicable
Requirements of Law as described in Annex I attached hereto or in any other
Guarantee required by applicable Requirements of Law), irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of Borrower under this Agreement, the Notes, if any, or any other
agreement or instrument referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or Guarantor
(except for payment in full). Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guarantors hereunder, which shall remain
absolute, irrevocable and unconditional under any and all circumstances as
described above:

                                       35
<PAGE>
                  (i) at any time or from time to time, without notice to the
            Guarantors, the time for any performance of or compliance with any
            of the Guaranteed Obligations shall be extended, or such performance
            or compliance shall be waived;

                  (ii) any of the acts mentioned in any of the provisions of
            this Agreement or the Notes, if any, or any other agreement or
            instrument referred to herein or therein shall be done or omitted;

                  (iii) the maturity of any of the Guaranteed Obligations shall
            be accelerated, or any of the Guaranteed Obligations shall be
            amended in any respect, or any right under the Loan Documents or any
            other agreement or instrument referred to herein or therein shall be
            amended or waived in any respect or any other guarantee of any of
            the Guaranteed Obligations or any security therefor shall be
            released or exchanged in whole or in part or otherwise dealt with;

                  (iv) any Lien or security interest granted to, or in favor of,
            Lender as security for any of the Guaranteed Obligations shall fail
            to be perfected; or

                  (v) the release of any other Guarantor.

      The Guarantors hereby expressly waive diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that any Loan
Party exhaust any right, power or remedy or proceed against Borrower under this
Agreement or the Notes, if any, or any other agreement or instrument referred to
herein or therein, or against any other person under any other guarantee of, or
security for, any of the Guaranteed Obligations. The Guarantors waive any and
all notice of the creation, renewal, extension, waiver, termination or accrual
of any of the Guaranteed Obligations and notice of or proof of reliance by
Lender upon this Guarantee or acceptance of this Guarantee, and the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guarantee, and all dealings between
Borrower and Lender shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. This Guarantee shall be construed
as a continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed Obligations
at any time or from time to time held by Lender, and the obligations and
liabilities of the Guarantors hereunder shall not be conditioned or contingent
upon the pursuit by Lender or any other person at any time of any right or
remedy against Borrower or against any other person that may be or become liable
in respect of all or any part of the Guaranteed Obligations or against any
collateral or guarantee therefor or right of offset with respect thereto. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Guarantors and the successors and
assigns thereof, and shall inure to the benefit of Lender, and its successors
and assigns, notwithstanding that from time to time during the term of this
Agreement there may be no Guaranteed Obligations outstanding.

      For purposes of this paragraph only, references to the "principal" include
each Loan Party and references to the "creditor" includes Lender and its
successors and permitted assigns. In accordance with Section 2856 of the
California Civil Code, each Guarantor waives all rights and defenses (i)
available to such Guarantor by reason of Sections 2787 through 2855, 2899, and
3433 of the California Civil Code, including all rights or defenses such
Guarantor may have by

                                       36
<PAGE>
reason of protection afforded to the principal with respect to any of the
Guaranteed Obligations, or to any other guarantor of any of the Guaranteed
Obligations with respect to any of such guarantor's obligations under its
guarantee, in either case in accordance with the antideficiency or other laws of
the State of California limiting or discharging the principal's Indebtedness or
such other guarantor's obligations, including Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure; and (ii) arising out of an election
of remedies by the creditor, even though such election, such as a nonjudicial
foreclosure with respect to security for any Guaranteed Obligation (or any
obligation of any other guarantor of any of the Guaranteed Obligations), has
destroyed such Guarantor's right of subrogation and reimbursement against the
principal (or such other guarantor) by the operation of Section 580d of the
California Code of Civil Procedure or otherwise. No other provision of this
Guarantee shall be construed as limiting the generality of any of the covenants
and waivers set forth in this paragraph. As provided below, this Agreement shall
be governed by, and shall be construed and enforced in accordance with the laws
of the State of New York. This paragraph is included solely out of an abundance
of caution, and shall not be construed to mean that any of the above-referenced
provisions of California law are in any way applicable to this Agreement or to
any of the Guaranteed Obligations.

      SECTION 7.03. REINSTATEMENT. The obligations of the Guarantors under this
Article VII shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of Borrower or any other Loan Party in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise. The Guarantors jointly
and severally (except to the extent otherwise limited in accordance with
applicable Requirements of Law as described in Annex I attached hereto or in any
other Guarantee required by applicable Requirements of Law) agree that they will
indemnify Lender on demand for all reasonable costs and expenses (including
reasonable fees of counsel) incurred by Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law, other than any costs or expenses resulting from the gross
negligence, bad faith or willful misconduct of Lender.

      SECTION 7.04. SUBROGATION; SUBORDINATION. Each Guarantor hereby agrees
that until the indefeasible payment and satisfaction in full in cash of all
Guaranteed Obligations and the expiration and termination of the Commitment of
Lender under this Agreement it shall not exercise any right or remedy arising by
reason of any performance by it of its guarantee in Section 7.01, whether by
subrogation or otherwise, against Borrower or any other Guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed Obligations.
The payment of any amounts due with respect to any Indebtedness of Borrower or
any other Guarantor now or hereafter owing to any Guarantor or Borrower by
reason of any payment by such Guarantor under the Guarantee in this Article VII
is hereby subordinated to the prior indefeasible payment in full in cash of the
Guaranteed Obligations. In addition, any Indebtedness of the Borrower or any
Subsidiary now or hereafter held by any Guarantor is hereby subordinated in
right of payment in full in cash to the Guaranteed Obligations. Each Guarantor
agrees that it will not demand, sue for or otherwise attempt to collect any such
indebtedness of Borrower or any Subsidiary to such Guarantor until the
Obligations shall have been indefeasibly paid in full in cash. If,
notwithstanding the preceding sentence, any Guarantor shall, prior to the
indefeasible payment in full in cash of the Guaranteed Obligations, collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced and received by such Guarantor as trustee for
Lender and be paid over to Lender on account of the Guaranteed Obligations
without affecting in any manner the liability of such Guarantor under the other

                                       37
<PAGE>
provisions of the guaranty contained herein. Each Subsidiary of Borrower which
(x) is not a Guarantor and (y) holds outstanding Indebtedness of another
Subsidiary of Borrower shall execute an agreement, in form and substance
reasonably satisfactory to Lender, subordinating such indebtedness to the prior
indefeasible payment in full in cash of the Guaranteed Obligations. Solely for
the purposes of this Section 7.04, the term "Indebtedness" shall not include
intercompany advances and amounts for goods or services sold or rendered in the
ordinary course of business, consistent with past practices, owed by any
Subsidiary to any Guarantor.

      SECTION 7.05. REMEDIES. The Guarantors jointly and severally (except to
the extent otherwise limited in accordance with applicable Requirements of Law
as described in Annex I attached hereto) agree that, as between the Guarantors
and the Lenders, the obligations of Borrower under this Agreement and the Notes,
if any, may be declared to be forthwith due and payable as provided in Article
VIII (and shall be deemed to have become automatically due and payable in the
circumstances provided in said Article VIII) for purposes of Section 7.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against Borrower and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by Borrower) shall forthwith become due and
payable by the Guarantors for purposes of Section 7.01.

      SECTION 7.06. INSTRUMENT FOR THE PAYMENT OF MONEY. Each Guarantor hereby
acknowledges that the guarantee in this Article VII constitutes an instrument
for the payment of money, and consents and agrees that Lender, at its sole
option, in the event of a dispute by such Guarantor in the payment of any moneys
due hereunder, shall have the right to bring a motion-action under New York CPLR
Section 3213 to the extent permitted thereunder.

      SECTION 7.07. GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action
or proceeding involving any state corporate law, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of any Guarantor under Section 7.01
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under Section 7.01, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Loan Party or any other person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.

      SECTION 7.08. CONTINUING GUARANTEE. The Guarantees in this Article VII are
continuing guarantees of payment, and shall apply to all Guaranteed Obligations
whenever arising.

      SECTION 7.09. RELEASE OF GUARANTORS. If at any time after the Closing Date
and in connection with the Guarantee of any Loan Party in this Article VII (i)
subject to the requirements of Section 5.10(c), in the case of a Foreign
Subsidiary, Lender (after consultation with Borrower) determines that in the
case of any existing Guarantor, it would not be commercially reasonable for such
Guarantor to remain a Guarantor (taking into account the expense (including
taxes), the ability of Borrower or such Guarantor to obtain any necessary
approvals or consents required to be obtained under applicable law (but have not
been previously obtained) in connection therewith, and the effectiveness and
enforceability thereof under applicable law) or (ii) such Guarantee becomes
illegal under applicable law and such Loan Party delivers to Lender a legal
opinion from its counsel to such effect, and no reasonable alternative

                                       38
<PAGE>
structure can be devised having substantially the same effect as the issuance of
a Guarantee that would not be illegal under applicable law, then, in case of
each of the immediately preceding clauses (i) and (ii), Lender shall (at the
expense of Borrower) take all action necessary to release its security interest
in that portion of the Security Agreement Collateral owned by such Guarantor
(provided, however, that 65% of the Equity Interests of such Guarantor (and 100%
of the Equity Interests of any Domesticated Foreign Subsidiary) shall not be
released from the Security Agreement Collateral)), and such Guarantor shall be
released from its obligations in respect of the Guarantees in this Article VII
(such Guarantor being hereinafter referred to as a "RELEASED GUARANTOR," so long
as it continues to be a Non-Guarantor Subsidiary), which release from such
Guarantees, in the case of an event described in the immediately preceding
clause (i), shall become effective as of the closing of the last day of the
taxable year that immediately precedes the date that Lender makes a
determination described in such clause (i).

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

      In case of the happening of any of the following events ("EVENTS OF
DEFAULT"):

                  (a) default shall be made in the payment of any principal of
            any Loan when and as the same shall become due and payable, whether
            at the due date thereof or by acceleration thereof or otherwise;

                  (b) default shall be made in the payment of any interest on
            any Loan (other than any amount added to principal of Loans pursuant
            to Section 2.05(d)) or any other amount (other than an amount
            referred to in paragraph (a) above) due under any Loan Document,
            when and as the same shall become due and payable, and such default
            shall continue unremedied for a period of five Business Days;

                  (c) any representation or warranty made or deemed made in or
            in connection with any Loan Document or the borrowings hereunder, or
            any representation, warranty, statement or information contained in
            any report, certificate, financial statement or other instrument
            furnished in connection with or pursuant to any Loan Document, shall
            prove to have been false or misleading in any material respect when
            so made, deemed made or furnished;

                  (d) default shall be made in the due observance or performance
            by any Company of any covenant, condition or agreement contained in
            Section 5.01, 5.03 or 5.07 or in Article VI;

                  (e) default shall be made in the due observance or performance
            by any Company of any covenant, condition or agreement contained in
            any Loan Document (other than those specified in paragraph (a), (b)
            or (d) above), and such default shall continue unremedied or shall
            not be waived for a period of 30 days after the earlier of (i) an
            officer of such Company becoming aware of such default or (ii)
            receipt by Borrower and such Company of notice from Lender of such
            default;

                  (f) any Company (other than any Immaterial Subsidiary) shall
            (i) fail to pay any principal or interest, regardless of amount, due
            in respect of any Indebtedness

                                       39
<PAGE>
            (other than the Obligations) when and as the same shall become due
            and payable (after all applicable grace periods have expired); or
            (ii) fail to observe or perform any other term, covenant, condition
            or agreement contained in any agreement or instrument evidencing or
            governing any such Indebtedness if the effect of any failure
            referred to in this clause (ii) is to cause, or to permit the holder
            or holders of such Indebtedness or a trustee on its or their behalf
            (with or without the giving of notice, the lapse of time or both) to
            cause, such Indebtedness to become due prior to its stated maturity;
            provided that, it shall not constitute an Event of Default pursuant
            to this paragraph (f) unless the aggregate amount of all such
            Indebtedness referred to in clauses (i) and (ii) exceeds $1.0
            million at any one time;

                  (g) an involuntary proceeding shall be commenced or an
            involuntary petition shall be filed in a court of competent
            jurisdiction seeking (i) relief in respect of any Company (other
            than any Immaterial Subsidiary), or of a substantial part of the
            property or assets of any Company (other than any Immaterial
            Subsidiary), under the Bankruptcy Code, or any other federal, state
            or foreign bankruptcy, insolvency, receivership or similar law; (ii)
            the appointment of a receiver, trustee, custodian, sequestrator,
            conservator or similar official for any Company (other than any
            Immaterial Subsidiary) or for a substantial part of the property or
            assets of any Company; or (iii) the winding-up or liquidation of any
            Company (other than any Immaterial Subsidiary); and such proceeding
            or petition shall continue undismissed for 60 days or an order or
            decree approving or ordering any of the foregoing shall be entered;

                  (h) any Company (other than any Immaterial Subsidiary) shall
            (i) voluntarily commence any proceeding or file any petition seeking
            relief under the Bankruptcy Code, or any other federal, state or
            foreign bankruptcy, insolvency, receivership or similar law; (ii)
            consent to the institution of, or fail to contest in a timely and
            appropriate manner, any proceeding or the filing of any petition
            described in paragraph (g) above; (iii) apply for or consent to the
            appointment of a receiver, trustee, custodian, sequestrator,
            conservator or similar official for any Company (other than any
            Immaterial Subsidiary) or for a substantial part of the property or
            assets of any Company (other than any Immaterial Subsidiary); (iv)
            file an answer admitting the material allegations of a petition
            filed against it in any such proceeding; (v) make a general
            assignment for the benefit of creditors; (vi) become unable, admit
            in writing its inability or fail generally to pay its debts as they
            become due; (vii) take any action for the purpose of effecting any
            of the foregoing; or (viii) wind up or liquidate;

                  (i) one or more judgments for the payment of money in an
            aggregate amount in excess of $1.0 million shall be rendered against
            any Company or any combination thereof and the same shall remain
            undischarged for a period of 30 consecutive days during which
            execution shall not be effectively stayed, or any action shall be
            legally taken by a judgment creditor to levy upon assets or
            properties of any Company to enforce any such judgment;

                  (j) an ERISA Event occurs, an event of noncompliance with
            respect to any Foreign Plan occurs or, if the present value of the
            accrued benefit liabilities (whether or not vested) under any
            Foreign Plan that is funded, determined as of the end of the most
            recently ended fiscal year of the respective Loan Party on the basis
            of actuarial assumptions proper under applicable foreign law,
            exceeds the current value of the assets of such Foreign Plan by more
            than $1.0 million, that in the opinion of Lender,

                                       40
<PAGE>
            when taken together with all other such ERISA Events, noncompliance
            and underfunding, could reasonably be expected to result in
            liability to any Company or its ERISA Affiliates in an aggregate
            amount exceeding $1.0 million;

                  (k) any security interest and Lien purported to be created by
            any Security Document shall cease to be in full force and effect, or
            shall cease to give Lender, for its benefit, the Liens, rights,
            powers and privileges purported to be created and granted under such
            Security Documents (including a perfected first priority security
            interest in and Lien on all of the Collateral thereunder (except as
            otherwise expressly provided in such Security Documents)) in favor
            of Lender, or shall be asserted by Borrower or any other Loan Party
            not to be a valid, perfected, first priority (except as otherwise
            expressly provided in this Agreement or such Security Document)
            security interest in or Lien on the Collateral covered thereby;

                  (l) the Guarantees or any Security Document shall cease to be
            in full force and effect, except to the extent expressly permitted
            to be released hereunder in accordance with Section 7.09;

                  (m) any Loan Document or any material provisions thereof shall
            at any time and for any reason be declared by a court of competent
            jurisdiction to be null and void, or a proceeding shall be commenced
            by any Loan Party or any other person, or by any Governmental
            Authority, seeking to establish the invalidity or unenforceability
            thereof (exclusive of questions of interpretation of any provision
            thereof), or any Loan Party shall repudiate or deny that it has any
            liability or obligation for the payment of principal or interest or
            other obligations purported to be created under any Loan Document;

                  (n) there shall have occurred a Change of Control; or

                  (o) the Distribution shall not have occurred on the Closing
            Date in accordance with the terms and conditions of the Distribution
            Agreement;

then, and in every such event (other than an event described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such event,
Lender may by notice to Borrower, take either or both of the following actions,
at the same or different times: (i) terminate forthwith the Commitment in whole
or in part; and (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and all other
liabilities of Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by
Borrower and the Guarantors, anything contained herein or in any other Loan
Document to the contrary notwithstanding. In any event described in paragraph
(g) or (h) above, the Commitment shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
other liabilities of Borrower accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Borrower and the Guarantors, anything contained herein or in
any other Loan Document to the contrary notwithstanding.

                                       41
<PAGE>
                                   ARTICLE IX

                                  MISCELLANEOUS

      SECTION 9.01. NOTICES. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:

                      (a)  if to any Loan Party, to Borrower at:

                               Mindspeed Technologies, Inc.
                               4000 MacArthur Boulevard
                               Newport Beach, California  92660-3095
                               Attention:  Simon Biddiscombe
                               Phone:  (949) 579-3000
                               Telecopy No.:  (949) 579-5289;

                               With a courtesy copy to:

                               Chadbourne & Parke LLP
                               30 Rockefeller Plaza
                               New York, New York  10112
                               Attention:  Peter R. Kolyer, Esq.
                               Phone:  (212) 408-5100
                               Telecopy No.:  (212) 541-5369

                      (b)  if to Conexant, to it at:

                               Conexant Systems, Inc.
                               4311 Jamboree Road
                               Newport Beach, California  92660-3095
                               Attention:   Dennis E. O'Reilly, Esq.,
                                            Senior Vice President,
                                            General Counsel and Secretary
                               Phone:  (949) 483-4600
                               Telecopy No.:  (949) 483-6388;

                               With a courtesy copy to:

                               Chadbourne & Parke LLP
                               30 Rockefeller Plaza
                               New York, New York  10112
                               Attention:  Peter R. Kolyer, Esq.
                               Phone:  (212) 408-5100
                               Telecopy No.:  (212) 541-5369

            (c) if to a Lender other than Conexant, to it at its address (or
      telecopy number) set forth in the Assignment and Acceptance pursuant to
      which such Lender shall have become a party hereto.

                                       42
<PAGE>
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or by certified or registered mail, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01, and failure to deliver courtesy copies of
notices and other communications shall in no event affect the validity or
effectiveness of such notices and other communications.

      SECTION 9.02. WAIVERS; AMENDMENT.

                  (a) No failure or delay by Lender in exercising any right or
            power hereunder or under any other Loan Document shall operate as a
            waiver thereof, nor shall any single or partial exercise of any such
            right or power, or any abandonment or discontinuance of steps to
            enforce such a right or power, preclude any other or further
            exercise thereof or the exercise of any other right or power. The
            rights and remedies of Lender hereunder and under the other Loan
            Documents are cumulative and are not exclusive of any rights or
            remedies that they would otherwise have. No waiver of any provision
            of any Loan Document or consent to any departure by any Loan Party
            therefrom shall in any event be effective unless the same shall be
            permitted by Section 9.02(b), and then such waiver or consent shall
            be effective only in the specific instance and for the purpose for
            which given. Without limiting the generality of the foregoing, the
            making of a Loan shall not be construed as a waiver of any Default,
            regardless of whether Lender may have had notice or knowledge of
            such Default at the time.

                  (b) Neither this Agreement nor any other Loan Document nor any
            provision hereof or thereof may be waived, amended or modified
            except, in the case of this Agreement, pursuant to an agreement or
            agreements in writing entered into by Borrower and Lender or, in the
            case of any other Loan Document, pursuant to an agreement or
            agreements in writing entered into by Lender and the Loan Party or
            Loan Parties that are parties thereto.

      SECTION 9.03. EXPENSES; INDEMNITY.

                  (a) Borrower agrees to pay all reasonable out-of-pocket
            expenses (including reasonable legal fees and expenses of counsel,
            expenses incurred in connection with due diligence and travel,
            courier, reproduction, printing and delivery expenses) incurred by
            Lender in connection with the preparation, execution and delivery,
            administration of this Agreement and the other Loan Documents or in
            connection with any amendments, modifications, enforcement costs or
            waivers of the provisions hereof or thereof (whether or not the
            transactions hereby or thereby contemplated shall be consummated),
            or incurred by Lender, in connection with the enforcement or
            protection of its rights in connection with this Agreement and the
            other Loan Documents or in connection with the Loans made hereunder,
            including the reasonable fees, charges and disbursements of
            Chadbourne & Parke LLP, special counsel for Lender (and one local
            counsel in each foreign jurisdiction where Lender deems such local
            counsel advisable and any additional counsel to Lender required in
            the event of a conflict of interest), and, in connection with any
            such enforcement or protection, the fees, charges and disbursements
            of any consultants and advisors in connection with any out-of-court
            workout or in any bankruptcy case.

                                       43
<PAGE>
                  (b) Except to the extent otherwise limited in accordance with
            applicable Requirements of Law as described in Annex I attached
            hereto, the Loan Parties agree, jointly and severally, to indemnify
            Lender, each Affiliate of Lender, and each of their respective
            directors, officers, trustees, employees and agents (each such
            person being called an "INDEMNITEE") against, and to hold each
            Indemnitee harmless from, all reasonable out-of-pocket costs and any
            and all losses, claims, damages, liabilities and related expenses,
            including reasonable counsel fees, charges and disbursements,
            incurred by or asserted against any Indemnitee arising out of, in
            any way connected with, or as a result of (i) any actual or proposed
            use of the proceeds of the Loans; or (ii) any claim, litigation,
            investigation or proceeding relating to any of the foregoing,
            whether or not any Indemnitee is a party thereto; or (iii) any
            Transaction Document; provided that, such indemnity shall not, as to
            any Indemnitee, be available to the extent that such losses, claims,
            damages, liabilities or related expenses are determined by a court
            of competent jurisdiction by final and nonappealable judgment to
            have resulted from the bad faith, gross negligence or willful
            misconduct of such Indemnitee.

                  (c) The provisions of this Section 9.03 shall remain operative
            and in full force and effect regardless of the expiration of the
            term of this Agreement, the consummation of the Transactions
            contemplated hereby, the repayment of any of the Loans, the
            expiration of the Commitment, the invalidity or unenforceability of
            any term or provision of this Agreement or any other Loan Document,
            or any investigation made by or on behalf of Lender. All amounts due
            under this Section 9.03 shall be payable on written demand therefor
            accompanied by reasonable documentation with respect to any
            reimbursement, indemnification or other amount requested.

      SECTION 9.04. 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 no Loan Party
            may assign or otherwise transfer any of its rights or obligations
            hereunder without the prior written consent of Lender (and any
            attempted assignment or transfer by any Loan Party without such
            consent shall be null and void). Nothing in this Agreement, express
            or implied, shall be construed to confer upon any person (other than
            the parties hereto, their respective successors and assigns
            permitted hereby and, to the extent expressly contemplated hereby,
            the Indemnitees) any legal or equitable right, remedy or claim under
            or by reason of this Agreement.

                  (b) Lender may assign to one or more assignees all or a
            portion of its rights and obligations under this Agreement
            (including all or a portion of its Commitment and the Loans at the
            time owing to it); provided that, (i) except in the case of an
            assignment to an Affiliate of a Lender, Borrower must give its prior
            written consent to such assignment (which consent shall not be
            unreasonably withheld or delayed); (ii) except in the case of an
            assignment of the entire remaining amount of the assigning Lender's
            Commitment or Loans, the amount of the Commitment or Loans of the
            assigning Lender subject to each such assignment (determined as of
            the date the Assignment and Acceptance with respect to such
            assignment is delivered to the Borrower) shall be in a principal
            amount that is an integral multiple of $500,000 and not less than
            $1.0 million, unless Borrower otherwise consents; (iii) each partial
            assignment shall be made as an assignment of a proportionate part of
            all the assigning

                                       44
<PAGE>
            Lender's rights and obligations under this Agreement; (iv) the
            parties to each assignment shall execute and deliver to Borrower an
            Assignment and Acceptance; provided further that, any consent of
            Borrower otherwise required under this Section 9.04(b) shall not be
            required if a Default or an Event of Default under Article VIII has
            occurred and is continuing. Subject to acceptance, from and after
            the effective date specified in each Assignment and Acceptance, the
            assignee thereunder shall be a party hereto and, to the extent of
            the interest assigned by such Assignment and Acceptance, have the
            rights and obligations of Lender under this Agreement (provided
            that, any liability of Borrower to such assignee under Section 2.09
            shall be limited to the amount, if any, that would have been payable
            thereunder by Borrower in the absence of such assignment), and the
            assigning Lender thereunder shall, to the extent of the interest
            assigned by such Assignment and Acceptance, be released from its
            obligations under this Agreement (and, in the case of an Assignment
            and Acceptance covering all of the assigning Lender's rights and
            obligations under this Agreement, such Lender shall cease to be a
            party hereto but shall continue to be entitled to the benefits of
            Sections 2.09 and 9.03).

                  (c) Upon its receipt of a duly completed Assignment and
            Acceptance executed by an assigning Lender and an assignee, the
            assignee's completed Administrative Questionnaire, and any written
            consent to such assignment required by Section 9.04(b), such
            Assignment and Acceptance shall become effective for all purposes.

                  (d) Lender may at any time pledge or assign a security
            interest in all or any portion of its rights under this Agreement to
            secure its obligations, including any pledge or assignment to secure
            obligations to a Federal Reserve Bank, and the other provisions of
            this Section 9.04 shall not apply to any such pledge or assignment
            of a security interest; provided that, no such pledge or assignment
            of a security interest shall release Lender from any of its
            obligations hereunder or substitute any such pledgee or assignee for
            Lender as a party hereto.

      SECTION 9.05. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.09 and 9.03 shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the expiration
or termination of the Commitments or the termination of this Agreement or any
provision hereof.

      SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may
be executed in counterparts (and by different parties hereto on 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

                                       45
<PAGE>
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Article IV, this Agreement shall become effective when it shall
have been executed by the parties hereto, and thereafter shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. 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.

      SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

      SECTION 9.08. RIGHT OF SET-OFF. If an Event of Default shall have occurred
and be continuing, Lender and each of its Affiliates are hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final (other than deposits in trust accounts)) at any time held
and other obligations at any time owing by Lender or Affiliate to or for the
credit or the account of any Loan Party against any of and all the obligations
of any Loan Party now or hereafter existing under this Agreement held by Lender,
irrespective of whether or not Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of Lender
under this Section 9.08 are in addition to other rights and remedies (including
other rights of set-off) that Lender may have.

      SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

                  (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
            GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTIONS
            5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
            YORK).

                  (b) Each Loan Party hereby irrevocably and unconditionally
            submits, for itself and its property, to the nonexclusive
            jurisdiction of the Supreme Court of the State of New York sitting
            in New York County 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
            any Loan Document, or for recognition or enforcement of any
            judgment, and each of the parties hereto hereby 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 or,
            to the extent permitted by 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 any other Loan
            Document shall affect any right that any Lender may otherwise have
            to bring any action or proceeding relating to this Agreement or any
            other Loan Document against any Loan Party or its properties in the
            courts of any jurisdiction.

                  (c) Each Loan Party hereby irrevocably and unconditionally
            waives, to the fullest extent it may legally and effectively do so,
            any objection that it may now or hereafter have to the laying of
            venue of any suit, action or proceeding arising out of or relating
            to this Agreement or any other Loan Document in any court referred
            to in

                                       46
<PAGE>
            Section 9.09(b). Each of the parties hereto hereby irrevocably
            waives, to the fullest extent permitted by law, the defense of an
            inconvenient forum to the maintenance of such action or proceeding
            in any such court.

                  (d) Each party to this Agreement irrevocably consents to
            service of process in the manner provided for notices in Section
            9.01. Nothing in this Agreement or any other Loan Document will
            affect the right of any party to this Agreement to serve process in
            any other manner permitted by law.

      SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.10.

      SECTION 9.11. CONFIDENTIALITY. Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates' directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential pursuant to the terms hereof); (b) to the extent
requested by any regulatory authority; (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process; (d) to any
other party to this Agreement; (e) in connection with the exercise of any
remedies hereunder or any suit, 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 9.11, to any assignee of, or any prospective assignee of,
any of its rights or obligations under this Agreement; (g) with the consent of
Borrower; or (h) to the extent such Information (i) is publicly available at the
time of disclosure or becomes publicly available other than as a result of a
breach of this Section 9.11, or (ii) becomes available to Lender on a
nonconfidential basis from a source other than Borrower or any Subsidiary. For
the purposes of this Section 9.11, "INFORMATION" shall mean all information
received from Borrower or any Subsidiary on a confidential basis relating to
Borrower or any Subsidiary or its business, other than any such information that
is available to any Lender on a nonconfidential basis prior to disclosure by
Borrower or any Subsidiary. Any person required to maintain the confidentiality
of Information as provided in this Section 9.11 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.

                            [signature pages follow]

                                       47
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                               MINDSPEED TECHNOLOGIES, INC., a
                                               Delaware corporation, as Borrower

                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                     III-1
<PAGE>
                                               CONEXANT SYSTEMS, INC., as Lender

                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                     III-2

<PAGE>

                                                                      EXHIBIT  A

                                  DEFINED TERMS
                              RULES OF CONSTRUCTION

1.01.    DEFINED TERMS.

         "AFFILIATE" means, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with the person specified;
provided, however, that, for purposes of Section 6.06, the term "AFFILIATE"
shall also include any person, other than Conexant, that directly or indirectly
owns more than 10% of any class of Equity Interests of the person specified or
that is an officer or director of the person specified.

         "AGREEMENT" means this Agreement, as amended, restated, supplemented or
otherwise modified from time to time.

         "AGREEMENT AND ESTOPPEL CERTIFICATE" means any Agreement and Estoppel
Certificate between a Loan Party, as tenant, and the applicable holder of the
fee interest, as landlord, substantially in the form of Exhibit E-1.

         "ASSET SALE" means (a) any conveyance, sale, lease, sublease,
assignment, transfer, license or other disposition (including by way of merger
or consolidation and including any sale and leaseback transaction) of any
property (including stock of any Subsidiary by the holder thereof) by Borrower
or any of its Subsidiaries to any person other than a Loan Party (other than
sales and other dispositions of inventory, and licensing of Intellectual
Property in the ordinary course of business consistent with past practices) and
(b) any issuance or sale by any Subsidiary of its Equity Interests to any person
other than a Loan Party.

         "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by Lender and its assignee, in the form of Exhibit B, or such other form as
shall be approved by Borrower.

         "ATTRIBUTABLE INDEBTEDNESS" means, when used with respect to any sale
and leaseback transaction, as at the time of determination, the present value
(discounted at a rate equivalent to Borrower's then-current weighted-average
cost of funds for borrowed money as at the time of determination, compounded on
a semi-annual basis) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in any such sale and leaseback
transaction.

         "AVAILABILITY PERIOD" means the period from and including the Closing
Date to the first to occur of (x) the Final Maturity Date, and (y) any
termination of the Commitment pursuant to Section 2.06 or Article VIII hereof.

         "BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.

         "BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.

         "BORROWER" has the meaning assigned to such term in the preamble
hereto.

                                      A-1
<PAGE>
         "BORROWER COMMON STOCK" means the common stock $0.01 par value per
share of Borrower, together with the associated preferred share purchase rights.

         "BORROWING REQUEST" means a request for a Loan by Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C, or such other form as shall be approved by Lender, appropriately
completed in conformity with this Agreement and signed by the Chief Executive
Officer or Chief Financial Officer of Borrower.

         "BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which banks in California or Michigan are authorized or required by law to
close.

         "BUSINESS UNIT" means, with respect to Borrower or any Subsidiary, (i)
any "segment," as defined by GAAP, reflected in Borrower's financial statements
included in filings made under the Exchange Act and (ii) any business unit,
product line or product, or any combination thereof, that, consistent with past
practice under Borrower's internal controls and procedures for accounting
matters, separately reports Revenue for purposes of preparing Borrower's
financial statements under GAAP.

         "CAPITAL EXPENDITURES" means, with respect to any person, for any
period, the aggregate of all expenditures of such person and its Consolidated
Subsidiaries for the acquisition of fixed or capital assets which should be
capitalized under GAAP on a consolidated balance sheet of such person and its
Consolidated Subsidiaries.

         "CAPITAL LEASE OBLIGATIONS" of any person means the obligations of such
person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

         "CASH BALANCE" means the sum, as of the last Business Day of a fiscal
month, of all cash and all Permitted Investments, as shown on the Borrower's
balance sheet for such fiscal month, and for this purpose, all amounts of cash
and Permitted Investments held by Borrower and its Subsidiaries shall be
included in the Cash Balance, without regard to any characterization or
treatment of such amounts (whether as cash and cash equivalents, short-term
investments, or other assets) on Borrower's balance sheet or under GAAP.

         "CASUALTY EVENT" means, with respect to any property (including Real
Property) of any person, any loss of title with respect to such property or any
loss of or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such property for which such
person or any of its subsidiaries receives insurance proceeds or proceeds of a
condemnation award or other compensation. "CASUALTY EVENT" includes any taking
of all or any part of any Real Property of any person or any part thereof, in or
by condemnation or other eminent domain proceedings pursuant to any law, or by
reason of the temporary requisition of the use or occupancy of all or any part
of any Real Property of any person or any part thereof by any Governmental
Authority, civil or military.

         "CHANGE OF CONTROL" shall have the meaning assigned to such term in the
By-Laws of the Borrower as in effect on the Closing Date, without giving effect
to any amendment thereof after the Closing Date.

         "CHARGES" has the meaning assigned to such term in Section 2.05(f).

                                      A-2
<PAGE>
         "CLOSING DATE" means June 27, 2003.

         "COLLATERAL" means all of the Security Agreement Collateral, any
Mortgaged Real Property and all other property of whatever kind and nature
pledged as collateral under any Security Document.

         "COLLATERAL ASSIGNMENT OF LEASE" means a Collateral Assignment of Lease
in form and substance reasonably satisfactory to Lender.

         "COMMITMENT" means Lender's commitment to make Loans hereunder in the
amount set forth on Annex II, or in the Assignment and Acceptance pursuant to
which such Lender assumed its Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments pursuant to Section 9.04. The initial
aggregate amount of Lender's Commitment is $50.0 million.

         "COMPANIES" means Borrower and its Subsidiaries; and "COMPANY" means
any one of them.

         "COMPANY FACILITY LEASE" has the meaning assigned to such term in
Section 3.05(b).

         "COMPANY LEASE" means any Company Facility Lease and any Company
Property Lease, individually and collectively.

         "COMPANY PROPERTY LEASE" has the meaning assigned to such term in
Section 3.05(b).

         "CONSOLIDATED COMPANIES" means Borrower and its Consolidated
Subsidiaries.

         "CONSOLIDATED TANGIBLE NET WORTH" means, at any time:

                           (a) the total assets of Borrower and its Subsidiaries
                  which would be shown as assets on a consolidated balance sheet
                  of Borrower and its Subsidiaries as of such time prepared in
                  accordance with GAAP, after eliminating all amounts properly
                  attributable to minority interests, if any, in the stock and
                  surplus of Subsidiaries, minus

                           (b) the total liabilities of Borrower and its
                  Subsidiaries which would be shown as liabilities on a
                  consolidated balance sheet of Borrower and its Subsidiaries as
                  of such time prepared in accordance with GAAP, minus

                           (c) the net book value of all assets, after deducting
                  any reserves applicable thereto, which would be treated as
                  intangible under GAAP, including, without limitation, good
                  will, trademarks, trade names, service marks, brand names,
                  copyrights, patents and unamortized debt discount and expense,
                  organizational expenses and the excess of the equity in any
                  Subsidiary over the cost of the investment in such Subsidiary.

         "CONSOLIDATED SUBSIDIARIES" means, as to any person, all subsidiaries
of such person that are consolidated with such person for financial reporting
purposes in accordance with GAAP.

         "CONTESTED COLLATERAL LIEN CONDITIONS" means, with respect to any
Permitted Lien of the type described in Sections 6.02(a), (b) and (e), the
following conditions:

                                      A-3
<PAGE>
                           (a) any proceeding instituted contesting such Lien
                  shall conclusively operate to stay the sale or forfeiture of
                  any portion of the Collateral on account of such Lien;

                           (b) at the option and upon request of Lender, the
                  appropriate Loan Party shall maintain cash reserves in an
                  amount sufficient to pay and discharge such Lien and Lender's
                  reasonable estimate of all interest and penalties related
                  thereto; and

                           (c) such Lien shall in all respects be subject and
                  subordinate in priority to the Lien and security interest
                  created and evidenced by the Security Documents, except if and
                  to the extent that the law or regulation creating, permitting
                  or authorizing such Lien provides that such Lien is or must be
                  superior to the Lien and security interest created and
                  evidenced by the Security Documents.

         "CONTINGENT OBLIGATION" means, as to any person, any obligation of such
person guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations ("PRIMARY OBLIGATIONS") of any other person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including any
obligation of such person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor; (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor; (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation; or (d)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term "CONTINGENT
OBLIGATION" shall not include (w) endorsements of instruments for deposit or
collection in the ordinary course of business consistent with past practices,
(x) any product warranties issued on products by Borrower or any of its
Subsidiaries in the ordinary course of business consistent with past practices,
(y) any obligation to buy back products in the ordinary course of business
consistent with past practices made pursuant to the buyback policy of Borrower
and its Subsidiaries or pursuant to applicable Requirements of Law, and (z) any
operating lease guarantees (other than in respect of Synthetic Lease
Obligations) executed by Borrower in the ordinary course of business consistent
with past practices. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made (or, if less,
the maximum amount of such primary obligation for which such person may be
liable pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such person is required to
perform thereunder) as determined by such person in good faith.

         "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 ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.

         "CONTROL AGREEMENT" has the meaning assigned to such term in the U.S.
Security Agreement.

         "DEFAULT" means any event or condition that is, or upon notice or lapse
of time or both would constitute, an Event of Default.

                                      A-4
<PAGE>
         "DISCONTINUED REVENUE" means, with respect to any Business Unit sold or
proposed to be sold in a Permitted Business Disposition, the Revenue of such
Business Unit for the twelve consecutive fiscal month period preceding the date
a binding commitment is made for the sale of such Business Unit.

         "DISTRIBUTION" means the distribution by Conexant to its shareholders
of shares of Borrower Common Stock as provided in the Form 10.

         "DISTRIBUTION AGREEMENT" means the distribution agreement between
Conexant and Borrower, dated June 27, 2003.

         "DISTRIBUTION DATE" means the date of the Distribution.

         "DIVIDEND" with respect to any person means that such person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
consideration any shares of any class of its capital stock outstanding on or
after the Closing Date (or any options or warrants issued by such person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such person outstanding on or after the Closing Date (or any options or
warrants issued by such person with respect to its capital stock). Without
limiting the foregoing, "DIVIDEND" with respect to any person also includes all
payments made or required to be made by such person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any similar
plans or setting aside of any funds for the foregoing purposes.

         "DOLLARS" or "$" means the lawful money of the United States of
America.

         "DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of
the United States of America, any state thereof or the District of Columbia.

         "DOMESTICATED FOREIGN SUBSIDIARY" means a Foreign Subsidiary which has
become domesticated into the United States of America.

         "EQUITY INTEREST" means, with respect to any person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
person, including, if such person is a partnership, partnership interests
(whether general or limited) and any other interest (other than an interest
constituting Indebtedness) or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of assets of,
such partnership, whether outstanding on or issued after the date hereof.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.

         "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with Borrower, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Tax Code.

                                      A-5
<PAGE>
         "ERISA EVENT" means (a) any "reportable event," as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan
(other than an event for which the 30-day notice period is waived by
regulation); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Tax Code or Section 302 of
ERISA), whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Tax Code with respect to any Plan or the
failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Tax Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan, or the occurrence of
any event or condition that could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the incurrence by any Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal from any Plan or
Multiemployer Plan; (g) the receipt by any Company or its ERISA Affiliates of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the making of any
amendment to any Plan that could result in the imposition of a lien or the
posting of a bond or other security; (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Tax Code or
Section 406 of ERISA) that could result in a Material Adverse Effect; (j) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Tax Code or
pursuant to ERISA with respect to any Plan; and (k) the assertion of a material
claim (other than routine claims for benefits) against any Plan or the assets
thereof, or against any Company or any ERISA Affiliates in connection with any
Plan.

         "EVENT OF DEFAULT" has the meaning assigned to such term in Article
VIII.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCLUDED TAXES" means, with respect to any payment to Lender made by
or on account of any obligation of Borrower hereunder, federal, state or local
income or franchise taxes imposed on (or measured by) Lender's net income by the
United States of America or by any other jurisdiction in which Lender is
organized.

         "EXPOSURE" means, with respect to Lender at any time, the aggregate
principal amount at such time of all outstanding Loans of Lender excluding from
principal, for purposes of this definition, any amount of interest which has
been capitalized and become principal as provided in Section 2.05(d).

         "FAIR MARKET VALUE" means on the day of valuation, for (a) any Equity
Interest, with respect to each share, interest, participation or other
equivalent (i) the last reported sale price regular way or, in case no such sale
takes place on such day, the average of the closing bid and asked prices regular
way, in either case as reported on the principal national securities exchange on
which the share, interest, participation or other equivalent is listed or
admitted for trading or (ii) if the share, interest, participation or other
equivalent is not listed or admitted for trading on any national securities
exchange, the last reported sale price or, in case no such sale takes place on
such day, the average of the highest reported bid and the lowest reported asked
quotation for the share, interest, participation or other equivalent, in either
case as quoted on the NASDAQ National Market System or the NASDAQ Small Cap
Market or (iii) if the share, interest,

                                      A-6
<PAGE>
participation or other equivalent is not listed or admitted for trading on any
national securities exchange or quoted on the NASDAQ National Market System or
the NASDAQ Small Cap Market, the last reported sale price or, in case no such
sale takes place on such day, the average of the highest reported bid and the
lowest reported asked quotation for the share, interest, participation or other
equivalent , in either case as reported on NASDAQ or a similar service if NASDAQ
is no longer reporting such information; and (b) any asset other than an Equity
Interest and any Equity Interest for which prices can not be obtained in
accordance with clause (a) above, the fair market value thereof as determined in
good faith by an independent auditor mutually agreed to by the Borrower and
Lender.

         "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.

         "FINAL MATURITY DATE" means June 29, 2007.

         "FINANCIAL OFFICER" of any person means the chief financial officer,
principal accounting officer, treasurer or controller of such person.

         "FOREIGN PLAN" means any employee benefit plan, program, policy,
arrangement or agreement that would be an "employee pension benefit plan" under
Section 3(2) of ERISA if such plan, program, policy, arrangement or agreement
was not maintained outside the United States primarily for the benefit of
persons substantially all of whom are nonresident aliens with respect to which
any Company could incur liability.

         "FOREIGN SECURITY AGREEMENTS" means each security, pledge or similar
agreement necessary or desirable to evidence the grant of a security interest or
pledge of assets of any Subsidiary Guarantor that is a Foreign Subsidiary and
that is required hereunder, in each case in form and substance satisfactory to
Lender and as such agreement may thereafter be amended, supplemented or
otherwise modified from time to time.

         "FOREIGN SUBSIDIARY" means a Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any state thereof or the
District of Columbia.

         "FORM 10" means the registration statement on Form 10 filed by Borrower
with the Securities and Exchange Commission as effective June , 2003,as amended.

         "GAAP" means generally accepted accounting principles in the United
States.

         "GOVERNMENTAL AUTHORITY" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.

         "GUARANTEED OBLIGATIONS" has the meaning assigned to such term in
Section 7.01.

         "GUARANTEES" means the guarantees issued pursuant to Article VII (or
pursuant to any other form of guarantee required by applicable Requirements of
Law and in form and substance reasonably satisfactory to Lender) by Borrower and
the Subsidiary Guarantors.

                                      A-7
<PAGE>
         "GUARANTORS" has the meaning assigned to such term in the preamble
hereof.

         "HEDGING AGREEMENT" means any interest rate derivative contract,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

         "IMMATERIAL SUBSIDIARY" means a Subsidiary that has less than $1.0
million in assets (based on the amounts thereof reflected on such Subsidiary's
most recent balance sheet prepared in accordance with GAAP) and generates less
than $1.0 million of net revenues during any fiscal year (based on the amount
thereof reflected on such Subsidiary's most recent income statement prepared in
accordance with GAAP) or, in the case of a Subsidiary without prior operating
history, is reasonably projected by Borrower to generate less than $1.0 million
of net revenues during its first full year of operation. All Immaterial
Subsidiaries in existence on the Closing Date are identified on Schedule
1.01(a).

         "INDEBTEDNESS" of any person means, without duplication, (a) all
obligations of such person for borrowed money; (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such person upon which interest charges are customarily paid or
accrued; (d) all obligations of such person under conditional sale or other
title retention agreements relating to property purchased by such person; (e)
all obligations of such person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable incurred in the
ordinary course of business on normal trade terms and not overdue by more than
90 days or, if overdue for more than 90 days, as to which a dispute exists and
adequate reserves in conformity with GAAP have been established); (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed; (g) all Capital Lease Obligations, Purchase
Money Obligations and Synthetic Lease Obligations of such person; (h) all
obligations of such person in respect of Hedging Agreements; provided that, the
amount of Indebtedness of the type referred to in this clause (h) of any person
shall be zero unless and until such Indebtedness shall be terminated, in which
case the amount of such Indebtedness shall be the then termination payment due
thereunder by such person; (i) all obligations of such person as an account
party in respect of letters of credit, letters of guaranty and bankers'
acceptances; (j) all Attributable Indebtedness of such person; and (k) all
Contingent Obligations of such person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (j) above. The
Indebtedness of any person shall include the Indebtedness of any other entity
(including any partnership in which such person is a general partner) to the
extent such person is liable therefor as a result of such person's ownership
interest in or other relationship with such entity, except to the extent that
the terms of such Indebtedness provide that such person is not liable therefor.

         "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.

         "INDEMNITEE" has the meaning assigned to such term in Section 9.03(b).

         "INFORMATION" has the meaning assigned to such term in Section 9.11.

         "INTELLECTUAL PROPERTY" has the meaning assigned to such term in the
U.S. Security Agreement.

                                      A-8
<PAGE>
         "INTERCOMPANY NOTE" means a promissory note, substantially in the form
of Exhibit G, evidencing Indebtedness payable by a payor Company to a payee Loan
Party.

         "INTEREST PAYMENT DATE" means with respect to any Loan, the last
Business Day of each March, June, September and December to occur during the
period that such Loan is outstanding and the Final Maturity Date.

         "INVESTMENTS" has the meaning assigned to such term in Section 6.03.

         "JOINDER AGREEMENT" means a joinder agreement substantially in the form
of Exhibit H.

         "LANDLORD LIEN WAIVER AND ACCESS AGREEMENT" means the Landlord Lien
Waiver and Access Agreement, substantially in the form of Exhibit E-2 or
otherwise in form and substance reasonably satisfactory to Lender.

         "LEASES" means any and all leases, subleases, tenancies, options,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.

         "LENDER" means Lender and any other person that has become a party
hereto pursuant to an Assignment and Acceptance.

         "LIEN" means, with respect to any property, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, any other type of preferential
arrangement in respect of such property or any filing of any financing statement
under the UCC or any other similar notice of Lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, and any agreement to give
any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such property; and (c) in the case of securities, any
transfer restriction (other than restrictions on transfer arising solely by
virtue of registration, qualification or similar requirements under the
securities laws of any jurisdiction), purchase option, call or similar right of
a third party with respect to such securities.

         "LOAN" means a Loan made by Lender to Borrower pursuant to Section
2.01.

         "LOAN DOCUMENTS" means this Agreement, each Guarantee, the Notes (if
any), the Warrant, the Registration Rights Agreement and the Security Documents.

         "LOAN PARTIES" means Borrower and the Subsidiary Guarantors.

         "MACARTHUR SUBLEASE" means the sublease between Lender and Borrower of
the Real Property located at 4000 MacArthur Boulevard, Newport Beach,
California.

          "MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
business, property, results of operations, prospects or condition (financial or
otherwise), of Borrower and its Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Loan Parties to

                                      A-9
<PAGE>
perform any of their obligations under any Loan Document; (c) material
impairment of the rights of or benefits or remedies available to the Lender
under any Loan Document; or (d) a material adverse effect on the Collateral or
the Liens in favor of Lender on the Collateral or the priority of such Liens.

         "MATERIAL ITEM" shall mean any property that is Collateral except for
any particular property that (x) is not material to the business, operations or
condition (financial or other) of any Loan Party and (y) has a book value of
less than $100,000, as shown on the most recent balance sheet of any Loan Party
prepared in accordance with GAAP.

         "MAXIMUM RATE" has the meaning assigned to such term in Section
2.05(f).

         "MONTHLY CASH BALANCE REPORT" has the meaning assigned to such term in
Section 5.01(d).

         "MORTGAGE" means an agreement, including a mortgage, deed of trust or
any other document, creating and evidencing a Lien on a Real Property, which
shall be in form and substance reasonably satisfactory to Lender, with such
schedules and including such provisions as shall be necessary to conform such
document to applicable or local law or as shall be customary under local law, as
the same may at any time be amended in accordance with the terms thereof and
hereof.

         "MORTGAGED REAL PROPERTY" means any Real Property that shall be subject
to a Mortgage delivered after the Closing Date pursuant to Section 5.10(d).

         "MULTIEMPLOYER PLAN" means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (a) to which any Company or any ERISA Affiliate is
then making or accruing an obligation to make contributions, (b) to which any
Company or any ERISA Affiliate has within the preceding five plan years made
contributions, or (c) with respect to which any Company or any ERISA Affiliate
could incur liability.

         "NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.

         "NEW WHOLLY OWNED SUBSIDIARY" has the meaning assigned to such term in
Section 5.10(b).

         "NON-GUARANTOR SUBSIDIARY" means (a) all of the Companies listed on
Schedule 3.06(a) (as in effect on the Closing Date), (b) each Subsidiary that
has been and remains released from its Guarantee in accordance with Section 7.09
hereof, and (c) each New Wholly Owned Subsidiary that is not required to become
a Guarantor hereunder in accordance with Section 5.10.

         "NOTES" means any notes evidencing the Loans issued pursuant to this
Agreement, if any, substantially in the form of Exhibit J.

         "OBLIGATIONS" means (a) obligations of each Loan Party from time to
time arising under or in respect of the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and (ii) all other monetary
obligations, including

                                      A-10
<PAGE>
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
each Loan Party under this Agreement and the other Loan Documents; and (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of each Loan Party under or pursuant to this Agreement and the other
Loan Documents.

         "OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.

         "PERFECTION CERTIFICATE" means a certificate in the form of Exhibit I-1
or any other form approved by Lender, as the same shall be supplemented from
time to time by a Perfection Certificate Supplement.

         "PERFECTION CERTIFICATE SUPPLEMENT" means a certificate supplement in
the form of Exhibit I-2 or any other form approved by Lender.

         "PERMITTED ACQUISITION" means any Investment, merger, consolidation, or
purchase of property, in one or a series of transactions, that satisfies all of
the following conditions:

                           (a) results in a Loan Party owning either (x) all of
                  the outstanding Equity Interests of another person that was
                  not a Subsidiary of Borrower prior to such transaction or (y)
                  all or substantially all of the business, operations and
                  assets of another person that was not a Subsidiary of Borrower
                  prior to such transaction (the "ACQUIRED BUSINESS");

                           (b) does not result in any Loan Party, incurring,
                  creating, assuming, guaranteeing, permitting to exist or
                  otherwise having any liability for, directly or indirectly,
                  any Indebtedness or any Liens (other than Permitted Liens);

                           (c) does not result in any Default or Event of
                  Default;

                           (d) The Purchase Price (as defined below) for:

                                    (i) any Acquired Business does not exceed
                  [120%] of the Fair Market Value of the Acquired Business;

                                    (ii) all Acquired Businesses acquired in any
                  fiscal year of the Borrower does not exceed, for any fiscal
                  year, $25,000,000 multiplied by the Pro Rata Percentage for
                  such fiscal year, reduced dollar for dollar by the amount of
                  any Capital Expenditures made or committed to be made by
                  Borrower or any other Loan Party in such fiscal year accounted
                  for in accordance with GAAP, and for purposes of this
                  definition, the Purchase Price for any Acquired Business shall
                  be allocated to the fiscal year in which a binding commitment
                  is made to acquire the Acquired Business, without regard to
                  when (1) the acquisition of the Acquired Business is
                  consummated

                                      A-11
<PAGE>
                  or (2) the Purchase Price is actually paid, and without regard
                  to when or how such Purchase Price may be accounted for in
                  accordance with GAAP;

                  For purposes of this definition, PURCHASE PRICE shall mean the
                  Fair Market Value of the property (whether cash, cash
                  equivalents, Equity Interests, or other property) used,
                  directly or indirectly, to pay (1) the purchase price, merger
                  consideration, tender offer or exchange offer consideration,
                  license or cross-license fees or other consideration
                  (including any (x) contingent consideration, valued for this
                  purpose assuming the maximum amount of contingent
                  consideration will be paid, and (y) any compensation, bonus or
                  other payment made to any shareholder, director, officer or
                  employee of the Acquired Business other than ordinary course
                  of business compensation for services to be performed
                  following the acquisition of the Acquired Business) for the
                  acquisition of the Acquired Business, and (2) all
                  out-of-pocket costs and expenses incurred in connection with
                  the acquisition of the Acquired Business (including any
                  investment banker, finder or broker fee or commission and any
                  accounting, legal or other professional expenses), without
                  regard to whether such costs and expenses would be accounted
                  for as purchase price in accordance with GAAP. Notwithstanding
                  anything to the contrary contained in clause (d)(ii) of this
                  definition, to the extent that the Permitted Acquisitions made
                  by Borrower and its Consolidated Subsidiaries in any fiscal
                  year are less than the amount permitted to be made in such
                  period (without giving effect to any additional amount
                  available as a result of this sentence), the amount of such
                  difference may be carried forward and used to make Permitted
                  Acquisitions in the next succeeding fiscal year of Borrower.

                           (e) does not have a Material Adverse Effect;

                           (f) upon the consummation of any acquisition that
                  results in a person becoming a Subsidiary of a Loan Party,
                  immediately following such acquisition:

                                    (i) 100% of the Equity Interest of any such
                  new Subsidiary is pledged and delivered to Lender for its
                  benefit under the applicable Security Agreement; and

                                    (ii) such Subsidiary becomes a party to the
                  applicable Security Documents and becomes a Subsidiary
                  Guarantor hereunder and executes a Joinder Agreement and other
                  applicable Loan Documents all in accordance with Section
                  5.10(b);

                           (g) upon the consummation of any acquisition that
                  results in any Loan Party acquiring any assets that are not
                  then subject to a perfected first priority security interest
                  or Lien of the Lender under the Security Documents,
                  immediately following such acquisition, the Loan Parties shall
                  execute and deliver to Lender such agreements and other
                  instruments, record such Mortgages and financing statements or
                  other documents and take such other actions as may be required
                  so that Lender has a perfected, first priority security
                  interest in or Lien on all such acquired assets, subject to no
                  Liens other than Permitted Liens.

         "PERMITTED BUSINESS DISPOSITION" means any Asset Sale that satisfies
all of the following conditions:

                           (a) the Equity Interest or other property sold is a
                  Business Unit;

                                      A-12
<PAGE>
                           (b) the Business Unit is sold for cash or cash
                  equivalents;

                           (c) the Asset Sale increases Borrower's Consolidated
                  Tangible Net Worth;

                           (d) the Asset Sale does not result in any Default or
                  Event of Default; and

                           (e) the aggregate amount of Discontinued Revenue for
                  such Business Unit and for all other Business Units for which
                  binding commitments for Asset Sales have been made after the
                  Closing Date, is less than 25% of Borrower's consolidated
                  Revenue for the 12 consecutive fiscal months immediately
                  preceding the month in which any binding commitment is or may
                  be made for such Asset Sale.

         "PERMITTED INVESTMENT" means any investment that Borrower is permitted
to make for the investment of surplus cash under Borrower's [Investment Policy
Statement for [Merganser] Capital Management] as in effect on the Closing Date.

         "PERMITTED LIENS" has the meaning assigned to such term in Section
6.02.

         "PERSON" means any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.

         "PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Tax Code or Section 307 of ERISA, and in respect of which any Company
or its ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA
or with respect to which any Company could incur liability.

         "PLEDGED EQUITY INTERESTS" has the meaning set forth in the Security
Agreements.

         "PLEDGED FOREIGN STOCK" shall mean the shares of capital stock of each
direct or indirect Foreign Subsidiary of Borrower owned by Borrower or any
Subsidiary of Borrower other than the Excluded Subsidiaries, including any and
all certificates and other instruments now or hereafter evidencing any such
capital stock.

         "PLEDGED INTERCOMPANY DEBT" has the meaning set forth in the Security
Agreements.

         "PRO RATA PERCENTAGE" shall mean for (i) each of the fiscal years
ending in 2004, 2005 and 2006, 1.0, (ii) for the fiscal year ending in 2003,
0.25 and (iii) for the fiscal year ending in 2007, 0.75.

         "PROPERTY" means any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any person and whether now in existence or owned or hereafter
entered into or acquired.

         "PURCHASE MONEY OBLIGATION" means, for any person, the obligations of
such person in respect of Indebtedness incurred for the purpose of financing all
or any part of the purchase price of any property (including Equity Interests of
any person) or the cost of installation, construction or improvement of any
property or assets and any refinancing thereof; provided, however, that

                                      A-13
<PAGE>
such Indebtedness is incurred within 90 days after such acquisition of such
property by such person.

         "REAL PROPERTY" means, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned, leased or operated by any person, whether by lease,
license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.

         "REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated June 27, 2003, entered into between Lender and Borrower in
connection with the issuance of the Warrant.

         "REGULATION T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

         "REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

         "REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

         "RELEASED GUARANTOR" has the meaning assigned to such term in Section
7.09.

         "REQUIREMENTS OF LAW" means, collectively, any and all requirements of
any Governmental Authority including any and all laws, ordinances, rules,
regulations or similar statutes or case law and all final orders, judgments,
decrees, injunctions, rulings or awards of any court of competent jurisdiction.

         "RESPONSIBLE OFFICER" of any corporation means any executive officer or
Financial Officer of such corporation and any other officer or similar official
thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.

         "REVENUE" means, for any person in respect of any period, the revenue
of such person for such period determined in accordance with GAAP as applied by
Borrower.

         "SECTION 5.10(b) LISTED SUBSIDIARIES" has the meaning assigned to such
term in Section 5.10(b).

         "SECURED PARTIES" has the meaning assigned to such term in the Security
Documents.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SECURITY AGREEMENTS" means, collectively, the U.S. Security Agreement
and each Foreign Security Agreement.

         "SECURITY AGREEMENT COLLATERAL" has the meaning set forth in any
Security Agreement delivered on the Closing Date or thereafter pursuant to the
terms of this Agreement.

                                      A-14
<PAGE>
         "SECURITY DOCUMENTS" means the Security Agreements, the Mortgages, the
Control Agreements, the Perfection Certificate, the Collateral Assignments of
Lease and each other security document or pledge agreement required by
applicable local law to grant a valid, perfected security interest in any
property acquired or developed, and all UCC or other financing statements or
instruments of perfection required by this Agreement, any Security Agreement,
Mortgage or Collateral Assignment of Lease to be filed with respect to the
security interests in property and fixtures created pursuant to any Security
Agreement, Mortgage or Collateral Assignment of Lease and any other document or
instrument utilized to pledge as collateral for the Obligations any property of
whatever kind or nature.

         "SUBSIDIARY" means, with respect to any person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held, or (b) that is, as of such date, otherwise Controlled, by
the parent or one or more Subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.

         "SUBSIDIARY GUARANTOR" means each Subsidiary listed on Schedule
1.01(b), each other Subsidiary that is or becomes a party to this Agreement
pursuant to Section 5.10 (but excluding any Released Guarantor that remains
released from its Guarantee in accordance with Section 7.09 hereof and including
each Foreign Subsidiary that enters into any other Guarantee required by
applicable Requirements of Law).

         "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).

         "TAX CODE" means the Internal Revenue Code of 1986, as amended.

         "TAXES" mean any and all present or future taxes, duties, levies, fees,
assessments, imposts, deductions, charges or withholdings, whether computed on a
separate, consolidated, unitary, combined or other basis and any and all
liabilities (including interest, fines, penalties or additions to tax) with
respect to the foregoing.

         "TAX REFUND" has the meaning assigned to such term in Section 2.09(f).

         "TAX RETURN" means all returns, statements, filings, attachments and
other documents or certifications required to be filed in respect of Taxes or
any amendments thereof or thereto.

         "TAX SHARING AGREEMENT" means the tax sharing agreement dated as of
June 27, 2003, among the Borrower and its Subsidiaries, as in effect on the
Closing Date and without giving effect to any subsequent amendment, waiver or
supplement thereof.

         "TITLE COMPANY" means any title insurance company as shall be retained
by Borrower and reasonably acceptable to Lender.

                                      A-15
<PAGE>
         "TITLE POLICY" has the meaning assigned to such term in Section
5.10(d).

         "TRANSACTION DOCUMENTS" means any and all documents entered into or
delivered in connection with the Transactions, including the Distribution
Agreement, the Tax Sharing Agreement and the Loan Documents.

         "TRANSACTIONS" means, collectively, the transactions to occur pursuant
to the Transaction Documents, including (a) the consummation of the
Distribution; (b) the execution and delivery of the Loan Documents; (c) any
borrowings pursuant to this Agreement; (d) the guarantees and grant of security
interests provided in the Loan Documents; (e) the issue of the Warrant; and (f)
the payment of all fees and expenses to be paid on or prior to the Closing Date
and owing in connection with the foregoing.

         "UCC" has the meaning set forth in the U.S. Security Agreement.

         "U.S. SECURITY AGREEMENT" means a Security Agreement substantially in
the form of Exhibit F among the Loan Parties for the benefit of the Secured
Parties, as the same may be amended in accordance with the terms thereof and
hereof, or such other agreements reasonably acceptable to Lender as shall be
necessary to comply with applicable Requirements of Law and effective to grant
to Lender a perfected, first-priority security interest in the Security
Agreement Collateral covered thereby.

         "VOTING STOCK" means any class or classes of capital stock of Borrower
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors of
Borrower.

         "WARRANT" means the warrant to acquire up to 8,333,334 shares of
Borrower's Common Stock to be issued to Lender.

         "WHOLLY OWNED SUBSIDIARY" means, as to any person, (a) any corporation
100% of whose capital stock (other than directors' qualifying shares) is at the
time owned by such person and/or one or more Wholly Owned Subsidiaries of such
person and (b) any partnership, association, joint venture, limited liability
company or other entity in which such person and/or one or more Wholly Owned
Subsidiaries of such person have a 100% equity interest at such time.

         "WHOLLY OWNED FOREIGN SUBSIDIARY" means any Wholly Owned Subsidiary
that is a Foreign Subsidiary.

         "WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

1.02. TERMS GENERALLY. 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 modified 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 (a) any definition of or reference to any agreement,
instrument of other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified in accordance with the provisions hereof and
thereof; (b) any reference herein to any person shall be

                                      A-16
<PAGE>
construed to include such person's successors and permitted assigns; (c) the
words "herein," "hereof" and "hereunder," and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision of this Agreement; (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to articles and sections of,
and exhibits and schedules to, this Agreement; and (e) 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. All references to the knowledge of any
Company or to facts known by any Company shall mean actual knowledge of any
Responsible Officer of any Loan Party or any of its Subsidiaries.

1.03. ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP, as in effect from time to time. Financial
statements and other information required to be delivered by Borrower to Lenders
pursuant to Sections 5.01(a), (b) and (c) shall be prepared in accordance with
GAAP as in effect at the time of such preparation.

1.04. HEADINGS. Article and section headings and the table of contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.

                                      A-17<PAGE>
                                                                    Exhibit 10.2

                                                                        [6/3/03]

                      MINDSPEED TECHNOLOGIES, INC. WARRANT

                                                                   June 27, 2003

THE WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.

                          MINDSPEED TECHNOLOGIES, INC.

                          COMMON STOCK PURCHASE WARRANT

                            Void after June 27, 2013

      MINDSPEED TECHNOLOGIES, INC. (the "COMPANY"), a Delaware corporation,
hereby certifies that for value received, CONEXANT SYSTEMS, INC., a Delaware
corporation, or its successors or assigns (the "HOLDER"), is entitled to
purchase, subject to the terms and conditions hereinafter set forth, at any time
during the Exercise Period (as hereinafter defined), Thirty Million (30,000,000)
fully paid and nonassessable shares of Common Stock (as hereinafter defined) at
an exercise price per share equal to the Exercise Price (as hereinafter
defined), subject to adjustment pursuant to the terms of this Warrant.

      This Warrant is issued pursuant to the Distribution Agreement (the
"DISTRIBUTION AGREEMENT"), dated as of the date hereof, between the Company and
Conexant Systems, Inc., and is subject to the terms thereof. Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to such terms in the Distribution Agreement. The Holder is entitled to
the rights and is subject to the obligations contained in the Distribution
Agreement and the Registration Rights Agreement, dated as of the date hereof,
between the Company and the Holder (as the same may be amended and supplemented
from time to time, the "REGISTRATION RIGHTS AGREEMENT") relating to this Warrant
and the shares of Common Stock issuable upon exercise of this Warrant.

      1.    DEFINITIONS. For the purposes of this Warrant, the following terms
            shall have the meanings indicated:

                                       1
<PAGE>

            "ADDITIONAL SHARES OF COMMON STOCK" shall have the meaning ascribed
to such term in Section 5(c) of this Warrant.

            "AMEX" means the American Stock Exchange.

            "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day when banks are authorized or required by law to be closed in
California or New York.

            "CAPITAL REORGANIZATION" shall have the meaning ascribed to such
term in Section 8 of this Warrant.

            "CHANGE OF CONTROL" shall have the meaning ascribed to that term in
the Bylaws of the Company as in effect at the Time of Distribution.

            "CLOSING PRICE" shall mean, with respect to each share of Common
Stock for any day, (a) the last reported sale price regular way or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices regular way, in either case as reported on the principal national
securities exchange on which the Common Stock is listed or admitted for trading
or (b) if the Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for the Common Stock, in either case as quoted on the
NASDAQ National Market System or the NASDAQ Small Cap Market or (c) if the
Common Stock is not listed or admitted for trading on any national securities
exchange or quoted on the NASDAQ National Market System or the NASDAQ Small Cap
Market, the last reported sale price or, in case no such sale takes place on
such day, the average of the highest reported bid and the lowest reported asked
quotation for the Common Stock, in either case as reported on NASDAQ or a
similar service if NASDAQ is no longer reporting such information.

            "COMMON STOCK" means the common stock, par value $.01 per share, of
the Company, together with the associated preferred share purchase rights, any
class of stock resulting from successive changes or reclassification of such
Common Stock and any and all other shares of capital stock of the Company
without preference with respect to liquidity distributions and entitled to
unlimited liquidation rights.

            "COMPANY" shall have the meaning ascribed to such term in the first
paragraph of this Warrant.

            "CONVERTIBLE SECURITIES" shall have the meaning ascribed to such
term in Section 5(b) of this Warrant.

            "CURRENT MARKET PRICE PER SHARE" shall have the meaning ascribed to
such term in Section 3(f) of this Warrant.

            "DISTRIBUTION AGREEMENT" shall have the meaning ascribed to such
term in the second paragraph of this Warrant.

                                       2
<PAGE>

            "EFFECTIVE PRICE " shall have the meaning ascribed to such term in
Section 5(c) of this Warrant.

            "ELECTION TO PURCHASE SHARES" shall have the meaning ascribed to
such term in Section 2(a) of this Warrant.

            "EXCLUDED ISSUANCE" shall mean (i) shares of Common Stock and/or
options, warrants or other Common Stock purchase rights issued and the Common
Stock issued pursuant to such options, warrants or other rights after the date
hereof to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements that are approved by the Board of Directors; provided that
such shares, options, warrants or other Common Stock purchase rights shall not
be Excluded Issuances in any case where the grantee acquires the shares, or
options, warrants or other rights to purchase Common Stock at a price per share
less than the Closing Price on the date of grant other than in connection with
adjustments to outstanding options to purchase shares of Conexant Systems, Inc.
as a result of the Distribution; and (ii) shares of Common Stock issued pursuant
to the exercise of rights, options, warrants or convertible securities
outstanding as of the date hereof.

            "EXERCISE DATE" shall have the meaning ascribed to such term in
Section 2(d) of this Warrant.

            "EXERCISE PERIOD" shall mean the period beginning on (x) the first
to occur of (i) the receipt of notice pursuant to Section 7 of this Warrant of
the occurrence of any of the events described in Section 7(b) or 7(c) of this
Warrant or (ii) the first anniversary of the date hereof and ending on (y) the
Expiration Date.

            "EXERCISE PRICE" shall mean the average of the daily volume weighted
average price per share of the Common Stock for the ten consecutive Trading Days
immediately following the Distribution Date, subject to adjustment pursuant to
Section 3 or 5 of this Warrant.

            "EXPIRATION DATE" shall mean 5:00 PM, California time, on June 27,
2013.

            "FIRST DILUTIVE ISSUANCE" shall have the meaning ascribed to such
term in Section 5(d).

            "HOLDER" shall have the meaning ascribed to such term in the first
paragraph of this Warrant and in Section 14(a) of this Warrant.

            "NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.

            "OFFICER'S CERTIFICATE" shall mean a certificate signed by the Chief
Executive Officer, the Chief Financial Officer or the Treasurer of the Company.

            "PAYMENT DATE" shall have the meaning ascribed to such term in
Section 3(c).

                                       3
<PAGE>
            "PERSON" shall mean any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.

            "PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2(a) of this Warrant.

            "QUALIFYING DILUTIVE ISSUANCE" shall have the meaning ascribed to
such term in Section 5(a) of this Warrant.

            "REGISTRATION RIGHTS AGREEMENT" shall have the meaning ascribed to
such term in the second paragraph of this Warrant.

            "SECURITIES ACT" has the meaning ascribed to such term in Section
9(a) of this Warrant.

            "SUBSEQUENT DILUTIVE ISSUANCE" shall have the meaning ascribed to
such term in Section 5(d) of this Warrant.

            "SUBSIDIARY" shall mean, with respect to any Person, a corporation
or other entity of which 50% or more of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.

            "TENDER EXPIRATION DATE" shall have the meaning ascribed to such
term in Section 3(d) of this Warrant.

            "TRADING DAY" shall mean, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which securities
are not generally traded on the principal exchange or market in which such
security is traded.

            "WARRANT" shall mean this Warrant and any subsequent Warrant issued
pursuant to the terms of this Warrant.

            "WARRANT REGISTER" shall have the meaning ascribed to such term in
Section 14(c) of this Warrant.

            "WARRANT SHARES" shall mean the shares of Common Stock issuable upon
exercise of this Warrant pursuant to Section 2(a) of this Warrant, without
regard to the last sentence thereof.

      2. EXERCISE OF WARRANT.

            (a) Exercise. This Warrant may be exercised, at any time and from
time to time during the Exercise Period (in whole or in part) by surrendering to
the Company at its principal office, this Warrant with an Election to Purchase
Shares (the "ELECTION TO PURCHASE SHARES") in the form attached hereto as
Exhibit A duly executed by the Holder and accompanied by payment equal to the
Exercise Price multiplied by the number of Warrant Shares for which this Warrant
is

                                       4
<PAGE>
being exercised at such time (the "PURCHASE PRICE"). Notwithstanding anything
contained herein, the Holder may not exercise this Warrant to the extent that
such exercise would result in the Holder owning at any one time more than 10% of
the then outstanding shares of Common Stock.

            (b) Delivery of Shares; Payment of Purchase Price. As soon as
practicable after surrender of this Warrant and receipt of the Purchase Price,
the Company shall promptly issue and deliver to the Holder a certificate or
certificates for the number of Warrant Shares for which this Warrant is being
exercised, in such name or names as may be designated by such Holder, along with
a check for the amount of cash to be paid in lieu of issuance of fractional
shares, if any. Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check, wire transfer, bank draft or postal or express money order
payable to the order of the Company, or (ii) by surrender of a number of shares
of Common Stock held by the Holder equal to the quotient obtained by dividing
(A) the Purchase Price by (B) the Closing Price on the Exercise Date.

            (c) Alternative Cashless Exercise. Notwithstanding any provision
herein to the contrary, in lieu of exercising this Warrant as set forth above,
if the Closing Price on the Exercise Date exceeds the Exercise Price, the Holder
may exercise this Warrant by electing to receive that number of Warrant Shares
as determined below by surrendering to the Company at its principal office, this
Warrant with the applicable Election to Purchase Shares duly executed by the
Holder and marked to reflect the cashless exercise of this Warrant, in which
event the Company shall issue to the Holder the number of shares of Common Stock
computed using the following formula:

                                CS = WS x (CP-EP)
                                     ------------
                                       CP

where:

      CS    equals the number of the Warrant Shares to be issued to the Holder

      WS    equals the number of Warrant Shares to be purchased as set forth in
            the applicable Election to Purchase Shares

      CP    equals the Closing Price on the Exercise Date

      EP    equals the Exercise Price

Following the surrender of this Warrant pursuant to this Subsection 2(c), the
Company shall promptly issue and deliver to the Holder a certificate or
certificates for that number of Warrant Shares to be issued to the Holder as
calculated above, in such name or names as may be designated by such Holder.

            (d) When Exercise Effective. The exercise of this Warrant shall be
deemed to have been effective immediately prior to the close of business on the
Business Day on which this Warrant is exercised in accordance with the
provisions of this Section 2 (the "EXERCISE DATE") and the Person in whose name
any certificate for shares of Common Stock shall be issuable upon

                                       5
<PAGE>
such exercise, as provided in Subsection 2(b), shall be deemed to be the record
holder of such shares of Common Stock for all purposes on the Exercise Date.

            (e) Warrant Shares Fully Paid, Nonassessable. The Company shall take
all actions necessary to ensure that following exercise of this Warrant in
accordance with the provisions of this Section 2, the Warrant Shares issued
hereunder shall, without further action by the Holder, be fully paid and
nonassessable.

            (f) Continued Validity. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part, shall continue to be
entitled to all of the rights and subject to all of the obligations set forth in
Section 14.

            (g) Exercise in Part. In connection with any exercise of this
Warrant for less than all remaining Warrant Shares, the Company shall, at the
time of the delivery of the stock certificate or certificates relating to any
such exercise, deliver to the Holder a new Warrant evidencing the right to
purchase the remaining Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical to this Warrant.

      3. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price shall be adjusted from
time to time upon the occurrence of the following events:

            (a) Common Stock Distributions, etc. In case the Company shall (i)
pay a dividend or make a distribution on its Common Stock in shares of Common
Stock, (ii) split or otherwise subdivide its outstanding Common Stock into a
greater number of shares or (iii) combine its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior thereto
shall be adjusted so that the price shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, of which (x) the numerator shall be the number of shares of Common
Stock outstanding immediately prior to such event and (y) the denominator shall
be the number of shares of Common Stock outstanding immediately after such
event. An adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of
subdivision or combination.

            (b) Rights, Options or Warrants Issuances. In case the Company shall
issue rights, options or warrants to all or substantially all holders of its
Common Stock entitling them (for a period commencing no earlier than the record
date described below and expiring not more than 60 days after such record date)
to subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price per share (or having an initial conversion price
per share) less than the Current Market Price Per Share on the record date for
the determination of stockholders entitled to receive such rights or warrants,
the Exercise Price in effect immediately prior thereto shall be adjusted so that
the same shall equal the price determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, of which (x) the
numerator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock that the aggregate
offering price of the total number of shares of Common Stock so offered (or the
aggregate initial conversion price of the convertible securities so offered,
which shall be determined by multiplying the number of

                                       6
<PAGE>

shares of Common Stock issuable upon exercise of such convertible securities by
the initial conversion price per share of Common Stock pursuant to the terms of
such convertible securities) would purchase at the Current Market Price Per
Share on such record date, and (y) the denominator shall be the number of shares
of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered (or into which the convertible securities so
offered are convertible); provided, however, that no adjustment shall be made if
the Company issues or distributes to the Holder the rights, options or warrants
which the Holder would have been entitled to receive had this Warrant been
exercised prior to the record date. Any such adjustment shall be made
successively whenever any such rights, options or warrants are issued, and shall
become effective immediately after the applicable record date therefor unless
such rights, options or warrants are not immediately exercisable, in which case,
any such adjustments shall be made at the time such rights, options or warrants
become exercisable.

            (c) Distributions Other Than Common Stock. If the Company after the
date hereof shall issue or distribute to all or substantially all holders of any
class of Common Stock evidences of its indebtedness, cash or other assets,
shares of capital stock of any class or any other securities or rights, options
or warrants to subscribe therefor (excluding (i) shares of Common Stock referred
to in subsection (a)(i) of this Section 3, (ii) those rights, options or
warrants referred to in subsection (b) of this Section 3 and (iii) the
distribution of rights to all holders of Common Stock pursuant to the adoption
of a stockholders' rights plan or the detachment of such rights under the terms
of such stockholders' rights plan), in each such case this Warrant shall
evidence the right to receive following the date on which such distribution
occurs (the "PAYMENT DATE"), upon its exercise, in addition to the Warrant
Shares deliverable upon such exercise, the kind and amount of indebtedness,
cash, or other assets, shares of capital stock, other securities or subscription
rights therefor described above that the Holder would have been entitled to
receive upon such distribution had the Holder exercised this Warrant immediately
prior to such distribution.

            (d) Tender Offers. (1) In case a tender offer (other than an odd lot
tender offer) by the Company for Common Stock is consummated at a price in
excess of the Closing Price of the Common Stock subject to such tender offer at
the expiration of such tender offer (the "TENDER EXPIRATION DATE"), the Exercise
Price in effect immediately prior thereto shall be adjusted to a price
determined by multiplying such Exercise Price by a fraction, of which (i) the
numerator shall be such Closing Price, less the amount of the excess of the
value of the tender offer price over the Closing Price, and (ii) the denominator
shall be the Closing Price, such adjustment to become effective immediately
prior to the opening of business on the day following such date of expiration.

                (2) For purposes of this Subsection 3(d), the term "tender
offer" shall mean and include both tender offers and exchange offers (within the
meaning of United States federal securities laws), all references to purchases
of shares in tender offers (and all similar references) shall mean and include
both the purchase of shares in tender offers and the acquisition of shares
pursuant to exchange offers, and all references to tendered shares (and all
similar references) shall mean and include shares tendered in both tender offers
and exchange offers.

            (e) For purposes of Subsections 3(a), 3(b) and 3(c), any dividend or
distribution to which Subsection 3(c) is applicable that also includes shares of
Common Stock, a subdivision of

                                       7
<PAGE>

Common Stock or a combination of Common Stock to which Subsection 3(a) applies,
or rights, options or warrants to subscribe for or purchase shares of Common
Stock to which Subsection 3(b) applies (or any combination thereof), shall be
deemed instead to be:

                (i) first, a dividend or distribution of the evidences of
indebtedness, cash, other assets, shares of capital stock, other securities or
subscription rights, other than such shares of Common Stock, such subdivision or
combination or such rights, options or warrants to which Subsections 3(a) and
3(b) apply, respectively, immediately followed by

                (ii) second, a dividend or distribution of such shares of Common
Stock, such subdivision or combination or such rights, options or warrants to
which Subsections 3(a) and 3(b) apply (and any further Exercise Price reduction
required by Subsections 3(a) and 3(b) with respect to such dividend or
distribution shall then be made).

            (f) Current Market Price Per Share. For the purpose of any
computation under subsection (b) of this Section 3 or Section 5, the current
market price per share of Common Stock (the "CURRENT MARKET PRICE PER SHARE") on
any date shall be deemed to be the average of the daily Closing Prices for the
30 consecutive Trading Days commencing 45 Trading Days before the such date.

            (g) Deferral of Issuance. In any case in which this Section 3 shall
require that an adjustment be made following a record date or a Payment Date or
Tender Expiration Date, as the case may be, established for purposes of this
Section 3, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Holder of the certificate described
in Section 5) issuing to the Holder of any Warrant exercised after such record
date or Payment Date or Tender Expiration Date the shares of Common Stock and
other capital stock of the Company issuable upon such exercise over and above
the shares of Common Stock and other capital stock of the Company issuable upon
such exercise only on the basis of the Exercise Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agent to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Exercise Price is required
to be made as of the record date or Payment Date or Tender Expiration Date
therefor is not thereafter made or paid by the Company for any reason, the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect if such record date had not been fixed or such effective date or Payment
Date or Tender Expiration Date had not occurred.

            (h) No Adjustment. No adjustment in the Exercise Price shall be
required unless the adjustment would require an increase or decrease of at least
1% in the Exercise Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 3(h) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 3 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.

            No adjustment need be made for issuances of Common Stock pursuant to
a Company plan for reinvestment of dividends or interest or for a change in the
par value or a change to no par value of the Common Stock.

                                       8
<PAGE>
            (i) Adjustment for Tax Purposes. The Company shall be entitled to
make such reductions in the Exercise Price, in addition to those required by
Section 3, as it in its discretion shall determine to be advisable in order that
any stock dividends, subdivisions of shares, distributions of rights to purchase
stock or securities or distributions of securities convertible into or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.

            (j) Other Dilutive Events. If any event or occurrence shall occur as
to which the provisions of Section 3, 4, 5 or 8 are not strictly applicable but
as to which the failure to make any adjustment to the Exercise Price and/or the
number of shares or other assets or property subject to this Warrant would
adversely affect the purchase rights or value represented by this Warrant in
accordance with the essential intent and principles of Sections 3, 4, 5 and 8,
then, in each such case, the Company shall determine the adjustment, if any, on
a basis consistent with the essential intent and principles established in
Sections 3, 4, 5 and 8, necessary to preserve, without dilution, the purchase
rights represented by this Warrant. If such determination involves or is based
on a determination of the fair market value of any securities (other than Common
Stock) or other assets or property, such determination shall be made in good
faith by the Board of Directors of the Company, whose determination shall be
conclusive evidence thereof and which shall be evidenced by an Officer's
Certificate delivered to the Holder.

      4. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any adjustment of the
Exercise Price as provided in Section 3 or 5, the number of shares subject to
this Warrant shall be adjusted so that the Holder shall thereafter be entitled
to purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/100th of a share) obtained
by multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares purchasable hereunder (whether or not the
Exercise Period has commenced) immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment.

      5. SALE OF SHARES BELOW CURRENT MARKET PRICE.

            (a) If at any time or from time to time after the date hereof, the
Company issues or sells, or is deemed by the express provisions of this Section
5 to have issued or sold, Additional Shares of Common Stock, other than as
provided in Section 3, 5 or 8, for an Effective Price (as defined below) less
than the Current Market Price Per Share (such issue, a "QUALIFYING DILUTIVE
ISSUANCE"), then and in each such case, the then effective Exercise Price shall
be reduced, effective as of the opening of business on the date of such issuance
or sale (or if earlier, the date on which a binding agreement providing for such
issuance or sale was entered into), to a price determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, of which:

            (i) the numerator shall be (A) the number of shares of Common Stock
      outstanding immediately prior to such issue or sale, plus (B) the number
      of shares of the class of Common Stock being issued or sold or deemed to
      be issued or sold which the aggregate consideration received by the
      Company for the total number of Additional Shares of Common Stock so
      issued or deemed to be so issued would purchase at the Current Market
      Price Per Share, and

                                       9
<PAGE>

            (ii) the denominator shall be the number of shares of Common Stock
      outstanding immediately prior to such issue or sale plus the total number
      of Additional Shares of Common Stock so issued or sold or deemed to be so
      issued or sold.

            (b) For the purpose of the adjustment required under this Section 5,
if the Company issues or sells (x) stock or other securities convertible into,
shares of Common Stock (such convertible stock or securities being herein
referred to as "CONVERTIBLE SECURITIES") or (y) rights, options or warrants to
purchase shares of Common Stock or Convertible Securities and if the Effective
Price of such shares of Common Stock is less than the Current Market Price Per
Share, in each case the Company shall be deemed to have issued at the time of
the issuance of such rights, options or warrants or Convertible Securities the
maximum number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
received by the Company for the issuance or sale of such rights, options or
warrants or Convertible Securities plus the minimum amounts of consideration, if
any, payable to the Company upon the exercise or conversion of such rights,
options or warrants or Convertible Securities (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities); provided,
however, that (i) subject to subsection (d) below, if the minimum amounts of
such consideration cannot be ascertained, but are a function of antidilution or
similar protective clauses, the Company shall be deemed to have received the
minimum amounts of consideration without reference to such clauses; and (ii) if
the minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options, warrants or Convertible Securities is
reduced over time or on the occurrence or non-occurrence of specified events
other than by reason of antidilution adjustments, the Effective Price shall be
recalculated using the figure to which such minimum amount of consideration is
reduced; provided, further, that if the minimum amount of consideration payable
to the Company upon the exercise or conversion of such rights, options, warrants
or Convertible Securities is subsequently increased, the Effective Price shall
be again recalculated using the increased minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options,
warrants or Convertible Securities.

            No further adjustment of the Exercise Price, as adjusted upon the
issuance of such rights, options, warrants or Convertible Securities, shall be
made as a result of the actual issuance of Additional Shares of Common Stock
upon the exercise of any such rights, options or warrants or the conversion of
any such Convertible Securities. If any such rights, options or warrants or the
conversion privilege represented by any such Convertible Securities shall expire
without having been exercised, the Exercise Price as adjusted upon the issuance
of such rights, options, or warrants or Convertible Securities shall be
readjusted to the Exercise Price which would have been in effect had an
adjustment been made on the basis of only the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise or conversion of such rights,
options, warrants or Convertible Securities, and on the basis that such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise or conversion
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities), plus the consideration, if any, actually received by
the Company for the issue or sale of all such rights, options, warrants and
Convertible Securities,

                                       10
<PAGE>

whether or not exercised, provided that such readjustment shall not apply to
prior exercises of this Warrant.

            (c) For the purpose of making any adjustment to the Exercise Price
required under this Section 5, "ADDITIONAL SHARES OF COMMON STOCK" shall mean
all shares of Common Stock issued or sold by the Company or deemed to be issued
or sold pursuant to this Section 5 (including shares of Common Stock
subsequently reacquired or retired by the Company), other than any Excluded
Issuance. References to Common Stock in the preceding sentence shall mean all
shares of Common Stock issued or sold by the Company or deemed to be issued or
sold pursuant to this Section 5.

            The "EFFECTIVE PRICE" of Additional Shares of Common Stock shall
mean the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold, by the
Company under this Section 5, into the aggregate consideration received, or
deemed to have been received, by the Company for such issue under this Section
5, for such Additional Shares of Common Stock.

            (d) In the event that the Company issues or sells, or is deemed to
have issued or sold, Additional Shares of Common Stock in a Qualifying Dilutive
Issuance (the "FIRST DILUTIVE ISSUANCE"), then in the event that the Company
issues or sells, or is deemed to have issued or sold, Additional Shares of
Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive
Issuance (a "SUBSEQUENT DILUTIVE ISSUANCE") pursuant to the same instruments as
the First Dilutive Issuance, then and in each such case upon a Subsequent
Dilutive Issuance the Exercise Price shall be reduced to the Exercise Price that
would have been in effect had the First Dilutive Issuance and each Subsequent
Dilutive Issuance all occurred on the closing date of the First Dilutive
Issuance.

      6. NOTICE OF ADJUSTMENT. Whenever the Exercise Price, exercise privilege
or number of Warrant Shares shall be adjusted pursuant to the terms hereof, the
Company shall promptly mail to the Holder a notice of the adjustment (in
accordance with Section 18) and an Officer's Certificate briefly stating the
facts requiring the adjustment and the manner of computing it. Unless and until
the Holder shall receive an Officer's Certificate setting forth an adjustment of
the Exercise Price or the number of Warrant Shares, the Holder may assume
without inquiry that the Exercise Price and the number of Warrant Shares have
not been adjusted and that the last Exercise Price and number of Warrant Shares
of which it has knowledge remain in effect.

      7. NOTICE OF CERTAIN TRANSACTIONS. In the event that:

            (a) the Company takes any action which would require an adjustment
in the Exercise Price or the number of Warrant Shares;

            (b) the Company consolidates or merges with or into, or transfers
all or substantially all of its property and assets to, another corporation or
another corporation merges into the Company and, in each such case, stockholders
of the Company must approve the transaction; or

            (c) there is a dissolution or liquidation of the Company;

                                       11
<PAGE>

the Company shall mail to the Holder a notice in accordance with Section 18
stating the proposed record or effective date, as the case may be. The Company
shall mail the notice at least ten days before such date. Failure to mail such
notice or any defect therein shall not affect the validity of any transaction
referred to in subsections (a), (b) or (c) of this Section 7.

      8. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON EXERCISE
PRIVILEGE. If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 3); (b) any
consolidation or merger or combination to which the Company is a party other
than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of, or change
(other than in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination) in,
outstanding shares of Common Stock; or (c) any sale, conveyance, transfer or
lease of all or substantially all of the property or assets of the Company,
directly or indirectly, to any Person (any such event being called a "CAPITAL
REORGANIZATION"), upon the effective date of such Capital Reorganization, the
Holder shall have the right to receive, upon exercise of this Warrant, the kind
and amount of shares of stock and/or other securities and/or property (including
cash) which the Holder would have owned or have been entitled to receive after
such Capital Reorganization if this Warrant had been exercised immediately prior
to such Capital Reorganization, assuming the Holder (i) is not a person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or conveyance was made, as the case may
be ("constituent person"), or an affiliate of a constituent person and (ii)
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such Capital Reorganization.
The provisions of this Section 8 shall similarly apply to successive Capital
Reorganizations. The Company shall not consummate any transaction that effects
or permits any such event or occurrence unless each Person whose shares of
stock, securities or assets will be issued, delivered or paid to the
stockholders (including the Company with respect to clause (ii) below), prior to
or simultaneously with the consummation of the transaction (i) is a corporation
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and (ii) expressly assumes, or in the case of
the Company, acknowledges, by a subsequent Warrant or other document in a form
substantially similar hereto, executed and delivered to the Holder hereof, the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions of this Section 8, such Holder
is entitled to purchase, and all other obligations and liabilities under this
Warrant, including obligations and liabilities in respect of subsequent
adjustments that are required under this Warrant.

      9. REPRESENTATIONS AND WARRANTIES OF HOLDER. In connection with the
issuance of this Warrant, and the Warrant Shares upon the exercise of this
Warrant, the Holder hereby makes the following representations and warranties to
the Company, effective as of the date hereof and upon each exercise of this
Warrant in whole or in part:

            (a) the Holder is an "accredited investor" as such term is defined
in Regulation D under the Securities Act of 1933, as amended (the "SECURITIES
ACT");

                                       12
<PAGE>
            (b) the Holder is acquiring the Warrant or the Warrant Shares, as
applicable, for the Holder's own account for investment and not with a view to,
or for sale in connection with, any distribution thereof in violation of the
Securities Act, nor with any present intention of distributing or selling the
same in violation of the Securities Act;

            (c) the Holder understands that the Warrant and the Warrant Shares
have not been registered under the Securities Act, in reliance upon exemptions
contained in the Securities Act and applicable regulations promulgated
thereunder or interpretations thereof, and cannot be offered for sale, sold or
otherwise transferred unless such sale or transfer is so registered or qualifies
for exemption from registration under the Securities Act, and that the
certificates representing such shares may bear a legend substantially in the
form set forth in Section 10 hereof; and

            (d) the Holder further understands that it may be required to hold
the Warrant and the Warrant Shares for an indefinite period of time unless the
Warrant and the Warrant Shares are subsequently registered under the Securities
Act or unless an exemption from registration is otherwise available.

      10. LEGEND.

            (a) The Holder agrees not to make any disposition of all or any part
of the Warrant or Warrant Shares except in accordance with Section 14 hereof and
unless and until:

                (i) The Holder shall be entitled to rely on an exemption from
registration under the Securities Act for such disposition; or

                (ii) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with said registration statement.

            (b) The Holder understands and agrees that all certificates
evidencing Warrant Shares may bear the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS.

Such legend shall be removed by the Company at the request of the Holder in
connection with any sale which the Company reasonably determines to be pursuant
to an effective registration statement under the Securities Act or pursuant to a
valid exemption from the registration requirements of the Securities Act.

                                       13
<PAGE>

      11. FRACTIONAL SHARES. Notwithstanding any provision of this Warrant to
the contrary, the Company shall not be required to issue fractions of shares
upon exercise of this Warrant or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company may make payment to
the Holder, at the time of exercise of this Warrant as herein provided, of an
amount in cash equal to such fraction multiplied by the Closing Price on the
Exercise Date.

      12. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will at all times reserve and keep available the maximum
number of its authorized shares of Common Stock, free from all preemptive rights
therein, which will be sufficient to permit the full exercise of this Warrant,
and (c) will take all such action as may be necessary or appropriate in order
that all Warrant Shares will, upon issuance, be duly and validly issued, fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof.

      13. REPLACEMENT OF WARRANTS. On receipt by the Company of an affidavit of
an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Warrant (and in the case of any
such mutilation, on surrender and cancellation of such Warrant), the Company at
its expense will promptly execute and deliver, in lieu thereof, a new Warrant of
like tenor which shall be exercisable for a like number of Warrant Shares. If
required by the Company, such Holder must provide an indemnity bond or other
indemnity sufficient in the judgment of the Company to protect the Company from
any loss which it may suffer if a lost, stolen or destroyed Warrant is replaced.

      14. RESTRICTIONS ON TRANSFER.

            (a) Subject to the provisions of this Section 14, this Warrant may
be transferred or assigned, in whole or in part, by the Holder at any time and
from time to time, without the consent of the Company. The term "Holder" as used
herein shall also include any transferee of this Warrant whose name has been
recorded by the Company in the Warrant Register (as hereinafter defined). Each
transferee of the Warrant or the Common Stock issuable upon the exercise of the
Warrant acknowledges that neither the Warrant nor the Common Stock issuable upon
the exercise of the Warrant has been registered under the Securities Act and may
be transferred only pursuant to an effective registration under the Securities
Act or pursuant to an applicable exemption from the registration requirements of
the Securities Act.

            (b) With respect to a transfer that should occur prior to the time
that the Warrant or the Common Stock issuable upon the exercise thereof is
registered under the Securities Act, such Holder shall request an opinion of
counsel (which shall be rendered by counsel reasonably acceptable to the
Company) that the proposed transfer may be effected without registration or
qualification under any Federal or state securities or blue sky law. Counsel
shall, as promptly as

                                       14
<PAGE>
practicable, notify the Company and the Holder of such opinion and of the terms
and conditions, if any, to be observed in such transfer, whereupon the Holder
shall be entitled to transfer this Warrant or such shares of Common Stock (or
portion thereof), subject to any other provisions and limitations of this
Warrant. In the event this Warrant shall be exercised as an incident to such
transfer, such exercise shall relate back and for all purposes of this Warrant
be deemed to have occurred as of the date of such notice regardless of delays
incurred by reason of the provisions of this Section 13 which may result in the
actual exercise on any later date.

            (c) The Company shall maintain a register (the "WARRANT REGISTER")
in its principal office for the purpose of registering the Warrant and any
transfer thereof, which register shall reflect and identify, at all times, the
ownership of any interest in the Warrant. Upon the issuance of this Warrant, the
Company shall record the name of the initial holder of this Warrant in the
Warrant Register as the first Holder. Upon surrender for registration of
transfer or exchange of this Warrant together with a properly executed
Assignment in the form attached hereto as Exhibit B at the principal office of
the Company, the Company shall, at its expense, execute and deliver one or more
new Warrants of like tenor which shall be exercisable in the aggregate for the
total number of Warrant Shares, registered in the name of the Holder or a
transferee or transferees.

      15. NO RIGHTS OR LIABILITY AS A STOCKHOLDER. This Warrant does not entitle
the Holder hereof to any voting rights or other rights as a stockholder of the
Company. No provisions hereof, in the absence of affirmative action by the
Holder hereof to purchase Common Stock, and no enumeration herein of the rights
or privileges of the Holder shall give rise to any liability of such Holder as a
stockholder of the Company.

      16. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax, or other incidental expense, in
respect of the issuance or delivery of such certificates or the securities
represented thereby, all of which taxes and expenses shall be paid by the
Company.

      17. AMENDMENT OR WAIVER. This Warrant and any term hereof may be amended,
waived, discharged or terminated only by and with the written consent of the
Company and the Holder.

      18. NOTICES. All notices, requests, claims, demands and other
communications required or permitted to be given hereunder will be in writing
and will be delivered by hand or telecopied, e-mailed or sent, postage prepaid,
by registered, certified or express mail or reputable overnight courier service
and will be deemed given when so delivered by hand or telecopied, when e-mail
confirmation is received if delivered by e-mail, or three Business Days after
being so mailed (one Business Day in the case of express mail or overnight
courier service). All such notices, requests, claims, demands and other
communications will be addressed as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

                                       15
<PAGE>
            (a) If to Conexant:

                Conexant Systems, Inc.
                4311 Jamboree Road
                Newport Beach, California  92660-3095

                Attention:    Dwight W. Decker
                              Chairman of the Board and Chief Executive Officer
                Telecopy:     (949) 483-4318
                E-mail:       dwight.decker@conexant.com

                with a copy to:

                Conexant Systems, Inc.
                4311 Jamboree Road
                Newport Beach, California  92660-3095

                Attention:    Dennis E. O'Reilly, Esq.
                              Senior Vice President, General Counsel
                                and Secretary
                Telecopy:     (949) 483-9475
                E-mail:       dennis.o'reilly@conexant.com

            (b) If to the Company:

                Mindspeed Technologies, Inc.
                4000 MacArthur Boulevard
                Newport Beach, California 92660-3095

                Attention:    Raouf Y. Halim
                              Chief Executive Officer
                Telecopy:     (949) 579-6106
                E-mail:       raouf.halim@mindspeed.com

                with a copy to:

                Mindspeed Technologies, Inc.
                4000 MacArthur Boulevard
                Newport Beach, California 92660-3095

                Attention:    Simon Biddiscombe
                              Senior Vice President, Chief Financial Officer
                                and Treasurer
                Telecopy:     (949) 579-5289
                E-mail:       simon.biddiscombe@mindspeed.com

      19. CERTAIN REMEDIES. The Holder shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions of this Warrant in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which such Holder may be entitled at law or in equity.

      20. GOVERNING LAW. This agreement shall be governed by, construed in
accordance with, and enforced under, the law of the State of Delaware applicable
to agreements or instruments entered into and performed entirely within such
State.

      21. HEADINGS. The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

                                       16
<PAGE>
                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       17
<PAGE>
                           [SIGNATURE PAGE TO WARRANT]

            IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer effective as of June 27, 2003.

                                             MINDSPEED TECHNOLOGIES, INC.

                                             By:
                                                 -------------------------------
                                                 Name:
                                                 Title:

ACKNOWLEDGED AND ACCEPTED:

CONEXANT SYSTEMS, INC.

By:
    --------------------------------
    Name:
    Title:

                                       18
<PAGE>
                                                          Exhibit A to Common
                                                          Stock Purchase Warrant

                                    [FORM OF]

                           ELECTION TO PURCHASE SHARES

                  The undersigned hereby irrevocably elects to exercise the
Warrant to purchase _____ shares of Common Stock, par value $.01 per share
("Common Stock"), of MINDSPEED TECHNOLOGIES, INC. (the "Company") and hereby
[makes payment of $_______ therefor] [or] [makes payment therefor by
surrendering pursuant to Section 2(b)(ii) of the Warrant _____ shares of Common
Stock of the Company] [or] [makes payment therefor by cancellation pursuant to
Section 2(c) of the Warrant of a portion of the Warrant with respect to
_________ shares of Common Stock]. The undersigned hereby requests that
certificates for such shares be issued and delivered as follows:

ISSUE TO:
________________________________________________________________________________

(NAME)

________________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)

________________________________________________________________________________

(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:
________________________________________________________________________________

(NAME)

________________________________________________________________________________

(ADDRESS, INCLUDING ZIP CODE)
<PAGE>
                                                          Exhibit B to Common
                                                          Stock Purchase Warrant

                              [FORM OF] ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.01 per share ("Common Stock"), of MINDSPEED
TECHNOLOGIES, INC. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:

Name of Assignee        Address           No. of Shares

and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of MINDSPEED TECHNOLOGIES, INC.
maintained for that purpose, with full power of substitution in the premises.

Dated:__________________________            CONEXANT SYSTEMS, INC.

                                            By: ________________________________
                                                Name:
                                                Title:

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